Corporate Social Responsibility: Nestlé Case Study PDF

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DEPARTMENT OF COMMUNICATION & LIBERAL ARTS COM 3054: CORPORATE SOCIAL RESPONSIBILITY INDIVIDUAL ASSIGNMENT Student ID: Angelo Louisse Munsayac Estella (12041356) Lecturer: Sabina Wong Due Date: October 28th, 2016 0 Contents 1.0 Introduction ..........................................................

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Corporate Social Responsibility: Nestlé Case Study Angelo Est

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DEPARTMENT OF COMMUNICATION & LIBERAL ARTS COM 3054: CORPORATE SOCIAL RESPONSIBILITY INDIVIDUAL ASSIGNMENT

Student ID: Angelo Louisse Munsayac Estella (12041356) Lecturer: Sabina Wong Due Date: October 28th, 2016 0

Contents 1.0 Introduction .......................................................................................................................... 2 2.0 CSR Initiatives ..................................................................................................................... 3 3.0 Suggestions .......................................................................................................................... 4 4.0 Conclusion ........................................................................................................................... 6 References .................................................................................................................................. 7

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1.0 Introduction Nestlé Malaysia Berhad is a global brand industry which origins date back in 1912, trading as an Anglo-Swiss Condensed Company in Penang and later expanded to Kuala Lumpur in 1939 (Nestle, 2016). The first factory was built in Malaysia in 1962, Petaling Jaya. This company is responsible for management and operations of Nestlé in both Malaysia and Singapore. It currently manufactures its products in 7 factories and operates from their main headquarters in Mutiara Damansara. Nestlé Malaysia Berhad is publicly listed on Bursa Malaysia Berhad on 13 December, 1989. According to Nestlé’s website (2016), it currently has more than 5,000 employees and manufactures as well as markets more than 300 Halal products. Milo, Nescafe, Maggi, Nespray, and Kitkat are popular household product names that are within the Nestlé Malaysia brand name in which they carry (Nestle, 2016). Corporate philosophy of Nestlé Malaysia Berhad is heavily embedded on how they conduct their business as they believe that it is their mission to be the leading multinational company in food, nutrition, health and wellness (Nestle, 2016). The company aims to be a responsible corporate citizen in which they address the needs of the government, shareholders, customers, communities and consumers. Most importantly, Nestlé Malaysia Berhad guarantees that products manufactured and distributed are certified Halal by authorised Islamic certification bodies. Lastly, their vision is to provide high quality, safe food solutions for consumers worldwide as they believe that their R&D is a long-term key competitive advantage of the company (Nestle, 2016). The company believes in creating shared value and meeting the commitments they promised towards society. This essay will explore and analyse Nestlé Malaysia’s CSR initiatives according to the four pillars of strategic CSR and provide suggestions how it could be further improved in order to be beneficial to both the company and society.

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2.0 CSR Initiatives Back in September 2013, Nestlé Malaysia Berhad received an award for being the ‘Top 3 Best CSR Initiative in Malaysia’ at The Edge Billion Ringgit Club Awards 2013 as it honours the country’s best performing listed companies and recognises the ‘Creating Shared Value’ efforts done by the company (Chong, 2013). According to Yahoo Finance (2013), the company came in Top 3 and was one of the 19 companies that are nominated for the Best CSR Initiative in the Malaysia category. Nestlé Malaysia’s CSR initiatives are based on their ‘Creating Shared Value’ (CSV) model in which is a fundamental part of the company’s core business activities in which value can be created for both society and shareholders (Nestle, 2016). Alois Hofbauer, Nestlé Malaysia Berhad’s managing director, states that the CSV model means that it is necessary to ensure that the communities should prosper along with the company in a longterm basis as they serve and operate (Tan, 2015). Based on the Nestle in Society Report (2015), the CSV model must first consider ethical compliance of business principles that creates value for the society and shareholders through their activities and then proceed on both the society and shareholder interest which intersects that leads to value creation to be optimised for both. This is supported by the four pillars of strategic CSR in which they focus on the pillar of core operations. Nutrition, water and environment, and rural development are the three main areas of focus that are core to the business strategy and operations of Nestlé Malaysia. The company believes that these three main elements are critical resources for them to exist in the long-term basis and also for the sustainability of society (Tan, 2015). These elements are fundamental to the business goal of Nestlé “to become the recognised leader in Nutrition, Health, and Wellness, trusted by all stakeholders” (Nestle, 2016). Thus, Nestlé Malaysia’s CSR initiatives are gathered from the CSR perspective in which value chain social impacts is part of their focus.

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The CSR initiative conducted by Nestlé Malaysia towards the community includes two notable programs. The first programme is the Nestlé Healthy Kids (NHK) programme in which was launched in 2010, in collaboration with the Ministry of Education Malaysia and the Nutrition Society to raise awareness on nutrition, health and wellness and to promote exercise among school children. According to the Nestle in Society Report (2015), they have been successful to involve 136 students in 2013 and a monumental increase in 2015 as they involved 4,924 students. The second programme is the Nestlé Paddy Club in which benefited 300 farmers in January and February 2015 and 294 farmers in August and September 2015 (Nestle in Society, 2015). According to Tan (2015), CSR initiative provided additional income to the rice farmers and at the same time benefiting the environment through efficient water usage and reduction of greenhouse gas emissions. For the environment, Nestlé Malaysia conducted specified CSR activities in which benefited and impacted both areas to promote sustainability. The RILEAF programme was launched in 2011 as a reforestation and palm oil sustainability initiative that aims to also strengthen relationships with the local communities and oil palm smallholders (Tan, 2015). The Nestle in Society Report (2015) states that a total of 484,580 trees has been planted since 2011 and it covered more than 2,300 hectares of degraded forests. This is relevant to the medium to long term strategic CSR. As for the workplace, ‘Reaching Out to Community and Kids Employee Volunteer Programme’ or ROCKS is an active employee participation in contributing towards the community is made within the company’s initiative (Nestle in Society Report, 2015). The Nestlé volunteers have the opportunity to take part in activities such as the children’s book & toy collection, ROCKS anniversary exhibitions, fundraising bazaars, school mural paintings, and children home visitations during Buka Puasa and Deepavali (Nestle, 2016). This is also part of the stakeholder perspective in which is a part of the concern they need to tackle as a company. 4

