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Corporate Social Responsibility (CSR)


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Chapt er 1 Int roduct ion


Corporate Social Responsibility is a rapidly developing, key business issue. It is a concept that has attracted worldwide attention. Due to the demands f or enhanced transparency and corporate citizenship, CSR started to embrace social, ethical as well as environmental challenges. Today, companies are aware of the social and environmental impacts of international production. It is accepted that Companies should not be only prof itable, but also good corporate citizens. T hrough globalization of the economy, multinational companies are increasingly involved with suppliers and customers worldwide, especially if they operate in developing countries. T he CSR agenda has a close relationship with international development. CSR within multinational companies is seen as a vehicle through which larger, well known corporations can contribute to the well being of developing countries by operating responsibly in terms of social and environmental issues. However, the promoted "CSR" in the developing world by multinationals is "not real CSR", despite signif icant contribution to development in some cases. Very little is known about the companies' CSR policies and practices in an international context, developing countries in particular. As reality shows, most of the larger corporations abuse the CSR and behave unethically and irresponsibly towards both society and the environment. Issues such as unsaf e working conditions, unf air payment, gender discrimination, sexual harassment, toxic emissions and the hazardous pollution of water and soil have all raised f air allegations by consumers, non-governmental organizations and the larger society. . Famous global brands like Nike, Coca-Cola, GAP and McDonalds are of ten under intense pressure f rom the public. Much of those pressures are due to their unethical behaviour in developing countries, where their main operations take place. T hough companies operate in host countries, their reputation extends across numerous national boundaries. T he actions of multinational companies in a host country can cause signif icant loss of reputation in the developed world, where the general public have become more sensitive to environmental issues and social impact. T he public have the power to boycott the goods and products of multinational corporations in cases of unethical behaviour where organisations are thought not to f ulf il their social and environmental obligations. However, international reputation side ef f ects are not the only reason behind the potential increased level of social and environmental responsibilities f aced by multinational companies; there are many drivers f or the correct implementation of CSR by business entities. However, f or many companies, corporate reputation and brand image are the f undamental components of business success. Corporate Social Responsibility in developing countries represents the f ormal and inf ormal ways in which multinational business enterprises contribute to improving the social, ethical and environmental conditions of the developing countries in which they operate. However, the rational approach to the CSR in the developing world is dif f erent f rom CSR in developed countries. For example, developing countries represent the ongoing growth of the economy; hence the most attractive growth markets f or many f oreign companies. T hey provide cheap labour, an absence of strong regulations and a rich availability of resources; all crucial concerns f or multinational enterprises f or conducting their businesses in developing world. It has been f ound that the public and the government are not as critical of unethical

business practices within f oreign companies. In addition, developing countries are where globalization, economic growth, investments and business activities are likely to have both positive and negative social and environmental impacts. T heref ore, developing countries represent a dif f erent set of CSR agenda f or multinational companies to those operating in the developed world. In this research paper the CSR practices of multinational corporations will be examined. T heir CSR commitment as well as irresponsible practices will be highlighted. In the f irst chapter, there will be overview on the previous works in this f ield. As CSR is a new concept, especially in developing countries, the short history of the development of CSR and main contributions will be presented. Literature review will give us the background knowledge about CSR. In chapter two, research methodology and relating this to the subject matter will be discussed. As research will be based on case study, there will be some examples of multinational corporations' experience in developing countries. T he examples of their commitments towards environmental and social sustainability as well as negative impacts caused by their unethical operations will be provided. T he opinions and critics of analysts and experts will provide a clear understanding of companies' CSR practices in the developing world. T he well known multinational companies like Nestle, Nike, KFC, Apple iPod and many others will be examined f or their irresponsible and unethical behaviour in developing countries such as China, Indonesia, India, Southeast Asia and Af rica. For the main research point the Coca-Cola crisis in India has been chosen, as Coca-cola, despite its CSR commitment towards society and environment, has caused damages to both the community and environment where it operates. From the case study, we are able to make some conclusions regarding CSR practices and make suggestions and recommendations f or f uture of Corporate Social Responsibility, as it will undoubtedly increasingly become a major issue and integral part of business practise.

Chapt er 2 Lit erat ure review


T he 21st Century has seen much advancement in the issue of corporate social responsibility (CSR), and there has been particular interest in the impact CSR could have globally. T his literature review will begin by def ining what is meant by corporate social responsibility. T here are a lot of debates about the origins of CSR; however it is clear that CSR is a modern term, a consequence arising f rom the history of business responsibility. T he modern term is considered to have western origin; however it has developed f rom dif f erent countries' ideas and theories. T his has created a number of def initions of CSR. T his can lead to conf usion making CSR less ef f ective. It is interesting to observe that none of the def initions actually def ines the social responsibility of businesses, as so f amously discussed by Milton Friedman (1970), but rather describe it as a phenomenon. T he Government sees CSR as a business contribution to sustainable development. However, the modern concept of CSR has been inf luenced by Globalization and so CSR has developed and is taken in dif f erent context worldwide. (Crane, Matten, Spence, 2008). In addition, organizations such as the European Union (EU) see CSR as a concept integrating social and environmental concerns in business operations and in their interactions with their stakeholders on a voluntary basis. However, others like Ethics in Action Awards (2003), describe CSR as a company's obligation to be accountable to all of its stakeholders in all operations and activities (Dahlsrud, 2006). T here are a number of debates raised in academic literature over the issue of to whom the business must have responsibility. Various authors have ref erred to the common approaches: shareholder, stakeholder and societal approaches. According to shareholder approach, the classical view on CSR maximizing the prof its of shareholders (Friedman, 1962). T his approach can also be interpreted as being that the company should make contributions to the extent, to which it can be connected with the creation of long-term value f or the shareholders (Foley, 2000). From the stakeholder theory, it is obvious that organisations should be accountable towards other groups of stakeholders, who can af f ect or be af f ected by a company's objectives (Freeman, 1984). T he last approach, which is regarded to give the broader view on CSR, argues that the organisations should be responsible to societies as a whole, of which they are an integral part. T he aim of the f ollowing literature review is to identif y the most valuable academic studies and important practical investigations. T he f ield of Corporate Social Responsibility can be divided into several parts; def initions of CSR,

analysis of CSR approaches, CSR in supply chain, CSR in developed countries as well as in developing ones, the link between CSR and globalization and last, but not least the global understanding of CSR.

The hist ory of CSR


T he development concept of Corporate Social Responsibility (CSR) has been carried out mainly in western countries; particularly in United States. Literature picks up the issue f rom the 1950s when attention was devoted to the responsibility of businessmen ( Bowen, 1953) to the 1980s when the argument with stakeholder theory took place (Freeman, 1984) and of course, to the 1990s when most studies were devoted to the analysis of the relationship between CSR and corporate f inancial perf ormance (Roman et al, 1999). In the beginning of the 1950s, Howard Bowen tried to give rational and systematic arguments in f avour of CSR and its connection with big corporations and their inf luence on social consequences and undoubtedly, their primary societal responsibilities. T he one of the earliest books on CSR, "T he Social Responsibilities of the Businessman", was written by Bowen in 1953. Bowen's book was specif ically concerned with the doctrine of social responsibility. Bowen argued that social responsibility is not panacea f or all business social problems, but that it contains an important truth that must guide business in the f uture (Asongu, 2007). Because of Bowen's early and very valuable work, Carroll has argued that Howard Bowen should be called the "Father of Corporate Social Responsibility" (Carroll, 2000). T he decade of the 1960s is characterized as seeing a growing interest in the f ormalizing or more precisely, def ining the meaning of CSR. One of the prominent writers in this period was Keith Davis, who later extensively wrote about the topic in his business and society textbooks, later revisions and articles. He argued that social responsibility is a nebulous idea, but should be seen in a managerial context (Mahon, 1991). Another inf luential contributor to the early research into CSR was Friedman. T he argument made by Friedman (1962) that the main corporation's responsibility is toward shareholders has created much debate among academics. It was not until 1970, that Wallich and McGowan f irst made attempts to demonstrate the link between corporations' social responsibility and shareholder's interests. T hey argued that the aim of corporation's long-term interest should be linked to the environment to which a corporation belongs. If society and environment became worse, a business would lose their "critical support structure" and customer base (Keim, 1978). In the 1970s there are a wide range of ref erences, increasingly being made to corporate social responsiveness, corporate social perf ormance as well as corporate social responsibility. In the 90s, literature tried to f ind out answers to questions such as why some companies are doing well and if CSR could be identif ied as a competitive advantage. Most academics and scholars started to apply the stakeholder theory to CSR, because stakeholders, other than shareholders have interest in the well-being of a company in relation to employees, customers, governments and others. T his model renewed the interest in CSR and more research was devoted to this subject. Also, there is great interest in the linkage between CSR and corporate competitiveness; but bbbthere is a shortcoming of quantitative translation of socially responsible practices into specif ic results af f ecting the income and loss of particular organization (Murillo and Lozano, 2006). Many scholars connect CSR with the competitive advantage that a company can gain. T he most well-known work in this f ield is Prof essor Michel Porter's "T he competitive advantage of corporate philanthropy" in which he describes how a company is able to improve its long-term potential by linking f inancial and societal goals (Porter, 2003). Further development in this area was made by Kramer (2003).

