Nestlé Switzerland and Global Water

Crisis

The history of all hitherto existing society is the

history of class struggles” and that the inevitable
victory of the proletariat, or working class, would put
an end to class society forever.
Karl Marx, The Communist Manifesto
(Feb. 21, 1848)1
Introduction
Should water be commoditized and sold by private industry, or is it essential human right?
Peter Brabeck-Letmathe serve in as Nestlé's CEO from 1997 to 2008 (he additionally serve in
as board for a time and is now chairman emeritus ). Despite the fact that he never expressed the
careful words "water is certainly not a human right," he appeared to state as much in a 2005
narrative called We Feed the World, wherein he described the view that individuals reserve a
privilege to water as "extreme". 2

Switzerland has helped 8,000,000 individuals improve access to clean drinking water and
proficient water system frameworks for horticulture, says the Swiss Agency for Development
and Cooperation (SDC). Introducing its mid-term report on 2017-2020 targets, featured giving
sterile can offices to 3,000,000 individuals in Africa, Asia and Latin America. The
administration organization has likewise collaborated with a Swiss beginning up hatchery in the
Middle East, which has helped 650 firms dispatch water, sanitation and waste ventures in the
area.3

Exactly 844 million individuals at present need access to clean water, SDC expressed. As per
the World Health Organization, 1,000 youngsters younger than five bite the dust each day since
they need access to clean water and sanitation. The Swiss government has as of late set the
global participation needs for the period 2021-2024. This sets out four center areas: North
Africa and the Middle East; sub-Saharan Africa; Central, South and South-East Asia; and
Eastern Europe. Global collaboration will organize destitution decrease and human security,
manufacture nearer connects with the private area and look for worldwide participation on
relocation issues.4

Global Water Scarcity

The water scarcity issue has severely affected developing nations. Most of the regions of
Asia, Africa and Europe including Britain face water stress as per UN report. 5 World
Economic Report mentioned that Pakistan is suffering from high level of water crisis and it
may “run dry” by 2025. In 2015, a study by NASA, confirmed that Indus Basin Aquifer is
quickly diminishing and is most stressed among the world. 6 International Monetary Fund
(IMF) reported in 2018 that Pakistan had 1500 cubic meters’ per capita annual
water availability in 2009 that has drop to 1017 cubic meters by this year which is an
alarming situation for country. These stats are distressing for a country whose 70% of
population is associated with agriculture that accounts for 26% of GDP. Pakistan Council
Research in Water Resources (PCRWR) stated that water shortfall in Pakistan can harm its
agriculture-based economy if federal and provincial government did not take any right
actions on time.8

United Nations reported that nearly 2 billion people will face water crisis by the end of
2025.9 (Exhibit 1). In United States, Flint being the largest city of Michigan is facing water
issues since 2014. The residents do not have access to clean drinking water as a result of the
shift to less costly source of water i.e. Flint River. The critics attribute the switch to
inefficient infrastructure and economic downturn.10

Switzerland, known as ‘water tower’ of Europe, constitutes 5% of European fresh water

reserves however also faces water scarcity in some regions.11 It is also reported that water
scarcity will increase as a result of climate change in SwitzerLand. Agriculture is linked to
the 80% of Switzerland’s water footmark: the regions which are susceptible to water
shortages are used to import the four-fifths of the agricultural products consumed by Swiss.12

Nestlé and Water Industry

Nestlé sold $7.7 billion worth water worldwide in 2017 with more than $343 million of it
extracted from Michigan. Due to weak infrastructure in such areas Nestle is exploiting its
resources to build its market share. Michigan’s Department of Environmental Quality (DEQ)
stated that bottled water merely account for less than 1% of total water usage in Michigan
encouraging MNC’s actions. In North America, Flint, Michigan residents do not have access
to clean drinking water yet their Governments are selling natural water resources to Nestle.13

In 1930 engineers installed pipes in Swiss regions that were already suffering from water
shortage. Bisses that carry water from mountain regions to lower valleys went into disuse
after 1930s as a result of mechanization of water distribution system. Elinor Ostrom a
proponent of equal natural resource availability developed system for equal rights to extract
natural resources to common people. Regional Seas Programme was founded in 1974 to
regulate and monitor water supply across different countries and it achieved its first objective
when in 1976 Israel and the Arab States were brought together through an agreement. Stjepan
Keckes conceptualized that natural or environmental problems were likely to be political and
economic rather than being scientific only and require respective solutions.14

Nestle started selling in Pakistan Pure Life in 1998 with a market campaign of providing safe,
quality water solution in Lahore. With Nestlé’s introduction of bottled water,
environmentalists say Government had step back from its responsibility to fix utilities in
country. World Bank reported in 2011 that 29% of water related cost was comprised of
bottled water consumption that is equal to 1.4% of total economic cost in Pakistan.15

