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“CORPORATE SOCIAL RESPONSIBILITY OF NESTLE”

Corporate Social Responsibility of Nestle

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“CORPORATE SOCIAL RESPONSIBILITY OF NESTLE”

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Corporate Social Responsibility of Nestle

CSR (Corporate Social Responsibility) has led to remarkable organizational interests in a short period of time and has drawn everybody’s attention in the business over a few decades (Singh, Sethuraman & Lam, 2017). Its empowering significance has been perceived through the fact that in sustainability, CSR report-making among S&P 500 firms has grown drastically from nearly 20% to some massive 82% between the year 2011 and 2016 (Flash Report, 2016). Unlike what have been seen before, a number of firms are going to invest purposefully in CSR programs and are ambitioning to integrate most notable aspects of their businesses with CSR. Provided the significance and ubiquity of CSR dynamics, an imperative has prompted much of interest from market realists and academic researchers regarding the fact that if such increased frequency of investments in CSR commotions generate noteworthy value for the stakeholders of the firm or lessen firm value because of their concentration on other stakeholders (Singh, Sethuraman & Lam, 2017). Regardless of firms’ general awareness regarding the CSR in today’s businesses and corporate practices, every firm makes use of particular strategies while implementing the CSR in their organizational settings. Still a good question to be precisely answered is whether firms are globally spending money behind the CSR only as the investment or as a means of their security and preventive techniques against social collapses. Since a firm has to deal socially on a consistent basis because of their needs to summon consumers from various societies to consume their products or receive services, it is not a sign of their higher ambitiousness to attribute social responsibilities into the organizational environment so as to prepare their employees and workers as socially responsive and keep pace with their responsibilities in terms of meeting the firm’s CSR. Finding and analyzing cases will be helpful to realize how particular firms have got the most out of CSR as part of substantiating sensible programs and contributing to their business

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consequence by switching this into the social effectiveness. As it has been contextually well understood, under the light of recent business progressions, that the application of CSR is inevitable for the continuity and improvement of the business, most prominent firms are taking less time to make up their mind about highlighting CSR and applying it to their own organizations, ambitiously, but reasonably. Part A Among many of the CSR models appreciated by many researchers and end users such as companies, the Model of Sustainable Development suggested by Aras & Crowther (2009) will be discussed throughout this paper. To attain sustainable development there is the need of achieving sustenance, which can be again, through four preferred actions: Maintenance of economic activities, while it is the raison d’etre of the firm (Friedman, 1970); preserving the environment as this is inevitable for the future generation maintenance; establishing social justice that incorporates removal of impoverishment and ascertaining the human rights; and improving and keeping up with cultural and spiritual values, where the societal and corporate values are arranged in a line within the individual. Nonetheless, the “Model of Sustainable Development’ summons a broader view of CSR practices without specifically determining “what to be accomplished” to make sure the environment is safeguarded and sustained in a precise manner. Nestle is one of the leading global health, nutrition, and wellness company. Almost 33 thousand workpeople are working in this firm, while Nestle becomes an MNC that operates its businesses in 83 nations through the effort of 461 of its factories, which are located worldwide, especially in developing nations. Nearly 50% of Nestlé’s plants are situated in the developing nations. Nestle is presumably keeping availing the trust of stakeholders and consumers with the stubborn principles. Nestlé’s principles and policies seem to be concerned with its interactions in connection to: Consumers, suppliers and customers, employees, human

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rights and labor practices, and the environment. As mentioned in Nestlé’s official published article, Nestle.com (2013), they continually try building sustainable linkages with stakeholders, people, and communities whom they touch using their business dynamics. Nestle Malaysia has attained the 2nd place in the most adorable CSR initiatives category in 2013 (Nestle.com, 2013). As a leading global company, Nestle is doubtlessly exponential at proving their performances in favor of maintaining CSR. The intention of this paper incorporates depicting and analyzing the Corporate Social Responsibility of Nestle in light of utilizing distinct model that guides with appropriate strategies for this firm, and to surmise the most remarkable and major driving forces of Nestlé’s CSR initiatives that have shaped this firm over the years towards the success; and are important to itself as well as its consumers living worldwide. This paper investigates Nestle and its CSR initiatives and engagement from an environmental prospect, highlighting deforestation and their utilization of Palm oil. As one of the world’s biggest food and beverage producers, they have been a target for common people’s scrutiny whenever getting engaged in CSR initiatives. By means of using Carroll’s (Teymouri, 2015) CSR pyramid and Lyon & Maxwell’s ideology of corporate environmentalism, it can be sensible to localize the dominant factors that positively enforce Nestle to get involved in CSR. Since CSR is a multifaceted concept and with the knowledge of distinct element parts and definitions- one needs to consider the aspect of CSR that are being tested when searching and analyzing for prime drivers that work actively behind the scene of CSR engagements. The human being is experiencing enhanced demand for environmentally affable services and products, while environment is seemingly in a brittle state for a long time. As Dauvergne & Lister (2013) state, this enhanced demand and consciousness dedicated to the environment from society is steadily making firms alternate the way in which all of them can

