Case Study: A Bottled Water Brand, An Ethical Obligation, And Everything In Between
A case analyses on the FIJI Water 2008 green-washing controversy.
In July 2008, there was an environmental protest carried out against bottled water companies in which FIJI water brand was singled out and targeted on producing humongous carbon footprint in the United States, United Kingdom and other developed nations whilst the message on carbon impact of bottled water was being widely publicized to customers. In response to this protest, the company launched a new promotion campaign under a slogan “every drop is green,” only to be immediately accused by environmentalist groups of engaging in green-washing activities.
The concept was to bottle Fiji natural artesian water and market it both locally and internationally as a unique and exotic product. FIJI Water had made its strategy revolve around capturing international market opportunities and strongly positioning the brand in large and growing markets for bottled water, but markets that were not overly price competitive, as FIJI Water, right from its inception, was designed to be a premium brand.
The baby boom generation, which constituted about a third of the total population in North America, had become obsessively health-conscious and fitness-oriented. FIJI Water also entered Australia as it had relatively large market and, more importantly, its proximity to Fiji made it an attractive market to delve into.
FIJI water was in the process of developing global channels, operations and supply chains. Globalization has its benefits and costs. It gives developing nations access to foreign investment funds to support economic development as in the case of Fiji. However, it prevents individual nations from adopting policies promoting environmental or social objectives, if these discriminate against products from another country as seen in the United Kingdom.
FIJI Water had so far been largely unsuccessful in penetrating the UK market. FIJI Water’s appearance in the United Kingdom had fueled the debate around the environmental impact of bottled water. The conservationists pointed out that the price of bottled water was about 500 to 1000 times higher than that of tap water. The UK happens to have one of the best qualities of tap water in the world.
In response to the environmentalists’ criticism, in 2008 FIJI Water LLC launched a “carbon negative” PR campaign, claiming that it was the first bottled water company to put out the carbon footprint logistics of its products. It further joined the Carbon Disclosure Project Supply Chain Leadership Collaboration and had started working with the Carbon Disclosure Project (CDP), the world’s largest investor coalition on climate change, to disclose its own and its suppliers’ carbon emissions.
FIJI Water was relying on a constituency-building strategy by forming stakeholder coalitions to influence the Fiji government by mobilizing the organizational stakeholders mentioned above to support its agenda.
According to a company press conference held in April 2008, FIJI Water had already implemented several measures to reduce its carbon emissions. By optimizing its logistics, the company had reduced trucking miles by 26 per cent on average. FIJI Water’s 1.5-liter bottle had been redesigned to reduce the packaging by seven per cent. The company had also managed to reduce motor fuel consumption in Fiji by 50 per cent by using more fuel-efficient trucks in transporting its products from the plant to ports.
By implementing these measures, FIJI Water demonstrated a proactive level of stakeholder engagement by anticipating conservationists’ concerns. It helped in neutralizing critics and improving corporate reputation for taking constructive action. It also demonstrated good corporate citizenship by showing a great deal of environmental commitment.
On July 4, 2008, without any prior consultation with the industry, the Fiji government imposed a twenty cents-per-liter export duty on all mineral water exports and the same level of excise duty on mineral water sold for domestic consumption. The local media reported that the interim finance minister, Mahendra Chaudhry, said, “The main purpose of this new duty was to stimulate conservation of our scarce natural resources.”
The Fiji government was stressing on implementing an economic public policy by raising tax on FIJI water in order to achieve public policy, as it had a much broader purpose.
FIJI Water and the nine other companies immediately mounted a campaign against the new tax. They first threatened to cease production and to lay off workers. They issued press releases that argued the new tax would destroy the whole industry and greatly undermine foreign investor confidence, which was already at a low level stating that the government did not have detailed information on company costs and profitability and that the firms could not absorb the ill-conceived new tax that would have a major negative impact on the whole economy. It would be the death knell of this new export industry and would greatly reduce export earnings and foreign exchange earnings, and lead to job losses and slower economic growth.
These companies tried to use constituency-building strategy by forming a trade association to coordinate their grassroots mobilization campaigns and then by using information strategically by lobbying and using expert witness testimony by providing facts and anecdotes to persuade others to support the association to consider the export duty tax put on these companies. As a result of the campaign launched against the new export tax, on 25 July 2008, the Fiji government made an announcement that it had decided to drop the new tax. This decision by interim Prime Minister Commodore Voreqe Bainimarama was praised by the proprietors of water bottling companies. Immediately after the announcement of the repeal of the tax, the major bottled water-exporting companies resumed production and re-employed the hundreds of workers who had been laid off.
As a result of demonstrating good corporate citizenship by working towards a better environment and sustainable development, and by successfully lobbying and using constituency-building strategy with other companies, FIJI Water and other companies came out successful against Fiji government’s implementation of new export duty.
FIJI Water’s bottling plant drew most of its workforce from these villages. It employed a young workforce and most of the workers had not previously had a wage occupation, but had been engaged in subsistence farming and fishing activities. The company provided its staff with on-the-job training in operating the sophisticated production line. In return, its workers exhibited a great deal of enthusiasm, loyalty, and pride in working for the company. Through strong leadership, FIJI Water succeeded in establishing an excellent work environment with good interpersonal relationships among the workforce. The company also came out to support children’s education. FIJI Water has been trying to use a healthy commerce policy where it is expected to increase the general well-being of its workers through service, invention and ethical conduct.
In 2009 and beyond, FIJI Water will continue to face complex CSR challenges. It will have to live up to its promise of becoming a carbon negative company. Any attempt to engage in green-washing will be quickly identified and protested by environmental groups. Keeping true to its slogan “every drop is green” will require substantial new investment in a renewable energy plant and equipment and in tree-planting offset activities. Maintaining good relations with the Fiji government will prove to be vital in the near future.
At the end of the day, FIJI Water will need to demonstrate good Corporate Social Responsibility as a corporation, as it would be safe to presume that it will always be held accountable for any of its actions that affect people, their communities, and their environment. As the bottled water market is not an overly price competitive one and the fact that FIJI water has always been designed as a premium brand, it has a domination in the water industry. Therefore, if it fails to vitalize on Corporate Social Responsibility (CSR) it will lose its power in ways society considers responsible, according to the Iron law of responsibility. Consequently, the performance-expectation gap might increase further in the eyes of its stakeholders. By demonstrating Corporate Social Responsibility, FIJI Water can discourage Fiji government export duty regulation in the future and can reap long-term profits for itself as it will improve its business value and reputation among the stakeholders involved. It can use a Corporate Social Performance Audit by evaluating its social, environmental and ethical performance by measuring it against its own mission statement and policy and further by utilizing the triple bottom line to the greatest extent possible to analyse its financial performance against its social and environmental performance in the long run.