3.0 Suggestions According to Asongu (2007), there are guidelines to identify the opportunities for using CSR innovations to the advantage of a company. There are three suggestions that Nestlé Malaysia can consider in order to further improve their CSR initiative via innovation in the modern state of the ever-changing society. Firstly, Nestlé Malaysia must make environmental commitment part of the corporate culture (Asongu, 2007). In order to fully utilize the CSV model that focuses on the areas of water and environment, the employees of the company must be encouraged to practice water usage efficiency and energy usage within the grounds of the workplace. An awareness programme about the harmful effects of water and energy wastage and also provide training and incentive for the employees in order for them to be encouraged to act upon it. This can be beneficial to not only towards their impact in the workplace but also may bring this habit back to their homes in which can lead to a more aware and active green community. Secondly, Nestlé Malaysia must not wait for the community needs to become community nuisances in times of trouble (Asongu, 2007). In the case of the Maggi Crisis, the entire community that were worried about their lead tainted Maggi products did not have sufficient information to understand the crisis situation (Fry, 2016). This nuisance has become an uncontrollable crisis that caused Nestlé billions of dollars to solve. In order to avoid this another potential crisis, the company should always take a proactive action in engaging the community by coming up with compromises and solutions by having an active online team at their Nestlé to address any problems that are raised up. This can further improve the effectiveness of CSR initiatives that Nestlé Malaysia can conduct under the context of the situation in order to align the community’s needs to their actions.

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Lastly, Nestlé Malaysia should make environmental groups their friends instead of foes (Asongu, 2007). According to the Nestle in Society Report, Project RILEAF was done in collaboration with Sime Darby Foundation. This shows that the company is open to collaborate with other groups and a collaboration with a Malaysian NGO should be recommended. The Centre for Environment, Technology Development Malaysia (CETDEM) is an NGO that focuses on providing practical and sustainable solutions for the community and this can align Nestlé’s own CSV model of sustainability (CETDEM, 2016). This in result can create a potential opportunity for Nestlé Malaysia in doing so in order to build stronger networks in their CSR initiatives by reassuring the Malaysian public their relevance and credibility through this support of CETDEM.

4.0 Conclusion Nestlé Malaysia Berhad is a popular household name amongst the Malaysian community and numerous shareholders continue to trust their brand image to be an exemplar of a socially responsible corporate citizen. The company’s strong belief towards their CSV model certainly straightens their core business operations as they continue to please their relevant constituents that they impact in society. Even though Nestlé Malaysia Berhad is still respected as a leader in CSR initiatives, there is still a lot of potential in innovation to further sharpen their efforts in building shared values with their stakeholders by the implementation of environmental commitment in the workplace, activation of present community engagement team online, and stronger network connections amongst its business peers and NGO groups. According to Nestlé in Society Report (2015), its Key Performance Index indicates that their company has been consistently achieving their goals through their various CSR activities. Nestlé Malaysia has successfully fulfilled all four pillars of strategic CSR through their CSR perspective, core operations, understanding stakeholder perspective, and achieving the medium to long term needs of their relevant constituents. 6

References Asongu, J. (2007). Innovation as an Argument for Corporate Social Responsibility.foretica.org. Retrieved 17 October 2016, from http://www.foretica.org/wp-content/uploads/2016/01/Innovation.pdf CETDEM,. (2016). CETDEM » About CETDEM. Cetdem.org.my. Retrieved 19 October 2016, from http://cetdem.org.my/wordpress/?page_id=56 Chong, C. (2013). The Edge Billion Ringgit Club 2013 : Malaysia still a growing market for Nestlé. Yahoo Singapore Finance. Retrieved 17 October 2016, from https://sg.finance.yahoo.com/news/edge-billion-ringgit-club-2013-113004650.html Fry, E. (2016). Nestlé’s Half-Billion-Dollar Noodle Debacle in India. Fortune. Retrieved 20 June 2016, from http://fortune.com/nestle-maggi-noodle-crisis/ Nestle in Society Report,. (2015). Nestle in Society Report (1st ed., pp. 10 - 72). Petaling Jaya. Retrieved from http://www.nestle.com.my/assetlibrary/documents/pdf/nestle_in_society_report_2015.pdf Nestle,. (2016). About Us. http://www.nestle.com.my. Retrieved 17 October 2016, from http://www.nestle.com.my/aboutus Tan, V. (2015). Sowing seeds of community service - Community | The Star Online.Thestar.com.my. Retrieved 17 October 2016, from http://www.thestar.com.my/metro/community/2015/10/10/sowing-seeds-of-communityservice-companys-csr-programmes-focuses-on-nutrition-efforts/

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