Coca Cola CSR challenges in and Shell Petroleum CSR Challenges in Niger Delta

1. A CONCISE REPORT FOCUSING ON KEY CHALLENGES FACED BY GLOBAL
ORGANISATIONS IN IMPLEMENTING CORPORATE SOCIAL RESPONSIBILITY
(CSR) POLICIES.
A report by
Mr Dare Adenuga
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2. TABLE OF CONTENTS
1. INTRODUCTION ................................................................................................................. 3
2. DEFINING AND UNDERSTANDING CORPORATE SOCIAL RESPONSIBILITY (CSR) .................... 3
FIGURE 1: THE PYRAMID OF CORPORATE SOCIAL RESPONSIBILITY ................................................................ 4
3. THE DEVELOPMENT OF CORPORATE SOCIAL RESPONSIBILITY ............................................. 5
3.1 CHALLENGES OF CORPORATE SOCIAL RESPONSIBILITY...................................................... 5
TABLE 1: CHALLENGES AND ISSUES TO SUCCESSFUL CSR STRATEGY IMPLEMENTATION BY ORGANISATIONS. ....... 5
4. COCA – COLA INDIA (CCI) AND CSR ..................................................................................... 6
TABLE 2: COCA – COLA INDIA ENVIRONMENTAL CSR INITIATIVES .............................................................. 7
4.1 ALLEGATIONS AGAINST COCA-COLA PRACTICES IN INDIA ................................................. 7
TABLE 3: ALLEGATIONS AGAINST COCA – COLA INDIA (CCI) ..................................................................... 7
4.2 DRIVERS OF CSR AND PERTINENT CHALLENGES FACING COCA- COLA INDIA
IMPLEMENTION OF CSR POLICIES .......................................................................................... 8
TABLE 4: KEY CHALLENGES FACING COCA – COLA INDIA IMPLEMENTATION OF CSR POLICIES .......................... 9
5. SHELL IN NIGERIA DELTA REGION ..................................................................................... 10
FIGURE 2. MAP OF THE NIGER DELTA, NIGERIA .................................................................................... 11
5.1 SHELL AND CSR IN NIGERIA ............................................................................................ 11
TABLE 5: SHELL CSR INITIATIVES IN NIGER DELTA ................................................................................. 12
5.2 CHALLENGES FACING SHELL IMPLEMENTION OF CSR POLICIES IN NIGER DELTA REGION OF
NIGERIA .............................................................................................................................. 12
TABLE 6: KEY CHALLENGES FACING SHELL NIGERIA EXECUTION OF CSR POLICIES ........................................ 13
6. CSR AS A STRATEGY AND THE BENEFITS ........................................................................... 15
7. SUMMARY RECOMMENDATION AND CONCLUSION ......................................................... 15
TABLE 7: FIVE STEP PROCESS TO CSR IMPLEMENTATION ........................................................................ 16
REFERENCES ........................................................................................................................ 17
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3. 1. INTRODUCTION
Corporate social responsibility (often referred to by the acronym CSR) is emerging as a
noteworthy discipline across multinational organizations, governments, social
entrepreneurs and NGOs (Inderjeet 2012).
This report aims to detect the key challenges faced by organizations in implementing
corporate social responsibility in its business operations. The report will concentrate on
identifying and understanding the key challenges in CSR implementation, establish their
importance and critically evaluate key points with references to academic literature.
Corporate social responsibility (CSR) is important to both private and public
organisations operating in developed and developing countries (Okpara 2009).
This paper will critically analyse, and discuss relevant cases, challenges of CSR in
reference to two organisations: Coca – Cola India and Shell Petroleum Nigeria.
Furthermore, the advantages of CSR will be discussed in order to develop and identify
organisational strategies for achieving and implementing successful CSR policies.
Finally, recommendations are discussed on how organisations can meet these
challenges.
2. DEFINING AND UNDERSTANDING CORPORATE SOCIAL RESPONSIBILITY
(CSR)
Although a significant body of literature exists, theproblem of auniversal and singular
definition of CSR remains (Abreu and David, 2004: 109). Since it first emerged in the
1950s (De Bakker et al., 2005), many ambiguities have surrounded the concept of CSR
(Lindgreen et al 2009). It may be defined as ―a concept whereby organisations integrate
ecological and social concerns in its operations‖ (Cited in Gill 2007).
