Questions and Answers re: Coca-Cola

(Updated April 11, 2006)

What are the most recent developments with respect to University of Michigan’s business relationship with Coca-Cola?

The University has been working with Coca-Cola over the past several months to try to reach agreement on a process for conducting an independent, third-party review of concerns raised about Coca-Cola’s business operations in Colombia and India.

On April 10, the Coca-Cola Company sent a letter (.pdf) to the University outlining the process for conducting the two reviews. The University responded with a letter (.pdf) on April 11 in which it expressed support for the two investigations moving forward. In the letter, U-M Executive Vice President and Chief Financial Officer Timothy P. Slottow stated that the University will resume procurement of Coca-Cola products, effective immediately.

Why does U-M want to have an independent investigation of Coca-Cola’s business practices in Colombia and India?

Several concerns have been raised by U-M students and others about the safety of workers at Coca-Cola bottling plants in Colombia, and the environmental impact of bottling plants in India. A formal complaint was filed with the University, and a U-M committee responsible for reviewing such complaints found sufficient evidence to warrant further investigation into some of the concerns. The committee recommended that an independent review be conducted to ascertain whether actions by Coca-Cola and its bottling plants may have violated the University’s Vendor Code of Conduct (.pdf)

Who will conduct the investigation in Colombia?

The investigation will be conducted by the International Labour Organization, an agency of the United Nations founded in 1919. According to its website (http://www.ilo.org/), ILO “seeks the promotion of social justice and internationally recognized human and labour rights.” ILO formulates international labor standards including freedom of association, the right to organize, collective bargaining, abolition of forced labor, equality of opportunity and treatment, and other standards regulating conditions across the entire spectrum of work-related issues. It promotes the development of independent employers’ and workers’ organizations and provides training and advisory services to those organizations.

When did ILO agree to review the situation in Colombia?

In early March, Coca-Cola and the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF) separately and formally requested that ILO conduct the investigation (see the IUF press release). On March 24, ILO announced that it has agreed to conduct the investigation.

What happened to the protocol developed by the multi-university commission, of which U-M was a member?

Last year the University of Michigan joined with several other interested universities to form a Commission to work with Coca-Cola on these issues. The Commission recommended a protocol for an independent, third-party investigation. However, in December 2005, Coca-Cola wrote to the Commission to indicate that concerns over a lawsuit filed against its Colombian bottling plants would make it difficult for Coca-Cola to agree to the protocol developed by the Commission. The University of Michigan continues to participate in the Commission and to work with Coca-Cola on resolving the concerns, as the independent review proceeds.

What are the details of the ILO investigation?

ILO intends to develop a detailed protocol over the next few weeks. The University of Michigan has had independent conversations with ILO representatives, and we are satisfied that their plans for proceeding with the Colombia investigation will be consistent with the goals of our Dispute Review Board. We expect that the process will be transparent to us so we can be assured that it is thorough and independent. ILO has positive indications of support from the bottling plants and employees in Colombia as well as from the Colombian government, and expects to have open access to employees, records and facilities.

What will the scope of the investigation be?

The investigation will encompass labor practices at all four Coca-Cola bottlers in Colombia: Coca-Cola Femsa S.A. de C.V., the owner of three different bottling companies in Colombia (Industria Nacional de Gaseosas S.A., Embotelladoras de Santander S.A., and Embotelladora Roman S.A.); Bebidas & Alimentos de Uraba S.A., which operates the bottling plant in Carepa; Luis Heli Tovar & Cia. S. en C., which operates the plant in Florenica; and Gaseosas Leticia S.A., which operates the plant in Leticia.

Are you satisfied that ILO will conduct an independent assessment of Coca-Cola’s bottling plant operations in Colombia?

Yes. ILO is an agency of the United Nations with a long and respected track record in labor and human rights issues. See ILO’s website at http://www.ilo.org/. The University of Michigan has had independent conversations with ILO representatives, and we are satisfied that their plans for proceeding with the Colombia investigation will be consistent with the goals of our Dispute Review Board. We have been assured that the methodology and findings of their investigation will not be influenced by the Coca-Cola Company or other third parties, and that ILO will forward its final report directly to the University without editing by Coca-Cola.

Does ILO have experience with this type of review?

Yes, ILO has monitored working conditions in private workplaces. For example, ILO did extensive work to monitor and report on working conditions in Cambodian garment factories (see http://www.betterfactories.org/ILO/). ILO helped Cambodian factories to improve working conditions andproductivity, and worked with the Cambodian government and international buyers to ensure a rigorous and transparent cycle of improvement.

