Ethical Performance
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Coca-Cola bridles at exclusion from index

September 2006

Coca-Cola has expressed surprise and disappointment at being dropped from one of the leading SRI indexes in the US.

The KLD Broad Market Social Index has removed the multinational drinks company over concerns about the selling of soft drinks in schools, allegations that the company has contributed to water supply depletion in India and concerns over its labour rights record in Colombia.

As a direct result of KLD’s decision, a US pension fund, the $8billion (£4.2bn) TIAA-CREF Social Choice Account, has disinvested. The fund, which is thought to have held about 1.2 million Coca-Cola shares with a market value of $52.4m, uses the index to guide its investments.

Coca-Cola claims it has recently shown ‘significant and continuous progress against key social issues’. The company has consistently denied involvement in abuse of workers in Colombia, and has allowed the International Labour Organization to conduct an independent investigation into its labour relations there. It has also rejected claims that its plants have caused water shortages in India, saying it has been used as a scapegoat for a shortage caused by low rainfall. And it points out that it recently agreed to ban most soft drink sales in US public schools.

KLD’s decision puts it out of line with a number of other SRI indexes. Last November Coca-Cola was added to the Dow Jones Sustainability North America Index, and the company is listed on the FTSE4Good Index and the Domini 400 Social Index. Last year GES Investment Services, the Scandinavian SRI analyst, recommended clients include Coca-Cola among their investments.

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