Nestlé Creating Shared Value Global Forum took place on 9 October. We posted key facts to the #CSVForum twitter feed as others tweeted about pronouncements from Nestlé’s Chairman, Peter Brabeck-Letmathé, and CEO, Paul Bulcke, apparently taken in by two executives who are trying to bend regulatory and development agendas to their own advantage.
Baby Milk Action and our partners in the International Baby Food Action Network (IBFAN) monitor the baby food industry around the world. So I am very familiar with how this company abuses human rights and the environment and the strategies it uses to divert criticism of its activities. The CSV Global Forum is the most ambitious manifestation of these strategies.
These charges against Nestlé are not just Baby Milk Action’s opinion. This week (15 October 2014), the Advertising Standards Authority (ASA) published a ruling upholding our complaints about a Nestlé promotion for its SMA baby milks in one of our major supermarket chains here in the UK. It found its promotion misled parents and it has been warned not to repeat it.
More broadly, the ASA upheld all of our complaints against a Nestlé anti-boycott advertisement some years ago in which the company claimed to market infant formula ‘ethically and responsibly’ around the world (See Brabeck flies in as Nestlé panics over ASA ruling, in Boycott News July 1999).
So we well know that this company misleads people – and have been able to prove it.
We have also had dealings with Nestlé’s Messrs Brabeck and Bulcke for many years and are familiar with their methods.
Soon after the ASA ruled against Nestlé’s anti-boycott advertisement, Mr Brabeck wrote to policy makers around the world with a hardbound book of letters that he claimed were official verification that Nestlé abides by the International Code of Marketing of Breastmilk Substitutes. On this occasion, it went badly wrong asNestlé was soon having to apologise to authors whose letters he had misrepresented.
Mr Brabeck also made a personal attack on the integrity of Syed Aamir Raza – the whistleblower whose story is dramatised in the new feature film, Tigers – but to this day Nestlé refuses to substantiate his allegations.
Jump to 10 April 2014 this year and Mr Brabeck addressed me in front of 2,700 shareholders gathered for the annual jamboree in Lausanne. I had the temerity to question him on his company’s baby milk marketing – again (if it’s not me, it is one of my colleagues). A new IBFAN monitoring report, Breaking the Rules 2014, demonstrates that Nestlé continues to systematically violate the International Code and subsequent, relevant Resolutions of the World Health Assembly.
‘Mike,’ Mr Brabeck said. ‘We already had the pleasure of hearing you in 2012 [pic. left]. Mr Brady, we would be very, very grateful if the relationship between IBFAN and Nestlé – I mean it’s been ongoing for decades now – and we have always been confrontational in our relationship. And we haven’t, you know, solved a single problem. So how about switching from confrontation to cooperation.’
I was able to take the microphone again to say that calls for cooperation rang hollow when the Head of Nestlé Nutrition had just dismissed the violations in IBFAN’s report, saying 90% are in line with Nestlé’s policies – that’s why we call for Nestlé to bring its policies into line with the UN standards.
Nestlé’s Global Public Affairs Manager had just written to me to defend the company promoting formula with claims it is the ‘natural start’, ‘gentle start’ and ‘protects’ babies.
Mr Brabeck knows that babies fed on formula are more likely to become sick than breastfed babies and, in conditions of poverty, more likely to die. He was wrong to give the impression that only IBFAN raises concerns about Nestlé practices – development organisations are doing the same. If cooperation meant stopping the violations reported to it that would be welcome, I told him, but we were still waiting for it to do so.
Let me make a simple statement because some people think we are in an argument over the semantics of marketing rules:
Brabeck and Bulcke, Chairman and CEO, put company profits before infant health, otherwise they would stop these inexcusable baby milk marketing practices.
Nestlé continue the aggressive marketing, switching tactics when we forced to close some of them down, and invests in public relations (PR) campaigns. The Nestlé CSV Global Forum is a prime example of Brabeck and Bulcke’s attempts to set the policy agenda and gain preferential access to policy makers.
The Nestlé CSV Global Forum was held jointly with UNCTAD (UN Conference on Trade and Development), whose Secretary General was present. Brabeck began courting the organisation in the 1990s, before he was even Nestlé CEO. He addressed what was then the UNCTAD Global Forum in October 1996 as Nestlé Vice President and Chair of the International Chamber of Commerce, explaining the ICC had ‘pushed hard’ to be allowed to speak. He argued:
‘Business…should not be lumped with the many single-issue NGOs, but be accepted as an interlocutor of a different stature, as the engineers of wealth.’
