A dubious alliance

TERI’s partnership with Coca-Cola, whose business practices in India and abroad have been called into question more than once, raises questions of ethics.

Published : Apr 01, 2015 12:30 IST

The main entrance of the Coca-Cola factory at Plachimada in Palakkad district, Kerala. This plant came under scrutiny in 2004 and was later ordered to be shut down for violating various laws.

The main entrance of the Coca-Cola factory at Plachimada in Palakkad district, Kerala. This plant came under scrutiny in 2004 and was later ordered to be shut down for violating various laws.

IN an irony of sorts, The Energy and Resources Institute (TERI) University has tied up with the global beverage company Coca-Cola to fund a Coca-Cola Department of Regional Water Studies at the institution.

TERI was set up in 1974 as the Tata Energy and Resources Institute by Darbari S. Seth, referred to as the builder of Tata Chemicals, who was at some point the chairman of 14 Tata companies, including Tata Tea, Consolidated Coffee, Excel Industries, and Rallis India Ltd. Considered a key strategist for several of these companies, he set up TERI as a not-for-profit independent research institute that would contribute to scientific and policy research in the fields of energy, environment and sustainable development. He was clear that financial autonomy was a prerequisite for TERI to retain its intellectual autonomy. TERI University was launched in 1998 to offer courses in sustainable development and to “disseminate” the knowledge created by TERI. Rajendra K. Pachauri, who joined TERI in 1981 as its director and went on to head it as its director general, became the university’s chancellor. It enjoys the status of a “deemed” university as certified by the University Grants Commission.

Coca-Cola’s business practices in India and abroad have been called into question more than once. It is not surprising, then, that eyebrows are being raised at this alliance between the multinational and TERI University, which came about in May last year. In a letter addressed to Prime Minister Narendra Modi, Water Resources Minister Uma Bharati, Pachauri and Leena Srivastava, university vice-chancellor, in October last year, the Alliance Against Conflict of Interest (AACI) wrote: “Coca-Cola is internationally known to be a polluter of waterbodies, for depleting water resources, for human rights violations, for violations of workers’ rights, for targeting children and schools with their aggressive marketing campaigns and for bribery of the American Academy of Paediatric Dentistry to soften their stand against children consuming sugary drinks which contribute to increase in non-communicable diseases like hypertension, diabetes and cancers, which require lifelong costly treatment.”

The AACI, a group of organisations and individuals—doctors, lawyers, women and child health groups, environmentalists, researchers, activists and mediapersons—has strongly condemned the partnership and urged the Ministry of Water Resources and TERI to disassociate themselves from Coca-Cola.

The situation becomes more ironical when one sees the chequered history that the two have shared. In 2001, TERI included Coca-Cola on its list of the most responsible companies in India. Krista Bywater (an assistant professor of sociology at Muhlenberg College, Pennsylvania, U.S.) in her essay in the book Global Management, Local Resistances: Theoretical Discussion and Empirical Case Studies edited by Ulrike Schuerkens said: “Coca-Cola has sponsored events with TERI, including its annual Delhi Sustainable Development Summit and its 2003 Earth Day event.... With such close ties to Coca-Cola, TERI’s reputation could be harmed if it publicised that the company it presents as a paragon of sustainable practices is in fact destroying the environment and people’s livelihoods.”

In 2003, when college campuses across the United States were boycotting Coca-Cola over the alleged maltreatment of its workers in bottling plants in Colombia and environmental concerns in India, Michigan University joined the boycott. It called for an independent investigation into the allegations levelled against Coca-Cola in these two countries. In the face of such uproar from the youth, its core customer base, Coca-Cola was forced to announce a third-party assessment. In India, it appointed TERI as the investigating agency despite its past association with it.

TERI undertook the assessment in 2004. It admitted in its report that Coca-Cola was responsible for over-extraction of water and had caused water shortages in areas around its plant sites. It was even mildly critical of Coca-Cola’s activities and recommended shutting down of its bottling plant in Kaladera, a drought-stricken region in Rajasthan. “What emerges, however, is that the plant’s operations in this area would continue to be one of the contributors to a worsening water situation and a source of stress to the communities around,” stated the report. Even though TERI limited the scope of the study by studying only a few facilities and did not test the product for pesticides, it could not avoid outlining how the company was passing risks on to local communities in its quest for growth.

