Corporate Social Responsibility Case Study

Case Title:

Colas in India – The Pesticide Residue Controversy

Abstract:

India, with its GDP growing annually at 7.5% and its middle income group’s disposable income also increasing, remains a priority market for the colas. In this context, in 2003, following an analysis on bottled water manufactured by the cola companies, CSE, through its lab, PML, had released a report stating that colas contained four toxic pesticides, Lindane, DDT, Malathion and Chlorpyrifos, in quantities far exceeding allowable limits. These pesticide residues, PML reported, could cause cancer, damage the nervous and reproductive systems, cause birth defects and disrupt the immune system.

The cola companies refuted the allegations and confirmed that their drinks are safe to consume and since there is no regulation on pesticide content in soft drinks, they had not violated any law. The controversy led to public awareness campaigns and partial bans, restrictions and seizure of soft drinks from bottlers and stockists. The government constituted a Joint Parliamentary Committee and assured the public that if the drinks were found to be unsafe, the government could even stop their production in the country. The committee found that there were pesticide residues, which were ‘‘unsafe for young, vulnerable sections of Indian population’’ and suggested that the government set standards for allowable pesticide content in soft drinks through BIS, its agency for standards, and make them legally enforceable. A committee was formed, and after 20 discussions spread over more than two years, it announced through the BIS’ website that the standards were set but yet to be declared. The CSE claimed that the standard setting procedure was stalled by a government initiative and resumed its series of testing in 2006, with widespread collection of samples from various regions and brands of soft drinks from different manufacturing plants.

The result published on August 2, 2006, created a huge furore in the country since it alleged that the soft drinks by the cola companies had more than 37 times of allowable pesticide content in the soft drinks and it was widely spread across the country and different brands. Apart from the regular pesticides, Caffeine and Aspartame, flavoring and sweetening agents in colas were also projected as being addictive and having genetic effects on human beings. Colas strongly denied the allegations and questioned the veracity of CSE’s report. They even employed individual testing labs in UK and furnished to the Indian public test reports stating that the drinks were utterly safe. Some states in India have introduced bans and partial restrictions. The Government constituted an expert committee, which after an analysis declared that the report of CSE was inconclusive and not balanced, but affirmed to the country’s judiciary that before 2007, it would notify the standards for pesticide content in colas. Sales of colas have dropped but not significantly and the cola companies have run ad campaigns with brand ambassadors endorsing that the drinks were safe.

Pedagogical Objectives:

• The case anticipates familiarising the students with
• The Cola manufacturing process and the market size globally
• The pesticide residue issue in colas
• The harmful effects of pesticide residues
• Effects of flavoring and sweetening agents in soft drinks
• Standard setting procedure and decision making process in India
• Analysing the possible ways the cola companies and the government can jointly address the issue.

Keywords : Corporate Social Responsibility Case Study Pesticide residue carbonated soft drinks, Coca-Cola, Pepsi, Center for Science and Environment, Ban and Restriction on colas, Caffeine Aspartame (Nutrasweet), Cola manufacturing, Pesticide residue in water and sugar, Lindane, Malathion, Chlorpyrifos, DDT Joint parliamentary committee, BIS standards on potable water, EU Norms on potable water Carcinogens