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COCA COLA and PEPSI

Student name: Pham Thuy Vy Vy

Ta lam Han

Tieu Thien Tam

Assignment: Ethics and Accountability

ACCT2162

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RMIT International University Vietnam Bachelor of Commerce Program

ASSIGNMENT COVER PAGE

Your assessment will not be accepted unless all fields below are completed

Subject Code: ACCT2162

Subject Name: Ethics and accountability

Location where you study: RMIT Vietnam- SGS campus

Title of Assignment: Group assignment

File(s) Submitted: Cocacola_Pepsi

Student name:

Pham Thuy Vy Vy

Tieu Thien Tam

Ta Lam Han

Student Number:

S3325175

S3324340

S3275812

Learning Facilitator in charge: Samia Ibrahimo

Assignment due date: 18th

April 2013

Date of Submission:

18th

April 2013

Number of pages including this one:

(Please number your pages like this:

page 1 of 7, etc.)

13

Word Count:

(Main Content)

2200 words (exclude references, table of content and

reference)

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Contents INTRODUCTION ....................................................................................................................................... 4

COMPARE AND CONTRAST POLICIES, PROCESSES AND GUIDELINES ......................................................... 5

a) Health and Safe Work Environment: ............................................................................................... 5

b) Fair Treatment: ................................................................................................................................. 5

c) Ability to exercise one’s conscience: ................................................................................................ 6

d) Human rights and employee rights .................................................................................................. 6

e) Privacy and dignity ........................................................................................................................... 7

KEY STAKEHOLDER .............................................................................................................................. 7

1) Communities ..................................................................................................................................... 8

2) Employees ......................................................................................................................................... 8

3) Suppliers ........................................................................................................................................... 8

4) Consumers ......................................................................................................................................... 8

5) Investors ............................................................................................................................................ 9

ETHICS RISK MANGEMENT ................................................................................................................ 9

CONCLUSION ......................................................................................................................................... 11

REFERENCE LIST: ................................................................................................................................. 12

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INTRODUCTION

In the beginning of twentieth century, the continuous collapse of Multinational Corporations has

arisen an alarm to the public, directors and top management about ethical issues in business

environment due to lack of ethical culture. Nowadays, code of conduct, which has been an

essential part within the business, are established to avoid ethical problems and to improve the

working environment as well as company’s reputation. According to Riley, J. (2012), ethics are

moral guidelines which govern good behavior; therefore, behaving ethically is doing what is

morally right and in business it is widely regarded as good business practice.

Firstly, this report provides general comparison of workplace ethics of PepsiCo and The Coca

Cola Company in regarding to employee rights, privacy and dignity, fair treatment, health and

safe work environment and ability to exercise one’s conscience. Then, the key stakeholders of

PepsiCo and the Coca Cola Company and how two corporations managed their ethics risks will

be considered.

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COMPARE AND CONTRAST POLICIES, PROCESSES AND GUIDELINES

a) Health and Safe Work Environment:

Health and Safe Work Environment are one of the most important priorities in the ethics policy

of both companies. Both of them have the same goal to provide the health and safe work

environment for their associates and employees. However, Coca Cola and Pepsi have different

way to ensure the health and safe work environment for associates. While Coca Cola has their

own safety management safety system to manage safety, health and loss prevention, Pepsi offers

associates a comprehensive benefits package designed to help them live healthier and have a safe

work environment. For the safety management safety of Coca Cola, according to the Safety and

Health statement 2013, in order to achieve the safe work environment, its system defines a set of

operational controls, which aligned with global requirements and standards, to manage the

known risks and aspects of the operations. Moreover, this system also establishes the internal

audit process to ensure they effectively control the operations. Besides, it also engages external

audit firms to assess the manufacturing operation with safety, health and loss requirements or

applicable laws or rules. In contrast, Health and Safety statement of PepsiCo states that they offer

a range of benefits such as health care or savings for associates. With the health and welfare

benefits, its associates can access to services that deliver high-quality care to the associates and

their family but at no additional costs. Moreover, PepsiCo also provides some programs such as

Healthy Money program or Healthy Competitions to help associates improve their health.

Moreover, communication within company about health and safety also applied for employees to

share their experiences.

b) Fair Treatment:

For the fair treatment, both companies always ensure that they treat the employees fairly and

honestly in terms of salary, rights, opportunities, benefits and other conditions. Particularly, they

both implement the United Nations Guiding Principles. Moreover, they both have their own

university to train for employees and provide them opportunities to develop their careers.

