The Methodist Conference received a report from the Church’s Joint Advisory Committee on the Ethics in Investment (JACEI) on 29 June 2015. This shows that a strategy of investing in Nestlé to exert pressure on its baby milk marketing policies and practices has actually made things worse (full details here).
Baby Milk Action sent the following letter to the JACEI Chair on 6 August questioning why he is advocating continuing with the same failed strategy rather than acting on the report’s findings.
Dear Revd Howard,
JACEI’s report on CFB’s Nestlé investment strategy
I am writing to you concerning the report from the Joint Advisory Committee on the Ethics in Investment (JACEI) report on the impact of the Central Finance Board’s (CFB’s) decision to invest in Nestlé. The Methodist Conference was told in 2006 that investing would enable JACEI to exert pressure on executives to stop systematic violations of baby milk marketing requirements. This was presented as a parallel strategy to boycotting the company (though, as you know, Nestlé tells people you called off your support for the boycott). The JACEI report on developments since 2006 was presented to the Methodist Conference on 29 June 2015, where you spoke moving the vote for conference to receive the report.
Although Baby Milk Action and our partners in the International Baby Food Action Network (IBFAN) were not consulted on this report, it is welcome that it includes the following information:
- Nestlé continues to systematically violate the International Code of Marketing of Breastmilk Substitutes and subsequent, relevant Resolutions of the World Health Assembly. The JACEI report cites evidence from Save the Children, as well as IBFAN.
- The report states, “For many years JACEI, in its dialogue with Nestlé, encouraged the company to engage with FTSE4Good”. It points out that the Breastmilk Substitute Criteria for this ethical investment index had to be weakened before Nestlé could be admitted. The criteria changed, not Nestlé. In fact, as FTSE4Good looks to company policies rather than compliance with the Code and Resolutions, Nestlé weakened its policies before joining.
Hence, the ONLY demonstrable impact of the investment strategy on Nestlé marketing cited in the report is that Nestlé weakened its formula advertising policies.
When you told Conference that the investment strategy had led to Nestlé “changing” its policies, I suspect many did not understand this meant they had changed for the worse. The chronology given in the report is also unclear as it states: “In 2010 Nestlé revised its policy and Instructions for Implementation of the WHO International Code of Marketing of Breast-milk Substitutes. In 2011 Nestlé was accepted into the FTSE4Good index.”
People who only read this summary may be unaware that “revised” means “weakened”. The JACEI report explains in section 4.1:
“Nestlé’s Operating Instructions were revised in 2010 and now permit the advertising of formula milk designed for babies older than one year even when the brand name is the same as that for infant formula.”
The practical impact of this “revision” has been shown in IBFAN’s monitoring through reference to Nestlé’s own advertising and promotional materials.
Nestlé also exploits the gift of inclusion in the FTSE4Good Index at every opportunity. For example, The Guardian interviewed Nestlé Chairman, Peter Brabeck-Letmathé, on 31 January 2014 and reported:
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.’
As you – and Mr Brabeck – are aware, inclusion in FTSE4Good does not signify compliance with the Code. FTSE has repeatedly asked Nestlé to stop implying that it does so.
The FTSE4Good BMS Advisory Committee, of which CFB is a member, presumably advocated or supported the weakening of the FTSE4Good Breastmilk Substitute (BMS) Criteria, Nestlé’s inclusion in the Index (despite weakening its policy) and Nestlé’s continued inclusion in the face of FTSE assessments finding evidence of violations of the Code and Resolutions.
We have raised concerns with FTSE that organisations with significant investments in Nestlé are part of the Advisory Committee. The CFB has over £1 million invested in Nestlé, making estimated income of £250,000 since investing. People can reasonably consider it to be an unacceptable conflict of interest that investors who profit directly from Nestlé systematically violating the Code and Resolutions have influence over the FTSE4Good criteria and decisions on company inclusion.
If the CFB and JACEI are to be credible actors on this matter, surely you should act on the findings in the JACEI report, disinvest from Nestlé and support strategies that are proven to be effective.
The argument that the investment should be continued as it allows JACEI to raise concerns with Nestle is misplaced. We are in direct written communication with Nestlé’s Chairman and Chief Executive and have been for decades. We also raise concerns with them and the Board at the shareholder meeting (we were donated two shares by a supporter many years ago to be able to attend). The refusal to abide by the Code and Resolutions comes from this level of the company. They have told us that 90% of the violations in IBFAN’s last global monitoring report, Breaking the Rules 2014, comply with the company’s own policies, showing the danger of looking to its policies as the benchmark, rather than the Code and Resolutions.
Nestlé’s Global Public Affairs Manager has just sent us a written response to the Breaking the Rules report. While admitting to some violations, Nestlé ignores those such as gifts and sponsorship to health workers, direct targeting of pregnant women and mothers of infants and young children or advertising of infant formula brands. These promotion strategies are allowed by its policies.
Nestlé has agreed to drop the claim that its formula is the “natural start” for babies as a direct result of Baby Milk Action’s work. Its response cites a letter Nestlé wrote to me in October 2014 as the public announcement of this change, which came within days of a shaming campaign we ran during Nestlé’s Creating Shared Value Global Forum. Similarly, Nestlé’s assurance that it does not promote complementary food for use before 6 months of age is a reversal that took concerted campaigning to achieve. Our strategies have been shown to be successful in prompting changes for the better.
We are making this letter an open letter to make it clear that the findings in the JACEI report do not support the investment strategy you are advocating.
We urgently ask the CFB and JACEI to reflect on the solely negative impact of its strategy and the impact this has on mothers, babies and their families and to think again about how it invests Church funds.
Campaigns and Networking Coordinator
Baby Milk Action