Switzerland Economy and Nestlé

Nestle is one of the giants in food and beverage manufacturing industry. In 2016 Access to
Nutrition Index™ (ATNI) ranked Nestle second out of 22 global companies. The global
turnover of Nestle in 2018 grew up to CHF 10.1 Billion (Exhibit 1).16

In Switzerland, 3.8 billion were invested by Nestle from 2008 to 2017. The company spends
990 million on research and development in the country. Moreover, it pays heavy taxes via
corporate tax and income tax directly and indirectly. Nestle remains committed to
Switzerland with a success story that spans around 150 years.17

Nestle Waters

Nestle started its bottled water operations in 1843 after the purchase of business on
Switzerland’s Monneresse Canal and it is largest brand of bottled water in terms of sales
(Exhibit 2,3). It owns almost 100 bottled water factories in 34 countries around the world.
Nestlé’s objective was to provide mineral water to achieve healthy lifestyle. 2018’s
worldwide sales of Nestlé Water exceeded $7.8bn (Exhibit 4).
Considering the stats and strong global position of Nestle it has strong role in determining
politics of the country. One view of political economist says, economic classes are the main
factors that determine the foreign policy of any state. The interest of any actor having power
in terms of wealth will dominate the decision making regarding business regulations.18

Critics argue strong political influence of Nestle can be seen in the commodification of water
despite severe issues of water scarcity globally. Nestle is focused on maximization of profit
by exploiting the natural shared resource. The hold of Nestle in government departments can
be seen at various levels. Recently, Ex CEO of Nestle - Peter Brabeck, became the head of
‘Geneva Science and Diplomacy Anticipator’ (GSDA). Brabeck always defended the
commodification of water issue and his choice to lead GSDA shows the role of multinational
corporation in the government has been quite influential.19

Another such example is Cristian Frutigar’s selection as the vice president of a Swiss agency
for development and corporation (SDC). This agency plays role in development projects in
other countries. This shows the policies of government are highly influenced by the business
key players. Despite growing issue of water scarcity the SDC supported the establishment of
Water Resource Group, the objective of which was privatization of water. Moreover, the
director of SDC is also a member of WRG board of governance.20

The problems with Nestle’s bottling operations are seen in many developed and developing
countries including France, Canada, Africa, Pakistan and the U.S.A. The issue is both SDC
and governments support the MNC and compromise the interest of their own citizens. In
France, the situation is quite clear, despite the fact that Vittel aquifer is depleting as per
reports the government has done nothing and Nestle can freely draw water from the aquifer.21

Anti-Bottled Water Campaigns and Nestlé’s Response

There has been a great deal of backlash for the bottled water companies. Annie Leonard
attributes the growth of bottled water companies to the misleading marketing campaigns and
gives convincing reasons to switch back to tap water.22

However, International bottled water association have responded to ‘The Story of Bottled
Water’ by saying that it is just an effort to damage bottling industry and lacks factual
information. Tom Lauria (VP of communications - IBWA) said, consumers are thoughtful
rather than victims as illustrated by the video.23
Another argument posed by Leonard is that bottled water companies are increasingly adding
to pollution and consuming energy that can be utilized in other areas. Moreover, the cost of
water extraction is minimal as compared to the returns which is depleting natural resources
for the benefit of only one entity and expense of masses. IBWA and Nestle give counter
argument that they are manufacturing 100% recyclable containers. A video ‘Good Stewards’
has also been uploaded by the organization to support its claims.24

In 2018, Nestle committed to improve its packaging by 2025. To achieve this, Nestle Institute
of Packaging Sciences has been established. Maurizio Patarnello (CEO - Nestle Waters) says
we accept the plastic waste issue is rising globally and we are looking for more natural ways
for packaging. With the help of Danimer Scientific, Nestle aims to create biodegradable
bottles that can be recycled.25

The resistance to bottled water initially came from Christian groups in 2006 when National
Coalition of American Nuns vowed to avoid use of bottled water. Later a documentary
‘Troubled Waters’ was aired that demonstrated the privatization of a shared resource is a
sin.26

By 2009, the anti-bottled water movements grew to the extent that many schools banned on
campus sale of bottled water. Washington University in St. Louis, Missouri, being the first to
take the initiative followed my University of Portland and many others.27

According to Bloomsberg Business Week story: “Nestlé Makes Billions Bottling Water It
Pays Nearly Nothing For”. It has been disclosed that Nestle paid $200 for extracting out
water from Michigan while the people living there in Michael Moore’s Flint have water
supplies so polluted that they cannot drink it. According to Caroline Winter $343 million of
Nestlé’s bottled water comes from Michigan. According to the detailed report of Bloomberg,
the company doing operation in Michigan reveals that Nestle has come to dominate with
water laws by going into economically depressed areas.28

