Introduction
Business sustainability is critical for any futuristic organization that understands the tradeoff between sustainability and long-term business profitability. The global population is currently plagued by environmental and social issues such as inequalities, ecological degradation, and unemployment. Unfortunately, organizations have significantly triggered some of these issues through unsustainable activities, strategies, and practices. The effects are even more profound for large corporations such as Coca-Cola, which have a sizeable number of consumers and stakeholders. Given its size, its organizational practices and decisions are likely to impact the environment and society substantially. Consequently, the company has a corporate social responsibility to the community and environment. The first section addresses the role of establishments in sustainability challenges. The second section analyzes the effectiveness of sustainable business practices in minimizing climate change, promoting social justice and economic prosperity; and, finally, an in-depth analysis of how Coca-Cola Company manages its sustainability practices. Large business corporations have a social obligation due to the magnitude of potential impacts to the environment and community. The purpose of this paper is to discuss the role played by businesses in enhancing the sustainability agenda.
Business and Sustainability Challenges
The unsustainable utilization of natural resources has severe implications for the environment. The National Aeronautics and Space Administration (NASA) reported that the loss of habitats, ocean degradation, air pollution, depletion of water resources, disposal of toxic wastes, and climate change result from unsustainable business practices (Byars and Stanberry, 2018). For example, construction companies and the agro-forestry industry have significantly contributed to the loss of habitats and species diversity. In Florida, the problem is so severe that 60% of the state’s manatees have to rely on human-made habitats to survive (Carr and Milstein, 2017). The widespread destruction of the manatee’s habitat cropped up in the wake of the rampant growth of industrial and residential establishments along Florida’s coastline.
The destruction of the manatee’s habitat led to the drainage of groundwater and clearance of wetlands to make room for construction activities. The issue was further exacerbated by environmental pollution and climate change, which resulted in the explosion of algae blooms that consequently invaded the manatee’s natural habitats. Recently, the US Endangered Species Act recognized these creatures as endangered species due to the likelihood of extinction (Carr and Milstein, 2017). The aforementioned threat is just an example of many animal lives that have been adversely impacted by unsustainable business practices.
There is no doubt that business practices and processes directly or indirectly affect the environment. Carr and Milstein (2017) identify industrial operations, policies, strategies, and models typified by short-term profitability as the root cause of sustainability challenges. A study conducted by Roblek, Erenda, and Mesko, (2018) attributed the unsustainable organizational practices to the global financial crises, especially the 2008 financial crisis. A viable fiscal system encourages productivity and sustainability within a firm’s operations. On the contrary, economic issues and limited funds cause companies to have a short-term profitability mindset to cut down on costs.
The complexities associated with fiscal and governmental regulatory reforms can have debilitating effects on an establishment’s ability to fulfill its social obligations. The 2008 and 2009 financial predicament was characterized by income inequalities in both emerging and developed nations. The recession also led to inflation and price gouging as countries reacted to politically motivated sanctions (Roblek, Erenda, and Mesko, 2018). The common disparities encountered by many companies during this era were contrary to the Corporate Social Responsibility (CSR) principle aimed at promoting social justice. Industries’ response during the last economic quandary indicates that the governmental and legal stakeholders in an organization’s external environment can indirectly contribute to sustainability challenges. Therefore, a firm’s capacity to effectively and efficiently meet its social obligations depends to a certain degree on external business factors.
Sustainable Business Practices
Climate Change
Climate change is a threat to human beings, wild and domestic animals, and plant life across the world. It plays a critical role in impacting people’s capacities to shape a sustainable future. Companies can help mitigate climate change through CSR practices such as green funding, habitat restoration, supporting individuals affected by natural disasters, and insuring themselves against natural disasters. For example, Bill Gates, the CEO of Microsoft, contributed $20 billion to clean energy and climate-related research initiatives (Byars and Stanberry, 2018). The current target, as per the Paris Agreement is to keep temperatures below 2 degrees Celsius. During this conference, over 200 countries in the world pledged to reduce their carbon footprint to combat global warming. The concord influenced and shaped the socioeconomic and legal environments of businesses as a significant number of nations implemented their emission reduction strategies to attain the set goal.
