study, published as a paper titled "Corporate
Social Responsibility Does Not Avert the Tragedy of the Commons - Case
Study: Coca-Cola India",
concluded that “In spite of choosing a context favourable to the
proposition, the results indicate that CSR does not avert the tragedy of
the commons. To address the major environmental challenges, it is
essential to develop regulatory regimes with appropriate incentives and
ability to enforce sanctions.”
Dr. Karnani, during his visit to Kala Dera
for the research, met various community members in Kala Dera and, also,
the Coca-Cola company officials separately.
It’s to be noted that Coca-Cola’s bottling
plant in Kala Dera has been the target of a community-led campaign for
several years now. The community, which includes large numbers of
farmers, blames Coca-Cola for causing severe water shortages in the
A study sponsored by Coca-Cola and
conducted by one of India’s largest NGOs, the Energy and Resources
Institute (TERI), sought Coca-Cola to shut down the plant in 2008
because its water use was not sustainable.
Preposterous CSR Claims Debunked
Coca Cola, however, refused to acknowledge
its part in contributing to the depleting groundwater resource in Kala
Dera. Instead, the company embarked upon an ambitious CSR drive in Kala
Dera and claimed that it recharges 15 times as much groundwater as they
use in Kala Dera.
“There is absolutely no evidence to
support the company's claim that it recharges 15 times the amount of
water it withdraws,” Dr. Karnani’s study mentioned echoing the findings
of the community and the India Resource Centre which have labelled
Coca-Cola’s claims as impossible to achieve and certainly a green-wash.
While Coca-Cola makes such exaggerated
claims, it is worth noting that Coca-Cola didn’t go for installation of
any meters to measure the amount of water recharged even though such
meters are available and are relatively cheap for the company to install
“Instead of actually measuring the
recharge, the company uses a mathematical model to calculate the
‘recharge potential’ of the RWH (Rain Water Harvesting) structures.”
Asked for the mathematical model and its assumptions with the intent of
getting it examined by a hydrologist, the company responded saying, “the
calculations shown in the spread sheet are an internal document and not
meant for external usage.”
Dr. Karnani’s research also found
Coca-Cola’s claims that its "water consumption is very limited and has
no impact or very minimal impact on the local ground water regime" to be
erroneous and misleading.
While studying livelihoods supported by
agriculture versus those supported by Coca-Cola, the study found that
“the Coca-Cola plant was not a low user of groundwater” because it took
much more than its “entitled” share of groundwater in Kala Dera, as
“calculated on a per person basis.”
In the summer months, when Coca-Cola
reaches maximum production, the 2008 TERI study found that the “plant
alone accounted for about 8% of the total water extraction at the
localized level” – within a 2 km radius of the plant.
Kala Dera’s groundwater resources were
declared as “overexploited” in 1998 by the government and Coca-Cola
built a new plant and started operations in 2000. Coca-Cola claimed to
have conducted a “due diligence report” prior to setting up the plant.
But when asked to share the due diligence report by Dr. Karnani,
Coca-Cola declined to do so stating that, “We do not share due diligence
reports externally. These reports may contain sensitive information of
both - business and legal nature.”
If the company were truly serious about
being socially responsible, it should stop the mining of groundwater in
Kala Dera because the company’s selfish use of water – to generate
profits for its shareholders – would lead to a tragedy of the commons
and cause complete destruction of the groundwater resources in Kala Dera,
views Amit Srivastava of the India Resource Centre, a campaigning group.
“The lessons to be learnt from this case
study are much broader than Coca-Cola and Kaladera. Unless we regulate
the commons, tragedy looms for Kaladera, for Rajasthan, for India, and
for the world, with regard to water and other CPRs (common property
regimes),” writes Dr. Karnani in the study.
“For CSR to help avert the tragedy of the
commons, it is necessary to define CSR as a company’s responsibility to
voluntarily undertake socially desirable behaviour that decreases the
firm's profits. Only then does CSR become the business equivalent of
altruism at the individual level, and help avert the tragedy of the
commons,” concluded Dr. Karnani.