The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Wednesday, February 15, 2012

Strategic CSR - Coke vs. Pepsi

When push comes to shove, will meaningful reform to our current economic model come in the form of sacrifice or innovation?

Many CSR supporters advocate for sacrifice on the basis that current consumption patterns cannot be extrapolated to future projected economic growth (i.e., there are insufficient resources to enable the Chinese to consume like Americans). Given that it is unreasonable to deny broader prosperity to the Chinese, the sacrifice people argue, any increase in resource use in China needs to be offset by decreased resource use in America. The innovator people, in contrast, are comforted by the belief that CSR supporters’ worst fears (i.e., ecological collapse) will not likely occur and, even if they do, that we will have found a technical solution by then.

In reality, some combination of both sacrifice and innovation will likely be necessary, given current projections of future economic growth (rapid) and current rates of innovation (more measured).

The article in the url below provides evidence in support of the innovation camp. In particular, Coca-Cola and PepsiCo are competing to produce the first soda bottle to be made without plastic and using 100% plant materials:

Coke delivered the latest volley on Thursday, saying it plans to work with three companies that are developing competing technologies to make plastic from plants, with bottles rolling out to consumers in perhaps a few years. PepsiCo is aiming to beat that timeline and claim the 100 percent green label first. The company declared in March that it had cracked the code of the all-plant plastic bottle, and on Thursday, it said that it was on schedule to conduct a test next year that involved producing 200,000 bottles made from plant-only plastic.

The problem, however, is less technological capability, but the ability to scale-up to mass production in a cost-effective manner:

… despite dueling announcements claiming technological breakthroughs, consumers should not expect to see many all-plant bottles on store shelves any time soon. Neither company is confident enough in the technology to say when, or even if, they will be able to deliver on their environmental ambitions.

To date, Coke has been more aggressive in committing to public targets in terms of the materials used to make its bottles:

… in 2009 [Coke] began selling Dasani water in the United States in bottles made with up to 30 percent plant-based plastics. … the company said that by 2020 all of its plastic bottles would meet the 30 percent plant-based standard.

Pepsi’s competing investments in this area will hopefully extend the Coke vs. Pepsi rivalry to environmental sustainability. One area of concern is that growing the plant materials used in producing plastic-substitutes can itself be counter-productive. For example, environmentalists claim that:

[Growing crops for plastic] causes a lot of land conversion, it affects the price of food, it uses a lot of fertilizers.

In response to this issue:

Pepsi has said it will use agricultural waste products, such as corn husks, pine bark or orange peels, to make its plastic bottles. … Coke might use a variety of materials, including wastes and crops grown for plastic production.