Ethical Issues of Nestlé

Introduction of Nestlé

Nestlé is the world’s leading nutrition, health and wellness company. Their mission of ‘Good
Food, Good Life’ is to provide consumers with the best tasting, most nutritious choices in a wide
range of food and beverage categories and eating occasions, from morning to night. For well over
a century, their commitment to producing foods that uniquely fulfill people's needs has been the
secret ingredient in everything they make. Creating Shared Value is a fundamental part of the way
that they do business. They believe that to enhance and protect their business they must go beyond
compliance and sustainability and create new and greater value for their people, their shareholders
and society as a whole (Nestlé, 2015).

Nestlé’s products include baby food, bottled water, breakfast cereals, coffee and tea,
confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Twenty-nine of
Nestlé’s brands have annual sales of over US $1.1 billion, including Nespresso, Nescafé, Kit
Kat, Smarties, Nesquik, Stouffer’s, Vittel, and Maggi (Fortune, 2011). Nestlé has 449 factories,
operates in 194 countries, and employs around 278,000 people. It is one of the main shareholders
of L’Oreal, the world’s largest cosmetics company. Together Nestlé and L’Oreal have leveraged
their relationship by forming two further joint ventures, Galderma and Innéov, to develop leading
edge products in dermatology and the new field of nutricosmetics (Nestlé, 2015).

Ethical Issues

The controversy between breast feeding and formula feeding gained high attention over the past
30 years, especially when it comes down to Nestlé. In 1977, campaigners first called for a boycott
of Nestlé according to its aggressive and deceptive marketing of infant formula to Third World
countries. This boycott was launched in the United States and it spread into Europe in the early
1980s. The boycott has been canceled and renewed based upon scrutiny of the business practices
of Nestlé and other substitute manufacturers monitored by the International Baby Food Action
Network (IBFAN), which consists of more than 200 groups in over 100 countries. Organizers of
the boycott claimed that use of the infant formula substitutes represent a health risk for infants and
encourage the practice of newborn nutrition via natural breast milk.

Nevertheless, regardless of the boycott, it is said that Nestlé produces a very high quality infant
formula, healthier than any other alternatives, which the firm successfully marketed in North
America, Europe, and some parts of Asia. Consequently, it seemed to make sense for the company
to market formula in Africa using the same communication strategies that had worked elsewhere.
However, Nestlé officials failed to take into account important cultural and economical differences
(Sage Publication, 2006). IBFAN claimed that the promotion of infant formula over breastfeeding
has led to health problems and deaths among infants in less economically developed countries.
There are three problems that have arisen when poor mothers in developing countries switched to
formula (Longhurst, 2015):
1) Formula must normally be mixed with water, which is often polluted in poor countries, leading
to disease in vulnerable infants. Because of the low literacy rates in developing nations, many
mothers are not aware of the sanitation methods needed in the preparation of bottles. Even
mothers able to read in their native language may be unable to read the language in which
sterilization directions are written.
2) Although some mothers can understand the sanitation standards required, they often do not
have the means to perform them: fuel to boil water, electric (or other reliable) light to enable
sterilization at night. United Nations International Children's Emergency Fund
(UNICEF) estimates that a formula-fed child living in disease-ridden and unhygienic conditions is
between 6 and 25 times more likely to die of diarrhea and four times more likely to die
of pneumonia than a breastfed child.
3) Many poor mothers use less formula powder than is necessary, in order to make a container of
formula last longer. As a result, some infants receive inadequate nutrition from weak solutions of
formula.