Problems wit h CSR research


We know very little about CSR initiatives and undoubtedly, there are some questions about both the ef f iciency of CSR approaches and the tangible benef its f or stakeholder groups. Also, we know very little about the social and environmental impacts of CSR initiatives. For example, many business schools analyzed and devoted their works to studying the content of codes of conduct. T hey looked at specif ic issues such as child labour, but they f ailed to study the wider societal impacts of CSR. T he most notable study about societal impacts came f rom development study scholars, not f rom business schools. T he study by Barrientos and Smiths (2007) reviled that there are, in particular in those countries where empirical investigation took place such as South Af rica, India, Vietnam and Costa Rica, some benef its f rom codes of conduct and initiatives implementing CSR by multinational companies. However there are f ailures in the areas of noncompliance and ensuring the improvement of working conditions. In addition

to this, Barrientos and Smiths questioned the methods used by the business communities in investigating the societal impacts of CSR, doubting the ef f iciency of the tools used to monitor CSR perf ormance. Due to the lack of empirical study and evidence regarding CSR impacts, there are still analytical limitations in the current CSR f ield. For example, some academics (Lantos, 2001) wrote about conceptualization of CSR, however, current f ield of CSR and business scholars f ail to answer vital questions. For example, how can CSR tackle a development challenge like poverty, without an understanding of the negative inf luence caused by multinational companies operating in host communities? Even if there is agreement about societal benef its of CSR initiatives, there is still uncertainty about the way in which CSR should be studied and analyzed. Lockett, Moon and Wisser (2006) argued that CSR knowledge should be best described as a continuing state of emergence. Indeed, many scholars study CSR initiatives without any ref erence to theoretical perspectives. Milton Friedman and other authors highlighted the "agency problem" of CSR f or a long time. For example, Friedman argued that the pursuit of societal and environmental objectives will undoubtedly hurt shareholders by lowering prof its. However, other scholars like Margolis and Walsh (2003) oppose the arguments of Friedman. T hey f ound that, between 1972 and 2002, at least 172 empirical studies investigated the positive relationship between social responsible behaviour of an organization and its f inancial perf ormance.

Levels of CSR
Another main contribution to the development of CSR made by Carroll (1991), considered the economic, legal, ethical and philanthropic levels of CSR. T hese levels represent what is required, expected and desired f or CSR strategies (Crane, Matten, Spence, 2008). According to Crane, Matten and Spence, Carroll's pyramid of CSR is the most widely accepted def inition of CSR. Until the 1980s, environmental corporate responsibility was the part of "social responsibility", which was used as a f rame term that covered a wide f ield of ideas. However, corporations became to understand the importance of environmental responsibility. For this reason, the concept of "corporate environmental responsibility" has started to be used by researchers such as Rondinelli and Berry (2000) in parallel with the development of "corporate social responsibility" by Carroll (1998), Maignan and Ferrel (2000) and Z arkada-Fraser (2004).

CSR and Corporat e Social Report ing


T he great number of scholars, who have since the 1970s (Fenn, Ackerman,), analyzed the complex issue of Corporate Social Responsibility and the advantage of reporting on a wider scale, have given the possibility to evaluate social perf ormance (Levis, 2006). T he theme of social reporting has been developed along with the CSR. T he approach f or researching reporting is dif f erent in comparison with past decades due to the growing number of organizations that have published a social report. (Belal, 2002; Bitcha, 2003; Weaver et al, 1999). T he reason f or the growing interest in this f ield is linked to progress in business ethics (Donaldson, 1999) and the signif icant importance of the stakeholder approach, which has led to an increase of interest in studying the causes and real meaning of the phenomenon. T he present approach to social reporting activities can be divided into two parts: f ists, those who still think that it is a responsiveness approach and others, who argue that it is much more than communication; it is a tool of strategic management.

Research in CSR worldwide


Cultural dif f erences af f ect CSR dynamics as well as companies practising responsible behaviour. For instance, research by Juholin (2004) reviled that long-term prof itability is the prominent driving f orce behind CSR in Finland. Research by Fulop et al. (2000) discovered dif f erences in CSR orientations between large and small f irms. A similar study by Uhlaner et al. (2004) suggests a mixture of CSR perspectives (economic benef its, legal, ethical and philanthropic considerations) as usef ul in explaining variations in CSR orientations amongst Dutch f irms. Despite cross-cultural and national dif f erences, there are dif f erences in the variety of methodologies adopted in examining and analyzing CSR. Some studies considered CSR as a philanthropic and ethical responsibility; however other studies have made a distinction between CSR as simple legal compliance vs. CSR as conducting business with high regard f or morality.

As noted previously, the debate about CSR has existed since the 1950s. In the f irst academic papers, a narrow concept of corporate social responsibility was used. Most of the authors like Bragdon and Marlin (1972) and Spicer (1975), tried to approach CSR through the main social and environmental problems such as pollution and contributions to the local community. T he data used f or their analysis was based on inf ormation issued by the Council on Economic Priorities. However they were not able to cover the whole aspects of CSR and their works were not valid f or every industry (Dooley, 2004). Later, a broader valuation and examination was provided by Moskowitz (1972, 1975). In his work he tried to cover almost every aspect of corporate social responsibility such as equal employment opportunities, charitable contributions, f air dealing with customers, product quality and more.

CSR in developing world


Despite the great interest in ethical and responsible behaviour in business, very little is known of the practise of CSR in developing countries. For example, Belal (2001) notes that there are a wide range of academic publications, describing CSR in the context of developed countries such as Western Europe, the USA and Australia. Also that we still know too little about practices of corporate responsibility in excolonial, smaller and developing countries. He suggests doing more research into developing countries as it will give a valuable insight to the western meaning of CSR in context (Jamali, 2007). T here are no large scale developmental studies of CSR in developing countries as there are in western countries. However, the CSR discussion traditionally revolved around the multinational companies operating in developing countries. T he multinational companies' response to CSR has great impact on the f uture global CSR agenda. T he f irst notions of corporate social responsibility in developing countries emerged in the 1960s amongst American companies operating in developing countries, particularly in Asia and Af rica. Perhaps a simple def inition, truly ref lecting the responsible behaviour of current multinational companies operating in developing countries is presented by Davies, who suggested CSR as a f ramework f or the role of business in society. T he implication of this def inition is that it includes any society in which the company operates, including the "global society" (Engle, 2006). Within the Asian context, most academics paid attention to describing the governance aspects of environmental responsibility (Hong Kong: Hills and Welf ord; China: Bi; T he Philippines: Forsyth). In contrast, in India, Mohan has f ocused on social responsibilities and corporate citizenships. Also, there is some research into the normative aspects of CSR such as the evolution of business ethics in Taiwanese companies (Wu). In the study of CSR in Malaysia, Teoh and T hong f ound that the most f oreign multinational companies seemed more inclined to accept their responsibilities towards environment and society (Chapple, 2005).

CSR in t he Global Cont ext CSR and mult inat ional corporat ions.
Relatively little is known about management of corporate social responsibility by multinational companies (Gnyawali, 1996). In general, little is known about the management of CSR in multinational companies, either practically or academically. While many areas of research have examined the nature of cultural or business pref erence to social equality (Adler, 1997; George and Jones, 2002; Lantos, 2002), there has previously been no research regarding the role of CSR in the expansion of organizations into new territories or cultures. T he dominant theoretical approach to studying CSR practices among multinational companies, operating in developing countries, is the works of Bartlett and Ghoshal (1989) and Prahalad and Doz (1987), who tried to analyze general multinational companies' management practices in CSR. T his f ramework was then extended by Yip (1992) and Husted and Allen (2006) to cover CSR practices (Geppert et al., 2006). T he studies of these researchers enabled interesting insights such as how CSR is being managed, the potential barriers to successf ul implementation of CSR practices within domestic places into operation

among multinational corporations. However, mainstream research of CSR was concentrated particularly on domestic issues such as labour issues, racial discrimination, the position of women and the environment. To date there has been limited analysis in the developing countries context, in particular regarding f oreign multinational companies. Further detailed analysis is needed of what instrumental, moral and relational motives exist in systems very dif f erent to the western context in which they were developed.

CSR and Globalizat ion


With Globalization, CSR has been propelled into a global context. Ruggie (2004) identif ied three particular aspects of social responsibility in the context of global governance. Firstly, nowadays it is expected that multinational companies will build new capacities and take care of issues such as working conditions, healthcare and education as well as respect human rights. So that, if corporations insist on setting up in developing countries, they are f orced to consider challenges, normally associated with developing countries like poverty or child labour. Nowadays, most multinational companies f ace a lot of new and challenging problems in this era of Globalization. According to Weber, Lawrence and Post, multinational companies are able to solve such problems. T hey have introduced the idea of "T hree sector world", compromising multinational companies, non governmental organizations and community. In their research, they compared both strengths and weaknesses of each sector and analyzed their contributions to solving global problems. T he research method was based on comparing attempts of two multinational companies in implementing CSR in developing countries (Young, 2008). Based on their f indings, it is obvious that a collaborative partnership with community and non governmental organizations can carry better results in implementing CSR. T heref ore CSR in the global context involves more than business implementation, it needs business cooperation with other organizations whose f ocus is greater on CSR. From the vast majority of literature, it is clear that CSR has gained major signif icance in the era of Globalization and multinational companies should take responsibilities f or their actions worldwide, especially in developing countries. Multinational corporations should behave as a moral leader in an area where there are no legal requirements (Scherer and Smid, 2000). CSR is considered a Western idea, which has now to be applied to problems in the developing world (Scherer and Smid, 2000). T he literature review is an account of what has been published on corporate social responsibility; it acknowledges the critical points highlighted by scholars and researchers. T he literature review conveys what knowledge and ideas have been established on corporate social responsibility and it enables f urther research to compare and contrast these ideas in order to create new theories. T heref ore a literature review provides the basis f or the analytical f ramework of this research (Bryman, 2004). It has also helped with the interpretation of the results and has led to other questions being asked. T he literature review also highlighted that there had been little research carried out on the societal impacts of CSR and implementation of CSR by multinational companies in developing world. T his gives f urther importance and emphasis to the analysis of literature in giving rise to new questions and theories. T he literature review has provided the f ramework of f ollowing deep research about corporate social responsibility of multinational companies in developing countries, in particular the problems and benef its of implementing of CSR and the role of huge corporations in this issue. T he literature review has helped to identif y key themes within CSR by multinationals and f rom this more questions have evolved.