He spoke out against the ‘over-regulation’ of business and specifically against the baby milk marketing requirements. However, this ideological gripe about regulations was selective. While calling for speedy deregulation of trade, he stressed the importance of brand protection, which he would like to see ‘entrenched in the law and strictly enforced by the authorities’.
This sums up Nestlé’s approach to regulation: strict rules to protect its own interests, deregulation when it comes to protecting the public interest.
Brabeck is not the originator of the range of PR strategies used by Nestlé. This dates back to the 1970s and the PR guru Raphael Pagan, employed by Nestlé to counter the criticisms about its baby milk marketing. Campaigning at that time had prompted a US Senate hearing in 1978 and led to the International Code of Marketing of Breastmilk Substitutes being adopted by the World Health Assembly in 1981.
Despite criticism of Nestlé’s ongoing impact on health, the environment, labour rights and so on, some applaud Nestlé executives as exemplary business leaders.
Bulcke’s piece is entitled: ‘Business: Part of the Problem? No, Part of the Solution’.
Here is the essence of Nestlé’s Creating Shared Value argument from Bulcke’s article:
‘Now is the time for us to find collaborative ways to shape, form and work together, share ideas and solutions and form partnerships to create the kind of world, and the kind of opportunities, that future generations deserve. Trust, strong values and transparency must be the cornerstones of these collaborations.’
So Nestlé’s current CEO wants us to ‘trust’ corporations as partners.
I first encountered Paul Bulcke in person at a meeting of the Prince of Wales Business Leaders Forum, when he was on a panel as head of Nestlé’s Latin American operations – he became CEO when Mr Brabeck relinquished the post (continuing as Chairman) and was praised on his appointment for the impressive growth in baby milk sales he had achieved in his region.
In typical fashion, Nestlé had commissioned an audit on its Pure Life water bottling operation in the historic spa town of São Lourenço, Brazil, which it claimed showed it was complying with all laws.
Not true: the Public Prosecutor had taken Nestlé to court in an ultimately successful action to stop Nestlé’s pumping.
Nestlé had sunk two 162 metre-deep wells in the area of maximum vulnerability in the water park in São Lourenço and the high volumes extracted drastically altered the profiles of the mineral springs which drew people to the town. The civil public action was prompted by a petition from the residents of the town whose livelihoods were suffering.
The auditors, Bureau Veritas, admitted afterwards, ‘our work did not constitute a legal audit as such, nor did it include a review of the on-going civil action’.
So, relying on ‘trust, strong values and transparency’ as Bulcke suggests would be extremely foolish. Look beyond the rhetoric and you too often find Nestlé engaged in dishonesty, profiteering and cover ups.
If executives say they are changing from ‘me now’ to ‘us tomorrow’, should that be believed? Are they changing their spots? Or is looking to corporations to become trustworthy a failure of imagination and moral courage ?
Corporations are a legal construct invented by human beings. It is for society to decide what form they take and the limits of their powers. As society, we can choose to regulate them in the public interest, if we be so bold.
IBFAN works for legislation implementing the baby food marketing rules introduced through the UN system. Over 70 countries have so far introduced legislation. We see that in countries with the political will to enforce the regulations, the aggressive marketing practices that are so commonplace and destructive elsewhere are stopped. Sometimes it takes nerve to face down ‘economic blackmail‘ from Nestlé when introducing legislation, sometimes action such as seizing products that do not comply with labelling laws is required when they are flouted.
Nestlé has long claimed to support breastfeeding and to abide by UN marketing rules, but the reality of its actions shows this to be a sham. Don’t take my word for it. Look at Nestlé’s own labels and marketing materials.
Where legislation does not exist or is not enforced, we use campaigns to shame Nestlé.
Do not underestimate the power of shining a spotlight on malpractice. After defending its ‘natural start’ logo in April 2014, Nestlé’s Global Public Affairs Manager wrote to me following these tweets during the CSV Forum to say (letter dated 14 October): ‘We will discontinue the use of the “Natural Start” logo on our infant formula products by mid-2015.’
