NESTLE Case Analysis

Roll No. –

045004 (Aditya Singh Yadav)

045033 (Nakul Arora)

045042 (Suprita Raha)

045043 (Prashant Kumar Talan)

045045 (Rishi Goswami)

045055 (Vasu Bansal)

045056 (Vidhu Rathi)

Q1. In what ways if any is Nestle exercising CSR?

Nestlé is demonstrating corporate social responsibility (CSR) in relation to the

issues discussed through various initiatives and programs. Some of the key actions
taken by Nestlé include:

1. Policy commitments & Governance: Nestlé has revised its corporate policies,
standards, and commitments to incorporate relevant human rights elements. This
includes policies on responsible sourcing, employee relations, consumer
communication, and privacy.

2. Nestlé Cocoa Plan (TNCP): Nestlé launched the Nestlé Cocoa Plan (TNCP), an
initiative aimed at improving the livelihoods of cocoa farmers and addressing
issues like child labor and forced labor. Through this program, Nestlé has invested
approximately $220 million in improving the conditions of its cocoa supply chain.
3. Child Labor Monitoring and Remediation System (CLMRS): Nestlé implemented
the CLMRS to monitor and remediate child labor issues in its cocoa supply chain.
Under this system, Nestlé identified 7,443 cases of child labor in 2018 and more
than 18,283 in 2019. These figures reflect Nestlé's commitment to actively
addressing and remediating child labor cases.

4. Stakeholder engagement: Nestlé has partnered with expert organizations such

as the Danish Institute for Human Rights, the Fair Labor Association, and Verité to
develop policies, procedures, and improve performance on the ground.

5. Training and awareness: Nestlé has rolled out human rights training programs
to raise awareness among employees and develop their skills in dealing with
human rights issues. As of 2018, Nestlé had trained about 96,599 employees.

6. Risk evaluation: Nestlé has integrated human rights risks within its Enterprise
Risk Management Framework and market compliance committees.

Additionally, Nestlé has collaborated with external organizations, dedicated

resources, and publicly reported on its progress, challenges, and failures. It has
also taken steps to address child labor in its cocoa supply chain, including building
schools and implementing age verification systems.

Overall, Nestlé's efforts demonstrate its commitment to addressing human rights

issues and promoting responsible business practices in its supply chains.

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02. Are there any changes to its CSR strategy that you would suggest?

Here are some suggestions for changes to Nestlé's CSR strategy:

1. Strengthen Supply Chain Monitoring: Nestlé should enhance its monitoring of

supply chain management systems by conducting independent third-party
assessments. This will help identify risks and issues related to human rights
abuses, such as child labor and slavery, and take appropriate actions to address
them.

2. Increase Transparency: Nestlé should improve transparency by publicly

reporting on its progress, including challenges and failures. This will demonstrate
the company's commitment to addressing ethical and reputational risks and hold
it accountable for its promises. The case study highlights criticisms of Nestlé for
providing incomplete and insufficient information about TNCP and its certification
schemes. Offering more comprehensive data would help build trust with
stakeholders and demonstrate the company's commitment to addressing labor
issues in its supply chain.

3. Collaborate with Industry Partners: Nestlé should actively collaborate with

industry partners and stakeholders, such as the Thailand Seafood Industry and the
Good Labor Practices Working Group, to share progress, learnings, and innovative
solutions. By working together, they can collectively address the complex issues in
the supply chain and expand implementation to other regions.

4. Allocate Dedicated Resources: Nestlé should appoint an executive who will be

responsible for implementing the CSR action plan. This executive should
coordinate with relevant parties, manage implementation activities, allocate
necessary resources, and represent Nestlé to industry parties and stakeholders.
5. Focus on Grievance Mechanisms: Nestlé should establish effective grievance
mechanisms to enable workers to voice their concerns and ensure timely
remediation across countries and industries. This will help address any violations
of human rights and provide a platform for workers to seek justice.

These changes will help Nestlé strengthen its CSR strategy, address human rights
abuses in its supply chain, and enhance its reputation as a socially and ethically
responsible company.

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Q3. If some shareholders complained that Nestle has been spending too little or
too much effort on CSR, what would you tell them?

When addressing shareholders' concerns about Nestlé's allocation of effort

towards CSR, it is important to consider the following points:
Addressing Concerns of Shareholders Who Think Nestlé Spends Too Little on
CSR:

1. Focus on Reputation and Brand Value:

Shareholders may argue that increased investment in CSR can enhance Nestlé's
reputation and brand value. The case highlights the negative publicity and legal
challenges Nestlé faced due to allegations of child and forced labor in its cocoa
supply chain. By investing more in CSR, Nestlé can mitigate reputational risks and
safeguard its brand, which is valuable in the long term.