Chapt er 3 Met hodology


In this research paper the case study was employed as the research strategy. Usually descriptive or exploratory research is associated with the case study, and this might be particularly usef ul when the phenomenon under investigation is dif f icult to study outside its natural setting. Using case study research methodology is also helpf ul when the concepts and variables need to be considered where experimental or survey methods are regarded to be inappropriate (Yin, 1994). Case study is used particularly in looking at the specif ic questions such as "how and why" that is set in the contemporary environment (Yin, 1989) Case study methodology has a lot of advantages over some other methodologies. First, it allows the use of multiple data collection techniques in order to build a more comprehensive picture of the case being investigated. Second, this in turn leads to the ability to capture

both qualitative and quantitative data. Case studies can provide a solid understanding required f or hypothesis development that then leads to improved theory development. T he main advantage of case based research is that results are considered to be interesting and important and can shif t the f ocus of investigation towards a new area of interest (Scapens, 1990). T he case study is usually considered more accurate, diverse and rich, if it is based on several sources of data (Alasuutari, 2000).

Advant ages of using secondary dat a f or research purposes


As the research is concerned with multinational companies operating internationally, secondary data will probably provide the main source of necessary inf ormation. As our research strategy is case study, it is better to use compiled data that have already been sorted or summarised (Kervin, 1999). Secondary data can be obtained f rom dif f erent sources aimed at the same geographic area, where our case study takes place such as the Coca-Cola's crisis in India. Area-based multiple sources of data are usually easily available in dif f erent f orms, especially in published f orms. Also tracking the original source of secondary data is much easier, especially when time restrictions are severe. As it will be a case study, it is even pref erable to use newspapers, journals and media on a regular basis, as they may provide recent events within the business world. Research will concern the specif ic country i.e. India, data f rom government sources are also usef ul due to their high quality. Because of time constraints, secondary data can be obtained very quickly, in addition they have better quality standards in comparison with collecting own data (Stewart and Kamins, 1993). Using secondary data within collection also has a wide range of benef its, as they have already been collected and analyzed (Cowton, 1998). Unlike the data collected by myself , secondary data are permanently available and easily accessible, so that it can be checked relatively easily to others (Denscombe, 1998).

Problems wit h collect ing primary dat a f or research purposes


Access f or some primary data can be problematic and dif f icult. T heref ore it is unlikely that gaining permission f or physical access will be easy and will be time consuming. As an interview is way f or collecting primary data, however it is dif f icult to seek access to a range of participants such as employees, suppliers, customers and other stakeholder groups. T he main cause might be restricted access to company's data either directly or indirectly (Bunchanan et.al., 1998; Raimond, 1993). As a f ull time master student, you are not able to have prior contact with huge multinational companies and you will be required to negotiate in order to gain any access to each level of inf ormation. Also, the major obstacle in obtaining primary data is time constrains. T here is not suf f icient time f or all methods of collecting primary data, as physical access may take weeks or even months (Bunchanan et.al., 1998). Even, if there are time allowances, nobody can guarantee that replies will be quick and contain all necessary inf ormation. In case of opportunities f or conducting interviews, undertaking questionnaires or engaging in observation, unf ortunately, this would take several weeks. Whichever method will be chosen, almost all methods f or gathering primary data are very time consuming (Bryman, 1988). However, due to the growing signif icance of the topic, many researchers have used primary data to conduct research. T hey collected primary data through interviews, observation and questionnaires. T here are some examples of case study based research approaches. T he implementation of CSR in developing countries was examined by Christina L. Anderson and Rebecca L. Bieniaszewska in the paper "T he Role of Corporate Social Responsibility in Oil Company's Expansion into New Territories". T he aims of the study were to analyse the role of CSR in British Petroleum's overall business strategy and to examin the benef its of employing CSR as a part of business strategy when it was operating in new territories and cultures. T he case study approach was conducted through providing interviews with representatives f rom BP, social auditing and accounting specialists. Recent company reports and website inf ormation were also examined. Another example came f rom Richard Welf ord and Stephen Frost's research that provides an overview of CSR practices in Asia. T he aim of the research paper is to review the benef its of the implementation of CSR in supply chains and arising obstacles. In order to collect data f or research purposes, interviews were undertaken with six CSR managers working f or well-known brand corporations, ten f actory managers and eight CSR experts. Interviews were held conf identiality and anonymously. All participants

have extensive experience of CSR issues and provide a good overview of the challenges f or CSR by multinational companies in Asia. T he case study based approach showed that multinational corporations such as Gap, Nike, Reebok, operating in Asia, are still continuing to be criticized because they were not 100% perf ect, f ailing in proper implementation of CSR as well as monitoring. Another example of a research case study came f rom Ian Harwood and Stuart Humby f rom the University of Southampton in their research paper " Embedding corporate responsibility into supply: A snapshot of progress". T heir research adopts a case study methodology, with specif ic f ocus on an exploratory cross-case analysis. Along with the revising literature review, methods included nine semi-structured interviews (1.5 hours each), f ollowed by conversations with dif f erent public and private organisations, which concerned CSR issues as well as dialogues with other universities working in the f ield of corporate responsibility both locally and internationally. Some participants asked about anonymity and conf identiality. Consequently, ethical issues were considered during the process of gathering data. Nine companies were large enterprises, operating in multinational markets. T he respondents were senior managers and directors in either procurement or CSR related roles. T he aim of research was to identif y the CSR practices in companies, the processes of implementing CSR in supply chain including the management of risk and perf ormance management. Also, views on the problems f or f uture development of CSR were analyzed. Corporate Social Responsibility became an important issue in the late 20th century. However, there are still several large companies, behaving unethically within society. Many companies have emphasized that they govern their social responsibility and behaviour, but more of ten than not, this is only on paper. T here are countless cases that can be examined f or corporate social responsibility of multinational companies in developing countries. Ten well known companies were chosen, because all of them were criticised f or corporate social irresponsibility and f ailures in f ulf illing their obligations towards society and environment.

Reebok case
"I do not know that anybody has bought a pair of Reebok shoes because of its human rights programme. But we are a global corporation and we have an obligation to give back to the communities in which we live and work." -Doug Cahn, Director of Human Rights Programmes, Reebok international limited

Background
US-based Reebok International Limited (Reebok) is one of the leading f ootwear companies in the world. With over a hundred years of operations in the f ootwear industry, Reebok has operations in over 170 countries across the world, most of which in developing world (Reebok, 2009). Reebok has its own Corporate Social responsibility; however Reebok joined the companies that were accused of human right issues. Reebok instituted a Code of Conduct, also known as Reebok's Human Right Production (appendix 1); to regulate working conditions, especially in developing countries. However, despite measures and regulations taken by the company, the company still have several allegations against them concerning human violations, f or example in Chinese f actories. Analysts f elt that the measures taken by company were not appropriate and that Reebok should regulate this problem in order to enhance its image as a socially responsible company (Aaron, 1999).

CSR of Reebok
Reebok established and become a member of Business f or Social Responsibility; they monitored human right abuse through audit and video camera f acilities. T hey launched a project called Educational Assistance in Pakistan and Workers Communication System in Indonesia in order to avoid working violence and conducted training programs f or f actories in developing countries. All theses initiatives helped the company improve its social image.

Reebok's problems in China


Like most of its competitors, Reebok has a wide range of sub-contractors in China due to low

production costs. Independent research agencies reported violations occurred in most Chinese f actories. T hey highlighted the inef f ectiveness of Reebok's monitoring system. T hey revealed that wages were not paid according to laws, overtime wages were also violated, women were not treated properly and the absence of any workers unions. It was also f ound that children aged between 13 and 15 were being employed. In addition workers suf f ered not only mentally, but also physically due to the lack of any appropriate conditions at work and unsuitable accommodation (China Labour Watch, 2002). All of these issues deprived workers of their human rights.

Crit icisms
Since such problems were identif ied, Reebok tried to take measures immediately. T hrough these measures Reebok attempted to solve the problems including f orced labour, low wages, child labour, physical and other types of abuse. However, many reports continued to be published showing human violence in f actories. For example, China Labour Watch argued that in order to prevent human abuse, the actions were not suf f icient and violations were still occurring (China Labour Watch, 2002).

KFC (Kent ucky Fried Chicken) case


"T he chicken they serve is f ull of chemicals, and the birds are given hormones, antibiotics and arsenic chemicals to f atten them quickly" -Nanjundaswamy, f ounder-leader of the Karnataka Rajya Ryota Sangha.

Background
By 2004, KFC emerged as one of the world's most popular chicken restaurant chains. With more than 11,000 restaurants in nearly 80 countries, KFC served nearly eight million customers worldwide every day (KFC, 2009).

KFC in India
KFC is one of the multinational companies entering the Indian market. However, a lot of economists and nutritionists opposed and criticised KFC f or many reasons. T hey argued that f irst; it was threat to domestic business and a cultural invasion Secondly it would cause a high rate of obesity, heart disease and cancer due to the sodium and cholesterol contained in f ast f ood. For example, the Municipal Food Inspector f ound out that some of KFC's chicken contained three times more monosodium glutamate than regular chicken (Ray, 1995). For the f irst time, KFC was accused processing "Junk f ood" in a poor country like India, where malnutrition problems are severe. PETA (People f or Ethical Treatment of Animals) accused KFC of cruelty to chickens and not providing care f or the birds in its f actories despite the f act that KFC has published standards to guarantee humane treatment f or its birds. PETA also said that because of such cruel attitudes towards animals, KFC must not enter India (Ecologist, 1995). As Pankaj Batra, director of Indian sub -continent pointed out that KFC was obligated to require its suppliers to f ollow the welf are guidelines f or proper animal treatment (T haiindian press, 2003). However, some opponents like the Indian Government tried to justif y KFC by saying that multinational companies like KFC would create more employment and improve inf rastructure. T hough, in reality as Nanjundaswamy argued, f ast-f ood companies brought jobs only f or a handf ul of educated people and the poorest people are lef t without job opportunities. Apart f rom the threat to local agriculture, there is another threat as mentioned by Nanjundaswamy. T his is that the company gives chemicals and antibiotics to the chickens in order to f atten them quickly. He called the chicken "chemically poisoned" (Newindpress, 2003). Ecologists also participated in the activities against KFC. T hey claimed that opening new f ast f ood outlets meant more trash like paper cups, bags and plastics on the streets.