Campaigning works – though we will have to keep monitoring to see if Nestlé delivers on this commitment. Also, it has made no undertaking to drop the claims that Nestlé formula is the ‘gentle start’ and ‘protects’ babies. More pressure is needed.
Rob Black, a member of Nestlé’s CSV committee, spoke at its Global Forum on the importance of the First 1000 Days from conception. Nestlé gives the appearance of supporting breastfeeding for this audience, but when addressing investors it boasts that its ‘gentle start’ claim in boosting formula sales. It calls its infant formula marketing strategy ‘Project Happy’, which has created an ‘engine for growth’.
How many people attending the Nestlé CSV Global Forum actually care to look at what Nestlé actually does? It seems they prefer to cover their eyes, listen to its well-sounding words about cooperation and look to corporations to be our saviours.
The academic Michael E. Porter explained ‘the magic’ of the CSV approach at Nestlé’s Global Forum in Colombia last year.
The magic occurs when a way is found for a corporation to make a profit from addressing a problem. Then the more it does, the more profit it makes, and the more it can do.
In nutrition, that means Nestlé looks to profit from the First 1000 Days with ‘product solutions’.
Nestlé targets women while they are pregnant – and even earlier as it tries to force itself into schools under the guise of nutrition education. The International Code, which Nestlé sometimes claims to support, prohibits baby food companies from targeting pregnant women and mothers of infants and young children. Other Resolutions say there should be no conflicts of interest in support for health programmes.
While Nestlé’s slide to investors above states ‘Breastfeeding is Best’ in the period 0 – 6 months, the ‘engine for growth’ slide from the same presentation reveals how it promotes infant formula in its ‘Project Happy’ strategy.
But it is a business so we should not be surprised it wants to make money – though sometimes those swept of their feet by its CSV rhetoric seem to have forgotten this fact.
As a business, Nestlé undoubtedly directly employs many people around the world and others indirectly in its supply and distribution chains. Here too, Nestlé claims to be Creating Shared Value, but again a closer look is necessary. For example, it says it benefits cocoa farmers, but does not mention it is vigorously contesting legal action brought against it by former child slaves from Cotê d’Ivoire. While it is a major purchaser of cocoa, less than 3% of Nestlé’s cocoa purchase is certified as Fair Trade.
Nestlé is criticised for its impact on coffee farmers. Only around 0.1% of Nestlé coffee purchase is certified as Fair Trade.
Nestlé claims to benefit dairy farmers, but has driven corporate concentration in the industry, lobbied against milk marketing boards, created barriers for small producers and, once it dominates the market, challenged price controls so prices and profits soar. Examples include Brazil and Pakistan (Nestlé’s Communications Director gave typically robust response to the Pakistan analysis, describing the report as ‘bovine excrement’).
The best solutions may not boost corporate profits. But if corporations are taking over food supply chains, should it at least be welcomed when they claim they are operating more efficiently, even sustainably?
Nestlé’s Chairman paints himself as an environmental guru.
This goes beyond diverting criticism of Nestlé’s harmful impact. Brabeck does not want policy makers and the public to even question the corporate takeover of food systems.
But expert groups are questioning and challenging it. Civil society organisations attending the Second International Conference on Nutrition (ICN2) the same week as the Nestlé CSV Global Forum issued a statement saying,
‘the current hegemonic food system and agro-industrial production model are not only unable to respond to the existing malnutrition problems but have contributed to the creation of different forms of malnutrition and the decrease of the diversity and quality of diets. Unfair trade agreements, lack of investment in small-scale food production and support to agro business models, have led to displacement of small-scale producers all over the world. Marketing of ultra-processed products, high in energy, sugar and salt, has contributed to the surge of obesity in the world. At the same time, unethical practices by breastmilk-substitute producers continue to undermine the life-saving practice of breastfeeding. ‘
These public interest groups criticised were concerned the ICN2 conference, ‘ignored major developments of the past 22 years such as the increase of unaccountable power of transnational corporations and their undue influence in policy processes.’
Nestlé’s CSV agenda promotes a food industry that processes food and ships it around the planet. While Brabeck spoke at Nestlé’s Global Forum of achieving food, energy and water security, elsewhere he has said Climate Change is an inevitability to which we must adapt (his comments as reported in the Guardian):
‘Climate change is an intrinsic part of the development of the world… Are we God to say the climate, as it is today, is the one we have to keep? That’s the way it’s going to be? We are not God. What we have to assure is that climate change happens within a timeframe that humankind can adapt to.’