Nestle has to face resistance but it took advantage of the Government. Water scarcity stats
irritate many because the natural resource gets pulled out of local water reserves for private
profit, not used in the facility of serving people or keeping their lights on. There’s also, of
course, the issue of plastic pollution. Nestle has taken over 4 billion gallons of water for
pennies and sold it back to same country for huge profits between 2005 and 2016. David
Zetland, author of Living with Water Scarcity, says governments must choose how much
water they want to protect under the public trust policy and the rest should be divided up on
the open market.29

Olson Evart inhabitants said that water is an open asset that the legislature is committed to
secure.20 Brabeck says that while water is the central issue, it additionally should be found in
relationship to the two other key difficulties mankind is confronting, to be specific
nourishment and vitality security.30

In 2012, among the various complaints against Nestlé, the honor winning film Bottled Life
recorded the contention among Nestlé and the network of Bhati Dilwan, a town in Pakistan
where nearby pioneers and individuals from the network have blamed Nestlé for depleting
groundwater assets to deliver its Pure Life filtered water. An ongoing Sum of Us request
reproving Nestlé's exercises in Pakistan got more than 346,000 signature. "Given the
particular center, constrained scope and glaring exclusions, the report can't be viewed as
anything over the organization's most recent advertising stunt," says Jorgen Magdahl of the
Norwegian NGO FIVAS.31

WWF-Pakistan joined forces with WWF-US and Levi Strauss and Co. (LS and Co) to
advance water stewardship in the Indus Basin. The undertaking exercises included fast needs
evaluation of water dangers of five LS and Co sellers in Lahore. Moreover, business cases for
Best Water Management Practices (BWMPs) were set up to improve asset productivity inside
ventures.

Nestle takes on water stewardship stating, wherever we operate water resource studies are
conducted and withdrawals are monitored continuously to monitor any negative impact on
local aquifers.24 In Buxton, UK 100% renewable energy is used to run the facility. In
Henniez, Switzerland agricultural biogas is used to meet power requirements.32

As indicated by nourishment and water watch, settle or its lobbyists gave $634,000 to Maine
government officials somewhere in the range of 2001 and 2012. In spite of the fact that it's on
government land, the Swiss filtered water goliath paid the US Forest Service and state for all
intents and purposes nothing, and it benefitted liberally: Nestlé Waters' 2018 overall deals
surpassed $7.8bn (Exhibit 5). The system of clear streams containing California's Strawberry
Creek run down the side of a precarious, rough mountain in a national woodland two hours
east of Los Angeles. A year ago Nestlé siphoned 45m gallons of perfect spring water from
the stream and packaged it under the Arrowhead Water mark. Nestlé's exercises left
Strawberry Creek "weakened" while "the flow water extraction is evaporating surface water
resources". Nestlé plan to take 1.1m gallons of water a day from characteristic springs sparks.
Meanwhile, the state is exploring whether Nestlé is wrongfully drawing from Strawberry
Creek and in 2017 exhorted it to "quickly stop any unapproved preoccupations". In any case,
after a year, the Forest Service endorsed another five-year license that permits Nestlé to keep
utilizing government land to extricate water, a choice pundits state resists basic sense.33

In 2007, the government of San Francisco, California inhibited buying bottled water followed
by Seattle, Washington and others encouraging the use of free tap water.27 In Pakistan,
Supreme Court took action against Nestle for exploiting natural resources. In 2018, Chief
Justice ordered a forensic audit of mineral water operations of all major water companies.
Moreover, the chief commanded the companies will have to pay suitable fee for water to the
government and set justifiable prices.28 According to constitution, “The right to have
unpolluted water is the right of every person wherever he lives”. 34

Later, the audit reported a wastage of 1.9 billion 0ut 0f 4.4 billion liters of water from 2013
and 2017 (43% loss). Nestle explained 15% water wastage was due to reverse Osmosis while
it was unable to justify the remaining 28% of wastage. Moreover, the report also highlighted
the lack of planning by the government in response to rapid depletion of water. The legal
shortfalls were also found in regulating such businesses.35

In British Columbia, Water Sustainability Act (WSA) was implemented on 29 February

2016. The purpose was to ensure continuous supply of clean water to citizens. This Act
required businesses to apply for license in order to extract groundwater. Furthermore, fees
and rentals for water use were revised and focused on better maintenance of ecosystem.
Critics say although this act is a commendable initiative by the government however its
implementation in true sense seems difficult.36