Wal-Mart case
"As one of the largest companies in the world, with an expanding global presence, environmental

problems are our problems". -H. Lee Scott, President & CEO, Wal-Mart Stores, Inc. "We don't know whether Wal-Mart's environmental changes are real or a Machiavellian attempt to greenwash a declining public image. But its long record of irresponsible behaviour f orces one to be sceptical" Chris Kof inis, Communications Director, wakeupwalmart.com

Background
Wal-Mart, the world's large retailer, operates in many developed countries as well as developing ones like China, Costa-Rica, Honduras and others. Its ultimate aim is being a f ully environmentally sustainable business. T he company planned to use more renewable sources of energy, recycle waste, and sell more organic f ood in its store. However, analysts highlighted that Wal-Mart's international operations had mixed results. T here are a lot of criticisms f rom environmentalist, traders and even politicians. Wal-Mart was accused of violating environmental laws, indulging anti-trade union policies, paying low wages, sourcing cheaper products f rom outside US and indulging in sex discrimination (Butler, 2006).

Wal-Mart 's init iat ives


As a leading world retailer, Wal-Mart launched many programmes and initiatives in order to achieve its goal to be sustainable towards society and environment. T hey established "Sustainable value networks", started to sell organic f ood at prices that were lower in comparison with its competitors and f ormed health oriented programmes.

Expert s' opinions


Some critics saw Wal-Mart's activities as a tool, an investment in its reputation rather than in sustainability. T hey f elt that the sustainability measures were the tool to divert public criticisms such as environment abuse, violation of air and water pollution laws, which f aced the company. T hey argued that company lacked its long-term commitment to the cause (Butler, 2006). However, in spite of some criticisms, some environmentalists were truly optimistic that Wal-Mart was going to become an environmentally sustainable entity. Also many analysts urged the company to work toward better wages and healthcare benef its. Wal-Mart has to show the results on the ground in order to prove its commitment towards sustainability and continue with sustainability initiatives, if it wants to improve its image as a corporate socially responsible multinational enterprise (Roberts, 2006).

Nest le case
"As a responsible f ood company, I don't like to have an image that I am behaving unethically?" Peter Braberk, CEO of Nestle, 2003

Background
Nestle is one of the largest multinationals, with over 200 f actories worldwide. Nestle had been accused several times of selling genetically modif ied products without appropriate labelling, f or supporting the use of child labour in some f actories and f or other reasons. Most of the controversies that Nestle was embodied have involved developing countries. Nestle in its corporate social standards, committed itself as a responsible, sustainable business entity, promising good working conditions, health, nutrition, and support f or the community. However, as reality shows, Nestle carried out socially irresponsible practices in most developing countries.

Nest l's social irresponsibilit y


Analysts argued that the main reason practicing corporate social irresponsibility by Nestle in the developing world was overlooked was because laws and procedures are considerably more lax compared to those in more developed countries. T he company was criticized f or its unethical practices such as using inf ant milk powder (which is harmf ul to health) in developing countries. By providing f ree samples, Nestle def ended itself as being socially responsible and doing it f or the benef it of poor women in

developing countries. Also, Nestle f ailed in providing good working conditions, as it had promised previously as well as child labour was employed on plantations (Megan, 2001). For example, UNICEF studies revealed that over 200,000 children worked on the plantations during the harvesting of cocoa and cof f ee beans (Unicef , 2008). One of the more disturbing revelations was that most of the workers had been traf f icked i.e. bought and sold, making them practically slave labour. Nestle purchased cocoa f rom these f arms despite its awareness of the conditions of the labourers. Nestle was also accused of reselling products rejected in Europe to developing Asian countries (Sinha, 2000).

Kimberly-Clark Corporat ion case


"T his is a company that claims to be a leader on the environment f ront. Unf ortunately, when you dig into the claims, you come up with a very dif f erent story" -Richard Brooks, a campaign coordinator at Greenpeace, 2006

Background
Kimberly-Clark Corporation (K-C), the paper-based consumer packaged goods giant, take a top position in the Dow Jones Sustainability World Index (Faircompanies, 2008). K-C has a good history of CSR and takes a leadership position in corporate sustainability. However, it has f aced a lot of criticisms f rom its stakeholders and in particular f rom environmental protection groups such as Greenpeace who alleged that the company used virgin f ibre f rom f orests instead of using recycled f ibres (Baue, 2005).

CSR of Kimberly-Clark Corporat ion


As any multinational company Kimberly-Clark has policies protecting the environment such as development an environment plan f rom product design to disposal. T he company also adopted energy conservation programs, Child Labour and Worker exploitation policies in most developing countries. In each report, K-C outlines its responsibilities as a good corporate citizen. K-C emphasized that sustainability and good environmental practices are keys to doing good business.

Crit icisms
Despite many environmental initiatives, K-C had been accused of destroying ancient f orests f or manuf acturing, using only 19% recycled material instead of 60% used by other companies (Greanpeace, 2008). For such attacks K-C def ended itself by arguing that they used virgin f ibre only f or producing f acial tissues. T here are some anomalies between that claim made by the company in its environmental reports and its actual record. It appeared that in reality, they used wood f ibres f rom ecologically signif icant established areas, though the company previously considered it as protecting such environmentally signif icant areas (Ethical Consumer, 2007).

Nike case
"Nike is being hypocritical in its support of children's programs in public schools while exploiting child labour in its f actories" -T he Canadian Catholic Organization f or Development and Peace

Background
Nike is the one of the biggest sports shoe manuf acturers, having suppliers around the world, mostly in developing countries. Nike repeatedly claimed that it was not going to tolerate worker maltreatment in its Asian f actories. It had its own Code of Conduct and required its suppliers to obey on issues like wages and working conditions, written into the company's corporate standards. However, Nike did not show any real interest in addressing those issues. It was accused of unethical treatment of workers by supervisors, of payment that is below the legal minimum wage and sexual abuse of several f emale workers at Nike' shoe f actories. In addition, Nike did not take adequate health and saf ety measures and turned a blind eye to child labour. Nike violated overtime wages, night shif t wages and weekend and holiday wages. Nike had been accused by Calif ornia's consumer law agency that it had mislead the public about working conditions f or its Vietnamese, Chinese and Indonesian workers. For example, f emale

workers in Vietnam were abused physically, verbally and sexually by f actory managers (Vietnam Labour Watch Report, 1997).

Nike' response
Nike, as a f amous, well known, multinational corporation, denied that it employed unf air labour practices. In order to def end itself , Nike tried to convince the public that they operated in socially responsible manner. Nike showed videos of working practices in Indonesia, T hailand, China and Vietnam f actories. As Nike's manager said, they are a very open company and do not have anything to hide f rom the public and community in which Nike operates (www.nike.com). But in spite its initiatives, Nike was not ef f ective in monitoring and regulating.

In realit y
Despite Nike's claims about sustainability, Nike workers were still paid wages that were below that legal minimum. As Leila Salazar, Global Exchange's corporate accountability director said, Nike still abuses workers right like harassment, violence, long overtime hours and others (Richman, 2001). Analysts said that in spite of its good image in the USA, Nike was a very dif f erent company in Asian countries (Herbert, 1997). According to Patrick Coughlin, one of the lawyers, f ighting against Nike, argued that Nike has to either disclose its attitudes towards workers or change working conditions (Josh, 2001)

Apple iPod case


"Apple has a zero tolerance policy of any instance, isolated or not, of any treatment of workers that could be interpreted as harsh..." -International Herald Tribune (IHT, 2006)

Background
Apple is the worlds leading multinational enterprise, producing and selling electronic products such as computers, sof tware and other electronic equipment. As any large corporation, Apple has its own manuf acturers in China and as practice shows, Apple has received a lot of criticisms f rom civil society organizations regarding workplace standards.

Crit icisms on iPod in China


Despite the f act that Apple was trying to ensure that its working standards were implemented in all f actories, there is still evidence about working hours, payment and other workplace issues including the use of hazardous chemicals. T he "Mail on Sunday" in June 2006 alleged that iPods were made in poor working conditions. T he newspaper claimed that Apple employed 16 years old workers, provided one dormitory f or 100 persons, required to work 15 hours per day and last, but not least had military-style drills in f actories (Joseph, 2006). Tanya Klowden (2006) analyzed Apple's irresponsibility and concluded that Apple iPod should put at least some marketing budget into to trying to promote itself as a socially responsible company, towards movement in implementing working ethics in its suppliers premises (Klowden, 2006). Another critic came f rom "China Business News" reporting that the f actory did not provide simple seats f or workers and made workers stand f or up to 12 hours while working (Soong, 2006). Since such events, in addition environmentalists have accused Apple of not having a computer recycling program.

Apple's response
As any well known brand corporation, Apple tried to def end itself in f ront of the public. It had posted its own f indings in the media and online. Several points were worth noting. Apple claimed that audits f ound some violations to its Code of Conduct as well as other areas f or improvement and that Apple was working with suppliers in developing countries to address these issues. However, some analysts argued that Apple must ensure in providing good working conditions bef ore such incidents took place (Kahney, 2006). As mentioned in their Code of Conduct, Apple iPod committed itself as a socially and environmentally responsible company, ensuring that the people around the world work under saf e, f air

and legal conditions. However, in reality Apple could not protect workers' rights.

Gap case
"It is easier f or the Gap to cancel its orders and move someplace where there are no unions than to say they will make sure that the rights of their workers are protected" -Deisy, ex-Gap worker who lost her job f or being a union organizer in El Salvador

Background
Gap Inc is a leading international retailer, operating through 3070 stores across the world with suppliers and f actories in many developing countries in Asia as well as in Af rica. Gap took several initiatives in order to support communities in which it operates. It has its own Code of Conduct. However, there were some serious questions raised about the working conditions in developing countries, which operated in behalf of Gap. Several human rights groups accused Gap f or maintaining f actories where workers were treated badly and where there was no hint of social responsibility. T hey f ound that low wages, various restrictions (contracts that f orbade workers to quit, marry or organize and join labour unions), unhealthy and unsaf e working conditions were commonly in practise (Engler, 2004). Such issues happened in most developing countries such as Indonesia, El Salvador, etc where Gap has its f actories.

