Introduction
Nestle is a global giant, multinational food, beverage, and nutrition company with a strong societal and environmental impact. It has played a part in global food security and nutrition. Still, the company has also struggled with numerous ethical problems that have given rise to consumer, activist, and shareholder alarm. This analysis delves into one such Ethical issue: The history of and continuing practices by Nestle regarding its marketing of infant formula.
Nestle has been particularly controversial about its marketing of infant formula, primarily in developing countries. But that's exactly what critics’ say is happening, as aggressive marketing tactics have skewed breastfeeding practices to serious health consequences for infants. It has been connected to higher infant mortality rates, malnutrition, and the spread of waterborne diseases.
The purpose, people, profit, and planet of Nestle’s infant formula marketing practices will be analysed concerning ethical implications. To assess how far the challenges, which raised ethical concerns faced by Nestle, have been resolved as a result of the company's response to these criticisms and to what extent efforts are still being made by the company to overcome the issues it still confronts.
In this paper, it is argued that although Nestle has taken some steps to improve Nestle’s corporate social responsibility, Nestle has to keep its ethical considerations in mind, especially when running its business in developing countries. This enables Nestle to focus its actions on its stated purpose of helping to create a better life for more people, nourishing and nourishing with sustainable and equitable ends.
Organisation’s Purpose
Infant Formula Controversy and Nestle’s Purpose
Nestle's purpose is to "unlock the power of food to boost the quality of life for everyone now and for the next generations." (Nestle, 2019), However, the fact that the company has a very detailedpast about its aggressive marketing of infant formula, notably, in developing countries, is extremely against this stated purpose(Neslen, 2018).
Impact on Organizational Purpose
Nestle's aggressive marketing in the 1970s and early 1980s met with widespread criticism and severely damaged the company's hard-earned reputation. Nestle has not been able to win popularity as a socially responsible company due to this erosion of trust(Alchemist, 2023).
Nestle's promotion of formula as better than breast milk has counted among those having contributed to a decline in breastfeeding rates in many developing countries. These have had negative health consequences that have been large enough to include increased infant mortality and malnutrition. It's directly contrary to the company's stated aim of improving quality of life(H Barennes & Srour, 2009).
Social Responsibility at Nestle
However in recent years,Nestle has made great efforts to improve its social responsibility code of practice. But its actions in the past and its problems today call into question how deeply the company is committed.
Positive Initiatives: Nestle is implementing a series of initiatives to tackle social issues as well as ecosystem problems, starting with supporting sustainable agriculture, curbing deforestation,reducing its carbon footprint, and supporting a healthy diet(Tay, 2023).
Critics' Perspective: These initiatives are, the critics say, often shallow, addressing only symptoms, not root causes of an ethical problem in the company. Nestle’s main emphasis, they say, continues to be profit maximization rather than social and environmental responsibility(Kazi et al., 2024).
Recommendations for a More Ethical Purpose:
To bring its actions in line with what it declares it is doing, Nestle must:
- Encourage breastfeeding: Nestle should actively encourage and promote breastfeeding as the best source of nourishment for the baby, which the Nestle is doing also. This would be done by excluding such forceful promotion that would interfere with the emergence of modernization in the country, except by ensuring that the people are properly enlightened on the benefits of breastfeeding and other tasks of promoting breastfeeding practices in the country(IBFAN, 2015).
- Do transparent and ethical marketing: In vulnerable markets, Nestle should follow strict ethical guidelines on the marketing of infant formula and other products. It means not making any misleading claims and making marketing materials are correct and informative(IBFAN, 2015).
- Strengthen corporate social responsibility: Socially responsible initiatives by the company ought to include an emphasis on communities’ needs, especially in developing countries(Edgar Manuel Cambaza, 2022).
- Independent oversight: Nestle should build a strong independent oversight mechanism that will oversee the ethical standard and find a way to address the issues of the stakeholders(IBFAN, 2015).
Taking these steps will enable Nestle to win back the trust of consumers and stakeholders, and show real intent on meeting its stated purpose, to enable a positive quality of life.
People in organisation
Specific people within organization affected by the issue
Nestle's historical practices, particularly the aggressive marketing of infant formula, have had a significant impact on various groups of people within the organization:
Marketing & Sales Personnel: In many developing countries, marketing and sales personnel may have faced ethical dilemmas in connection with the promotion and sale of infant formula. They might have been forced under vast pressure to meet unrealistic sales targets, so they had use deceitful and aggressive marketing practices. It is this that can cause moral distress and burnout(Wilhelm, 2019).
Management: In some sense, perhaps managers were involved in decision-making that emphasized short-term profits over long-term ethical values. It can be a cause of internal struggles and loss in their reputation.
Corporate Social Responsibility (CSR): The balance between the company’s profit incentive and its commitment to social responsibility may be a challenge to CSR teams. They might not have the know-how or capability to have effective strategies to counteract the downsides of past practices(Wilhelm, 2019).
How it affects safety, enthusiasm, engagement, productivity, hiring, turnover, compensation, or advancement.
