The multinational company, Nestle was established in 1866 in Switzerland and it has been growing ever since. However, there have been some major ethical concerns that have placed Nestle in hot waters. The world is becoming socially aware, so some practices that were ignored in the past have major consequences now. There have been many boycotts in the past regarding their unethical sourcing of bottled water, noncompliance to marketing policies, the conflict between Nestle and US communities, etc. So it is in Nestlé’s best interest to address these ethical issues and develop Sustainability Development Goals (SGDs) that would improve their image globally. This paper will highlight these ethical issues, the negative consequences of these issues, and make some recommendations.
Current ERS Issues
Every company has to be ethical, responsible, and sustainable, but unfortunately, Nestle falls short of these traits as public opinion is not in its favor. The sustainability of the triple bottom line (TBL) and the company depends upon the transparency of the company’s actions. Their actions revolve around the people, planet, and profit which are considered the “three cores”. The company’s visibility is presented through annual reports. Nestle stated that it has made jobs for more than seven hundred thousand people. However, in October of 2019, a report suggested that the rights of workers were being abused and campaigns against worker unions were being conducted by the company (AFL-CIO, 2019). There were also reports of discrimination, unfair productivity measures, and a lack of respect.
There are also reports of unethical water and cocoa sourcing. In 2017, Nestle stated that through their “Cocoa Plan”, 51 percent of child labor has been reduced and the cocoa was being sourced ethically. However; it later came to light that only 44 percent of cocoa was being sourced through Cocoa Plan and the rest was being taken from unethical sources (Walt, 2020). Many countries and people have been boycotting Nestlé’s bottled water for unethically extracting water and drying up the sources, causing droughts. Some of this water was packaged as water from Poland spring and sold at a higher price which led to a lawsuit (Patterson, 2013). Many of California’s Strawberry Creek beds that used to be gushing springs are completely dry as Nestle illegally took 45m gallons of water from them. This water was taken from federal land and compensation was not made to the state or the US Forest Service (Perkins, 2019). Nestle does not report its carbon emission percentage clearly and still employs the use of HFC refrigerants. It claimed that it will slowly stop using these refrigerants but no clear indications were provided. These kinds of unethical practices are damaging the environment and greatly affecting the company’s TBL.
Another major ethical issue that Nestle has is that it still performs animal testing, factory farming and has no regard for animal rights. Milk is the biggest raw material in terms of volume but there is no information on the welfare of the cows in regards to their living conditions. Other raw materials like eggs, poultry, and meat are bought from different suppliers globally but there is also no clear information on the ethicality of these raw materials. Nestle stated that it would only conduct animal testing when necessary but the statement was met with dissatisfaction as many companies have stopped animal testing and have opted for other ways of testing products (Starling, 2013). Nestle is a global company, so it needs to be responsible for every action that it takes. These issues cannot be brushed under the rug as there will be major consequences for the company’s image. Nestlé already has a negative public opinion and any effort made is seen with suspicion and distrust.
Negative Impact on the Stakeholders
The stakeholder of any company includes the employees, investors, suppliers, and customers, so any negative action of the company can have negative consequences for the stakeholders. Due to Nestlé’s different unethical practices, the customers as stakeholders have expressed their distrust for the company through highly critical messages that totaled up to 120,000 emails that were received by Nestlé’s CEO. This action of the customers was due to the deforestation of the Indonesian rainforest and the destruction of the home of many species in an attempt to source palm oil. The employees as stakeholders played a role by formally apologizing and informing that they had changed their supplier that was more ethical. These types of issues develop a rift between the company and the stakeholders as they lose their trust in the company. This distrust is apparent as the ratings that Nestle has received from its customer are only 2-star ratings out of 5 (Trustpilot, 2022). These reviews admonish the company on their unethical practice and suggest that either the company reverse the damage they have done or simply close down. The negative connotations of Nestlé’s bad image seem insurmountable as they have lost the trust of their major stakeholders; the customers. They need to make big and obvious changes if they want to survive the public backlash.
Recommendations and Conclusion
The company needs to win the stakeholder’s favor by making some major changes not just empty promises. The best way to do this would be through assembling Sustainable Development Goals (SGDs) report and addressing the major ethical issues. The first goal should be regarding material sourcing by working with fair-trade farmers and suppliers. They need to always investigate who they are contracting as their supplier and make sure that these suppliers do not use child laborers. Their Cocoa & Forests Initiative should prove helpful in the implementation of responsible sourcing. The Cocoa Plan has been devised in a way that implementing it will ensure that cocoa sourcing is done through ethical suppliers. They should aim for 100 percent sustainability by 2025. When this plan is fully implemented then major environmental and ethical concerns will be solved regarding cocoa sourcing (Myers, 2021).
Nestle needs to be more transparent with its action and the way they present information so that people are not concerned by the lack of information. It needs to provide the names of all its suppliers for the public, to see as their distrust is too great at this moment and Nestle needs to gain their trust back because there would be no Nestle without its customers. They also need to report their carbon emission percentage and the ways they will be reducing them in the future. Reducing plastic usage should also be the focus of the company as there has been a devastating amount of pollution caused by single-use plastics. It is also high time that Nestle stops animal testing as it is not acceptable in any way, shape, or form in present society (Nestle, 2020). People are highly aware of animal rights and will not accept animal testing under any condition. These changes need to be made as there are many unethical practices associated with Nestle and consumers are slowly moving away from its products. If this keeps on happening then in near future Nestle will become a forgotten memory. Sustainability and an eco-friendly approach will be in the company’s best interest. Nestle needs to correct its mistakes and not cover them up.
AFL-CIO. (2019, October 20). The Double Standard at Work: European Corporate Investment and Workers’ Rights in the American South. https://aflcio.org/sites/default/files/2019-10/EuroSouth_Oct2019_FINAL.pdf
Myers, A. (2021, March 26). Nestlé releases new Sustainability Report, with promise to ‘accelerate efforts.’ Confectionerynews.Com. https://www.confectionerynews.com/Article/2021/03/26/Nestle-releases-new-Sustainability-Report-with-promise-to-accelerate-efforts
Nestle. (2020). Creating Shared Value and Sustainability Report 2020. https://www.nestle.com/sites/default/files/2021-03/creating-shared-value-report-2020-en.pdf
Patterson, B. (2013). NEWS: Nestle sued over alleged phony bottled spring water. The Council of Canadians. https://canadians.org/analysis/news-nestle-sued-over-alleged-phony-bottled-spring-water
Perkins, T. (2019, October 29). The fight to stop Nestlé from taking America’s water to sell in plastic bottles. The Guardian. https://www.theguardian.com/environment/2019/oct/29/the-fight-over-water-how-nestle-dries-up-us-creeks-to-sell-water-in-plastic-bottles
Starling, S. (2013, June 21). Nestlé: ‘Our animal testing has nothing to do with superfoods or health claims.’ Nutraingredients.Com. https://www.nutraingredients.com/Article/2013/06/21/Nestle-defends-animal-testing-practices
Trustpilot. (2022). Nestlé is rated “Poor” with 2 / 5 on Trustpilot. Trustpilot. https://www.trustpilot.com/review/www.nestlenordic.com
Walt, V. (2020, October 19). Big Chocolate’s child-labor problem is still far from fixed. Fortune. https://fortune.com/2020/10/19/chocolate-child-labor-west-africa-cocoa-farms/