In1999,followingacampaignbyastudentgroupknownasStudentsOrganizingforLaborandEconomicEquality(SOLE),theUniversityofMichiganinstitutedaVendorCodeofConductthatspecifiedkeyperformancecriteriafromalluniversityvendors.Thecodeincludedthefollowing:

GeneralPrinciples

The Universityof Michiganhas a long-standingcommitment to sound, ethical, and sociallyresponsiblepractices. In aligningits purchasingpolicies with its core values and practices, the Universityseeks to recognizeand promotebasic humanrights,appropriatelabor standardsfor employees,and a safe, healthful, and sustainableenvironmentforworkersand the generalpublic. Inaddition,theUniversityshallmakeeveryreasonableefforttocontractonlywithvendorsmeetingtheprimary

standardsprescribedbythisCodeofConduct.

PrimaryStandards

• Nondiscrimination
• AffirmativeAction
• FreedomofAssociationandCollectiveBargaining
• LaborStandards:Wages,Hours,Leaves,andChildLabor
• HealthandSafety
• ForcedLabor
• HarassmentorAbuse

PreferentialStandards

• LivingWage
• InternationalHumanRights
• EnvironmentalProtection
• ForeignLaw

ComplianceProcedures

University-Vendor Partnership.The ideal University-vendor relationshipis in the natureof apartnership, seekingmutuallyagreeableand importantgoals. Recognizingourmutualinterdependence, it is in the best interest of the Universityto find aresolutionwhenrespondingtochargesorquestionsaboutavendor'scompliancewiththeprovisionsoftheCode.

OnNovember30, 2004,SOLEsubmittedformalcomplaintsagainstonespecificuniversityvendortheCoca-ColaCo.with which the universityheld 12direct and indirect contractstotaling justunder$1.3 millionin fiscal year2004. ThecomplaintsagainstCoca-Colawereasfollows:

• BiosolidwastedisposalinIndia.Thecomplaintallegedthatbottlingplantsludgecontainingcadmiumand Page72othercontaminantshasbeendistributedtolocalfarmersasfertilizer.
• Useofgroundwaterin India.ThecomplaintallegedthatCoca-Colaisdrawingdownthewatertable/aquiferbyusingdeep-borewells; waterquality has declined;shallowwellsusedbylocal farmershave gonedry; and poorcropharvestsnearbottlingplantshaveresultedfromlackofsufficientirrigationwater.
• PesticidesintheproductinIndia.StudieshavefoundthatpesticideshavebeendetectedinCoca-ColaproductsinIndiathatareinexcessoflocalandinternationalstandards.
• La bor practicesin Colombia. Datashowinga steep declinein Sinaltrainal,a Colombianbottler's union (fromapproximately2,300 to 650 members in the past decade), SOLEclaimsrepeatedincidentswith paramilitarygroupsthreateningand harming union leadersand potentialmem bers, including allegationsof kidnappingand murder. SOLEisalsoconcernedaboutworkingconditionswithinthebottlingplants.

The VendorCode of Conduct Dispute ReviewBoardmet in June2005 to review the complaintsandrecommendedthatCoca-ColaagreeinwritingnolaterthanSeptember30,2005,toathird-partyindependentaudittoreviewthecomplaints.An independent auditor satisfactory to both parties had to be selected by December 31, 2005. The audit had to becompleted by March 2006, with the findings to be received by the university no later than April 30, 2006. Coca-ColawouldthenbeexpectedtoputacorrectiveactionplaninplacebyMay31,2006.Sinceoneofthe12contractswasscheduledto expire on June 30, 2005, with another seven expiring between July and November 2005, Coca-Cola wasformally placed on probationuntil August2006 pendingfurther investigationof the SOLEcomplaints.The boardalsorecommendedthattheuniversitynotenterintonewcontractsorrenewanyexpiringcontractsduringthisperiodandthatit agree only to short-termconditionalextensionswith reassessmentat eachof the establisheddeadlinesto determine ifCoca-Colahasmade satisfactoryprogresstowarddemonstrating itscompliancewiththeVendorCodeofConduct.

The situationgot progressivelyworse for Coca-Cola.By Decem ber2005, at leastadozen institutionsworldwidehaddivestedfrom the Coca-ColaCo. on the groundsof alleged humanrights violations in Asiaand South America.OnDecember8,NewYorkUniversitybeganpullingallCokeproductsfromitscampusafterCoca-Colarefusedtosubmittoanindependentinvestigationbythatday'sdeadline.

On December3O, 2005, the Universityof Michigansuspendedsales of Coke productson its three campusesbeginningJanuary1,2006,affectingvendingmachines,residencehalls,cafeterias,andcampusrestaurants.KariBjorhus,aspokespersonfor the Coca-ColaCo., toldThe Detroit/Vews, "The University of Michigan is an importantschool, and Irespectthe way they workedwith us on thisissue. We are continuingto tryhard to workwith the universityto addressconcernsandassurethemaboutourbusinesspractices."

QUESTIONS

1. Whichethicalstandardsarebeingviolatedhere?
2. Istheuniversitybeingunreasonableinthehigh standardsdemanded initsVendorCodeofConduct?
3. Doyouthinktheuniversitywould havedevelopedtheVendorCodeofConductwithouttheaggressivecampaignputforwardbySOLE?
4. How shouldCoca-Colarespondinorder tokeeptheUniversityofMichigancontracts?