The infant formula controversy has had a significant impact on various aspects of Nestle's operations:
Safety: The safety and quality of Nestle's products have been the concerns raised by the issue as it led to massive infant deaths. This increases the possibility of regulators and consumers scrutinizing it more, which could damage the safety standards of its product(Anttila-Hughes et al., 2023).
Engagement: Negative publicity and ethical scandals affect the morale of employees and influence engagement. A demoralized workforce results in more productivity loss(Anttila-Hughes et al., 2023).
Productivity: Ethical scandals may divert the attention of managers and employees from core business activity which may eventually lead to a decline in productivity and efficiency(Boyd, 2012).
Hiring and turnover: It may also tarnish the company's reputation, and does not make it easy to attract or retain top talent. And this can cause higher recruitment costs as well as higher turnover(Boyd, 2012).
Compensation and advancement: The company may feel the effect of ethical scandals on its get upped boost, which may adversely hit the compensation and advancement alternatives of the employees.
Recommendations and remedies to avoid, or at least be more ethical in their treatment of people
To remedy these problems, Nestle should:
- Do ethical training and development; Ethics training programs for all employees-including marketing, sales, and supply chain are organized on ethics in the organization and responsible business practices(Kumar, 2015).
- Instead of presenting misleading and aggressive marketing, promote transparency and the truthfulness of marketing, in which breastfeeding is portrayed as the perfect kind of nutrition that mothers may provide for their infants, while breastfeeding and the breast are placed at a higher priority among the public instead of formula(Kumar, 2015).
- The Fair Labour Practices will provide equitable wage, safe and healthy working conditions, and opportunities for career advancement.
- Create a friendly and healthy environment for employees in the workplace, focusing on mental well-being(Kumar, 2015).
Through the issues addressed and ethics in its business activity, Nestle will establish a positive and sustainable workplace environment for its employees.
Organisation’s Metrics Profit
Nestle: Balancing Profit and Purpose
Financials, Profits, and Shareholder Value
As a global leader in the food and beverage sector, Nestle is responsible to its shareholders and investors to generate profits and secure a strong financial return. It is a committed firm to promoting shareholder value in its operations that shapes every aspect of its operations from product development to market expansion to cost optimization(Butt, 2024). The problem is a narrow focus on short-term profits carries risks, especially in areas where ethical concerns overlap with revenue-generating strategies. The reliability of quarterly profits or short-term payoffs, however, would rather jeopardize the brand and sustainability as well as long-term profitability(Haessler, 2020). It had to change its thinking as threatened by adverse results from the short-term approach with the brand and sustainability going hand in hand with corporate responsibility.
Effect on the Position of Nestle
No doubt that the past practices of Nestle in marketing infant formula, especially and more generally in developing countries, produced a very clear dilemma for the corporation. The conflict highlighted the crux of the matter: how Nestle's conjoined yet opposing goals of expanding market share and profit competed with public claims that it failed to uphold its social responsibility for children's health over profitability. Facing negative media attention and an ensuing public outcry, the company has been compelled to review its marketing practices and adopt more responsible marketing approaches. As a reaction to such criticisms, Nestle has tended to overemphasize its moral business conduct as well as corporate strategy based on sustainability(Boyd, 2012). However, its ability to align the profit with purpose is still in progress, owing to the need for continuous developments in transparency, ethics, and stakeholder interaction. So, the future growth of Nestle will strictly depend upon how it manages to reconcile these opposing forces-profits and ethical integrity.
Recommendations
The following are some recommendations for better ethical metrics. To balance profitability and ethical responsibility, the company has to employ strategic metrics and practices that would strengthen responsible growth, including the following:-
- Nestle may also concentrate on innovative value over the long term instead of focusing on mere short-term profit margins. Investment in innovative practices such as responsible sourcing habits and initiatives like carbon neutrality and zero-waste goals will feature in this approach.
- It would mandate Nestle to measure, track, and report about such positive contributions as it is mandated to do for the financial performance. For example: that would include Key Performance Indicators such as carbon reduction, water management, waste management, etc. metrics that help to measure progress in fair labour practices and ethical sourcing would also bring accountability(SAI, 2015).
- Nestle can actively engage with a different constituency of stakeholders, such as consumers, employees, investors, NGOs, even regulatory bodies, to collect important information about their expectations. However, the company should be in regular dialogue with its stakeholders for as long as possible so that it knows societal concerns and can adjust its policies or deeds accordingly(SAI, 2015).
- Regardless of the degree, it must be supported with a commitment to transparent and diligent reporting. Stakeholders should be able to see how Nestle operates and what challenges that involves with enhanced disclosures on Nestle’s supply chain practices, labour standards and environmental impacts. Nestle’s have followed such comprehensive reporting on social and environmental performance as in its annual sustainability reports, which strengthen their commitment with such values(Development, 2023).
By adopting these recommendations, Nestle would likely gain stronger public trust and demonstrate a genuine commitment to ethical business practices, ultimately benefiting its long-term sustainability. Transparent and responsible operations are not only beneficial to Nestle’s reputation but contribute to a fairer and more equitable global business landscape.
