UPDATE: The response to the Memorial described below was not discussed, but was adopted with the undertaking:

The Conference accepts the suggestion of the Lancashire District Synod that a further report be brought by JACEI to the 2015 Conference that includes an account of reports from independent agencies such as Save the Children and UNICEF on Nestlé’s performance in this area.

Memorial calls for transparency

The Methodist Church Conference 2014 is taking place in Birmingham at the moment (until 3 July).

A Memorial has been put forward by Lancashire District Synod basically calling for transparency from the Church’s Central Finance Board (CFB) on its million-pound investment in Nestlé.

I was asked to provide a working group of the Lancashire District Synod with an update of concerns about Nestlé at their meeting in May. I am pleased to see the Synod went on to vote to put forward a Memorial on the investment (105 votes for, 0 against and 10 abstentions).

The draft response to the Memorial published on the Conference website suggests that the investment has had a positive impact, when in reality it has had the opposite effect (see page 35 of the Memorials document prepared for Conference). The draft response credits the investment with prompting Nestlé to engage with the FTSE4Good ethical investment index – without pointing out that Nestlé weakened its baby milk policies prior to being included. FTSE4Good assesses companies against their own stated policies, rather than the baby milk marketing requirements they should follow, so the weaker the policies are, the better for Nestlé.

The draft response describes FTSE4Good as ‘independent’. It is not: the Methodist Church CFB sits on the FTSE4Good Expert Committee that advises on the criteria and on whether companies should be included or excluded in the index. While Nestlé was added to the Index in March 2011, UNICEF has confirmed Nestlé violates the marketing requirements. Save the Children, IBFAN and others have called for the FTSE4Good criteria to be brought into line with minimum standards and the assessment procedures to be changed.

I am not sure if Conference can – or will – vote against the draft response, but I’ll run through some of the key details with reference to the draft response proposed to the Memorial and links to supporting evidence.

One thing worth remembering is the 2013 Conference adopted a text stating: ‘Methodist members may, through conscience, wish to maintain a consumer boycott of [Nestlé] products.’

Baby Milk Action is grateful to the long-running support of many Methodist churches and members to the campaign to hold Nestlé to account and for raising this again at Conference. Some good news to reflect on is we joined other campaigning groups in achieving a significant victory at the UN Human Rights Council in Geneva this week: a treaty is to be drafted to hold corporations accountable for their human rights abuses. Might the Methodist Church be interested in giving its support to this initiative?

Decision of officials to invest based on incorrect assumptions

The draft response to the Memorial explains:

In 2005 the Joint Advisory Committee on the Ethics of Investment (JACEI) stated its view that there was sufficient evidence from Nestlé of responsiveness to campaign pressure and investor dialogue to make engagement an appropriate approach for the Central Finance Board

The view of JACEI was not supported by Baby Milk Action, development agencies or the evidence. In our experience it takes pressure from campaigns such as the boycott or the threat of legal action to force changes from Nestlé. As mentioned above and explained below, the CFB approach has made things worse, not better.

Baby Milk Action presented evidence at the time of JACEI’s deliberation that proved that assurances and claims made by Nestlé were simply not true. Rather than examine this evidence and correct its 2005 report accordingly, the JACEI Chair stated:

this was a complex and difficult issue… highly technical… it would be possible to continue the discussion ad nauseam… the Committee did not have the resources to do so, nor was it desirable for it to devote its attention exclusively to the subject of infant formula to the exclusion of other ethical issues.

Nestle pelargon leaflet detail BotswanaAs an example of the failings: Baby Milk Action had denounced Nestlé for promoting its formula in Botswana with the claim it counteracts diarrhoea. Babies fed on formula are more likely to become sick than breastfed babies and are at increased risk of diarrhoea, which can lead to malnutrition and death in conditions of poverty. Nestlé denied producing such a leaflet and JACEI included Nestlé’s denial in its report without comment – even after Baby Milk Action provided JACEI with a copy of the leaflet Nestlé claimed did not exist. (Full analysis from the time is available here).

CFB invested to achieve change – Nestlé says no change is necessary

The Lancashire District Synod Memorial states:

Whilst the CFB and JACEI undoubtedly excel in many areas, we are concerned that recent reports to the Conference in 2013 failed to clearly detail the actions or promises of action that meetings with Nestlé executives have brought about, given that the CFB has agreed that engagement with the company is an appropriate way to bring about change. We feel it is important at this stage that the Conference hears about any change in practice that our engagement as an investor has brought about.