However, they have different guides and processes to ensure the fair treatment. For Coca Cola,

they offer a variety of developmental opportunities for their associates, including Coca Cola

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University (CCU), especially for high performers (Associate Training statement, 2013). They

also have a Equality Policy Statement of Coca Cola Hellenic, which emphasizes about the

discrimination, harassment, monitoring and reporting (Equality Policy Statement 2012).

Moreover, there is a annual performance review system for employees to set goals and objectives

after discussing with the managers. Moreover, Coca Cola also provide associates the opportunity

to have many e-learning online resources beyond CCU, external conferences or other education.

In contrast, according to Human Rights statement 2013, PepsiCo provides annual online training

on their Code of Conduct for the associates to ensure that they all read and understand it.

Moreover, the Human Rights Policy also ensures that the associates are not discriminated and

respected. PepsiCo also has their own universities such as PepsiCo University, Finance

University, Customer Management University and Global R&D University to train their

employees. For evaluation, they do it ethically by applying 360 Degree Feedback, which is one

of the best feedbacks that is free from bias. They also have their reward system for a variety of

performances in different jobs.

c) Ability to exercise one’s conscience:

Both companies have exercises their conscience. According to Angel 2012, Coca Cola launched

the “Work it out Calculator” program to tell customers about the amount of calories that they

need to burn after consuming Coca Cola’s products. With this program, Coca Cola can help

customers know how to enjoy the drinks and improve the health. In contrast, Pepsico also gains

more health-conscience image with broad product base (Klingbeil, A 2003). They has made some

drinks that have less calories and can be drinks for diet such as: “Fun for you”, “Better for you”

and “Good for you” products. Besides that, according to Human Rights 2013 of Pepsico, they

also have the whistleblowers that encourage associates to report when there is discrimination,

harassment or unfair treatment.

d) Human rights and employee rights

According to PepsiCo (2012) and The Coca Cola Company (2012), both of their human rights

policies, which is created based on the guidance of the Universal Declaration of Human Rights

and other related international human rights, define how employees should conduct themselves

as representatives of the companies and also declare respectfully their responsibility to ensure

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associates’ rights to personal security, safe and healthy workplace, free of discrimination to

sustain their ethical workplace culture. However, there are still several differences between the

policies of two companies. Firstly, Coca Cola seems to provide more specific than PepsiCo when

the company prohibits hiring individuals under 18 years old for hazardous positions. However, in

some poor countries, it is essential for the children to work themselves to support their lives.

Actually, it will definitely violate the policies, but ethics are not like legislation, it is about

morality. Secondly, in general, PepsiCo seems to provide better ethics training for their

employees. The Coca Cola Company maintains their intranet site with information about the

guidelines, on the other hand, PepsiCo requires their employees have to complete the annual

online training on the Code of Conduct. In addition, BBoyd9 (2010) states that Coca Cola,

because of its labor violations, has to improve their ethics trainings for employees.

e) Privacy and dignity

Due to confidentiality, PepsiCo (2012) requires people who are able to access the information

related to PepsiCo’s business must keep those data privately as their personal secret unless there

is clear that the information have been published by PepsiCo. Similarly, the CocaCola Company

(2012) states that the company respects privacy of all employees, customers and partners,

therefore, people who handle personal data must comply with the privacy laws, only access for

business purpose and prevent unauthorized disclosure. However, PepsiCo requires a transmit –

securely via encryption – of personal information only to authorized parties that are responsible

for protecting its confidentiality and to report any breach of privacy or security risks exist to the

Law Department. Moreover, transferring of personal information of PepsiCo’s employees

internally must be abode by privacy laws of that country.

KEY STAKEHOLDER

Both businesses have made an impressive impact on millions of people through honest, open,

transparent discussion with individuals, groups and advocates who represent community,

environmental and social interests. Here, we will discuss some key stakeholders of both

companies:

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1) Communities

Both companies’ responsibilities are to work with communities, globally and locally since most

of the major projects have to engage with local communities in a variety of ways. Communities

are supported by both companies contributing to not-for-profit group and dedicating to improve

people’s lives. The availability of employment and other economic opportunities, local

environmental issues such as water stewardship, obesity, and the company’s contribution to local

social investment are the main expectations of communities for both companies.

2) Employees

Employees are one of the key stakeholders that have significant impact on the business. Both

companies have developed high standards workplace in order to meet the expectations of

employees, by complying with United Nations Universal Declaration of Human Rights. Ensuring

our associates are happy, healthy, treated fairly and with respect is at the core of both companies’

business values and success. Moreover, an open work environment with addressing expectations

such subjects as child labor, forced labor, free of discrimination, health and safety workplace are

described in our Human Rights Statement and Workplace Rights Policy.

