Thursday, 5 June 2008

In China, Corporations Cultivate Profits and Conscience

BEIJING -- Coca-Cola will revamp bottling practices globally to save water and fund conservation along the Yangtze River and other major waterways, highlighting a growing emphasis on social and environmental spending by multinationals in China.

Under the program, Coca-Cola Co. intends to offset some of the 76 billion gallons of water _ a two-month supply of drinking water for New York City _ that the world's largest beverage maker and its bottlers use each year to make Coke, Sprite, Fanta and other drinks.

The company said it will reduce the amount of water used to rinse, clean, heat, and cool during the manufacturing process. The company also plans to recycle factory wastewater.

"Essentially the pledge is to return every drop we use back to nature," Coca-Cola Chief Executive Officer E. Neville Isdell said in Beijing.

"We need to think holistically about the availability of water for the ongoing sustainability of our business," Isdell said.

Atlanta-based Coca-Cola pledged $20 million for the World Wildlife Foundation to protect sections of major rivers in North America, Europe, Africa and Asia, including China's badly polluted Yangtze, the world's third longest.

Coca-Cola's sales by volume have seen double digit growth in China over the past few years and the mainland is now the company's fourth-largest market.

Coca-Cola has joined a wave of global corporations funding social projects outside their business investments across China.

As China becomes an ever more important market and manufacturing base, many multinationals are under growing pressure in the Chinese media to show they're doing in China than taking profits.

There is also pressure at home. Shareholders questioned Isdell directly about Coca-Cola's global water usage during the annual shareholder meeting in April.

Projects funded by multinationals in China run the gamut from "planting a few trees by the Great Wall" to significantly reducing carbon emissions, said Elizabeth Knup, who heads the corporate social responsibility committee for the American Chamber of Commerce in Beijing.

She said the spending in China on corporate social responsibility is difficult to calculate. Different companies consider compliance with environment or labor standards a measure of their social responsibility while others tout charity, sponsorship programs or industrial training courses.

Either way, media attention in China is focused increasingly on major corporations and their practices.

Over the past year, Western icons such as Wal-Mart Stores Inc. and Yum Brands Inc.'s KFC and Pizza Hut have been pilloried in Chinese media for alleged unfair or predatory practices.

Other companies have recognized that socially conscious projects can tip the scales when they compete for government contracts and licenses, Knup said.

United Technologies Corp. plans to open a 'green' elevator factory in the eastern city of Tianjin in July and has worked with the Ministry of Construction on developing better environmental standards for government buildings.

The projects help to promote UTC's subsidiaries like Carrier, which makes air conditioning units, and Otis, an elevator manufacturer, said Jim Gradoville, president of UTC's international operations in China.

Carrier landed a contract to provide air conditioning equipment for 70 percent of the venues for next year's Olympics in Beijing because the company led competitors in phasing out ozone-depleting chlorofluorocarbons, Gradoville said.

China's leaders were once leery of campaigns by foreign campaigns or groups to improve local environmental or labor conditions, believing they undermined domestic companies that had neither the financial or human resources to compete.

Recently, however, under the slogan "building a harmonious society," the government has embraced corporate social responsibility for foreign and Chinese companies alike.

One Chinese activist group launched a campaign this year to publicize companies that violate environmental or labor standards. Ma Jun, the head of the Beijing-based Institute of Public and Environmental Affairs, said he hoped the campaign would shame offenders and drive up the costs for violators through consumer boycotts.

Source: Associated Press

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