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Ethics and Stakeholder Report of Nestle

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 3158 words Published: 22nd Dec 2020

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Who are stakeholders?

Before starting with the stakeholders mentioned in this case study let’s talk about who are stakeholders and what is there role. Stakeholders are people with an interest or concern in a certain business.


Now let’s talk about the stakeholders that are mentioned in this case study. Greenpeace was one of the stakeholders mentioned in this case study as they started campaign against nestle. Some sources of media were also the stake holders such as social media which includes Facebook, vimeo, twitter and traditional media such as newspaper, television, radio. As Greenpeace started a campaign which was apparently revealing a discrepancy between the image that nestle was promoting and showed some realities that Greenpeace had no concern with other than there business. As a consequence, consumers all over the world immediately reacted on Nestles Facebook fan page. People were so angry that they even changed the KitKat logo into ‘Killer’ logo. Posts were removed from Facebook but Greenpeace reposted on other platforms like Vimeo, Facebook and Twitter.

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Nestles customers also took a massive part as stakeholders as they posted highly critical messages, more than 120,000 emails were sent to Nestles CEO Paul Burke demanding Nestle to stop destroying the Indonesian rainforest and making species homeless by deforestation to get access to use palm oil. Nestles employees also took part as stakeholders as Nestles CEO played a vital role in making the situation better, by officially apologising on its Facebook page and announced a major change by changing its supply chain having no contact with illegal distributor Sinar Mars and by forming a new contacts with legal distributors such as Cargill. The forest trust also took a huge part as stakeholders as Nestle signed a partnership with the forest trust on 17th may 2010, which was an NGO that promotes sustainable forestry exploitation. Nestle defined their responsible sourcing guidelines with the help of the forest trust.

What is Ethical?

Ethical is something related to moral principle and something that makes an impact socially and affects the environment too.

Ethical marketing issues:

Some of the ethical marketing issues Nestle faced that are raised in this case study are deforestation, ecological outcomes due to palm oil production and some of their product posted a threat to human health. At environmental and ecological level Nestle palm oil production increase from 170,000 to 320,000 lead to deforestation to Indonesian rainforest which affected people and animal. It lead to the extinction of the animal called orang-utans and destruction of other plants and animal species. The Orang-utans only lived in the Indonesian tropical rainforest of Borneo and Sumatra, deforestation deprived them of their natural source of food and habitat which forced them to eat young palm oil plant leading to plantation workers killing them.

Secondly deforestation posted a threat to two-thirds of the terrestrial plant and animal species found in the forest therefore deforestation raised dramatic concern for their survival. At a social level deforestation affected local communities by the development of conflicts over land rights and resources disputes, people used to claim their rights to some of the land so as to benefit from palm oil production and plantation. At health related level, Palm oil consumption posted a threat to human health though was not stated in Greenpeace report. Palm oil consumption indeed contains high level of saturated fat which could lead to cardiovascular diseases. Relating to what Nestle went through with their ethical marketing issues we learn a lot of qualities and lessons. Some of the lessons we learn is when doing a business one must make sure that the business does not affect social, environmental and ecological factors. Deforestation lead to a lot crisis which really affected people, plants and animals and it destroyed their image leading to a bad reputation. Nestle palm oil posted a threat to human health because of the high saturated fat it had. In all these we learn to produce product that are not a threat to human health and in doing business we must try to make sure it does not affect people socially and the environment around.

Solutions to ethical issues:

Ethical is the something related to moral principle. Some of the ethical issues Nestles’ had are deforestation, which lead to the destruction of many plants and animals. Palm oil consumption also came with dangers to human health because it had saturated fat that could lead to cardiovascular diseases. Nestle was first accused by Greenpeace that their use of palm oil had risen from 170,000 to 320,000 tons. They defended themselves saying that they use less than one percent of the world’s palm oil production compared to the use of 500,000 tons of biofuel production in the UK and Germany. Nestles’ first reaction toward the video posted by Greenpeace, they delete the negative posts on their Facebook page and demanded for the video to be removed from YouTube but unfortunately the video had already in other different social media applications. They later officially apologised on their Facebook page and also changed their PR firms.

They later also changed their supply chain, severing any direct contract with Sinar Mars the Indonesian producer that were accused of breaking Indonesian forestry laws and regulations. Nestle announced that it needed to use only certified palm oil by 2015 when there will be enough available quantity, the announcement was aligned with the conclusion of the 190+ participants including nestle in the roundtable on sustainable palm oil organised on the 25 March 2010.The World Wide Fund was among them claimed that it was urgent that firms increased their product certified palm oil, which necessitates that palm oil trees be planted on a non-wooded areas and respect diverse social and environmental requirements. As a results of the whole crisis Nestles’ responded by signing a partnership with The Trust Forest on 17 May 2010, it’s an NGO that supports forestry exploitation. With their help Nestle defined the Responsibilities sourcing guidelines the set of critical requirement to guide Nestle procurement process and to ensure compliance with the Nestle supplier code. They expected that 50percent of its palm oil purchases would come for sustainable sources by the end of 2011 keeping the 100 per cent objectives by 2015. Every action taken by Nestle can be followed on a dedicated webpage of the firm’s website called ‘Update on deforestation and palm oil’.

One final response that Nestle did was they announced in late 2011 that most of its recipe were under major revision to improve the nutrition qualities of its products like they would contain less sugar, salt and fat. This lead to RSPO delivering a very good grade to Nestle to reward it for its efforts in managing its palm oil supplies.  (RSPO is a non-for-profit associate that unites stakeholders from seven sectors of the palm oil industry to help develop and implement global standards for sustainable palm oil). Relating this to business we get to learn different values of how Nestle responded to the ethical issues raised at them. Nestle did respond positively to issues at them and changed positively for the better of their company and to improve their image too. By signing different partnership and commitment to help and stop deforestation and saying no to deforestation product. As a business we learn to accept and acknowledge our mistakes and try to correct them as soon as possible and make commitments and partnerships to prove your support to correct your mistake.