Nestlé’s Chairman, Peter Brabeck-Letmathé states that the company complies with the marketing requirements and does not need to make any changes at all. Nestlé should comply with the International Code of Marketing of Breastmilk Substitutes and subsequent, relevant Resolutions of the World Health Assembly (sometimes called the ‘WHO Code’).

This is from an interview with Mr Brabeck in The Guardian on 31 January 2014:

Brabeck also defended Nestlé against accusations by Baby Milk Action that it contributes to the unnecessary death and suffering of infants around the world by aggressively marketing baby foods.

“We are the only infant formula producer which is part of FTSE4Good. We are being checked and controlled by FTSE4Good. They make their audits in different parts of the world and we have to prove that we are complying with the WHO code and up to now we can prove that in everything we are.”

This misrepresents FTSE4Good. It is not necessary to comply with the Code to be included in the FTSE4Good Index (see below).

How is the investment going to encourage Nestlé to abide by the Code when Nestlé already claims ‘in everything we are’?

In fact, from the draft response to the Memorial it appears that the CFB approach has actually prompted Nestlé to weaken its marketing policies

Nestlé, FTSE4Good, the Central Finance Board and conflicts of interest

The proposed response to the Memorial states:

One example of the influence that the Methodist Church has had as an investor is in persuading Nestlé to participate fully in the FTSE4Good process. This has independently verified Nestlé’s performance in accordance with the FTSE4Good criteria for the marketing of breast milk substitutes.

The inclusion of the word ‘independently’ is curious.

In its report to the 2013 Conference, JACEI explained:

A member of the CFB team sits on the FTSE4Good Expert Committee on Breast Milk Substitutes which met twice during the year. The Expert Committee reviews adherence by companies to the WHO Code on Breast Milk Substitutes and FTSE criteria, conducts a verification process and makes recommendations to the FTSE Policy Committee. Ultimately it can recommend inclusion or expulsion from the Index.

Baby Milk Action has suggested to FTSE that it is a conflict of interest to have Nestlé investors sitting on the Expert Committee as they have a vested interest in defending their investment.

Rather than describe FTSE4Good as independent, perhaps the draft response should include a reminder of the CFB’s role in it.

Nestlé was only admitted to the FTSE4Good Index because the breastmilk substitutes criteria were weakened in September 2010. It would not be admitted under the criteria in force beforehand. The Chief Executive of FTSE, the stock exchange listing company which runs the Index, explained the justification for weakening the criteria: ‘In the infant food sector we were not able to engage the companies as they were all being excluded from the index.’

Baby Milk Action engages with Nestlé on an on-going basis – but we won’t compromise on the marketing standards it should be following. One of the main concerns raised by Baby Milk Action, IBFAN, Save the Children, UNICEF Lao and others about the FTSE4Good criteria is they assess companies against their own policies, not against the WHO Code (full analysis here).

The CFB investment has resulted in Nestlé weakening its policies

The draft response to the Memorial states:

One example of the influence that the Methodist Church has had as an investor is in persuading Nestlé to participate fully in the FTSE4Good process.

However, Nestlé engagement with the FTSE4Good process coincides with it weakening its formula marketing policy – a step backwards.

Nestle materials in Armenia - June 2011As explained above, the FTSE4Good breastmilk substitute criteria assess practices against company policies, not the WHO Code.

The CFB invested in Nestlé in 2007. Nestlé weakened its formula marketing policies in July 2010. Prior to this it said it would not advertise follow-on milks (for use with older babies) with the same brand names as infant formula (for use from birth).

The Expert Committee on which the CFB sits developed weakened criteria that were introduced in September 2010. Nestlé was admitted with its weakened policies in March 2011. Under its new policies, Nestlé allows itself to advertise milks for older babies in countries it describes as ‘high risk’, such as the products on the right of this flier from Armenia, which cross promote the infant formula shown on the left.

Missing reports still missing

When it reported to the Conference in 2013 JACEI made no mention ofo recent and significant reports from Save the Children, UNICEF Lao and others that detailed examples of aggressive marketing by Nestlé. Instead it highlighted Nestlé’s inclusion in the FTSE4Good ethical investment index.

Baby Milk Action provided details of the information missing from the report at the time of the 2013 Conference.

The draft reply for the 2014 Conference says:

The Conference accepts the suggestion of the Lancashire District Synod that a further report be brought by JACEI to the 2015 Conference that includes an account of reports from independent agencies such as Save the Children and UNICEF on Nestlé’s performance in this area.

So the Methodist Church will continue to profit from its million-pound investment in Nestlé – and Nestlé’s aggressive marketing of baby milks – for at least another year.

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