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maneuver their businesses to appear as more in compliance with consumers. Hence, it is easily posited that large firms should take responsibility for their activities. It can be done by not causing to deforest and damage the environment by other actions when manufacturing their products. Nestle is selected as the center point of analysis, despite the prevalence of many other firms that need to be scrutinized for their CSR actions. Nestle makes use of numbers of scarce innate resources and contribute more or less to environmental devastation. This paper analyzes many of Nestlé’s approaches that are based on some core CSR models in favor of demonstrating that this firm is critically adept in keeping pace with CSR challenges and are executing prime doable things in response to potential threats. According to nestle.com (2013), Nestle is ceaselessly striving for building sustainable connections with individuals, communities, and stakeholders who it touches through its business. Nestle has been pioneer of the unique business approach named CSV (Creating Shared Value) that symbolizes its willingness to creating prosperity and props up the quality of life for numberless individuals in a conclusive manner. Therefore, apart from its compliance with country’s laws, global standards as well as its own Nestle Corporate Business Principles, it operates in a means of helping safeguard the environment for the betterment of the future generations (nestle.com, 2013). Hence, its commitments to compliance and sustenance generate the foundations on which it creates its actions to build shared value in its highlighted arenas of Nutrition, Rural Development, and Water & Environment. For example, Nestle keeps nourishing the Malaysians since the period 1912, while as a consequence of this; it has gained the trust of its consumers not just simply for bringing the quality of its products to life, but also for its dedications to perk up communities’ lives. Over a number of years Nestle has proven that it is possible to work well as a firm, by executing works decently for the society and community on a broadened basis (nestle.com, 2013).

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With Nutrition having been Nestlé’s prime area of expertise, it continues its efforts in encouraging healthful eating and energetic lifestyles using its Nestle Healthy Kids Program, an undertaking ambitioned at a couple of different age groups- primary school and secondary school students. Back in 2010, it was launched and implemented in combination with the Nutrition Society of Malaysia, the first one, Primary School Module perceived the performance of a set of Teachers’ Seminars, which helped the teachers from candidate schools as well as lecturers and Kids’ Athletics coaches with a partnership with the MAF (Malaysia Athletic Federation). Nestlé’s dedication to Water & Environment has been further reinforced after signing a correlated contract with Sime Darby Foundation to collectively initiate Project RiLeaf. To suit the standard of Global Reporting Initiative (GRI) 3.1, Nestle has engaged PricewaterhouseCoopers (PwC) for a verification purpose. Nutritional deficiencies and other complicated health-related issues are mainly resulting from inadequate access to decent quality of foods meaning “Good Food”. There is a certain convincing ideation from Nestle about “Good Food”, which is “Good Life”. Principles of Nestle based on “CSV”, which helps it generate what it means by “Good Food, Good Life”. Carroll (1991) denotes that for a businessperson of a conscientious kind, being capable of accepting CSR, it needs to be framed in a way which encapsulates the whole range of a business’ liabilities embraced. Thus, Carroll recommends that there are four kinds of responsibilities such as, ethical, economic, legal, and philanthropic, and all these needs to be further scrutinized from time to time. Neslte’s CSR initiatives comprise heavily of environmental awareness despite their primary unorganized attitudes towards the environmental friendliness. This paper, furthermore, is going to analyze Nestlé’s use of palm oil which is a nonsustainable product and is strongly contributing to deforestation. Deforestation causes a

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massive contribution to the change of climate and the enhancement of deforestation on earth is having a horrible impact on this planet (Gilding, 2011). The impact of deforestation on this globe is also a prime driver of warming on this planet; and it is responsible to nearly 20% of the total gas emissions of greenhouse. According to Greenpeace.com (2015), this percentage is more than what the whole transportation sector contributes to the greenhouse gas emissions. Therefore, deforestation must not only be an issue for governments but also for things that contribute mostly to the environment, for example, firms that are active in this industry. Indonesia is a nation, which is becoming worse in managing the forestation; this is a nation where Nestle derives its maximum supply of palm oil from. The broadening incoherence is the consequence of a correlative impact of the interactions from companies where they avail the benefit of the current arrangements from (Levy & Newell, 2005). After the campaign of the Greenpeace, Nestle has made a few major alternations with its business approaches and operations, and is committing to not causing any deforestation footprints within its productions. Nestlé’s strategy creates a very clear message to firms that destroy forests and peat lands for novel plantations- If the deforestation is not stopped and peat lands are not protected, days of supplying to international brands such as Nestle will be over (Nestle CSV, 2010). Greenpeace has welcomed this statement and is expecting that this would inspire other firms to follow its footsteps. Nestle has also been a member of the forest trust (TFT) as an important step to stop its causation to deforestation (Nestle CSV, 2010). Part B There are a few major drivers of the firms’ CSR initiatives and these are similarly significant to Nestle and its consumers at a time. These drivers incorporate the affluence growth, globalization, sustainable ecology, random stream of information, and the brand’s power. Nestle and its consumers are simultaneously influenced by these drivers when it comes to keeping pace with CSR dynamics in response to the marketplace conditions.