Gap's Corporat e Social Responsibilit y and init iat ives


Gap's name was closely tied with the scandals about abuse of human rights in most developing countries. T here were a lot of aggressive global movements and strikes f or worker's rights in developed countries as well as in developing ones. Gap started to implement Code of Vendor Conduct in all f actories manuf acturing Gap's products. Gap also maintained monitoring programmes and collaborated with partners worldwide in order to solve such problems.

Crit icisms of Gap's CSR


When Gap started to f ace a boycott against its products, it started to produce CSR reports. However, CSR reports are subjected to criticisms f rom agencies f or just being a public relations activity. Also, critics noted that Gap did not provide reports f or its whole range of f actories. Gap did not publish its suppliers' names, but critics believed that this was a tool to resist outside monitoring. Even though there were a lot of activities against unethical practices in Gap's f actories, it seemed that several retailers remained to be unaf f ected by public allegations and continued to behaviour irresponsibly (Engler, 2004).

Cocoa Indust ry case


"We need to be permanently concerned with where cocoa comes f rom, the impact of coca on the environment and how the workers are treated. T hat's where the industry has changed, permanently and f orever" -Larry Graham, the President of the Chocolate Manuf actures Association, the American industry trade Group

Background
Child labour, child traf f icking and slavery became prevalent and held within the cocoa industry in West Af rica. T he increased campaigns raised its awareness of child labour abuse. T his is crucial question and issue and in order to raise public awareness of child labour abuse, most consumers boycott of chocolate f abrics products.

The problem of Child Labour in West Af rica


70% of cocoa beans are produced in West Af rica, especially in Nigeria, Ghana and Cameroon, which are the major producers and exporters of cocoa (Antislavery report, 2004). In 1998, International Labour Organization revealed that the practise of child slavery occurred in the cocoa f ields (Rawf oodinf o, 2008). UNICEF reported that in Ghana over 200,000 children were sold into slavery (Global Exchange, 2006).

Since such events have come to light the international civil society organizations, governments and the cocoa industry acknowledged that it is necessary to address the child labour issue and implement some initiatives.

Corporat e Social Responsibilit y init iat ives


T he cocoa industry recognised that it needed to address labour issue in order not to damage the image of industry. All multinational manuf actories and retailers using cocoa f rom Af rica such as Nestle, Mars, Kraf t Foods and Starbucks Cof f ee Company contributed and became members of World Cocoa Foundation, whose primary aim is to destroy the practice of child exploitation. T he chocolate industry launched programmes f or eliminating child slavery and certif ying that no f orm of child labour would be employed in the production of cocoa and chocolate. As US Senator Tom Harkin said, it was good evidence that any chocolate or other cocoa products were not made by children's' hands (Chatterjee, 2001). T he objective of this CSR initiative was to enable children to go to school, instead of working f ulltime in order to help their f amilies.

Crit icisms
Despite all above mentioned, analysts pointed out that the cocoa industry's promises were still unf ulf illed. T here were no signs of progress even af ter three years since the f irst steps were made. Analysts claimed that it was a public relation tool, not an attempt to tackle problem of child labour and multinational companies also did not show their willingness to participate in solving and destroying child labour problems (Peel, 2004). As social scientists emphasised, even if consumers continue to boycott the goods made by child labour, such measures are unlikely to eliminate the problem at all. Economists and researches like Pham Hoang Van and Kaushik Basu pointed out that total elimination of child labour might cause much worse consequences such as acute hunger or starvation, or even worse "occupations" like "prostitution" (Basu, 1999). Without doubt, such controversial issues need to be solved or at least to be changed.

Philip Morris case


We don't want kids to smoke. We're intensif ying our ef f orts that we started a number of years ago by launching this new smoking-intervention, starting with these ads" -Michael E.Szymanszyk, chairman and CEO, Philip Morris USA

Background
Philip Morris is the world's largest tobacco company, owing the world's largest-selling cigarette brand since 1972. As any tobacco company, Philip Morris singed the agreement f or not targeting young people. However, as it was observed, Philip Morris continued to target the younger population. For example, the company sponsored concerts where an auditorium was attended f ully by young people, or it advertised cigarettes being of f ered to young girls and boys. T his is considered to be irresponsible; such advertisements can have impacts on young immature minds. Many critics argued that even Philip Morris tried to take measures; however it was only made in order to create positive publicity rather than actually reduce youth smoking. For example, Kathryn Kahler Vose, the communications director of Campaign f or Tobacco- f ree Kids, pointed out that Philip Morris tried to buy respectability, though in reality it was a Public Relations exercise (Tobaccof reekids, 2003). All of attacks came f rom the media despite the f act that the company previously acknowledged itself as socially responsible and promised to sponsor independent research on public health.

Crit icisms
Philip Morris as a harmf ul tobacco company is the centre of public, media and government attentions. "T he Wall Street Journal" in an article, accused the company of being the major cause of people's deaths. As a survey showed, a 50% share of the market belongs to Philip Morris Company (Alsop, 2001). Critics claimed that the multinational tobacco companies were using large marketing budget to attract

customers, especially young people. T he government emphasized that the company was misleading the public about the risks of passive smoking and so called "light cigarettes" (Economist, 2004). T hey charged that the company lied to customers about the hazards of smoking and tried to hide scientif ic evidence about it. T hey charged that they intentionally made people addicted to nicotine and sold cigarettes to smokers who were below the permitted age as well as causing many diseases like cancer, heart disease and so on (Economist, 2004).

Philip Morris' init iat ives


As any multinational company operating worldwide, the image and reputation of its brand is a very important intangible asset. So scandals regarding a company's social responsibility can signif icantly damage a well known brand. T he f irst reactions of Philip Morris were to improve its reputation, as it was surely expected. T he company intended to reposition itself as a socially responsible business entity through new anti-smoking campaigns. In order to prevent teenagers f rom using cigarettes, the company cut down its advertising and started to responsibly pay attention on what it advertised, its impacts and the targeting population. However, many analysts are conf ident that despite the company's ef f orts towards establishing corporate social responsibility, it is a simple tool f or ref urbishing its negative image (Tobaccof reekids, 1999). Some experts remarked that if Philip Morris honestly wanted to reduce youth smoking and to be a responsible company, it had to end its marketing practices that attracted young people (US. newswire, 1999). However, in reality, it is appeared that they increased their marketing campaign to young people.

Chapt er 4 Findings and Discussions Coca-Cola case


"Coca-Cola India undertakes a diverse range of activities f or the benef it of the community across the country. As part of our CSR strategy, sustainable water management remains our top priority" -Deepak Kaul, Regional Vice-President, South, the Hindustan Coca-Cola Beverages Pvt. Ltd., in 2007. "It is India where the company's abuse of water resources have been challenged vocif erously and communities across India living around Coca-Cola' bottling plants have organized in large numbers to demand an end to the mismanagement of water... In response to the growing Indian campaigns against Coca-Cola, the company has decided to promote rainwater harvesting - a traditional Indian practice - in and around its bottling plants in India. Touting rainwater harvesting initiatives is now central to CocaCola's public relations strategy in India" -Amit Srivastava, Coordinator of India Resource Center, in 2007.

Background
Coca-Cola established its f irst plant in India in 1950 and remained on market till 1970s. Because of the Indian Government's request to share the "secret f ormula" of coke, Coca-Cola lef t the Indian market. Af ter an absence of about 16 years, Coca-Cola re-entered the Indian market in the early 1990s, when economic liberalisation took place in India (CokeFacts, 2009). Nowadays, Coca-Cola is the largest multinational corporation operating in India and is considered to be a one of the top international investors to the Indian economy. T hrough the acquisitions of domestic beverage companies, Coca-cola expanded its capacity and heavy investments made by the company helped to increase prof itability and it occupied a strong position in the Indian market. As any internationally operating multinational enterprise, Coca-Cola has f aced a series of allegations against its bottling plants. Despite the company's attempts to implement social and environmental initiatives, Coca-Cola is still criticized not only by the Indian community, but also by the world public. Coca-Cola claims itself to be a very responsible company towards both society and environment. Like any well-known brands worldwide, Coca-Cola said that Corporate Social Responsibility is the integral part of its business objective especially in India, where environmental and social issues are crucial. Coca-Cola India explained it by the f act that it was aware about environmental, social and economic impacts caused by its operation. T he company has tried launch programmes and initiatives to support and improve the lives of customers, employees and society at large

Coca-Cola's Sust ainable Object ives


Coca-Cola India describes itself as working towards helping to build sustainable communities. T he main internal and external f rameworks, standards and principles in guiding the company's approach to corporate social and environmental responsibility are described in Coca-Cola's own environmental report f or 2007-2008, known as "Towards Sustainability" f or India (Coca-Cola India, 2008). In this report the company emphasized that the Coca-Cola Company has always placed high value on good citizenship. T he company targets objectives such as protecting, preserving and enhancing the environment, strengthening the community, enriching the workplace, ref reshing the market. Other aims go towards supporting and responding to local needs like education, health, water and nutrition. One of the major objectives of the company's operation, is an ef f icient treatment of its waste water, aimed the reaching a 100 per cent standard by 2010. T he company promised that by 2010, it will reach zero water balance (Hiluq news, 2007).

