Business Ethics Now 3rd Edition by Andrew Ghillyer

Exercise 14

In 1999, following a campaign by a student group known as Students Organizing for Labor and Economic Equality (SOLE), the University of Michigan instituted a Vendor Code of Conduct that specified key performance criteria from all university vendors. The code included the following:
General Principles
The University of Michigan has a longstanding commitment to sound, ethical, and socially responsible practices. In aligning its purchasing policies with its core values and practices, the University seeks to recognize and promote basic human rights, appropriate labor standards for employees, and a safe, healthful, and sustainable environment for workers and the general public. … In addition, the University shall make every reasonable effort to contract only with vendors meeting the primary standards prescribed by this Code of Conduct.
Primary Standards
• Nondiscrimination
• Affirmative Action
• Freedom of Association and Collective Bargaining
• Labor Standards: Wages, Hours, Leaves, and Child Labor
• Health and Safety
• Forced Labor
• Harassment or Abuse
Preferential Standards
• Living Wage
• International Human Rights
• Environmental Protection
• Foreign Law
Compliance Procedures
University-Vendor Partnership. 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.
On November 30, 2004, SOLE submitted formal complaints against one specific university vendor-the Coca- Cola Company-with which the university held 12 direct and indirect contracts totaling just under $1.3 million in fiscal year 2004. The complaints against Coke were as follows:
• Biosolid waste disposal in India. The complaint alleged that bottling plant sludge containing cadmium and other contaminants has been distributed to local farmers as fertilizer.
• Use of groundwater in India. The complaint alleged that Coca-Cola is drawing down the water table/aquifer by using deep-bore wells; water quality has declined; shallow wells used by local farmers have gone dry; and poor crop harvests near bottling plants have resulted from lack of sufficient irrigation water.

• Pesticides in the product in India. Studies have found that pesticides have been detected in Coca-Cola products in India that are in excess of local and international standards.
• Labor practices in Colombia. Data showing a steep decline in SIALTRAINAL, a Colombian bottler's union (from approximately 2,300 to 650 members in the past decade); SOLE claims repeated incidents with paramilitary groups threatening and harming union leaders and potential members, including allegations of kidnapping and murder. SOLE is also concerned about working conditions within the bottling plants.
The Vendor Code of Conduct Dispute Review Board met in June 2005 to review the complaints and recommended that Coca-Cola agree in writing no later than September 30, 2005, to a third-party independent audit to review the complaints. An independent auditor satisfactory to both parties had to be selected by December 31, 2005. The audit had to be completed by March 2006, with the findings to be received by the university no later than April 30, 2006. Coca-Cola would then be expected to put a corrective action plan in place by May 31, 2006. Since one of the 12 contracts was scheduled to expire on June 30, 2005, with another 7 expiring between July and November 2005, Coca-Cola was formally placed on probation until August 2006 pending further investigation of the SOLE complaints. The board also recommended that the university not enter into new contracts or renew any expiring contracts during this period and that it agree only to short-term conditional extensions with reassessment at each of the established deadlines to determine if Coca- Cola has made satisfactory progress toward demonstrating its compliance with the Vendor Code of Conduct.
The situation got progressively worse for Coca-Cola. By December 2005, at least a dozen institutions worldwide had divested from the Coca-Cola Company on the grounds of alleged human rights violations in Asia and South America. On December 8, New York University began pulling all Coke products from its campus after Coke refused to submit to an independent investigation by that day's deadline.
On December 30, 2005, the University of Michigan suspended sales of Coke products on its three campuses beginning January 1, 2006, affecting vending machines, residence halls, cafeterias, and campus restaurants. Kari Bjorhus, a spokesperson for the Coca-Cola Company, told the Detroit News , "The University of Michigan is an important school, and I respect the way they worked with us on this issue. We are continuing to try hard to work with the university to address concerns and assure them about our business practices."
Do you think the university would have developed the Vendor Code of Conduct without the aggressive campaign put forward by SOLE