Corporate Social Responsibility

CSR Evaluation [pic 1]

Law/Ethics/Corporate Social Responsibility

Nestlé is a Swiss transnational food and beverage company headquartered in Vevey, Vaud, Switzerland. It is the largest food company in the world measured by revenues, [1][2] and ranked #72 on the Fortune Global 500 in 2014.[3] Nestlé’s products include baby food, medical food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Twenty-nine of Nestlé’s brands have annual sales of over CHF1 billion (about US$1.1 billion),[4] including Nespresso, Nescafé, Kit Kat, Smarties, Nesquik, Stouffer’s, Vittel, and Maggi. Nestlé has 447 factories, operates in 194 countries, and employs around 339,000 people. [5] It is one of the main shareholders of L’Oreal, the world’s largest cosmetics company. [6]

Nestlé was listed No. 1 in the Fortune Global 500 as the world’s most profitable corporation. [7] With a market capitalization of US$239.6 billion, Nestlé ranked No. 11 in the FT Global 500 2014. [8] Nestlé was an early agent in the shared value space and hosts a global forum, the “Creating Shared Value” Global Forum. [9][10] It is active in participating in new ways to help support environment Nestlé has adopted the Corporate Social Value (CSV) approach (it encourage businesses to create economic and social value simultaneously) focusing on three areas – nutrition, water and rural development – as these are core to their business activities.[11]. Nestle also publishes an annual progress report on its goals and achviements. [12] Nestle has a long list of CSR initiatives like

1) Sustainable Agriculture Initiative 2) Creating Shared Value 3) Nestlé Cocoa Plan 4) Ecolaboration

5) The Nescafé Plan 6) Committed to Health Care and Nutrition 7) Member of Fair Labor Association 8) Rural Development Framework.

So how is Nestle dealing with CSR and its responsibility toward the society and environment? Unfortunately, there are many examples which identify the drastic actions of Nestle that are not complying with the ethical and morality laws which is leading a negative effect on the Stakeholders and future generation. I will review some of it’s CSR initiatives

Committed to Health Care and Nutrition

Nestle considers Health Care as one of the important goal as their most of the products are FMCG and food products. However, the records records illustrate it differently. In the year 1977 Nestle was boycotted including its own country Switzerland, UK and USA for using wrong marketing tactics to promote their own bottled milk products as compared to mother’s breast milk. Later research found that the products used by Nestle were harmful for the Babies. [13] Even the Swiss associates titled their report ‘Nestle Toten Babies’ (Nestle Kills Babies) which drove the judge to warn Nestle about their sales behavior. This debate came in limelight again in the year 2011, for labelling issues in Laos (French Republic) and the provision of incentives to doctors and nurses to promote the use of infant formula. [14]. Ernest W. Lefever (American political theorist and foreign affairs expert) and the Ethics and Public Policy Center were criticized for accepting a

$25,000 contribution from Nestlé in an alleged deal to minimize the impact of Nestlé's wrong marketing of infant formula.[15] Bottled water Operation Nestle’s bottled water operations have been no stranger to controversy too. Nestle’s bottling operations in California have come under scrutiny over the last few months. Protesters converged on the company’s Sacramento bottling plant to urge the company to stop bottling water in California during time of severe drought. [16] Nestlé’s Plant have been bottling water with an expired license since 1988, and they seem to provide monetary benefits to former forest supervisor who was responsible for supervising the license renewal [17].

In Oregan, in the midst of the drought, Nestle continue to use water supplies from areas experiencing drought and to look for new sources of water. Nestle Waters North America is looking to create a bottling plant in the small town of Cascade Locks to bottle under its Arrowhead Springs Brand. About 7,000 citizens have signed petitions attempting to block the water rights exchange that would allow Nestle to draw water from Oxbow Springs (Oregon) [18].

There seem to be less public interest from Nestle even though one of their CSR goal is “Creating Shared Value”! Member of Fair Labor Association and Child Labor In 2012, Nestlé became the first company in the food industry to join the Fair Labor Association (FLA). This followed collaborations with the FLA on special projects to assess labor conditions and compliance risks throughout Nestlé’s supply chain of hazelnuts and cocoa.[19] The 2014 Assessments of Shared Hazelnut Supply Chain In Turkey published by the Fair Labor Association identified "a total of 46 child workers younger than 15 years" as well as "a total of 83 young workers (between 15 and 18 years of age) working the same hours as adults and performing similar hazardous and strenuous tasks, such as carrying heavy bags of hazelnuts weighing up to 70 kilograms".[20] Food Safety Nestlé being the leader in food and beverage industries, you would expect high levels of food safety standards and regulations, in reality it shows otherwise. In May 2015, Food Safety Regulators from the Uttar Pradesh, India found that samples of Nestlé's leading noodles Maggi had up to 17 times beyond permissible safe limits of lead in addition to monosodium glutamate.[21]Due to these findings, Food Safety and Authority of India banned instant noodles sales in India, terming them "unsafe and hazardous" for human consumption.[22] In June 2015 Nepal indefinitely banned Maggi over concerns about lead levels in the product.[23]. During the same time UK Food Safety Authority also ordered lab test to check for Maggi’s (imported from India) lead and MSG level but levels were under permissible limits [24]. Nestle revealed later that the Maggi imported in UK is manufactured in separate import facility in India. Does that mean Nestle has two separate food safety standards for the same product inside India?

Conclusion

Nestlé’s CSR performance seem to be getting better but there is lots of room for improvement. Nestle has been proactive in signing up for Fair Labor Association and also been very actively committed towards the environment initiatives. They have come up a long way since their first backlash started in 1977 but still they are part of some big recent controversies involving dishonest ethical and moral practices. A problem with Nestle can be due to their huge product lines and multiple ventures, it may very well be a rationalization from Nestle’s point of view but Nestle has to put lot more efforts, lot more boots on the grounds to make sure what their CSV reports references are being carried out up to the last level.