Coca-Cola's irresponsible pract ices


However, the appeared evidence totally discloses the truth about company's unethical behaviour and entire irresponsibility. Communities across India are under assault f rom the company's practices. As a result of Coca-Cola's operations, water shortages, pollution of groundwater and soil, exposure to toxic waste and pesticides are having a huge impact and even destroying lives, livelihoods and communities. A lot of people were af f ected by Coca-Cola's irresponsibility and the extent of issues is large, causing long term problems. Coca-Cola destroyed land, poisoned water and soil; consequently it is f air to say that Coca-Cola is also responsible f or the reducing quality of lif e f or f uture generations. T he irony of the crisis is that even an economy benef its f rom the company's operations by employment, creating inf rastructure and donations. Unf ortunately, the majority of the Indian population are lef t out of the so called "economic and social development process" and they have to pay a high price f or this. T he signif icance of company's irresponsibility is countless; the damage made by Coca-Cola cannot be created by several companies in so vast volumes. One of the main allegations against Coca-Cola is extracting large volumes of water, thereby depleting the local water resources in surrounding areas. Using 1.5 million litres per day in production of beverages, the company not only devastated the lif e sources f or people, but also made water undrinkable (Srivastava, 2007). Apart f rom these allegations, Coca-Cola was f airly accused of selling poisonous f ertilizers f or f armers, which are rich in lead and cadmium. T he livelihood of many people was destroyed, as agriculture is a main source of income. As a result, due to the mounting pressure, one plant was shut down in March 2004. Indian Coke is still conf ronted with f urther, more complicated problems. On February 4th 2003, T he Centre of Science and Environment (CSE) released a report, which revealed that coke contains maximum permissible limit of pesticides. It is 45 times higher than that is allowed by European norms (Centre f or Science and Environment, 2003). Such abuse of pesticides could cause cancer, damage to nervous and reproductive system and lead to the severe disruption of the immune system. T he interesting point in this story is that by comparing the same brand of coke produced in India and US, f ound that if Indian coke exercised "double standards" in terms of pesticides, the US product contained no pesticides at all (Business line: internet edition, 2003). However, Coca-Cola did not f ace issues in India alone. T he same problems had been raised in other developing countries like China, Turkey, Southeast Asia and Af rica. As it can be expected Coca-Cola, tried to justif y itself in f ront of the public and took numerous measures to improve its already damaged image. At f irst, Coca-Cola tried to decline all accusations. As expected Coca-Cola India has criticized the CSE report f or its methodology. President and CEO of Coke India pointed out that such serious allegation against its brand still continues to damage the well known responsible image of the company. T he company in case of f urther unf air judgements will consider legal recourse. In addition Coca-Cola conducted its own research in this issue and released data on the tests done by the Netherlands based `Nutrition and Food Research Laboratory (CokeFacts, 2009). T he company started to implement several economic, environmental and social initiatives. Despite its massive ef f orts to improve its public image through advertising, f or example, Coca-Cola India continued to be the target of public, non governmental organizations, even Indian Parliament, who considered the multinational company as a violator of the rights of local communities. For instance, Indian parliament banned selling Indian Coke products on its territories. Such boycotts were

made also by Michigan University students, requiring its campus to stop selling coke. Nevertheless, such examples emphasize that multinational companies' irresponsible behaviour will be the f ocus of worldwide public attention.

Coca-Cola's init iat ives as a response f or public allegat ions


Coke India took several measures such as implementing "eKo System", participating in the "Jalanidhi" water pipeline project, establishing educational programmes and much more. Due to the signif icance of each attempt, it can be divided into three parts: economic, social and environmental.

Environment al responsibilit ies


Coca-Cola's operation is closely tied with the environment and the consequences are as f ollows: excessive level of water consumption, waste water discharge, high energy consumption, discharge of ef f luents and greenhouse gas emissions. Coca-Cola India said as it has so a huge impact on the environment, it will try to eliminate all negative consequences.

Wat er
As water is a main source of Coca-Cola's production and with water shortage being so severe in India (and with its related problems), the company started actively educating communities and personnel on the preserving of watersheds, including access to saf e water and sanitation as well as water f or productive use. T he evidence f or their claims is the reducing company's water consumption by 35 per cent between 1999 and 2006(T he Coca-Cola Company, 2008). In addition, several initiatives like rural water resource inf rastructure were undertaken.

Energy
Since the company is producing beverages, its operation is closely linked with ref rigeration equipment, coolers and vending machines that resulted in the emission of GHGs. For these reasons, the company was trying to eliminate such hazardous outcomes. Owing to the Energy Management System (EMS), the company was able to curb its harmf ul emission. T he f igures showed that as a result of initiatives, the total reduction was 300,000 metrics tons of GHGs (T he Coca-Cola Company, 2007).

Packaging and Recycling


Being the beverage industry, Coca-Cola heavily depends on packaging; theref ore it is expected to have a good recycle programme. T he company's sustainable strategy was f ocused on reduction, recovery and reuse of packaging materials, while maintaining the quality of the product itself . As a result, the company implemented several programmes in this area such as community recycling programs.

Communit y Development Init iat ives Communit ies


A commitment to the community is the crucial and a very signif icant part of Coca-Cola India's CSR. Initiatives include attempts to improve public health, education and others in order to support local community. As it was highlighted in the company's sustainable report, the company f ocuses on the importance of education. By providing clean drinking water in schools, Coca-Cola India attempted to improve sanitation services in around 150 schools (CokeFacts, 2008). As part of the company's social responsibilities, Coca-Cola established several education programmes in villages as well as providing all necessary f acilities needed f or education.

Healt h
Health-related topics are regarded to be as important as preserving the environment f or instance. Such health education measures were aimed to raise awareness among poor people in slums about key

aspects such as sanitation, hygiene, HIV/AIDS, communicable diseases, reproductive and child health.

Economic Responsibilit y Init iat ives


According to Coca-Cola India it has made strong ef f orts towards the country's economic development and growth. T he company argued that it has played a crucial role in providing employment and creating inf rastructure, theref ore it has contributed to the community it has served. One of the major ef f orts was the supporting of small business partners. T he practice shows that many multinational corporations occupy a vast proportion of market, so that cutting opportunities f or operations f or smaller, less comparative domestic businesses. Besides this, the company encouraged local retailers to be partners and even more, Coca-Cola India enabled small retailers to learn skills and knowledge f or how to signif icantly operate and succeed in India's developing market (T he Coca-Cola Company, 2007). In addition to above-mentioned, Coca-Cola India launched a 5 pillar growth strategy to strengthen its relationships with India. T his strategy f ocused on people, planet, portf olio, partners and perf ormance (Kohlar, 2007).

Crit icisms
Despite a wide range of ef f orts made by the company, it still continues to be under criticism f rom several quarters. First of all, the company was censured f or depleting ground water, theref ore cutting the primary source of income of almost all local f armers. A vast majority of people f rom close communities opposed the company's activities insisting on shutting down Coca-Cola's bottling operations. Besides, there are some allegations that the company seized land f rom local f armers and continued to pollute surrounding areas with hazardous material and sludge (Shef ali, 1998). As the Director of Indian resource Centre, Amit Srivastava said, Coca-Cola announced itself as environmentally sustainable company, having partnerships with many non-governmental organizations and environmental groups in order to show its positive image in f ront of worldwide public. However in reality, the company's corporate social responsibility has gone wrong and the company continued to litter with toxic waste and completely disregarded and destroy the lives of many people in India (Srivastava, 2007). Many critics argue that the company's claim about conserving water is the simple tool to silence the growing criticisms against it. Coca-Cola initiated some rainwater harvesting attempts f or preserving water and announced it to the world public as a genius idea f or sustainable development. Nevertheless, critics pointed out that such harvesting initiative has already been implemented by Indian citizens and such practise is common among local people (Cares, 2008). Also, many critics f igure that an investment of US$ 20 million f or water conservation projects was just 1 percent of Coca-Cola's annual advertising budget (de Srivastava, 2008). T he company spent a huge sum of money on advertising their initiatives more than on water resource management. So the Indian resource Centre claimed it as the company's "Greenwashing" tactics. As it was previously mentioned, the campaigns against Coca-Cola India occurred not only in India alone, but also such criticism took place in the USA. T his def initely proves that the company's unethical business practices can not be restricted to India, as such violations cannot be disregarded by the world public as well. T he boycotts at the University of Michigan lead to the requirement of testing Coke's beverages in India. As a result, on January 14, 2008, T he Energy and Resource Institute (T ERI) released a report on Coca-Cola's environmental practices. To many people's surprise, T ERI f ound no pesticides in the water, as it was previously stated by critics. Coca-Cola claimed that it absolutely f ollowed all its own standards; nevertheless there are some areas which can be improved and where the company is able to do better (SamayLive, 2008). Despite the T ERI report, the company continues to receive negative publicity. Also a f ew critics pointed out that the Golden Peacock award received by Coca-Cola India, in reality is the privilege made by World Environment Foundation (WEF), who issued this reward. T he truth is that Coca-Cola was the only sponsor f or the WEF (Polaris institute, 2007). Many critics are conf ident, that all sustainable initiatives towards environment and society are just attempts to improve brand image. T hey considered it as part of a Public Relation (PR) exercise. As Richard Girard, researcher, Polaris Institute, said, Coca-Cola has succeeded in "greenwashing", ensuring people about its green and good responsibilities, but not in totally changing its operation practices. T heref ore, hazardous consequences are expected to be continued (Polaris institute, 2007). Critics also contended that the sustainable report f or 2007-2008 was aimed at painting a green image of itself rather than disclosing the challenges the