CSR represents the continuing commitment by an organization to behave ethically and
contribute to economic development, while improving the quality of life of its employees
and their families, as well as of the local community and society at large (Watts and
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4. Holme, 1999).The basis of what is considered to be the modern definition of CSR is
embedded in Carroll‘s ―Pyramid of Corporate Social Responsibility.‖
According to Carroll (1979) ‗the social responsibility of a business encompasses the
economic, legal, economic and discretionary (philanthropic) expectations that society
has of organisations at a given point in time‘‘. The link between organizations and the
environment is clear in his definitions (Gill 2007). In the private sector, CSR is important
in addressing the ―triple bottom line‖ of ―people, planet, and profit‖ (Elkington, 1998)
Berger et al, (2007) argued that CSR goes beyond business ethics to include a wide
range of issues for organizations. Moreover, Friedman (1970) stated ‗the business of
business is business‘. The Figure below illustrates Carroll‘s Pyramid of Corporate social
responsibility.
Figure 1: The pyramid of corporate social responsibility
Unfortunately, organizations in sub-Saharan Africa, particularly Nigeria have been
unable to fully implement progressive and sustainably CSR policies (Okpara 2009).
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5. 3. THE DEVELOPMENT OF CORPORATE SOCIAL RESPONSIBILITY
Intensified attention to Corporate Social Responsibility has not been entirely intentional.
Several international organisations awoke to it only after being affected by public
responses to issues they had not until that time thought were part of their organization
duties. Nike, for example, faced consumer boycotts after the New York Times and other
media outlets reported abusive labour practices at some of its Indonesian suppliers in
the early 1990s and Shell Oil‘s decision to sink the Brent Spar oil rig, in the North Sea
led to Greenpeace protests in 1995 (Porter and Kramer, 2006).
Since Corporate Social Responsibility has gained attention from the pressures between
society and organisations (Friedman, 1970; Handy, 2002; Martin, 2002; Kooskora,
2006), most CSR initiatives have been overridden by the voices of good rather than the
complexity associated with actual implementation of CSR policies (Gill 2007). Global
pharmaceutical organisations are expected for example to respond to the AIDS
epidemic in Africa even though it is far-off from their principal business operations
(Porter and Kramer, 2006).
3.1 CHALLENGES OF CORPORATE SOCIAL RESPONSIBILITY
Several challenges limit the successful integration of CSR policy in organisations
operations. Table 1, identifies some of the challenges which hinder the implementation
of a successful CSR strategy.
Table 1: Challenges and Issues to Successful CSR Strategy Implementation by
Organisations.
 Lack of total organizational commitment to CSR
 Challenges in integrating CSR with core business values and practices
 Lack of financial resources to pursue CSR practices
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6.  Economic and commercial pressure
 Different views in the role and responsibility of organisations (e.g. – Friedman
vs. Freeman
 Strong Stakeholder (interest) conflict
Source: Berad 2011.
When organisations find it difficult to implement Corporate Social Responsibility policies
or successfully link it to core organisational practices, companies such as Shell Nigeria
will be unwilling to fully commit and assign the crucial skills and time to such CSR
undertaking (Berad 2011).
Porter (2006) and Windsor (2006) argue that ‗corporate social responsibility‘ involves a
key focus, requiring a strategic approach rather been controlled by outside pressures or
good intents.
Integrating ‗Corporate Social Responsibility‘ strategy into an organisations core
operation to create competitive advantages and benefits will be briefly discussed later in
the report.
4. COCA – COLA INDIA (CCI) AND CSR
Coca-Cola was the leading beverage manufactures in India until 1977 (Hills and
Welford 2005) it pulled out from the country rather than reveal its guarded secret
formula and cut its equity stake as required under the Foreign Exchange Regulation Act
(FERA), which the Janta party –– introduced to govern the operations of foreign
organisations in India (Hills and Welford 2005). In 1993 Coca – Cola saw as an
opportunity to make a comeback after the ban was lifted.
Since returning in 1993 Coca-Cola estimates it has invested around US$1 billion in
India, making it one the country‘s biggest international investors in India (Hills and
Welford 2005). Table 2, identifies some of its recent CSR environmental initiatives.
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7. Table 2: Coca – Cola India Environmental CSR Initiatives
 Environmental due diligence before acquiring land or starting projects.
