Transnational Corporation: Nestlé

Transnational Corporation: Nestlé

by Michelle Chu // Boppre

Nestlé began in 1866 when American brothers Charles and George Page helped to start the Anglo-Swiss Condensed Milk Company. Later in 1867, Nestlé’s founder, German-born Swiss pharmacist Henri Nestlé developed an infant formula as an alternative for infants who could not be breastfed. He called this formula “Farine Lactée Henri Nestlé” and named his company “Société Farine Lactée Henri Nestlé”. In 1874, Nestlé developed his own condensed milk product in order to compete with the Anglo-Swiss Condensed Milk Company. Furthermore, in 1875, Nestlé assisted chocolatier Daniel Peter in his development of milk chocolate by providing him with condensed milk. Nestlé began selling chocolate in 1904, and by 1905, it had merged with the Anglo-Swiss Condensed Milk Company to form the Nestlé and Anglo-Swiss Milk Company. When World War I began in 1914, the company’s productions doubled due to the increased demand of dairy products from government contracts.

According to Nestlé’s code of conduct, they thoroughly support the United Nations Framework and Guiding Principles on Business and Human Rights and strictly prohibits the use of child labour or forced labour in their supply chain. In 2001, Nestle signed the Harkin-Engel protocol, which promised to work towards ending child labour in cocoa farms. Despite claims that child labour goes against everything that Nestlé stands for, in 2012, the Fair Labor Association (FLA) reported to have identified several violations of Nestlé’s supplier code, including child labour, forced labour, health and safety, discrimination, and compensation. Furthermore, researchers from the Fair Labor Association found that among 260 farms used by Nestlé in their cocoa supply chain, 56 workers were under the age of 18 while 27 of them were under the age of 15. The FLA also found evidence of forced labour at one farm as well as a case of a young worker who had not received fair pay for a year’s worth of work. Since these reports, Nestlé has been sued and faced multiple class-action lawsuits from consumers relating to their alleged use of child labour on their cocoa farms.

Lawsuits generally lead to bad publicity, resulting in poor reputation, and may lead to loss of market share and/or revenue through activities such as boycotting, which corporations usually prefer to avoid. Therefore, these sorts of proceedings can influence a corporation to take action in order to investigate and prevent the allegations that they are being accused of. Nestlé began a monitoring and remediation program in 2012 for two of their cocoa cooperatives in order to ascertain the existence of child labour among them and to observe if any children were at risk. Their plan is that this program will have reached all the cocoa cooperatives working under Nestle in Ivory Coast (approximately 70) by the end of 2016.

Generally, poverty is the prime factor leading to child labour, where poor families are forced to send their children to work in order to help support the family. On the other hand, employers may prefer to hire children as workers because they do not have to pay them as much, as well as the fact that children are easier to control. When children are busy working, they do not have the opportunity to go to school to receive an education. Consequently, their lack of education will hamper their ability to get a good job, thus diminishing their chance of escaping poverty. Additionally, most workplace environments are not suitable for children, as it will put them at risk of injury, illness, and even death. For example, in the cocoa farms in Ivory Coast, workers must use a machete to crack open cocoa pods, and it is too dangerous to let a child to use a machete.

In 2012, Nestlé had promised to build 40 schools in Ivory Coast by 2015, and by February in 2016, they had built 42. Usually, if a farmer is unable to send their children to school, those children will likely end up working on their cocoa farm. However, if free high-quality education is provided for them, a farmer will likely prefer to send their children to school. Although this does seem like a good solution, some farmers may still be reluctant to send their children to school if they cannot afford to hire adult labourers. Nestlé addressed this issue through their monitoring program which identified children that were working or at risk. By doing so, Nestlé was able to offer these children the support that they needed in order to attend school, whether that was a uniform or new income sources. Through supporting cocoa farmers and helping their children receive the education they deserve, Nestle is able to contribute to making a difference towards ending child labour among the Ivory Coast community.

I believe that transnational corporations have an important social responsibility as a global citizen to help support the local communities that they are working alongside with. If the community is supplying a TNC with their products, then the TNC has a responsibility to contribute towards the betterment of the community. It is often that the TNC is the one with the financial and management capabilities to tackle an issue that is affecting the local community, then it becomes good global citizenship that the TNC take action in order to improve the quality of life of the people in the community. For instance, the steps that Nestlé took in order to identify and solve the causes of child labour within their supply chain in Ivory Coast by building schools and offering support to their cocoa farmers is a good example of a TNC exercising their responsibility as a global citizen.

Nestlé motto: Good Food, Good Life

Nestlé's mission statement: Nestlé is the world's leading nutrition, health and wellness company. Our mission of "Good Food, Good Life" is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night.