company f aced in India. Analysts f elt that Coca-Cola's problems in India had impact not only on the company's image in India, but also globally (Tootoonews, 2008). Coca-Cola recognized that the main tool to communicate with various stakeholders is marketing communication campaigns such as "Little Drops of Joy". So that critics claimed that Coca-Cola's promise to become water neutral is Public Relation exercise. As the concept of becoming totally water neutral is impossible, as individuals, communities and businesses will always have a residual water f ootprint (Srivastava, 2008). As Jolly highlighted, nowadays a range of stakeholder groups evaluate company's perf ormance based not only on f inancial results, but also how those corporations operate in community and what they do f or people's benef its (Business standard, 2008). All ef f orts made by the company were aimed to change Coca-Cola India's image f rom strong multinational enterprise to that of a modest and approachable company. Also, Coca-Cola claimed that they put back f ive times as much as they used f rom ground water. However, they said that they do not have special measurable devices. T he question would def initely appear to be how they can claim f ive times recharge the amount of water in the absence of devices to measure the recharge (Srivastava, 2008). T hese are some of the key f indings of criticisms on company's operation.At f irst, even knowing that in some areas the water resources were overexploited, the company continued to worsen the water situation. Secondly, the company saw its bottling plants only f rom "business perspective", only f or making a lot of prof it in the country, where corporate social responsibility issues are not acute and not strictly regulated by government like in Europe or USA. T he Coca-Cola Company did not include the wider context (environmental, social issues) in that perspective. In addition, Coca-Cola did not respect the rights of f armers and did not consider the groundwater conditions, and how it might inf luence on the livelihoods of community. Also, the company did not meet its own standards f or sustainability. Everything, described in the sustainable report looked like a public relations tool and a way to improve the company's social image. T he company f ailed in implementing corporate social responsible standards in its plants such as standards on waste management. Despite many awards, received by the company f or its CSR initiatives, Coca-Cola f ailed to meet all requirements f or being an entirely socially responsible enterprise. It seems like CSR initiatives were only a green washing ef f ort. Because, the company had concentrated only on "af ter prof it initiatives" instead of "bef ore prof it initiatives" T he initiatives look like more reactionary rather than pro-active initiatives in implementing CSR. Also, as the company realised that the success of business depends on the health of the community in which it operates, the initiatives taken by the company are not suitable, appropriate and did not meet expectations of the community in which it operates. T he evidences f or these are f ollowing: f irstly, the company's harvesting program had limited success. Secondly, the Coca-Cola Company spent more on advertisements, while it could give that large sum of money to the society's needs. Coke continued to have f ailures in addressing the environmental issues it created across the globe, including India. As it can be seen f rom dif f erent sources: media, websites, newspapers and non governmental reports, the Coca-Cola Company did not meet requirements in areas relating to marketing to children, overseas worker's rights across the globe, including environmental issues in India.

Key out comes f rom t he case st udy


One lesson that can be learnt f rom the case study is that regardless how many thousands miles the multinational corporation operates away f rom developed countries, its irresponsibility will never be out of the limelight. As public concern over CSR increases, this is making companies take f ull responsibility and be accountable at all times. If we look at this Coca-Cola's sustainable report in India f or 2007/2008, our eyes would be caught by the photographs of happy Indian people, enjoying lif e and drinking coke, the bright colours and descriptions of company's sustainable good looking activities. However, in reality it is not the same. Also, one of the company's revelations was that the Coca-Cola 2007/2008 Sustainable Review surprisingly did not mention critical issues of company's operation in India (Tootoonews, 2008). Def initely it would not be seen as attractive in the report, in particular when the company tries to build a green image in f ront of the public. A multinational company like Coca-Cola cannot ignore these problems, especially, if those issues have enormous consequences. As it can see f rom dif f erent sources, the company tries to look green through public relations. However no amount of public relations can help to solve problems if the company continues to cause those problems because of negligence. To deal with such concerns, India's government should actively participate, not to be neutral or trying to excuse the company's

irresponsibility. Government should take measures to monitor hazardous waste, caused by the company's operations. Government has to ensure that Coca-Cola is not negatively af f ecting the consumers, employees, environment and community in which it operates. From the Coca-Cola case study, it is obvious that the only way to reach sustainable development is when the environment is preserved protected and community is supported. Since the company started to f ace allegations and social problems, it realized that it would be much better to f ocus more on the community and environment development initiatives in India. It might also be explained by the f act that Coca-Cola's sales dropped by 30%-40% in just two weeks, while it had taken approximately f ive years to have 25%-30% growth per year (Aaron, 2007). Coke India was alleged to have had various unf air practices such as extracting enormous quantities of water, thus f orcing local people to suf f er and destroying the conditions f or survival. Coke also damaged crops by supplying f armers with poisonous waste and much more problems, caused by the company's irresponsibility. As a result, the sales in India dropped by 14% and Coca-Cola's brands have being banned in some places. In addition, the stock value of the company dipped by the f ive dollars on the New York Stock Exchange f rom $55 to $50 (Basu, 2002). And as it was expected, there is a huge damage to the company's reputation and brand image. T he main reason f or Coca-Cola's or any other multinational company's unethical behaviour is that national legislation in developing countries is of ten weak and cannot adequately protect environmental and human rights. However, such irresponsibility never happens in developed countries due to strong regulations. In addition it is very dif f icult to apply UK laws to UK-based multinational company f or allegations, committed outside the country's boundaries. In order to solve this problem, the multinational companies' activities should be regulated by international standards making companies accountable and providing communities with protection where national legislation is unable or unwilling to do so. T he tragedy at the heart of this story is not only that community still continues to be destroyed and damaged by the actions of multinational companies. It is also that each time Coca-Cola f ails to f ollow its own Code of Conduct or comply with existing regulations; it means that a major opportunity f or development is missed. As the Coca-Cola crisis in India shows us, the power of multinational companies in the developing world need to be monitored, as they can allow themselves to behave negatively, af f ecting the environment, society and community in which they operate. T he f inal issue arising f rom the case study is the nature of "Corporate Social Responsibility". Even Coca-Cola's "af ter-prof it" initiatives in some occasions benef it people and poor community, yet there is still great dissatisf action regarding the company's "bef ore-prof it" activities.

India f aced problems f rom ot her mult inat ional corporat ions
T he problems f aced by Coca-Cola in India is not only problem of Coca-Cola itself , but also the problem of other huge multinational companies operating in developing countries as they f ace the same issues or even worse including child labour, sexual harassment, slavery and other violations. Since the 1970s, most multinational enterprises started to f ace environmental and social issues, which f rom small regional problems have turned into major globally troubles, if the companies f ail to make any attempts to f ind a solution. By ignoring the situation, they are at risk of f acing allegations f rom not only environmental groups and non governmental organizations, but also f rom their consumers (Gugler, 2009). T he Coca Cola Company is not the only corporation, which was charged with many allegations in India, other well known corporations have irresponsible practices in this country also. Well known scandals such as the industrial disaster of 1984, Nestl's unethical behaviour, Pepsi's unethical advertising practice and so on. In the 1980s, as CSR became a much more signif icant global issue, more ethical groups seamed to be active and more critical in f orcing serious implications on the companies f or not changing their unsaf e environmental practices. In December 1984, an industrial disaster occurred in Bhopal, India, when methyl isocyanate was released f rom a plant of Union Carbide India Limited (UCIL). It killed 2,000 people and af f ected a f urther 200,000 people. Indian governments accused UCIL f or collapsing environmental saf ety measures. T he Bhopal disaster was deadly and af f ected the lives of the Indian population, as people still continue to suf f er f rom the hazardous consequences. T he Union Carbide did not admit to this disaster or even support suf f erers so f ar (Bhopal Inf ormation Centre, 2008). Another example comes f rom CocaCola's competitor, well known brand "Pepsi", which also showed irresponsibility towards the ecosystem in India. Several Indian newspapers such as Indian newspaper, Indian Express accused Pepsi Company of

destroying the ecological balance of the Himalayan state of Himachal Pradesh (HP) (Indian Express, 2002). Pepsi as well as Coca-Cola def aced rocks that were over 45 million years old along the ManaliRohtang road in the state. T hese companies painted their advertisements on the rock, causing damage to the ecosystem and disf iguring the beauty of the mountains. Environmentalists pointed out that such damage cannot be repaired, as Prof essor Ashok Sahni of Punjab University argued that the repairing the original surf ace was absolutely impossible (Indian Express, 2002). T he companies were charged f or violating the Forest Conservation Act 1980 (Financial Express, 2002). It was vandalism to an extensive ecosystem that had developed over millions of years. Much research was conducted on the surf ace of the rocks; however such damage destroyed this geological evidence and thus severely af f ected research in the area (Islam online, 2002). With such vandalism was object to by not only the Indian population, but also by tourists. However, as analysts pointed out, the government authorities did not take any measures to prevent or punish the violators. As it had been expected, the companies tried to deny responsibility f or such activities, blaming their f ranchisees (Indian Express, 2002).

Failures of ot her mult inat ional companies' init iat ives


T he CSR drivers are many, so it is dif f icult to claim that the company uses CSR only f or building a good corporate image. Most multinational companies use CSR f or various reasons such as sustainability, legal compliances, new business opportunities, market expansion and many others. For example, Marks and Spencer (UK) aim to trade ethically, battle climate change, reduce waste, saf eguard natural resources and build a healthier nation. However, it is also f air to point out that some multinational corporations use CSR as a green washing tool used to convince non-governmental organizations, who protest against multinational companies' unf air business practices and to divert the consumers' minds f rom allegations and issues. T heref ore, not all initiatives can lead to better results. For instance, US-based Shell Company, tried to rebuild its reputation through various community development programmes, but in spite of its ef f orts, the community development programmes were inef f ective. Shell tried to implement initiatives which did not f ulf il the community's needs or were not appropriate (Frynas, 2009). Another example is the UK-based British American Tobacco, which f aced a series of protests f rom the public f or causing chronic diseases in f armers based in Brazil and Kenya, who cultivated tobacco f or them. However, instead of f inding the root cause of the diseases, the company put ef f orts into other f ields such as protection of water resources and the control of the use of agrochemicals. (Budna-Litic, 2009). Whether it is multinational company operating in host countries, or local businesses, they see it is right to implement CSR. T hey have to concentrate not only on "af ter prof it initiatives" but also on" bef ore prof it initiatives", which is possible when the company tries to implement this at the beginning of the operation. T he same f ailures have been experienced by Coca-Cola Company in India, f or example the harvesting programme or the programme on waste management. T he f inal criticism is that many companies do not understand the consequences of their behaviour and f ocus only on those issues which af f ect their reputation. Or they will serve their self -interests in other ways, f or example investing in maintaining a healthy, educated workf ace, hence protecting their image.

