Corporate Responsibility To The Environment and Society: How Nestle Does It

Corporate Responsibility to the Environment and Society: How
Nestle does it.

Introduction
Corporate Social Responsibility is defined as a concept whereby companies incorporate social
and environmental concerns in their business operations and in their interactions with their
stakeholders on a voluntary basis (European Commission n.d.). As most corporations are
profit-driven, social obligations such as are often neglected, resulting in negative impacts on
the society and environment (Shah 2009). Nestl, a Swiss multinational corporation is the
largest food group in the world, trading in almost every country (Simonian 2006). In relation to
that, the society and media expect large companies to surpass the minimum regulations that
the government sets on the work situations and ecological impact. In addition, society expects
large corporations that rake in massive earnings annually to contribute to the community,
employees, and environmental causes (Clapper 2007). This paper will review the social
performance of Nestl in terms of the impacts on Nestl's stakeholders. It will review Nestl's
involvement in the infant formula controversy and their efforts with the establishment of The
Cocoa Plan, displaying both positive and negative sides in their operations and their impact on
stakeholders.
Case against Nestle.

One of the biggest cases Nestle has starred in is the infant formula controversy. It all started in
the late 1800s when Henri Nestle and the company created and marketed infant formula as a
substitute to human milk for mothers who do not breast feed. However, due to profit motive
reasons, Nestle also began irresponsibly marketing the infant formula to mothers perfectly
capable of breastfeeding. Nestle managed to persuade a large proportion of mothers in the
Third World that infant formula was better for their babies than human milk. But the fact is that
breast milk is essential for babies because it provides them with certain nutrients and
antibodies that cannot be substituted (Mokhiber 1987). Nestle has deeply impacted the lives of
numerous stakeholders, especially the consumers and their family by the irresponsible
marketing of the infant formula causing deaths and suffering to infants. Besides that, an
economic impact can be seen to negatively affect the society's lifestyle because as more
women in the Third World do not practice breast feeding, the demand for infant formula
imports from other countries increases which causes a decline in national and household
economies (Pettigrew 1992).
The results of more infants being fed with infant formula were severe. Approximately 1.5
million infant deaths were recorded annually throughout the world due to infants being
inadequately breastfed(Global Strategy for Infant and Young Child Feeding 2001). The deaths
occur not only because of the lack of natural nutrients, but also because people were trying to
prolong the supply of infant powder by diluting it and some of the consumers were not
educated enough, leading to the misuse of infant formula (Baker 1985). For example, in
Tanzania it was reported that although the mothers know their native language, Nestl's
Lactogen, a type of infant formula largely marketed in the community, only had instructions in
English, which mothers could not read. Other than that, as boiled water is considered lavish to
Third World women, the water used to prepare the milk is often contaminated and the bottle
they use are not properly sterilized (Mokhiber 1987). In relation to that, WHO estimated that
annually, ten million cases of malnutrition or disease could be the result of improper use of
infant formula and one tenth of the babies die (Baker 1985).
Following that, a boycott towards Nestle products was announced by the Infant Formula Action
Coalition (INFACT) in 1977 to protest the marketing of infant formula in the Third World
(Akhter 1994). It has been reported that Nestle violated the rules set by the World Health
Organization (WHO) which was aimed at providing a safe and adequate nutrition for infants
with the promotion of breastfeeding and the proper use of milk substitutes. A notion supported
by the WHO was that the marketing of breast milk substitutes required suitable marketing
practices appropriate for infant formula. However, Nestle broke 25 WHO recommendations in
56 countries within a year in 1990 to 1991 (Pettigrew 1992). For example, in Singapore, Nestle
hired women to dress up as nurses and convince mothers that infant formula was a modern
and better way of feeding their infants. Besides that, in 1983, INFACT cited Nestle for taking
no notice of the important sections of the WHO International Code of Marketing of Breastmilk
Substitutes (1981), for the company had given out excessive amounts of free infant formula to
a hospital in Malaysia (Mokhiber 1987). The Nestle boycott stretched beyond its area of
operations. This could be seen through the incident where when the American Public Health
Association was to take place in Ohio. After realizing that the hotel was owned by one of
Nestl's subsidiary, the conference was called off, resulting in a loss of 6000 convention room
rentals. In efforts to deal with the boycott, Nestle reported a severe loss in earnings in 1980
and 1981.
To cushion the blow of the boycott, Nestle came up with a few strategies in 1981. One of the
major strategies undertaken by Nestle which was to formally support the WHO code finally
progressed in 1982 to prevent further loss. Another move which is arguably the best move
made by Nestle was to launch the Infant Formula Audit Commission (IFAC) to go over claims
that Nestle violated WHO or national codes. A report submitted by IFAC included a detailed
plan that included dissuasion of the promotion of infant formula by promoters, an agreement to
give out free or cheaper infant formula specifically to those infants that are unable to
breastfeed and applying the WHO Code to infant formula for all use by children. After a few
more of such reports, the boycott was finally lifted in 1984 due to the fulfilment of the Code
(Baker 1985). Overall, although Nestle did not deliberately violate laws, there were many
social costs. Many deaths and suffering of infants have occurred throughout the world
because of Nestl's infant formula. The fact remains, those lives cannot be replaced and all
Nestle can do is minimize the impact by being more socially responsible. Nestl's sincerity in
their cleaning up efforts are questionable because a about decade later, the Advertising
Standards Authority lodged a complaint to Nestle about unethical advertising of infant formula
in the newspaper (Ferriman 1999).
Case for Nestle.