Recent drought in B.C. have raised questions about the use of water by bottling industry.
According to Nestle the stats about groundwater use are exaggerated saying, we are only
extracting water from one source i.e. Kawkawa Lake aquifer. The use of water is managed
efficiently so that other water users remain unaffected.37

Do Nestle Care?
Although Nestlé was positioned among Corporate Knights' 2018 Global 100 Most
Sustainable Corporations in the World. In 2018, nestle held place in CDP's yearly Climate.
For instance, Nestlé scored 100 for Health and Nutrition Performance criteria and holds
administration scores in the Environmental measurement. The objective of the Access to
Nutrition Indexes is to encourage improved abstains from food and a decrease of the genuine
worldwide issues of both stoutness and under-nutrition. The fact that Nestlé planned an
unlawful reconnaissance operation within Switzerland and was convicted by the Swiss courts
for doing this had no outcome on the company’s affairs with the Swiss Government and
especially with the Swiss Agency for Development and Cooperation, as one would expect
this position welcomed the questions: if the company is capable of such actions in
Switzerland itself, what would the company do in other countries of weaker democracy
guarantees? or how much should the government truly care about socially reckless activities
of Swiss based organization?

The Road Ahead

On current of position, Nestle and Switzerland government still have numerous choices
available. What alternative would give nestle best outcome? Should nestle proceed as it was
and underestimate the periodic piece of negative publicity? or should nestle accomplish more
to handle what had ended up being a complex issue? Should nestle looks to work more to
improve the water scarcity, such as by working with NGOs and transnational associations?
But how might such changes influences nestle profit margins more significantly the reaction
of customer to Nestlé’s steps?
Reference
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London: Penguin.

2 Nestle (2019), Does Peter Brabeck-Letmathe believe that water is a human

right?.https://www.nestle.com/ask-nestle/human-rights/answers/nestle-chairman-peter-
brabeck-letmathe-believes-water-is-a-human-right

3 swissinfo.ch (FEB 5, 2019) Switzerland makes a splash with water development projects.

https://www.swissinfo.ch/eng/international-cooperation_switzerland-makes-a-splash-with-
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4 UN Development Programme (2019) New UNDP-Switzerland agreement to

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5 Roger Harrabin (19 June 2012). Shortages: Water supplies in crisis. Retrieved from
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6 Mohammad Mohsin Raza (19 June 2018). Thirsty Days Ahead: Pakistan’s Looming Water
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looming-water-crisis

7 Baloch, S.M. (2018, June 07). Water crisis: Why is Pakistan running dry? Retrieved
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8 Lakho, B. A. (2019, June 9). Water Scarcity in Pakistan. The Nation

9 Nadeem Shad (26 Aug 2019). Water scarcity: Five ways to avert a water crisis. Retrieved
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10  EMMA WINOWIECKI (21 Aug 2019). Does Flint have clean water? Yes, but it’s
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yes-it-s-complicated

11  Luigi Jorio (6 May 2019). Amid shortages, can Switzerland stay Europe’s ‘water tower’?
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switzerland-stay-europe-s--water-tower-/44943504
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13 Caroline Winter (2017 September 23) Nestle Makes Billions Bottling Water It Pays
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billions-bottling-water-it-pays-nearly-nothing-for

14 Peter Hulm (12 Sep 2017). Water and peace: Made in Switzerland. Retrieved from
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15 Rosemann, N. (2005). Drinking Water Crisis in Pakistan and the Issue of Bottled Water:
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17 Nestle. (2018, April). Enhancing Quality of life and contributing to a healthier future.
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library/documents/library/documents/about_us/nestle-in-switzerland-2017-en.pdf

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21 Swissinfo.ch. (2019, Feb). Switzerland moves to boost International Geneva. Retrieved

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22 the story of stuff project (2018) The Story of Bottled

Water.https://storyofstuff.org/movies/story-of-bottled-water/
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24 Good Stewards of the Environment, published on Mar 22, 2010,
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https://www.youtube.com/watch?v=iExU-NT-RlA
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26 Steven Stern (April 22, 2010) Bottled water faces

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32 Nestle. (2019). What is your response to false stories that Nestlé wants to privatize water
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34 Rana Bilal (16 Sep 2018) SC orders forensic audit of Nestle’s mineral water operations.
Retrieved from https://www.dawn.com/news/1433283
35 Mohsin Raza (31 Oct 2018) Audit report finds profit margins in bottled water sale
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36 Water Sustainability Act (29 Feb 2016). Retrieved from
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 Appendix

Exhibit 1

Source: [ CITATION Sta19 \l 1033 ]

Exhibit 2

Exhibit 3
Exhibit 4

Source: Nestle Website

Exhibit 5

Source: Nestle Website