Cont roversial issues


According to one of the def initions of Corporate Social Responsibility, "T he concept of CSR goes beyond charity or philanthropy and requires the company to act beyond its legal obligations and to integrate social, environmental and ethical concerns into its business process". However, many organizations f ail to f ollow either the ethical or environmental as well as social responsibilities. If they, f or example, contribute to the society through social welf are or employees' welf are, they will be criticized by their shareholders that they are wasting their money. Or if they donate money f or charitable purposes, af ter causing harm to the society or environment, it seems that they f ail in ethical considerations. T hey then try to buy public positive attitude and rebuild their damaged reputation. So many companies should consider ethical, environmental and social approaches together by f ocusing on so called "multi stakeholder" approach (Aparna, 2003). For example, in the supply chain, especially f or multinational corporations with suppliers in developing countries, companies should integrate social, environmental, human rights and other aspects. For the community it might be providing job opportunities, making positive changes to the lives of people and community through f unding and other support. In summary, each internationally operating corporation should integrate all components of CSR together. From that

point the f ollowing question will be raised: What would a socially responsible company look like? In order to be socially responsible, the company would have to: Address climate change, not sell products that are intrinsically harmf ul, stop manipulating the public, pay taxes in f ull, stop lobbying against the public interest, democratise the workplace and much more.

Chapt er 5 Conclusions and Recommendat ions Suggest ions f or proper implement ing of CSR in business
Despite the dif f erences in size, culture, industry and commitment in leadership, there are some common approaches in properly implementing Corporate Social Responsibility into business operation to make it as an integral part of business entity. Usually, CSR can be best implemented if it is stated in company's Mission, Vision and Objectives in order that all shareholders and stakeholders can be f amiliar with it. A company should have good corporate policies and develop a CSR culture within the organization itself . People must f eel that the CSR concept is not only f ormally written statements on paper, but also an important part of any company. Without good CSR practice, no company can f lourish and benef it itself as well as the community in which it operates. CSR must be implemented at every stage of a company's operation such as; quality maintenance in supply chain, providing job opportunities to local people, producing environmentallyf riendly goods and having a good analysis in measuring the impact on the environment. T his will help in reducing the impacts of business on the environment and avoid public and non governmental organization scrutiny against the company's potentially irresponsible practices.

Fut ure f or Corporat e Social Responsibilit y


T he strengths and weaknesses of current approaches to Corporate Social Responsibility are recognized and replaced, or supplemented by new types of approaches such as green innovation, social entrepreneurships and new models of philanthropies. In understanding the f uture of corporate social responsibility, it is better to look at the f uture context of CSR worldwide. Climate change, demographic change and poverty are the three major trends that will see the context f or corporate responsibility worldwide. As international science community highlighted that there is a need f or reducing gas emissions by 80-90 percent by 2050 (IPCC, 2008). So that, businesses have to do things to address this as it becomes a global issue. However, corporations must not f orget about other societal changes af f ecting business' relationship with society. T he total population is predicted to reach 9 billion people by 2050, which would pose all sorts of challenges f or companies, including migration, wealth f lows, health care, social provision, competition f or natural resources and pressure on ecosystems (Blowf ield, 2008). T he third thing, which will inf luence the development of CSR, would be global poverty. Despite the f act that people become more literate and have higher incomes, the picture is still complex, as many people live f or less than two dollars per day. While the most of multinational corporations become much more powerf ul, the CSR should consider the improvement of livelihood f or many people. Also CSR should concentrate on the burden multinational corporation have on the development of small and medium enterprises, especially in developing countries, where it might be used as a f orm of protectionism to limit access to wealthier markets. In addition, the treatments of workers within companies and in the supply chain, remain a high concern f or the next decades, especially when there are many issues regarding unsaf e working conditions, unf air payment, sexual harassment, discriminations and others. Much more emphasis is needed f or protecting human rights. T he business impacts on the environment are likely to come under closer scrutiny. Environmental perf ormance will be an integral part of a company's operation. A particularly worrying aspect will be preserving saf e water, and the multinational corporations like Coca-Cola will have to pay much more attention to the water issues, especially when business operation is closely tied with the environment.

Recommendat ions f or t he f ut ure of Corporat e Social Responsibilit y


1. Stakeholder engagement Relationship with stakeholders needs to become close and strategic. Open communication will help

companies build ongoing relationship with dif f erent groups of stakeholders. A good relationship will help the company to reduce risk, to be a source of market research and to build a good brand image and reputation. Stakeholder engagement should be implemented in the decision making process. Improved listening to stakeholders and taking more responsibility on global issues must be an integral part of new management. 2. A new view on business model Every business should take into account its impact on the community and environment. As practice shows, most multinational companies' operations negatively af f ect the community and environment. Companies should start with a through review of existing policy, values f rameworks and develop vision f or the f uture, in which CSR will become the central to business strategy and an integral to long-term development. T he f ocus must be on having long term prof itability f rom sustainable business practise rather than making short term prof it, but harming almost everything. Taking care of communities and environment must be requirements f or proper business operation. 3. Capacity building Increased training of employees in understanding and proper implementation of CSR will help the corporations towards sustainable development. Sustainable development education should be implemented into supply chains, as most businesses operating with the multinational corporations f ail in understating or even more, f ollowing CSR standards. If it can be achieved, the problems such as poor working conditions, unf air treatment and harm to the environment, will not take place. Companies should support wider prof essional development initiatives. T he notion of a CSR manager should be implemented and developed. T he on-going evaluation of staf f should be held in order to make them contribute towards social and environmental activities. 4. Supply Chain Management Companies should pay more attention to the supply chains, as these are areas where human rights are of ten abused. Companies need to develop a comprehensive Code of Conduct and regularly monitor the suppliers' activities towards society and environment through regular audits. Multinational corporations should check the working conditions, whether workers are provided with everything they need, health care, support, the working hours, f air payment and relationship between workers and managers. Practice shows that many supervisors abuse their power and issues such as discrimination and sexual harassment are still common in developing countries. 5. Partnerships T he importance of community investments will be benef itted both by community and business enterprise itself . But the most benef icial and advantages will be f rom partnerships with non governmental organizations and local community groups. T his will show that the company targets both local and global challenges and it will be the part of business activity that works towards sustainability. Working with local communities, the company can better understand the domestic issues and its impacts, rather than giving money f or short term alleviation of problems. Social entrepreneurship will be much more ef f ective f or almost everyone. 6. Reporting and disclosure T he requirement f or transparency and accountability will demand improved reporting and disclosure. But, reporting must be very interactive and usef ul, and should be used to disclose the complete truth about a company's operation. T he new model of reporting must include the engagement of stakeholders, as it might be a new dynamic type of disclosure. Using on-line interaction with dif f erent groups of stakeholders, they can give their opinion on disclosed inf ormation and leave the comments in special blogs in on-line f orums on "hot topics". Owing to such implementation, the company will know which area is more af f ected by business or where the company can make a large contribution.

7. Regulations f rom government Most of the developing countries suf f er f rom the unethical behaviour of multinational companies due to their weak legislation system. Local governmental authorities do not monitor the multinational's operation or even def end them, arguing their benef its to the domestic economies. As practice shows, many voluntary approaches tackling social and environmental challenges have limited success. T he new requirements must be implemented by government concerning the issues like environmental, labour rights, f air payment and much more. Regulations must be mandatory f or all types of business activities and those likely to come f rom security regulators and institutions tasked with tackling health and saf ety. 8. Product responsibility T he companies should ensure that the produced products and goods are saf e, healthy and provide a high quality. Recent issues by Nestle or Coca-Cola India raised concern over product contents. Companies should take improved measures to ensure that a range of saf ety processes are in place. Better product quality will not raise the boycotts of products and of brands by consumers and consequently, will positively af f ect on the company's reputation. 9. Other types of initiatives Since CSR becomes an integral and important part of business operation, every huge multinational company should demonstrate that they have positive impacts on the communities where they operate. It must be so called pro-poor community investments projects in health, saf ety, education, sport and other programmes. Involvement in community lif e must be regular and not just af ter hazardous consequences. Such community investment strategies will increasingly involve climate change adaptation and responses to environmental challenges. Contributing to the poverty alleviations and health initiatives should be on the agenda of every business enterprise.

Conclusion
Corporate Social Responsibility represents the new challenge f or multinational business corporations. T here is now a growing consensus which pushes multinational companies towards sustainable development. Many companies have realized the importance of implementing Corporate Social and Environmental responsibility practices into business process, especially in developing countries. However, it is also evident that the companies are very slow in translating CSR at corporate level to visible sustainable actions at community level. Businesses have to take economic, social and environmental responsibilities seriously. Business activities should be held towards minimising social and environmental costs and impacts, while simultaneously maintaining or raising the f inancial costs. Undoubtedly, multinational corporations like Coca-Cola are capable of making signif icant direct and indirect contributions to the communities where they operate. From the case studies it is obvious that CSR initiatives are the response to the stakeholders' activisms and pressure f rom non-governmental organizations. For example scandals regarding unethical practices of multinationals have f ocused signif icant attention on the companies' commitments towards ethical and socially responsible behaviour. As a result, multinational corporations are expected to address or even more, solve social and economic issues, especially in developing countries. Otherwise, activists and non governmental organizations can target corporations perceived to be socially irresponsible. Public demonstrations, boycotts, shareholders resolutions and severe critics towards companies are nowadays, widely used as a call f or changes in global business practices. Continued deterioration of public health and environmental conditions will def initely grow the public awareness about such challenges leading to exerting added pressure on the multinational corporations. While establishing CSR concepts, multinational companies can generate important advantages not only f or the host country, but also f or the companies themselves and their home economies. Taking a CSR step f orward in the context of developing countries is likely to require actions f rom multinational corporations. It is obvious that it will require ef f orts and collaborations with community, non

governmental organizations and local authorities. In addition, f or improved social and environmental responsibilities, the f ollowing will be usef ul: stakeholder engagement, regulations f rom local governments, developing a comprehensive Code of Conduct, partnership with non governmental organizations and others. T he multinationals should accept that they play a crucial role in the livelihoods of many people, developing countries in particular. Hence, the main objective of their business must be benef iting both itself and society as well as decreasing negative social and environmental impacts. Corporate initiatives must be "bef ore prof it" rather than "af ter-prof it". If worldwide, well known brands show their commitment towards sustainability, other medium and small companies will f ollow suit and try to adopt mainstream CSR policies within their operations. Need an essay? You can buy essay help f rom us today! Custom essay QUOT E ORDER a custom essay

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