 Environmental impact assessment before commencing operations.
 Groundwater and environmental surveys before selecting sites
 Compliance with all regulatory environmental requirements
 Ban on purchasing refrigeration equipment containing CFCs
 Waste water treatment facilities with trained personnel at all company-owned
bottling operations
 Energy conservation programmes
Source:Hills and Welford 2005
4.1 ALLEGATIONS AGAINST COCA-COLA PRACTICES IN INDIA
Coca – Cola India has come under intense scrutiny and allegations from NonGovernmental Organisations, mostly from the India Resource Centre, led by activist
Amit Srivastava India (Hills and Welford 2005). These allegations are divided into four
distinct categories, highlighted in the Table below.
Table 3: Allegations against Coca – Cola India (CCI)
 Water shortages
Communities across India living around Coca-Cola‘s bottling
plants are experiencing severe water shortages as a direct
result of Coca-Cola‘s extraction of water from the common
groundwater resources. NGOs say several studies have
confirmed the significant depletion of the water table.
 Pollution
Coca-Cola has been discharging its waste water into the fields
around its plants and sometimes into rivers and Ganges, in
surrounding areas. The result has been that groundwater and
soil has been polluted.
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8.  Distribution of toxic
waste
Coca-Cola has been distributing solid waste to farmers in two
communities, Plachimada and Mehdiganj, as ‗fertilizer‘. Tests
conducted by the BBC found cadmium and lead in the waste,
effectively making it toxic waste. Coca-Cola stopped the
practice of distributing its toxic waste only when ordered to do
so by the state government.
 Products contain
pesticides
Tests conducted by a variety of agencies, including the
government of India, found Coca-Cola products contained high
levels of pesticides.
Source: Hills and Welford (2005), Case Study - Coca-Cola and Water in India
Coca – Cola has been constantly pressured to permanently close down bottling facilities
in Plachimada, Kala Dera and Mehdiganj (Hills and Welford 2005), due to several
allegations.
4.2 DRIVERS OF CSR AND PERTINENT CHALLENGES FACING COCA- COLA
INDIA IMPLEMENTION OF CSR POLICIES
Organisations tend to assume CSR is a fringe issue for their trade and consumer
gratification is of more importance. They apparently imagine that consumer satisfaction
is only about price and customer service, but fail to realise the changes that are taking
place globally that could damage the organisation (Berad 2011). Some of the drivers
pushing organisations towards CSR identified by Berad (2011) research on
organisations in India include the following:
 The shrinking role of government in CSR initiatives
 Demands for greater corporate disclosure from key stakeholders including
communities, consumers, suppliers, employees and investors.
 Increased consumer interest
 Intense investors pressure
8

9. Several other CSR drivers may be added to this list as it is not exhaustive. The Table
below highlights key challenges faced by Coca – Cola India in implementing CSR
policies.
Table 4: Key Challenges facing Coca – Cola India Implementation of CSR Policies
 Lack of Community Participation in Research by a plethora of authors
CSR Activities
suggest that there is an inherent lack of
local community interests in involving or
contributing to the CSR activities of Coca
– Cola India. Largely attributable to the
fact that there exists little or no
awareness about CSR within the
grassroots communities such as Kala
Dera and Plachimada.The issue is further
intensified by a lack of communication
between Coca – Cola India and the
grassroots local community.
 Non-availability of efficient NGOs
Reports suggest that there a lack of
efficient NGOs in local communities that
can evaluate and detect the needs of the
community and work along with
organisations like Coca-Cola India to
ensure successful implementation of CSR
policies.
 Lack of Consensus on
Implementing CSR Issues
Evidence from Berad (2011) survey
identifies the inherent lack of consensus
among local NGOs regarding CSR
developments. This factor tends to limit
Coca – Cola India abilities to undertake
impact analysis of their CSR policies on
an ongoing basis.
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10.  Issues of Transparency
The integral Lack of transparency is one
of the key challenges faced by Coca –
Cola India. This lack of transparency
unfortunately impacts the process of trust
building between Coca – Cola India and
rural communities negatively.
Source: Berad (2011)
The four key challenges identified in Table 4 faced by Coca – Cola India are not only
limited to them. Other factors such as political pressures constitute other challenges the
organisation face in implementation of its CSR policies.
