The Role of Corporations in Society // Example: Coke
Can companies do well by doing good, considering that doing well still refers to the creation of profit? Companies do well by responding to and driving demand for their product, and then marketing it effectively, but doing good is constantly being redefined via market perception and the consumers, the press, and the regulatory rule of the day.
Even if a company does have the best intentions of navigating the precarious tradeoffs between its stakeholders and the environment and greater society — there is no objective measure of what good is. Consider the balance between serving your customers and serving your employees, and how the bigger picture is too convoluted to make a claim as to good and bad.
How to define the responsibility of, for example, Coca Cola in society? At a very high level of impact — Coke uses a lot of water in its production processes, (12 litres for every one litre of Coke — although they are actively trying to reduce this), and Coke contributes to a lot of global plastic waste. Consider that Coke is available in every bar, restaurant, shop, night shop, even with an agglomeration across rural Africa, and 1,8 billion bottles of Coke are sold per day. That Coca Cola is not necessarily a healthy product is only relevant when considering that Coca Cola makes it onto the shopping list of approximately a third of the world population every day.
Let’s say that Coca Cola closed down in support of general global health, water reduction, and waste management — what would happen to all of the employees and those employees’ families? Not to mention stores and shop owners that rely on Coca Cola sales,… not to mention that people evidently like drinking Coke. It is so difficult to plan the unravelling of such a massive and complex interconnected system. There is no doubt that corporations should be responsible — but, in light of the above example, what exactly should they be responsible for?
Sustainability reporting and companies make these sorts of decisions using materiality matrices which try and trade off the needs of society with the needs of the company, both of which are ranked. This allows the company to focus on only what is most relevant to them, or where they can leverage the most good. Materiality Matrices are theoretically useful, but at the moment industry wide standards have yet to be developed, and the creation of the matrix lies largely within the hands of the company.
Kramer, M.R. and Porter, M.E., 2011. Creating shared value. Harvard business review, 89(1/2), pp.62–77.