Corporate social responsibility:

The problems faced by nestle:

  • Deforestation dramatic concerns for the survival of all the   terrestrial plant and animal
  • Palm oil consumption come with the dangers for human health, it contains high level of saturated fat which can lead to cardiovascular disease

The deforestation was one of the problems faced by nestle because it had effect on the plant and animal. Nestle was getting their palm oil from illegal producer who was burning down forest and this affect the animal because they have no place to live and also no food to eat, the animals were eating young plant which lead to their killing by the famer. [Orang-utans]. The burning of the forest can affect human health because of the smoke been release into the air it can affect human and create a lot of disease such as damage to reproductive organs, harm to liver blood and nervous system. Nestle are losing their customer because of the air pollution.

The consumption of palm oil that nestle put in their product can be endanger to human health because it contain high level of saturated fat which can lead to cardiovascular disease. Another problem that was faced by nestle was the effect of environment the smoke from the burning down of the forest cause air pollution which affect the environment because it gas an effect on the climate and also human health. Effect on economy nestle still bought palm oil from illegal producer Sinar mars who do not have legal right to sell palm oil, Greenpeace company complain that nestle is buying from an illegal supplier nestle came out to say that they have changed their supplier, but Greenpeace still found out that they were still purchasing from that supplier. This can cause an effect on the economy because the supplier is stealing land from the local community which can affect the economy of a country. Relating it to marketing there are three main corporate social responsibility pillars for the individual and families this enabling healthier and happier lives and the second one is for the plant stewarding resources for future generation and the last one is for communities helping develop thriving resilient communities.

Social medias influence to issues raised by Greenpeace:

There two question here first is the response to the issues raised by Greenpeace and what can be learnt from it. Nestle chairman created a group of senior staff in the company to help resolve the issues on Facebook and the they started marketing and communication strategy to help them answer the question on their Facebook page which work because the person there  before did not solve the problem    nestle actually got some help from the social media because they change their supplier  because from the social media they got information that they should change their supplier which they did to keep their customer.

Lesson learned:

We can learn leadership skills from this case study because nestle chairman created a group of senior staff who have experience to help them solve the problem at that time. The chairman also apologies about the deforestation and started plantation of trees in the forest which they have burn down. The chairman come clean to admit that they were buying palm oil from an illegal supplier, but they have changed the supplier to show how serious they are about keeping their customer.

Current status and Improvements:

Nestle has announced that it will pay Starbucks $7.1bn (£5.2bn) to sell the company's coffee products. The Swiss giant, which boasts Nescafe and Nespresso amongst its brands, will have the right to market Starbucks' coffee in retail outlets outside the cafe chain. That part of the business currently generates $2bn in annual sales. The deal means Nespresso machine owners will be able to buy Starbucks coffee branded pods for use at home. Consumers will also find Starbucks coffee beans, ground and instant coffee more readily available as Nestle, the world's largest food and drinks company, uses its vast distribution network to market Starbucks products worldwide. The Swiss company Nestlé S.A. was rated as the world’s largest fast moving consumer goods company, in terms of revenue amounting to a staggering 90.8 billion U.S. dollars in 2017. It is headquartered in Vevey, Switzerland and employed approximately 323,000 people worldwide in 2017.

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The product portfolio is vast and ranges from beverages such as powdered and liquid beverages or water (Nestlé Waters), to baby and health foods (Nestlé Nutrition) and sweets and snacks (Nestlé confectionery sector). Nestlé today joined a coalition of major palm oil producers and buyers to support and fund the development of a new, publicly available radar-based forest monitoring system known as Radar Alerts for Detecting Deforestation (RADD). Since the end of 2018, Nestlé has been monitoring 100% of its global palm oil supply chains using Starling, a monitoring system using optical and radar satellites. This allows the company to manage risks and perform field intervention strategies to drive changes. Today’s move is a step further to realize Nestlé’s no deforestation commitment by contributing to industry transformation through publicly accessible monitoring system. “No longer can anyone claim to be unaware of the deforestation risks around their supply chains,” said Benjamin Ware, Global Head of Responsible Sourcing, and Nestlé. Developed by Wageningen University and Satelligence, and facilitated by World Resources Institute, RADD is the first radar-based monitoring system of this scale that will make deforestation alerts publicly available. Alerts will be made available on Global Forest Watch and Global Forest Watch Pro. We take an integrated approach in addressing the risks of deforestation, combining tools like certification, supply chain mapping, on-the-ground verification and satellite monitoring,” said Benjamin. “We are pleased to support the development of forest monitoring system like RADD as it will bring accountability and transparency across the industry.”

The open nature of the system will enable companies - plus governments, civil society organizations and concerned stakeholders - to monitor forests using the same information source and standards. Nestlé is committed to having deforestation-free products. As of April 2019, 77% of the key agricultural commodities Nestlé buys, including palm oil, were verified deforestation-free. That figure will surpass 90% by the end of 2020. Nestlé will continue to work with smallholder farmers and large suppliers alike to be close to 100% deforestation-free within the next three years. Nestlé has today inaugurated its first Gerber NutriPuffs cereal snacks plant in Shuangcheng District, Harbin City, Heilongjiang Province, and China. With an investment of around RMB 100 million (approx. CHF 14 million), the launch is an important milestone for Gerber in China. Gerber has a range of baby foods already available in China including infant cereal, fruit and vegetable puree, and baby snacks. Currently, Gerber is the No. 1 brand of infant cereal in China market.

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