5. SHELL IN NIGERIA DELTA REGION
Shell‘s Oil Nigeria drilling began in 1937 (SPDC, 1998b). In 1938, the organisation was
given an oil exploration license and the organisation first found commercial oil in the
Niger Delta region of Nigeria in 1956. The first shipment of crude oil left Nigeria in 1958
(SPDC, 1998).
Poverty is a prevalent issue in the oil exploration region of Nigeria (Ite 2004). The region
boasts an estimated population of 20 million people in the nine oil producing
states.Figure 2 below, is a map of Nigeria showing the nine states typically considered
as part of the Niger delta region.
10

11. Source: Frynas (2000)
Figure 2. Map of the Niger Delta, Nigeria
Covering nearly 70 000km of land, the Niger Delta region accounts for over 90% of
Nigerian international export incomes and nearly 70% of revenues to the Nigeria
Federation Accounts (Ite 2004).
Currently, 14% of Shell‘s global crude oil production is from Nigeria, yet it accounts for
only 7% of their profits (Boele 2001).
5.1 SHELL AND CSR IN NIGERIA
Just before the pressure of the 1995 CSR issues of Shell Nigeria, the organization‘s
CSR strategy focused on reputation management and risk. Shell adopted a community
assistance (CA) approach to fulfil its social responsibilities, which focused solely on
corporate philanthropy (Ite 2004).
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12. According to Uwem Ite (2004) research, Shell focused on 7 key areas highlighted in
Table 5 below.
Table 5: Shell CSR Initiatives in Niger Delta
 Clean water projects
Local community clean water initiatives
such as drilling bore holes and wells
 Small finance credit and business
development
Personal cash generating initiatives such
as fishing and local transportation
 Agriculture
Creation of support centres to help farmers
 Education
Provision of scholarships
 Health Care
Building community hospitals and clinics
 Voluntary Training
Basic skill training in welding or plumbing
 Other Infrastructure
Roads, rural electrification projects.
Source: Uwem Ite 2004
Shells CSR strategy of community assistance seemed to place great importance on
one-time ‗gifts‘ (Ite 2004), as an alternativeto creating sustainable CSR policies and
focused solely on what the organisation felt rural communities lacked (Ite 2004).
This top-down CSR implementation approach became the beginning of the end for the
organisation, as local communities started viewing the CSR initiatives as charity, and a
form of rent for Shell‘s use (and abuse) of their environment and resources (Ite 2004).
5.2 CHALLENGES FACING SHELL IMPLEMENTION OF CSR POLICIES IN NIGER
DELTA REGION OF NIGERIA
Shell's corporate social responsibilities came under intense pressure in 1995 (Wheeler
et al. 2002). First there was the Brent Spar incident, followed by the execution of
Nigerian military regime of Ogoni writer, environmentalist and human rights activist Ken
Saro-Wiwa and eight of his contemporaries on November 10, 1995 (Lawrence 1999 and
Boele et al. 2000a). It is clear that the effect of these two cases induced a negative
response the firm's CSR system (Wheeler et al. 2002).
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13. Shell believes its most positive impact to Nigeria economy is through the oil taxes and
royalties paid to the government coffers (Shell International,1995a). Frynas (2005), in
table 6 identified some key challenges facing shell in Niger Delta.
Table 6: Key Challenges facing Shell Nigeria Execution of CSR Policies
While Shell may have some exceptional
 Country and context-specific issues
strategies and skilful staff, the firm also faces
many practical implementation problems as a
result it finds it hard to implement CSR policies.
Country specific challenges ranging from
corruption to theft: for example, funds allocated
for communities are some instances embezzled
by Shell‘s liaison officers with the collusion of
corrupt village chiefs. Nigeria also suffers from
inter-ethnic conflict which can impede CSR
implementation.
 Failure to involve the beneficiaries of
CSR
Community participation and constant interaction
is considered as the top route for CSR by
organizations as diverse as the World Bank and
Oxfam. In the case of Shell even when a formal
understanding has been signed, the local people
sometimes meet and discuss with the company‘s
liaison officer less than once a year.