Individual companies have taken the initiative to reduce their carbon emission rates. For instance, Microsoft and Coca-Cola are now considering the profitability of low carbon resources in their financial planning as an innovative approach aimed at minimizing the carbon footprint in their value chains (Wei et al., 2016). Through the efforts of such organizations, countries all over the world will be able to achieve their goals for climate change. But to what extent does the impact of these practices make on mitigating climate change? An account by the Carbon Majors revealed that over seventy percent of the global greenhouse gas emissions are generated by just 100 companies (Riley, 2018). The Intergovernmental Panel on Climate Change (IPCC) also indicated that fifty percent of the industrial carbon emissions are generated by 25 large organizations (Riley, 2018). The above statistics show that the emissions produced by companies have a significant effect on climate.
If these companies implemented measures to reduce their carbon emissions, then, there would be a difference in the carbon emission levels in the world. Additionally, mitigating adverse environmental impacts can have positive financial outcomes for the organization. A survey conducted by Söderqvist et al. (2015) uncovered that the benefits of sustainable business practices in remedying contamination sites outweigh the risks. Firms can also save resources by opting for cheaper low-carbon resources (Wei et al., 2016). Therefore, industries should undertake individual measures to decrease carbon emissions to facilitate the generation of positive outcomes for both the environment and the financial status of the business.
Social Justice
Social justice is a new business paradigm that requires businesses to use their influence and position to build a better world. Various regions in the United States have taken initiatives to establish regulations that promote CSR. For example, the California Transparency in Supply Chains Act demands that all businesses operating within the state give an account of the implementation of strategies that aim to combat human trafficking and slavery (Harris, 2015). Industries subject to the statute are expected to report on how their verification, training, internal accountability, audit, and certification procedures are designed to avert slavery and human trafficking. The legislation not only promotes transparency but also provides an avenue for organizations to build their reputation.
The legitimacy theory explains the relationship between a company’s reporting behaviors and its brand identity. It asserts that by revealing its social responsibilities, a firm can build a positive image and increase its social acceptance within the community, as well as its profitability (Hummel and Schlick, 2016; Mousa and Hassan, 2015). Organizations such as Coca-Cola are employing approaches that aim to promote gender equality, for instance, the organization campaigns for LGBTQ groups’ rights (Byars and Stanberry, 2018). Fighting against gender inequalities and injustices against minority groups is a CSR strategy that aims to promote social justice.
In most instances, companies promote social justice due to legal obligations established by statutes such as the Equal Employment Opportunity Act, which mandates equality in all management practices. However, Kant’s moral theory asserts that ethics is a sense of duty and an individual’s willingness or commitment to do what is right for the sake of others. An organization that adheres to the rule mentioned above typically implements strategies that underscore the extent to which it is willing to go to protect consumers’ and employee rights (Byars and Stanberry, 2018). Kant’s theory distinguishes a morally upright company and a legally-compliant business.
Economic Prosperity
CSR plays a crucial role in promoting economic prosperity for both the business and key stakeholders. A company can support the financial success of its immediate community by funding small-scale businesses, encouraging innovative ideas, sponsorships, and community-based development. On the other hand, CSR can increase an establishment’s profitability by attracting and retaining loyal customers through appealing to their goodwill (Hill, 2019). Key stakeholders are likely to trust a firm if they are knowledgeable of its values. Sustainable business practices may also trigger the adoption of cost-savings initiatives which subsequently translates into business profit (Mahajan and Bose, 2018). However, corporations criticize CSR for generating unsustainable costs to the business. CSR critics, basing their rationale on the utilitarianism theory, claim the primary purpose of an organization is to maximize profit and promote business growth.
