Famously unapologetic when Nestlé comes to its social affairs, it has published a 68-page report: The Nestlé concept of corporate responsibility.
Nestlé is one of the world’s largest foreign direct investors and has built factories and processing plants across the globe. In Latin America alone, it sources products from 275,000 farmers who supply about €2.64bn-worth of goods to 72 factories across the continent.
Nestlé has long been a target for global protesters working to get it to recognise, among other things, the impact of marketing formula milk for babies in areas without clean water.
The company’s huge size is part of the problem: staff at its head office in Switzerland appeared at times to have little knowledge of those affected by its global footprint. When fDi questioned Nestlé in 2003 about its corporate responsibilities, the spokesperson said: “What good is public relations when you have a fire in your house?” A week later, Nestlé dropped its $6m lawsuit against the Ethiopian government, at a time when the country was facing widespread famine.
In an attempt to get a better understanding of its social impact, Nestlé turned to the Foundation Strategy Group (FSG), which is affiliated with Harvard Business School’s Michael Porter. In May, it published FSG’s findings in a report into “the social impact the company has had over several decades” in Latin America.
The report concluded that Nestlé “has had a profound and positive impact on the environment in Latin America” and highlights many convincing ground-level case studies. To its credit, it includes input from non-governmental organisations, such as The Fairtrade Foundation, which welcome the launch of Nestlé’s fair-trade range.
With Professor Porter’s help, Nestlé is trumpeting the idea of “creating shared value”. This means creating value not just for shareholders and consumers, but also for employees and business partners, and the local communities and national economies in which Nestlé operates.
Perhaps most importantly, Nestlé acknowledges in the report some responsibility for problems in its supplier chain: “Nestlé… must work assiduously to eliminate any possible harmful social or environmental impacts from its value chain.”
Nevertheless, just how big a factor local communities become in Nestlé head office’s management equation remains to be seen.