Resolutions of the Case

The boycott focuses considerably on when and how Nestlé comply with the World Health
Organization’s (WHO) Code. While focusing on external codes can create discipline, clear
guidelines, measurable results, etc. However, this type of focus can also distract people from the
broader questions of whether the actions themselves are ethical or not. In the specific case of the
WHO Codes, there are elements such as no infant pictures on labels, no sampling to mothers, no
point-of-sale advertising etc. which seem to focus more on limiting Nestlé’s sales than on
safeguarding the health of vulnerable children (Longhurst, 2015). In this regards, while Nestlé’s
focus on the WHO code is politically viable, it does not quite get to the root of the issue. From a
deontological point of view (Deontological argues, first, that to act in the morally right way,
people must act from duty, second, that it was not the consequences of actions that make them
right or wrong but the motives of the person who carries out the action (Waller, 2005) ), it could
be argued that since Nestlé’s baby formula is healthier than other alternatives that selling the baby
formula is ethical. Besides, Nestlé infant formula could save the lives of babies whose mother are
positively AID/HIV infected. However, this case highlights the difficulties of a legalistic and
deontological approach in that different customers are reacting quite differently to the same
marketing (Longhurst, 2015). Consequently, it would sound fair for Nestlé to utilize their own
codes of ethics and conducts for the operation in poor countries while keeping WHO codes as a
top guideline.
From a consequentialist point of view (Consequentialism is the class of normative ethical
theories holding that the consequences of one's conduct are the ultimate basis for any judgment
about the rightness or wrongness of that conduct (Mizzoni, 2010), which is commonly
encapsulated in the English saying, "the ends justify the means", meaning that if a goal is morally
important enough, any method of achieving it is acceptable), while the baby formula itself
is healthy, if customers misuse the product, the net consequences of the marketing could be
negative. In other words, there is an ethical and moral responsibility to educate customers in how
best to use the product. In this sense, what is more important is actually education and training
rather than items in the WHO code such as removing pictures of babies from labels. From a
utilitarian point of view (an action is morally right if it results in the greater amount of good for
the greater amount of people affected by the action (Crane and Matten, 2010) ), the sacrifice
required to improve the education of customers and the training of sales people does indeed
increase happiness or at least reduce suffering and unnecessary deaths, thus it would be morally
and ethically justified and even required for Nestlé to do a better job at informing customers as to
the benefits of natural breast milk, the dangers of contaminated water (and the fact that their
formula will not fix that), the importance of providing proper nutrition (for customers who use too
little nutrition), and constantly monitoring the way customers use and misuse the product in order
to help all their stakeholders derive the maximum benefit from their product. This also makes
business sense as well informed stakeholders would derive more value and utility from using their
product.

Other methods which could be applied by Nestlé to improve their damaged reputation from the
boycott under the understanding of theories of utilitarianism include giving support (i.e. funds and
knowledge) to local governments in terms of providing available clean water (i.e., building
hygienic wells, offering tools to boil the water and tools to keep boiled water clean), following
different codes in different countries while keeping WHO Codes and Nestlé’s own ethical codes as
top guidelines, reporting code violation discovered either in Nestle's audits, or in African countries
or from any other organizations directly to HQ so that appropriate disciplinary actions could be
taken on time.

Conclusion

The key question for this case is whether or not Nestlé was guilty of an ethical violation in the
marketing of their product. While the company claims that their baby formula has been
scientifically proven to be healthier than many alternatives, there are still many vulnerable
children who were dying unnecessarily due to their parents’ misuse of the product. While it would
be easy (and partially justified) to lay the blame on the parents who are misusing the product,
Nestlé has the obligation to seek ways to avoid ways for these clients to be damaged by the misuse
of the produce. From the point of view of virtue ethics, courage, justice, charity and prudence
seem to suggest that if Nestlé can solve unnecessary suffering, they should. From the point of
view of deontology, solving unnecessary suffering could be made into a universal maxim and from
a consequentialist/utilitarian point of view the increased happiness and reduced suffering would
justify the effort to educate customers in the proper use of the baby formula. All the methods
suggested above might solve the controversy between Nestlé and campaigners to a large extent if
these methods were carried out responsibly and carefully, however it will be a long way to go in
the future.

References
1) Crane, A. and Matten, D.(2010) Business Ethics: Managing Corporate Citizenship and
Sustainability in the Age of Globalization. Third edition. Oxford: Oxford University Press.

2) Fortune. (2011). Nestlé's Brabeck: We have a "huge advantage" over big pharma in creating
medical foods. Retrieved march-2015, from
http://archive.fortune.com/2011/04/01/news/companies/nestle_brabeck_medical_foods.fortune/ind
ex.htm

3) Heber Longhurst (2015). Nestlé & the Infant Formula Controversy: Did Nestlé Incur and
Ethical Violation through Marketing of Infant Formula? Retrieved march-2015, from
https://www.academia.edu/7146054/Nestle_and_the_infant_formula_controversy?

4) Mizzoni, John (2010). Ethics: The Basics. John Wiley & Sons. p. 104.

5) Nestlé. (2015). About us. Nestlé today. Retrieved march-2015, from

http://www.nestle.co.nz/aboutus

6) Sage Publication (2006). Ethical Decision Making and Action. Retrieved march-2015, from
http://www.sagepub.com/upm-data/12906_Chapter3.pdf

7) Waller, Bruce N. (2005). Consider Ethics: Theory, Readings, and Contemporary Issues. New
York: Pearson Longman. P.23.