Contrary to Kant’s theory, the utilitarianism postulation has been used to justify business practices that are considered to be unethical. According to this ideology, if an action has a more significant benefit than harm, then it is morally okay to perform the act. It has been used to justify cost-benefit analyses, layoffs, and business expansion. (Utilitarianism, 2018). However, its proponents do not consider the differences that exist between the impacts of an act on the people, the environment, and the business. What benefits an organization does not necessarily benefit the staff or the environment. Therefore, a firm should strive to understand and abide by the evolving demands of society to ensure its profitability and productivity in the market.
Case Study: Coca-Cola
Coca-Cola is a manufacturing company that specializes in the production of carbonated drinks, juices and tea, bottled water, sports drinks, and beverage drinks. It is the largest beverage and soft drinks manufacturer in the world and it operates in all countries in the world except North Korea and Cuba. The firm has over 700,000 employees working across two hundred nations and territories globally. Coca-Cola identifies itself as a sustainable business due to its commitment to building impoverished communities and reducing negative environmental impacts.
Triple Bottom Line Sustainability
The Triple Bottom Line (TBL) concepts help to bring equilibrium between people, the planet, and company profits. Effective TBL management requires that an organization assesses or evaluates three measures of its practices; this includes social, economic, and environmental impacts (Masud et al., 2019). Coca-Cola implements the TBL conceptualizations by creating new ethical standards for its practice to serve consumers, stakeholders, and the community efficiently.
Social Responsibility
The social component of TBL constitutes the well-being of employees, fair trade, and community stakeholders. In the absence of the law, gender inequalities can be used as an index to measure an organization’s social and ethical performance. Attracting and retaining a diverse workforce is a critical component of a company’s ethics which emphasizes aspects such as fairness, social justice, and equal treatment. One of Coca-Cola’s sustainability objectives is to improve gender equality in the workplace (Sustainable business, 2020). In 2018, the Human Rights Campaign foundation credited the firm for being one of the top 100 organizations in the world to support LGBTQ rights.
Coca-Cola also empowers women across the world by partnering with various global diversity and inclusion organizations. For example, the 5by20 program has economically empowered over 5 million women worldwide (Business & sustainability Report, 2019). This project helps female entrepreneurs, especially those from low-income families by offering financial assistance, training, and peer-to-peer mentorship initiatives. The form provides insurance coverage, vacation packages, and retirement benefits, children’s scholarships, and allowances to its employees to ensure that it adequately meets their economic, health, and social wellbeing needs.
Environmental Sustainability
The environmental component of the TBL encompasses carbon emissions, land use, and waste management. In compliance with the Paris Agreement, Coca-Cola pledged to reduce global carbon emissions by twenty-five percent before 2030 (Business & sustainability Report, 2019). To achieve this goal, Coca-Cola has adopted up-to-date technologies in its manufacturing operations worldwide. Furthermore, the establishment supports renewable energy projects around the world. The organization uses a Carbon Scenario Planner Tool to assess its potential carbon footprint and, subsequently, develop interventions and targets in line with the device’s projections (Sustainable business, 2020). Regarding sustainable waste management, the firm has employed strategies such as the ‘World Without Waste’ program that aims to minimize the generation of refuse. This project promotes the packaging of the organization’s products in recyclable bottles. According to the Business and Sustainability report (2019), the establishment recycles ten percent of all their PET plastic bottles used in packing their carbonated drinks (Business & sustainability Report, 2019). The organization does not include its business operations regarding land use.
Profits
The profit spectrum of the TBL encompasses the following concepts: cost, revenue, and growth. Business operations ought to maximize market growth and competitiveness rather than profit maximization. Each year, Coca-Cola publishes an annual sustainability report, which details its manufacturing operations. By engaging and involving the opinions of major stakeholders, the firm can conduct transparent reporting of their business practices. Recently, Coca-Cola reported that they no longer evaluate business growth based on the number of products sold, but by seeking customer satisfaction, packaging advantages, and fair pricing (Sharma, 2017). The board of investors in the company, through the Sustainability Accounting Standards Board, approves of and supports every activity and decision implemented by its employees (Sustainable business, 2020). According to Masud et al. (2019), to be ethical, an establishment’s sustainability operations must engage and be accepted by the majority of key stakeholders. The company’s investment priorities align with its sustainable goals, such as reducing added sugar in its products to promote public health.