Of course, it will be the poor countries and peoples who will be less able to adapt.
Okay, but if Nestlé actually reduces its water use, isn’t that a good thing?
Nestlé highlights these case studies to suggest it should be trusted to do the right thing. But how far can that get us? Is this another diversionary tactic from the solutions that are really needed?
In a previous existence I worked as an engineer at a research centre in the car industry. Innovations in improving engine performance were driven by European Union regulations requiring reduced emissions. The regulations prompted all manufacturers to invest to be able to meet them.
Policy makers should be setting the framework within which business operates, not simply trusting them to do the right thing as Brabeck and Bulcke advocate.
One example Brabeck likes to cite to illustrate CSV is the decision to hook a community up to a factory’s water treatment facilities so the community benefits from the infrastructure.
This reminds me that here in the UK we have planning laws. Proposals are put to consultation, sometimes a public enquiry. Town councils might put conditions on a development so that it includes benefits to the surrounding community. Planning permission may be conditional on improvements being made to surrounding infrastructure to, for example, deal with any traffic congestion that may result from it.
With a CSV approach we are expected to be grateful for gifts bestowed by executives.
Allowing Nestlé to set the agenda is not inevitable.
How many of the individuals and organisations paying homage to our new would-be rulers were with us in August in body or spirt at the UN Human Rights Council?
The Council decided to draft an international Treaty for regulating corporate power – in the face of opposition from US and EU policy makers, lobbying to protect the interests of their corporations.
This is what Raphael Pagan was really worried about in the 1970s. It is the reason why Brabeck pushed hard to force his way into UNCTAD meetings in the 1990s and pushes his CSV agenda so strongly today.
Brabeck called corporations the ‘engineers of wealth’. His fundamental duty as an executive is to put his shareholders’ interests first. Executives are legally required to do so, it is their fiduciary duty. When the interests of society, people, new-born babies, are at odds with maximising shareholder value, then Nestlé tramples on their rights.
We could address the fiduciary duty by redefining the corporation and its responsibilities (see my proposals in the book Global Obligations for the Right to Food if you are interested in systemic solutions).
Otherwise the fiduciary duty can be trumped in two ways. One, is through regulation as executives should not break the law. The other is by putting a financial cost on malpractice, which is the purpose of the consumer boycott of Nestlé over its aggressive marketing of baby milks. Nestlé promised this week to end its ‘natural start’ claims on its infant formula because of exposure during the CSV Global Forum and in preceding months and years (it takes time and perseverance to force change).
It should be self-evident that claiming formula is the ‘natural start’ idealises the product and should never have been done in the first place, but Nestlé still defends the claim while bowing to campaign pressure.
It will take further pressure to stop Nestlé’s other violations of the marketing requirements. You can help by emailing Nestlé.
Nestlé had two parting shots at the CSV Global Forum to try to improve its image. Both relied on using its cheque book to associate itself with good causes.
Honey Care Africa probably is doing great work, but dangling money in front of organisations does not impress them all.
Nestlé’s closing announcement was a partnership with the International Federation of the Red Cross (IFRC).
Nestlé isn’t just supporting the IFRC, it links its support to water and sanitation to divert attention from its exploitation of water resources and its actions in other disasters (such as when it demanded money from the Ethiopian Government during a famine).
Organisations such as the Nelson Mandela Children’s Fund and Breakthrough Breast Cancer have turned down large donations from Nestlé in the past as they thought it inappropriate to accept.
If we are not to fund the initiatives from corporate handouts, how can they be funded? This is a discussion for another day (or read the article I wrote with my colleague Patti Rundall for the UN SCN Journal, Governments should govern – Corporations should follow the rules). It is worth recalling that corporation tax has fallen around the world as transnationals have played one government off against the other. That boosts their profits to spend on good causes, with strings attached to further their business interests.
That’s about it for my reflections on the CSV Global Forum for this year. Except to note:
Nestlé set up its Digital Acceleration Team to detect discussions about it and its interests on the internet so it could intervene.
How we talk about corporations is being policed and manipulated.
If you believe corporations should be put in their place, help us to expose Nestlé’s Creative Storytelling Venture.