Nestlé sells their products in 189 countries

Case Study:

The Local Community (cont'd)

Annual Sales:

According to Nestlé’s annual report, the total sales (in millions) in 2015 was 91 143 USD and 99 961 USD in 2014

Products and Brands

Annual Revenue:

Baby foods:

Cerelac, Gerber, Gerber Graduates, NaturNes, Nestum

According to Forbes, Nestlé’s 2015 revenue was $92.21 billion USD

Bottled water:

Nestlé Pure Life, Perrier, Poland Spring, S. Pellegrino

Cereals:

Chocapic, Cini Minis, cookie Crisp, Estrelitas, Fitness, Nesquick Cereal

Chocolate and confectionary:

Employees:

Aero, Butterfinger, Cailler, Crunch, KitKat, Orion, Smarties, Wonka

Nestlé employs 335 000 people internationally.

Coffee:

Nescafé, Nescafé 3 in 1, Nescafé Cappuccino, Nescafé Classic, Nescafé Decaff, Nescafé Dolce Gusto, Nescafé Gold, Nespresso

Culinary, chilled and frozen food:

Buitoni, Herta, Hot Pockets, Lean Cuisine, Maggi, Stouffer's, Thorny

Carnation, Coffee-Mate, La Laitière, Nido

Dairy:

Milo, Nesquik, Nestea

Drinks:

Food Service:

Chef, Chef-Mate, Maggi, Milo, Minor’s, Nescafé, Nestea, Sjora,Lean Cuisine, Stouffer's

Boost, Nutren Junior, Peptamen, Resource

Healthcare Nutrition:

Ice Cream:

Dreyer’s, Extrême, Häagen-Dazs, Mövenpick, Nestlé Ice Cream

Petcare:

Alpo, Bakers Complete, Beneful, Cat Chow, Chef Michael’s Canine Creations, Dog Chow, Fancy Feast, Felix, Friskies, Gourmet, Purina, Purina ONE, Pro Plan

History of Nestlé

Case Study: The Local Community

Countries that Nestlé has factories and/or offices in

• Switzerland
• Syria
• Taiwan
• Thailand
• Trinidad and Tobago
• Tunisia
• Turkey
• Ukraine
• United Arab Emirates
• United Kingdom
• United States
• Uruguay
• Uzbekistan
• Venezuela
• Vietnam
• Zambia

• Algeria
• Angola
• Argentina
• Australia
• Austria
• Bahrain
• Bangladesh
• Belarus
• Belgium
• Benin
• Bolivia
• Bosnia and Herzegovina
• Brazil
• Bulgaria
• Burkina Faso
• Cambodia
• Cameroon
• Canada
• Caribbean
• Chad
• Chile
• China
• Colombia
• Congo

• Nicaragua
• Nigeria
• Norway
• Pakistan
• Panama
• Papua New Guinea
• Paraguay
• Peru
• Philippines
• Poland
• Polynesia
• Portugal
• Puerto Rico
• Romania
• Russia
• Saudi Arabia
• Senegal
• Serbia
• Singapore
• Slovakia
• Slovenia
• South Africa
• Spain
• Sri Lanka
• Sweden

• Congo, Democratic Republic of
• Costa Rica
• Côte d'Ivoire
• Croatia
• Cuba
• Czech Republic
• Denmark
• Dominican Republic
• Ecuador
• Egypt
• El Salvador
• Fiji
• Finland
• France
• Gabon
• Germany
• Ghana
• Gibraltar
• Global
• Greece
• Guatemala
• Haiti
• Honduras
• Hong Kong

• Hungary
• India
• Indonesia
• Iran
• Ireland
• Israel
• Italy
• Jamaica
• Japan
• Jordan
• Kazakhstan
• Kenya
• Korea, Republic of
• Kuwait
• Lebanon
• Macedonia
• Malaysia
• Malta
• Mauritius
• Mexico
• Morocco
• Mozambique
• Netherlands
• New Caledonia
• New Zealand

Response

Case Study: the Corporation (cont'd)

Bibliography

• http://www.nestle.com/aboutus/history/nestle-company-history
• http://www.nestle-ea.com/en/aboutus/history/history_detailed
• http://www.nestle.com/asset-library/documents/library/documents/financial_statements/2015-financial-statements-en.pdf
• http://www.nestle.com/asset-library/documents/library/documents/suppliers/supplier-code-english.pdf
• http://www.nestle.com/csv/human-rights-compliance/child-labour
• http://www.forbes.com/companies/nestle/
• http://www.nestle.com/ask-nestle/human-rights/answers/nestle-child-labour-supply-chains
• http://www.theguardian.com/global-development-professionals-network/2015/sep/02/child-labour-on-nestle-farms-chocolate-giants-problems-continue
• http://www.bbc.com/news/world-africa-18644870
• http://www.independent.co.uk/news/world/americas/nestle-is-being-sued-for-allegedly-using-child-slaves-on-cocoa-farms-a6806646.html
• http://www.un.org/en/globalissues/briefingpapers/childlabour/
• http://www.nestle.com/media/newsandfeatures/light-on-school-work-didier-drogba
• http://www.voanews.com/content/ivory-coast-fights-child-labor-on-cocoa-plantations/3259054.html

Case Study: The Corporation