The report pointed out that while in Mehdiganj, in Uttar Pradesh near Varanasi, the aquifer might move from a safe to a semi-critical situation owing to continued water depletion, in Nabipur, Guajrat, the state of the aquifer had already moved from a critical to an overexploited condition.

“In both the areas, water-intensive crops such as rice are predominantly cultivated for a major part of the year and riparian rights need to be respected,” the report stated. In 2013, the Central Ground Water Authority backed this finding by stating that from 1999 to 2009, the quantity of groundwater in Mehdiganj had gone from safe to critical. In 2014, the Uttar Pradesh Pollution Control Board ordered a shutdown of the unit as it found the company to be violating a number of conditions of its licence.

In 2004, the Plachimada plant of the company in Kerala had come under scrutiny and was later ordered to be shut down for violating the Water (Prevention and Control) of Pollution Act, the Environment (Protection) Act, the Factories Act, the Hazardous Waste (Management and Handling) Rules, the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, the Indian Penal Code, the Land Utilisation Order, the Kerala Ground Water (Control and Regulation) Act and the Indian Easement Act. A State government-appointed panel imposed a fine of $47 million on the company in 2010 and said: “The fact that Coca-Cola factory at Plachimada has caused immense damage to the environment and people and their livelihood and health is supported by impeccable evidence.”

In the light of such mounting evidence against the behemoth, TERI’s association with it has raised questions of ethics and damaged its credibility to a great extent. It also shows how corporates can use the concept of corporate social responsibility to offset the damage they might be doing to a locality and its community. This is not to say that all corporate-sponsored research is biased in favour of the corporate but the integrity of such research does become questionable by way of “guilt by association”.

Dr Arun Gupta, regional coordinator, International Baby Food Action Network (IBFAN Asia), who is part of the AACI, told Frontline : “TERI can’t pretend ignorance. There is a quid pro quo unfolding.”

In the absence of a targeted law to arrest this quid pro quo, Dr Gupta, along with other members of the AACI, developed a draft Bill. E.M. Sudarsana Natchiappan, a Congress member, introduced it in the Rajya Sabha in 2001 as a private members’ Bill, but it lapsed. According to the Bill, a conflict of interest may exist even if no unethical or improper act results from it and can create an appearance of impropriety that can undermine confidence in the individual, his/her constituency or organisation. Both actual and perceived conflicts of interest can undermine the reputation and work of a public body/authority/project.

Conflicts of interest arise when politicians, public servants, consultants, technical/scientific experts, subject matter specialists or even academics have an actual or potential interest (usually financial) that may influence or appear to influence the conduct of their official duties or the quality of advice or recommendations rendered by them, explains Dr Gupta. The Bill mandates that “every public official, consultant, member or employee concerned with a public project” file a public disclosure statement. Contravention of, abetment to contravention of or attempts to contravene provisions of the Bill would be punishable with imprisonment up to three or five years or a fine of Rs.1 lakh or up to Rs.10 lakh or both. The Bill further recommends establishment of a conflict of interest commission to be headed by a chairperson and consisting of eight members, six of whom should be from civil society and two should be women to be appointed by the Central government.

According to Coca-Cola, it has invested more than $1.1 billion in the country since its re-entry in 1992. It operates around 23 bottling plants, some of which are located in economically underdeveloped areas of the country. It has always maintained publicly that its business practices are above board and that it engages in corporate social responsibility to offset the damage it may be causing on the ground. Its presidents and CEOs talk about “sustainability”, “water stewardship”, “energy management and climate protection”, “community development”, and so on but their words ring hollow in the face of mounting evidence to the contrary.

TERI has maintained that there is no conflict of interest in partnering with Coca-Cola. Currently, it is embroiled in the controversy over Pachauri, who went on leave in February from the post of director general of TERI following charges of sexual harassment from a junior woman employee. He also resigned from the post of Chairman of the Intergovernmental Panel on Climate Change.

On its website, TERI states that it receives support from organisations such as Deutsche Bank, HSBC, the United Nations Environment Programme, the Ford Foundation, the MacArthur Foundation and public sector undertakings such as NTPC Ltd, Steel Authority of India Ltd and NHPC Ltd.

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