2. Costs of Legal Battles and Lawsuits:

Shareholders should be made aware of the costs associated with legal battles and
lawsuits related to CSR issues. The case mentions class action lawsuits against
Nestlé over alleged mislabeling of products as sustainable and lawsuits on child
slavery in Africa. These legal battles can be financially draining, and increased CSR
investment can help prevent or reduce such legal challenges.

3. Competitive Advantage:

Emphasize the competitive advantage that strong CSR initiatives can provide.
Companies that demonstrate a strong commitment to CSR often have a
competitive edge in attracting consumers, especially those who are ethically
conscious. Nestlé can benefit from this advantage by investing more in CSR.
Addressing Concerns of Shareholders Who Think Nestlé Spends Too Much on
CSR:

1. Balanced Resource Allocation:

Nestlé ensures a balanced allocation of resources to meet CSR objectives while

maintaining financial stability. While CSR is crucial, it's important to strike a
balance between CSR investment and financial sustainability. The case doesn't
explicitly mention Nestlé overspending on CSR, but prudent resource allocation is
essential to maintain profitability and shareholder returns.

2. Evaluating ROI on CSR Initiatives:

Explain that Nestlé evaluates the return on investment (ROI) on its CSR initiatives.
Effective CSR should provide a measurable ROI in terms of reputation
enhancement, risk mitigation, and consumer preference. Nestlé is likely to be
careful about ensuring that its CSR investments provide a positive return.

3. Legal and Ethical Obligations:

Nestlé has legal and ethical obligations to address labor issues and environmental
concerns. The case demonstrates that Nestlé faced legal challenges and
allegations related to child and forced labor, which require investment in CSR to
comply with legal and ethical obligations.

4. Market and Regulatory Pressures:

Share how market and regulatory pressures can necessitate increased CSR efforts.
Market trends and regulations are pushing companies toward stronger CSR
practices. Nestlé may need to adapt to these pressures to remain competitive and
avoid regulatory penalties.
Q4. What grade would you give to Nestle for its efforts thus so far to become a
socially responsible environmentally sustainable company?

Grade – B (Good)

Nestlé has made efforts to become a socially responsible and environmentally

sustainable company. They have established clear roles and responsibilities, set
up boards and committees, and implemented grievance mechanisms to address
human rights issues. Nestlé has also taken steps to tackle child labor in its cocoa
supply chain and has partnered with organizations to help workers voice their
concerns. They have dedicated resources, collaborated with industry partners,
and publicly reported on their progress. However, there have been criticisms and
controversies surrounding Nestlé's corporate responsibility in the past. Overall,
Nestlé's efforts can be seen as a step towards becoming a more socially
responsible and environmentally sustainable company, but there is room for
improvement.

Why Grade B:

While Nestlé has initiated some CSR efforts, there are lingering doubts about the
effectiveness and transparency of these initiatives. Critics have accused Nestlé of
"greenwashing" through TNCP.

There is room for improvement in terms of transparency and the depth of

Nestlé's commitment to combating child and forced labor in its cocoa supply
chain.

The complexity of the supply chain is a valid challenge, but it's essential for Nestlé
to invest more in addressing these issues, especially at the bottom tiers where
forced labor is most prevalent.

In summary, Nestlé's grade of "B" reflects a moderate effort to become socially

and environmentally sustainable. While the company has made strides in
addressing some CSR issues, there is room for increased transparency,
effectiveness, and a more proactive approach to eliminating child and forced
labor, especially in its lower-tier suppliers.
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Q5. What recommendations would you make to increase Nestle's triple bottom
line performance? Provide justification for these recommendations based on
the outlook for Nestle and the risks involved.

Economic:

Strengthen Supply Chain Management: Ensure efficient supply chain operations

to minimize waste, reduce costs, and enhance profitability by implementing
ongoing monitoring of business partners' supply chain management systems.

Enhance Governance: Establish a clear governance structure to optimize resource

allocation and strategic decision-making, thus contributing to long-term economic
sustainability.

Increase Transparency and Reporting: Regularly review and transparently report

economic performance, demonstrating fiscal responsibility and accountability to
shareholders and investors.
Social:

Improve Grievance Mechanisms: Create robust mechanisms for addressing

stakeholder concerns promptly, enhancing Nestle's social sustainability by
fostering a positive reputation and strong community relations.

Collaborate and Scale Up: Collaborate with industry partners and stakeholders to
expand social initiatives. This includes sharing best practices and scaling up efforts
to improve labor conditions in supply schemes and locations, contributing to
social well-being.

Environmental:

Increase Transparency and Reporting: Regularly report on environmental

progress, showcasing Nestle's commitment to environmental sustainability. This
demonstrates accountability and highlights efforts to reduce the company's
ecological footprint.

Dedicate Resources: Allocate resources to support environmental initiatives, such

as eco-friendly sourcing and production practices, reducing Nestle's
environmental impact and ensuring long-term ecological sustainability.

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