Business Ethics and Corporate Social Responsibility
Corporate Social Responsibility
Coca-Cola has made considerable investments to improve the conditions of impoverished communities. It heavily invests in Water, Sanitation, and Hygiene (WASH) programs that provide impoverished communities with access to quality, safe, and clean water (Sustainable business, 2020) The organization also supports sustainable agricultural practices among farmers, indigenous people, and small-scale agriculturalists by offering financial support and market opportunities. Furthermore, it promotes the use of farm products that maintain ecosystems and improve land and soil quality.
Business Ethics
The company is devoted to its 2020 sustainability goals by ensuring that its business processes, activities, and strategies are feasible. It is estimated that for every liter of Coca-Cola, three liters of water are used (Byars and Stanberry, 2018). A report published by Pskowski (2017) showed that the firm’s bottling plant in Mexico utilizes a daily intake of 1.08 million of water daily. Ironically, over fifty percent of the community members have been experiencing water shortages for four years. While the households near the bottling plant have to travel for miles to get water, Coca-Cola does not encounter any water shortages (Pskowski, 2017). Greenwashing is a marketing practice involving an organization’s deceitfully advertising itself as an environmentally-friendly establishment. Coca-Cola, in this context, is greenwashing the public because it spends more resources in self-marketing than actually minimizing the environmental impact of its activities. A fundamental precept of business ethics asserts that if an operation damages or harms the environment and/or society, then the practice should be terminated regardless of its monetary value.
A second ethical issue posed by the company’s business practice is the impact of its product on public health. In 2016, Coca-Cola launched the Global Energy Balance Network, a project whose main agenda was to promote physical exercise. This program underscored the concept that physical inactivity is the primary cause of obesity, but not an individual’s diet. The initiative was instigated in response to the accusations that the business’ products were significantly contributing to the national obesity pandemic (Ruskin, 2018). The firm was also accused of financing the sabotage of organizations, which were investigating the impact of their commodities on childhood obesity (Stuckler, Ruskin, and McKee, 2017). Coca-Cola’s approach to public health concerns is unethical because it does not take responsibility for its services.
An excellent example of a company that applies ethical CSR is Samsung electronics. For instance, in 2016, online videos emerged, which typically depicted its smartphones exploding due to technical issues. Consequently, airlines started banning phones on flights due to the fear of security and health threats. Samsung responded to the meltdown by recalling all dispatched gadgets worldwide and even replacing them to diffuse the situation. Samsung’s response to the disaster is illustrative of honorable practice; the firm acted morally by focusing on the safety and satisfaction of their customers rather than the losses it would incur following the implementation of the approach.
From a business ethics perspective, Coca-Cola should have acknowledged that diet significantly contributes to obesity and taken initiatives to reduce the health effects of their products. The firm is making an undoubtedly positive impact on many sustainability components except for a few noticeable areas. Simply providing amenities to a community does not automatically fulfill an organization’s social obligation. An ethically responsible business must strive to make systemic changes that will have a positive long-term impact on communities.
Conclusion
Every organization has an implicit social obligation to the communities that exist within their business environments. However, the CSR of large business corporations is more explicit than small business entities. Coca-Cola seems to be adequately fulfilling its social obligations to society. However, there needs to be a distinction between real CSR and greenwashing activities. On one hand, the company is making a positive impact on communities and the environment, but on the other, it is depleting natural resources and contributing to a public health issue. Therefore, its annual sustainability report is greenwashing consumers to build a public image and misinform its users. A socially responsible establishment does not treat its stakeholders as a means to an end, and providing amenities to the community does not automatically translate to CSR. To be an actual sustainable business, the company needs to address systematic issues and strive to bring long-term profits to the community. As the public collectively addresses and responds to these ecological and societal problems, industries should also strive to contribute to the efforts. Effective collaboration between industries, governments, and other key stakeholders is also crucial in enhancing the adoption of CSR approaches.
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