3) Suppliers

Suppliers are an essential part of the businesses who provide us goods and services at

competitive prices in order to make reasonable profits. Suppliers must be chosen by their

integrity, workplace security and safe environment. Commitment to sustainability to our

suppliers are placed in Supplier Corporate Social Responsibility Assurance Program, which

includes our Supplier Code of Conduct, Sustainable Packaging Policy and Sustainable

Agriculture Practices. Suppliers also place high expectations on both companies in which will

provide them the best conditions as well as follow their company’s code of conduct.

4) Consumers

Same as other industry, consumers are always the most important part of every existing business.

Both companies have made significant effort to offer customers a wide range of products that

deliver great taste, nutritional value, convenience and affordability. The consumers’ expectations

for which products they would use has increased, due to the fact that they are having several of

choices and more health-conscious. As a result, the products launch out in the market must meet

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the standards of health and safety. From the ingredients used in manufacturing to the sources of

water, all are matters of concern to consumers.

5) Investors

The investor is also another essential part of developing. Both companies are trying to produce

more of a return for their investors, based consistent financial growth in the marketplace and

consistent financial results. Investor judge mostly their expectations for companies based on the

amount of return they receive. Long-term view and appropriate invests that can strengthen the

brands, develop capabilities and pursue new opportunities may bring investors more good than

their expectations.

ETHICS RISK MANGEMENT

Ethics risk can consist many areas, such as failing to meet stakeholders’ expectation, and both

companies have been efficiently dealing with their risks. The first ethics risk will be discussed is

the quality of products to customers. Most of soft drinks nowadays are reported be a major

contributor to obesity and both companies admitted that issues to be “the issue of generation”

(Tinker, B, 2013). PepsiCo has launched a program called Together Counts™ encourages

families to involve in exercising together to help prevent obesity, while Coca Cola is joining a

campaign "reinforcing its efforts to work together with American communities, business and

government leaders to find meaningful solutions to the complex challenge of obesity." (Tinker,

B, 2013). It also dedicates $5 million to build fitness centres among schools in the US.

Moreover, both will list calorie content on the front of its beverage containers, vending machines

and fountain equipment by the end of 2012. Another quality issue is caramel coloring. According

to a research by Center for Science in the Public Interest, it was discovered that caramel coloring

contains potential cancer-causing compounds. After that new research, both companies has

release disclosure news claiming that their caramel coloring are safe and has been tested.

According to reuters.com (2012), Coke and Pepsi asked their suppliers to alter their

manufacturing process to meet the requirements aiming to limit people's exposure to toxic

chemicals. Both companies are having good management departments that can have immediate

change in order to manage risk efficiently.

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Another risk need to be concerned is using child labor.In 2004, Coca Cola has been reported to

use products from suppliers that exploiting child labor in El Salvador. This has gone against

Coca Cola’s suppliers guidelines, which states that their suppliers must not use child labor as

defined by local law. In this issue, Coca Cola failed to meet the expectations of communities

about protecting human rights. This also show that Coca Cola failed to have a committee that can

judge the process of their business. However, according to CNN.com, in September 2010, Coca

Cola Foundation has joined a coalition of the local government to prevent children from working

in sugarcane fields. On the other hand, in order to deal with issue from supplier, PepsiCo use

their Supplier Corporate Social Responsibility (CSR) Risk Evaluation and Management Program

to “educate suppliers, validate compliance and facilitate continuous improvements within our

supply chain” (pepsico.com, 2013).

In order to manage risk efficiently, PepsiCo’s shareholders request that company should establish

Risk Oversight Committee of the Board of Directors. They have acknowledged that risk such as

bottle water quality, could negatively ruin their reputations and expectations of public. However,

the Board thinks that creating a separate committee is not necessary because the board has

already taken steps to fulfill the responsibilities of managing risks. On the other hand, Coca-

Cola shareowners’ have chosen the Board to oversee their interests and risk. They are in charge

of managing risk, through strong internal processes as well as internal controls. “Purposeful and

appropriate risk-taking is essential for the Company to be competitive on a global basis and to

achieve the objectives set forth in its 2020 Vision” (Proxy statement, 2012).

