Coca-Cola has made progress toward U. requirements

Updated 10:00 AM October 17, 2005

Coca-Cola has made progress toward U. requirements

By Laurel Thomas Gnagey

The Coca-Cola Company has taken a number of steps to begin to address alleged violations of the University's Vendor Code of Conduct (VCC) in India and Colombia, says Vice President and Chief Financial Officer Timothy P. Slottow.

The company is accused of improper bio-waste disposal, depleting water resources and allowing pesticides to make their way into products in India, as well as questionable labor practices in Colombia, including claims of threats, violence, kidnapping and murder against members of the bottler's union.

Under a deadline set by the University's VCC Dispute Review Board (DRB), Coca-Cola was to have agreed by Sept. 30 to a third-party audit or audits relative to concerns about its business practices in the two countries.

"Coca-Cola has shown its intent to try to respond to these allegations by creating a global labor relations position in the spring to look into these issues, and by participating over the summer with U-M and six other universities to create an assessment protocol for the Colombia investigation—a set of actions that demonstrate a level of commitment not shown in earlier interactions with the University," Slottow said. At least for now, the University's 12 direct and indirect contracts with Coca-Cola and its bottlers valued at just over $1.3 million in FY2004 will continue to be extended, he said.

In June, the DRB recommended that contracts with Coca-Cola be extended on a short-term, conditional basis while the company responds to the alleged violations. The action was the result of four concerns brought forth by Students Organized for Labor and Economic Equality (SOLE) in November 2004. The allegations involve:

• Bio-solid waste disposal in India—the complaint alleged that bottling plant sludge containing cadmium and other contaminants has been distributed to local farmers as fertilizer;

• Use of groundwater in India—the complaint alleged that the water table/aquifer is being drawn down by Coca Cola, which uses deep bore wells. As a result, the claim states, water quality has declined; shallow wells used by local farmers have gone dry; and poor crop harvests near bottling plants have resulted from lack of sufficient irrigation water.

• Pesticides in the product in India—studies have found that pesticides have been detected in Coca-Cola products in India that are in excess of local and international standards.

• Labor practices in Colombia—SOLE claims repeated incidents with paramilitary groups threatening and harming union leaders and potential members, including allegations of kidnapping and murder. SOLE also is concerned about working conditions within the plants.

In considering the allegations, the DRB relied on extensive research by U-M Procurement and Logistic Services, which included meetings with representatives of Coca-Cola, SOLE, and activists and union leaders from India and Columbia. The board found evidence that Coca-Cola may have violated standards of the University's VCC regarding pesticides in India but could not determine whether there had been violations with respect to groundwater depletion and disposal of bio-solid wastes, so members recommended additional assessment.

Since a plan for addressing the allegations was outlined by the DRB in June, U-M has joined with six other institutions interested in a third-party investigation. A commission formed from their alliance is working to establish a protocol for the independent audit of the situations in India and Colombia. At a meeting early last month, the commission and Coca-Cola agreed the Colombia assessment should take place prior to November.

Under the DRB's timetable, an independent auditor satisfactory to all parties was to be selected by Dec. 31 and an audit completed by March 31. Findings were to be received by U-M no later than April 30 and Coca-Cola was to have a corrective action plan in place by May 31.

For information on the VCC, Coca-Cola and the DRB, go to: http://www.umich.edu/news/index.html?BG/cocacola.

Coca-Cola has made progress toward U. requirements

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