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First, the growing affluence is one of the main drivers of the CSR initiatives nowadays. CSR has turned out to be indispensably relevant as the time progresses with economic growth and stabilization. The greatest interest that the CSR exposes is more generic in developed nations. Stability and security at workforce provides the aristocracy of choice and sociably liable activism. Such aristocracy does not exist if fundamental desires are seemingly in question. As Nestlé’s business operations are multifaceted in kinds, it adopts various attempts in numerous nations based on what are suitable under the business situations within the setting of a distinct country. It provides specific business programs, campaigns, and promotional strategies in each and every country of its business where they look reasonable. Nestle is also committed to suit environmental needs in response to its operational requirements to prove that it does not harm the nature by, for instance, reproducing palm oil through deforestation. Second, obviously, the most interesting burning question regarding the CSR drivers is whether a firm is causing pollution, depletion of natural resources, wastes elaboration, change of climate, and deforestation, in particular; or continues to function as an eco-friendly unit in business. In fact, dealing with ecological sustainability is one of the most significant tasks to safeguard the firm’s future and the long term viability of resources upon which the firm has to rely. Nestle has to depend on raw materials and therefore, to collect palm oil on a regular basis, so that many of its end products are manufactured, however, it affects the environment through deforestation, which requires them again, to find out the best way of safe manufacturing without damaging the environment. Lyon & Maxwell (2013) investigates on key factors, which make companies turn into corporate environmental. Businesses that relates with Nestlé’s core interactions are acting and shaping their functioning over their consumers; whenever the consumer stipulation for Green Products remain big, firms will reproduce them as it would enhance the volume of its profits. Nonetheless, there are many means of producing

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products that do not have massive impact on the environment. By means of shifting its business functioning, it also pressurizes its suppliers to get involved in these actions rooted in the corporate environmentalism- this would help Nestle to steer clear of the criticism that its actions of being sustainable and Green are getting converted into hardly green-washing (Lyon & Maxwell, 2013). Third, multinational companies are increasing their wealth and power but the developing areas are comparatively going backward. Globalization has a significant impact on this. Different religion has difference in their culture, behavior and activity. They are creating more complexity as requirement differs and the responsibilities are also increasing. So it has become very necessary to filter all the strategic decision through a CSR lens to ensure an optimal outcome for diverse stakeholders. If so one can be assure of the best output of the task. Because of the globalization, multinational firms like Nestle, has to think wide and become country-specific in terms of setting their CSR initiatives and strategies. It has different approaches in different nations based on different governmental acts, laws, conventions, and different consumers and their needs. Nestlé’s stakeholders are also expecting specific kinds of business returns in specific geographical locations. Again, globalization has relentlessly been shaping and changing consumer behaviors, therefore firms are constantly changing their business policies that include the CSR initiatives as well. Nestle has promised not to hamper environmental balance through their actions such as deforesting, which is prohibited under the laws of some nations. Apart from the economic and benefit motive for an ongoing business, Nestle is also anticipated to comply with regulations and laws that are attributed in some societies by country-based and supranational authorities, for example, the EU and Sweden. Therefore, even being impacted by the globalization, fulfilling the societal contract between the society and business, firms are anticipated to pursue their financial missions within the laws and regulations-centric frameworks (Carroll, 1991).

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Fourth, the bloggers are predominantly responsible for the flow of information that has been shifted back to the stakeholders. They are to be blamed for this also. Again three important groups are also liable for this. They are consumers, NGOs and general media. Technology is spreading fast worldwide. So it has become easily accessible and affordable for the people from all around and they can easily find out the true and authentic companies easily. So it has created a situation for those companies to be more profited in the long term. Information flow enables firms to be socially more responsible. Information flow makes the labor market remain more prepared and resourceful indeed. Firms are also taking advantages from the information flow. This has been very easy and effortless for firms to evaluate and assess their employees and labor market as well. Firms thus can screen their immediate responsibilities by applying sociably responsible practices and then avail profit from it (Lyon & Maxwell, 2013). Fifth, as the focal point of corporate success, the brand’s power works as a strong driver of the CSR initiatives. The healthiness of a brand relies mostly upon how the public perception is on the corporation. That means that reputation is the main force and an originally honest CSR is the effective means of safeguarding the reputation of a brand. Nestlé’s reputation, as a brand is doubtlessly high and it continues to be so in the forthcoming days. Nestle has occupied its place on top of others for a long period and each and every Nestle product carries its brand reputation. Nestlé’s reputation as a brand even supersedes everything, as it continues to grow since its initial appearance at the marketplace. As part of getting the most out of the CSR initiatives, Nestle has been remarkable among other competitors and players in the marketplace. No firm even if tried may have problems to give its 100%. Major drawbacks that Nestle has in its CSR initiatives include claiming “Global Policy” falsely as the cause for not being able to negotiate with unions; false commitment about global policy upon shift patterns; exceeding the limit of working hours that

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violate the laws of most nations; and interfering in trade unions’ elections and other activities. When accused, Nestle responds having a declination from these complaints. Nestle has experienced a major issue with its quality practices as well a...