 Lack of human resources
In the case that organizations like Shell set out to
act as quasi-development agencies, they tend to
lack the human resources to plan and execute
genuine CSR initiatives. Furthermore,
management staff rarely spend time in the
community. Hence they cannot understand
specific local problems. Even if one CSR
conscious manager is devoted to genuine CSR
implementation, his/her replacement may not be
as dedicated and may halt a CSR program
begun by his/her predecessor.
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14.  Failure to integrate CSR initiatives
into a larger development plan
Due to the nature of corporate objectives of
organizations like Shell and the challenges of
implementing corporate social responsibility
initiatives, it is not unexpected that CSR hardly
forms part of Shell‘s bigger regional development
plans. Without such basic plans in place CSR
implementation of policies cannot simply
succeed.
 Social attitudes of oil company staff
This is related to the lack of effective human
resources, and the negative impact of the social
attitudes of Shell staff. That is the social values
that guide the decisions makers.
Firstly, employees commonly in responsible
within oil companies like shell tend to have a
managerial and/or engineering background, and
are highly skilled at dealing with technical and
managerial challenges, and this thinking is
reflected in their attitudes to CSR. The
restrictions of technical/managerial methods can
be seen in the way in which rural communities
are consulted. A discussion exercise with local
representatives is expected to be qualitative and
inherently discursive, needing in-depth
deliberations and the creation of a good
understanding among the local people.
Handling discussion exercises like this from a
technical/managerial angle leads top level
management to speed up discussions with the
local people and to try to achieve an instant
objective rather than to build relationships with
the community and spend long periods
deliberating the roots of challenges.
Source: Frynas 2005
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15. Rampant corruption and the federal government‘s failure to build basic infrastructure are
some of the other key factors impeding the successful implementation of Shell Nigeria
corporate social responsibility policies (Boele 2001b).
6. CSR AS A STRATEGY AND THE BENEFITS
―The essential test that should guide CSR is not whether a cause is worthy but whether
it presents an opportunity to create shared value—that is, a meaningful benefit for
society that is also valuable to the business‖ (Porter and Kramer, 2006: 8). As a result,
they show how a company can create a corporate social agenda, composed of
―responsive CSR‖ and ―strategic CSR‖ (Gill 2007). Strategic CSR aims at accomplishing
large and distinctive social and business benefits from a strategically focused set of
CSR policy implementation (Carlisle and Faulkner, 2004; Crawford and Scarletta, 2005
cited in Gill 2007).
The benefits of CSR include many dimensions of business activities: investor relations,
recruitment, productivity, risk management, market positioning and even research and
development.
7. SUMMARY RECOMMENDATION AND CONCLUSION
Michael Porter and Mark Kramer (2006) proposed that CSR should be interconnected to
core corporate objectives that are leveraged for increased economic and social values
(Cited in Miliman et al. 2008).
The report has identified the key challenges faced by organisations in implementing
CSR policies with specific references to Coca-Cola India and Shell in Niger Delta region
of Nigeria.
Miliman et al. 2008, proposed a five step process for how organisation such as CocaCola and Shell Nigeria can implement a successful Porter‘s Strategic Corporate Social
Responsibility Model. Table 7, highlights the five key steps to implementing Strategic.
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16. Table 7: Five step process to CSR Implementation
 Scoping the organization‘s environment for ways the firm can translate societal
issues which impact it into some type of a corporate advantage.
 Development of an expanded menu of CSR program options to create corporate
opportunities associated with these societal issues.
 Analysis of strategic CSR policies based on reference to economic and, societal
impacts as well as other relevant core variables.
 Execution of the specific strategic CSR program option which often involves
coordination with other businesses and sectors.
 Evaluating both the economic and social effects and discussing results within
the organization and to key stakeholders.
Source: Miliman et al, 2008.
Michael Porter‘s (2006) strategic CSR model can be effectively utilised by Coca-Cola
India and Shell Nigeria to achieve societal and economic benefits simultaneously
(Miliman et al, 2008). The fifth stage of the approach allows for each party to build trust
and transparency, while also improving communication between both organisations and
its key stakeholders.
Strategic CSR requires careful planning, ongoing analysis and feedback, and long term
implementation for its success (Miliman et al, 2008). However, as pointed out by
Miliman et al (2008), ‗‗the benefits of this approach -- improved economicimpact,
increased sales, and reduction oforganizational risks -- are considerable and canenable
an organization to solve difficult problemsand create new opportunities for growthwhile
also having a positive impact on society‘‘.
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