On the other hand, Nestle has also shown great concern for the society. This is shown through
the launch of their concept of Corporate Social Responsibility in 2006, Creating Shared Value
(CSR). A statement made in the report was that business and society are interdependent, one
fails to survive without the other (Kramer 2006). Since the launch of CSR, Nestle has
undertaken many projects to help the society. One particular project that has brought upon
significant change to the society is The Cocoa Plan. Being one of the biggest buyers of cocoa
beans, Nestle launched The Cocoa Plan project to facilitate African cocoa farmers and the
society take advantage of mounting market prices by increasing their productivity (Media Club
South Africa 2009). Furthermore, on top of the 60 million Swiss francs invested in cocoa
sustainability projects over the last 15 years, Nestle has planned to invest 110 million Swiss
francs over a decade in Cte d'Ivoire and Ghana which produce over half of the world's cocoa
supply (Bhatti 2009). The investments include distributing 12 million disease-resistant plantlets
to the cocoa farmers which is claimed to be able to produce up to double the amount of trees
being used in several plantations in Cte d'Ivoire and Ghana. Since the launch of the Plan in
2009, Nestle has funded farmer schools in West Africa so that farmers can learn more efficient
up-to-date ways which could enable them to produce better quality cocoa and increase their
income. Besides that, Nestle also set up a research and development centre in Cte d'Ivoire
that worked in hand with Nestl's plant science base in Tours. The result of the collaboration is
the allocation of one million high-yield cocoa plantlets every year starting 2012 (The Cocoa
Plan: Nestle and sustainable cocoa 2010).
As a result of The Cocoa Plan initiatives, many have benefited. Nestle, as a partner of
International Cocoa Initiative and the World Cocoa foundation tackled problems such as child
labour and lack of excess to health and education. For example, sending farmers to field
schools not only educates the farmer on methods to increase cocoa productivity, but they are
also educated on diseases and prevention methods. Also, because of the boost in the
production of cocoa, household incomes have increased. This is shown through the increase
in income by more than 20% for 80,000 West African households, thus improving their
lifestyles (The Cocoa Plan: Nestle and sustainable cocoa 2010). Besides that, the boost in
production of cocoa could also increase their exports and in turn reduce their foreign debt. By
setting up the research centre in Cte d'Ivoire, the locals sent to work and learn there could
gain new skills, study the technology and share the information with the other locals towards
having useful technological advances of their own. Needless to say, Nestle has demonstrated
that they are corporately responsible towards their stakeholders, particularly the farmers who
supply them with cocoa and their families, impacting their lives positively.
Conclusion
With all that, the social performance of Nestle in relation to their consumers and workers has
scraped both negative and positive results. In a positive light, Nestle impacted the lives of
many by introducing The Cocoa Plan. Several communities in Cte d'Ivoire and Ghana have
been given many opportunities and advantages towards a more sustainable development. It
shows that Nestle has upheld its part of the social contract by giving back to the society that
supplies them with resources to produce their goods. In contrast, Nestle started the infant
formula controversy by irresponsibly marketing infant formula and it had caused unnecessary
death and suffering to millions of babies. Their greed and inability to take action earlier
resulted in irreversible consequences. Although they cleaned up their act a few years later, the
damage had been done; those dead babies cannot be brought back to life. Regardless of the
corporation's efforts, it is obvious that they have not withheld their part of the social contract.
Their actions clearly do not meet the expectations of the society and up till now, they are
dealing with more controversies. The business power invested in them could go a long way
towards affecting peoples' lives positively, but instead is sometimes being misused.
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Case against Nestle.

Case for Nestle.

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