Organisation’s Sustainability
Nestle Environment and Sustainability
While it is a social and ethical issue, the controversy surrounding baby formula indirectly influences Nestle's environmental sustainability. In a sense, negative publicity and boycotts from consumers may worsen a company's sales; hence, sales and subsequent production will decline until eventually, the company has to close some or even all of its facilities(Neslen, 2018).
Its supply chain, especially the agricultural and manufacturing sectors, will significantly impact the environment. For example, the farming of raw materials such as palm oil and cocoa can lead to deforestation as well as soil and water pollution (Shahida Anusha Siddiqui et al., 2024).
Does the issue degrade or regenerate the natural systems it affects?
Nestle runs both degrading and regenerating operations that depend on specific practices and products. An example is that the production of the company and its use of water-intensive ingredients can strain local water resources, particularly when local water resources are scarce. At the same time, Nestle has carried out some sustainable agriculture work, like promoting regenerative agriculture and reducing water use in its operations(Butt, 2024).
But historically, the company has unfairly marketed infant formula, and that, indirectly, has helped to destroy the environment. Frequent formula preparation could increase formula consumption and lead to health problems that will strain environmental systems and healthcare resources further, especially, since the increased consumption of formula prepared with contaminated water can result in waterborne diseases(Butt, 2024).
Recommendations for an Ethical Ecological Position
To these issues, Nestle should strive to build a healthy future through:
- Responsible procurement- Sourcing all raw materials, such as palm oil and cocoa, should be done in sustainable ways. On water, Nestle should ensure that its acquisition and use are done in responsible ways(SAI, 2015).
- Set aggressive targets for greenhouse gas emission cuts and commit to renewable energy sources.
- Waste reduction and increased recycling are traceable along the supply chain.
- Innovative packaging to prevent waste by plastics while using sustainable materials.
- Reporting on company performance regarding the environment and its impacts on water, energy, and waste should be transparent(Butt, 2024).
Staff Techniques
The Staff Techniques to carry out the ethical change at Nestle-
i. Leadership
To drive an ethical change within an organization, you need strong leadership. To implement the recommended strategies for addressing Nestle's ethical challenges, leaders should:
- In its ethical practices, ethical leadership should be demonstrated as integrity, transparency, and accountability towards the desired behaviour by the ethical leaders.
- Communicate clearly to all the employees the organization’s ethical vision and values. This means clarifying why it is important to do the right thing, and how what you are doing is helping the company achieve its long-term objectives(The Economic Times, 2023).
- Allowing its employees to speak out about ethical concerns without fear of retaliation. So, create this open and accepting culture of communication that openly accepts that there are no dirty corners and encourages its’ employees to ventilate when they see something unethical(Beasley, 2024).
- Provide enough training and support to help employees make an ethical decision.
ii. Bureaucracy
Ethical standards can easily be maintained with a good structuring of the bureaucratic system. To implement the recommended strategies, Nestle should:
- Craft & establish thought-out and detailed ethical guidelines that indicate and explain employee behaviour and decision-making(Kaptein & Wempe, 2002).
- Implement robust compliance programs to monitor and enforce ethical standards. It may be audited regularly, and measures such as implementation of whistle-blowers.
- Review and decide ethical issues by creating dedicated ethics committees. These committees are allowed to guide, investigate complaints, and recommend improvement(UNODC, 2013).
iii. Rewards
It’s a well-designed reward system that can drive up ethical behaviour and discourage unethical practices. To motivate employees to act ethically, Nestle can:
a. Recognise and reward employees for taking on the right behaviour and helping move the company towards its social and environmental aims (FasterCapital, 2022).
b.Include ethical performance metrics in employee evaluation and compensation packages.
c.Reward and encourage leaders with strong ethical leadership and contribution to social responsibility(FasterCapital, 2022).
If Nestle is able to apply these techniques effectively, they will be able to shape an ethically and sustainable organization with the interests of its stakeholders at centre.
Conclusion
Involvement in the infant formula marketing controversy has brought up many ethical issues that don't fit with Nestle's declared aim for enhancement of quality of life. Although the company has been working on enhancing its corporate social responsibility practices, however, much still has to be achieved in order to address the legacy of action of its former and move towards a more ethical future(FasterCapital, 2022).
If Nestle systematically puts an emphasis on ethical decision making in its decisions it can regain consumer, employee as well as other stakeholder’s trust. That means advertising responsibly, encouraging breastfeeding and putting money into sustainable projects(Boyd, 2012).
Yet it’s important to acknowledge that ethical challenges are challenging and require work, but never done. Nestle must keep an eye on what it is doing, adjust to new circumstances and willingness to learn from error. The company can move toward becoming a truly responsible and sustainable one, by driving towards a culture of ethical leadership and accountability.
Nestle’s long term success, and its impact on the rest of the world will depend on its ability to deal with these ethical challenges. The building of a more sustainable, equitable future for all is possible for the company by putting people, planet and purpose first.