Who is paying for the investigation in Colombia?

It is our understanding that ILO will not charge a fee for its staff services; however, it will need to recover expenses incurred in conducting the investigation. ILO will make the final determination about how those expenses will be reimbursed. The University of Michigan will work with ILO to ensure that the plan for reimbursing its expenses does not compromise the independence of its investigation.

Will the investigators have complete access to records, employees and facilities?

Yes. Coca-Cola and its bottling companies in Colombia have pledged full cooperation with the ILO investigation.

Will the findings be made public?

We expect that ILO will share its findings with the University of Michigan and will make its final report public in accordance with its normal practices.

Has the Colombian government given any indications that it will cooperate with the investigation?

Yes, ILO has had preliminary conversations with the Colombian government and it has indicated its support for the investigation.

How long do you expect the investigation to take?

ILO plans to finalize the details of its protocol over the next few weeks. Although we cannot say precisely how long it will be before the investigation is concluded, we expect the review process to move forward with reasonable speed.

What is the process for the review of environmental concerns in India?

Coca-Cola has been in discussions with The Energy and Resources Institute (TERI), a highly respected nonprofit organization with more than 30 years of experience and leadership on sustainability issues, to develop a transparent and independent third-party assessment of water resource management practice at Coca-Cola bottling plants in India.

What are the details of the review in India?

The details are not yet finalized, but we expect the work plan to be completed within the next few weeks. The University of Michigan will evaluate the details of the proposed process in consultation with faculty from our School of Natural Resources and Environment.

Who is paying for the investigation in India?

The details for the review process, including how it will be paid for, are not yet finalized. The University of Michigan will work Coca-Cola, TERI and others to ensure that the plan for funding the investigation does not compromise its independence.

What deadlines has the University established as milestones for progress on the investigations in Colombia and India?

The deadlines established by our Dispute Review Board have passed, and those dates are no longer practicable for measuring progress. Now that plans for the investigations are back on track, we do not have specific deadlines established but we expect the two review processes to move forward with reasonable speed. We will continue to monitor completion of the key action steps identified by the DRB, including launch and completion of the investigations, and remediation of any identified problems.

What will happen when the investigations are complete?

Both ILO and TERI have agreed to forward their final reports directly to the University without editing by Coca-Cola. Once the investigations are complete, we anticipate a continued dialogue with Coca-Cola about remediation of any concerns identified in the reports.

When will the University resume purchasing of Coca-Cola?

Purchasing will resume immediately.

How long will it take to get Coca-Cola products back in the vending machines?

Coca-Cola products should be back in the vending machines within a couple of days. Other supply channels may take from several days to several weeks, depending upon availability.

What will happen to the University’s contracts with Coca-Cola?

Most of the University’s Coca-Cola contracts expired between June and November 2005. We will continue to extend those contacts while the investigations proceed.

How much business does the University do with Coca-Cola?

In FY2005, the University had 13 direct and indirect contracts for providing Coca-Cola products, for a total U-M expenditure on Coca-Cola products of about $1.4 million.

What is the Vendor Code of Conduct?

The Vendor Code of Conduct was developed in Spring 2004 upon the recommendation of a task force composed of faculty, staff and students. In response to some complaints about the business practices of a small number of University vendors, the task force was appointed to review U-M’s purchasing practices and recommend policies that would help encourage the University to do business with organizations that most closely share its ethical values.
The Vendor Code of Conduct states, "The ideal University-vendor relationship is in the nature of a partnership, seeking mutually agreeable and important goals. Recognizing our mutual interdependence, it is in the best interest of the University to find a resolution when responding to charges or questions about a vendor’s compliance with the provisions of the Code." The University’s Vendor Code of Conduct can be found on the web at http://www.umich.edu/%7Epurch/news/code.pdf (.pdf). The complete task force report is posted at http://www.umich.edu/pres/committees/tf_report.html.

What is the Dispute Review Board?

The Dispute Review Board was established to look into any formal complaints that the University’s business partners may have violated its Vendor Code of Conduct. The DRB is chaired by a faculty member and includes two additional faculty members, two staff members and two students.

What will be the role of the U-M Dispute Review Board going forward?

The Dispute Review Board is advisory to the University’s chief financial officer. Once the DRB issued its recommendations regarding Coca-Cola and those recommendations were accepted by the CFO, the DRB’s formal role reviewing in the Coca-Cola concerns ended. However, the CFO’s office continues to keep the DRB informed about developments and progress.

The DRB will continue to be the body that accepts and reviews any new complaints that organizations may have violated the University’s Vendor Code of Conduct.