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CONCLUSION

In conclusion, Coca Cola and PepsiCo are two big company that have their own policies,

processes and guidlines to ensure the employee rights, privacy and dignity, fair treatment, health

and safe work environment and ability to exercise one's conscience in the work place. Both

companies have the key stakeholders like consumers, employees and communities. In order to

manage the ethics risk, they both have some campaigns to support and ensure the integrity,

fairness, honesty and responsibility.

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REFERENCE LIST:

Angela 2012, “Work it out Calculator from Coca Cola: a healthy conscience or a marketing

ploy?”, plus-size-magazine.com, viewed 19 April 2013, < http://www.plus-size-

magazine.com/work-it-out-calculator-from-coca-cola-a-healthy-conscience-or-a-marketing-ploy-

1062>

Associate Learning & Development, homepage, pepsico, viewed 17 April 2013, <

http://www.pepsico.com/purpose/talent-sustainability/associate-learning-and-development.html>

BBoyd9 2010, “Unethical Companies: Coca-Cola”, WordPress, Ethical Footprint, viewed 17

April 2012, <http://ethicalfootprint.wordpress.com/2010/04/28/unethical-companies-coca-cola/>.

Equality Policy Statement 2012, homepage, coca-colahellenic, viewed 17 April 2013, <

http://en.coca-colahellenic.rs/Towardssustainabilit/Ourapproach/Sustainopolicies/>

Geller, M 2012, “Coke, Pepsi make changes to avoid cancer warning>, reuters.com, viewed 17

April 2013, < http://www.reuters.com/article/2012/03/09/us-coke-pepsi-

idUSBRE82814V20120309>

Health & Safety, homepage, homepage, pepsico, viewed 17 April 2013, <

http://www.pepsico.com/Purpose/Talent-Sustainability/Health-and-Safety.html>

Human Rights Statement 2013, homepage, coca-colacompany, viewed 17 April 2013, <

http://www.coca-colacompany.com/our-company/human-rights-statement>

Klingbeil, A 2003, “Pepsi seeks more health-conscience image with braod product base”,

http://the.honoluluadvertiser.com, viewed 18 APril 2013, <

http://the.honoluluadvertiser.com/article/2003/Aug/09/bz/bz12a.html>

Lah, K 2012, “Life not sweet for Philippines' sugar cane child workers”, edition.cnn.com,

viewed 16 April 2013, < http://edition.cnn.com/2012/05/01/world/asia/philippines-child-labor>

PepsiCo Supports First Lady's Initiative to Help Reduce Childhood Obesity 2013, homepage,

pepsico, viewed 18 April 2013,< http://www.pepsico.com/PressRelease/PepsiCo-Supports-First-

Ladys-Initiative-to-Help-Reduce-Childhood-Obesity02092010.html>

PepsiCo 2012, Global Code of Conduct, PEPSICO, viewed 17 April 2013,

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<http://www.pepsico.com/company/global-code-of-conduct.html>.

Policies, homepage, pepsico, viewed 16 April 2013, <

http://www.pepsico.com/Purpose/Overview/Policies.html>

PR Newswire, 2013, Healthy Weight Commitment Foundation Launches National Family-

Centered Campaign to Curb Obesity, viewed 17 April 2013, <

http://www.prnewswire.com/news-releases/healthy-weight-commitment-foundation-launches-

national-family-centered-campaign-to-curb-obesity-121492714.html>

Safety & Health, homepage, coca-colacompany, viewed 17 April 2013, < http://www.coca-

colacompany.com/our-company/safety-health>

Supplier Expectations 2013, homepage, coca-colacompany, viewed 17 April 2013, <

http://www.coca-colacompany.com/our-company/suppliers/supplier-expectations>

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http://www.pepsico.com/purpose/responsible-sourcing/supply-chain.html>

Sustainability Report 2011/2012, Coca-Cola, viewed 17 April 2013, < http://www.coca-

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about-us>

Talent Sustainability 2013, homepage, Pepsico, viewed 17 April 2013, <

http://www.pepsico.com/purpose/talent-sustainability/human-rights.html>

Tinker, B 2013, “Coca-Cola weighs in on obesity fight”, edition.cnn.com, viewed 17 April 2013,

< http://edition.cnn.com/2013/01/14/health/coke-obesity>

The CocaCola Company 2012, Code of Business Conduct: Acting with Integrity Around the

Globe, CocaCola Journey, viewed 17 April 2013, <http://www.coca-

colacompany.com/investors/code-of-business-conduct>.

Riley, J. 2012, “What are business ethics?”, Introduction to Business Ethics, tutor2u, viewed 17

April 2013, <http://www.tutor2u.net/business/strategy/business-ethics-introduction.html>.