Analysis Of an Unethical Behavior Of The Nestle Company

Categories: Business EthicsNestle

Ethics: the discipline dealing with what is good and bad and with moral duty and obligation, a guiding philosophy, a consciousness of moral importance. The Webster dictionary defines ethics as the discipline dealing with what is good and bad and with moral duty and obligation, a guiding philosophy, a consciousness of moral importance. The key phrase in that definition is “the discipline of what is good and bad.” With that being the defining factor in determining one’s ethical composition; it builds a scenario where it is subsequently difficult to determine, because it does not have a black and white definition.

It leaves many holes and generates openings for different opinions on how we judge someone’s ethical compass. No one person will have the same ethical composition as the next, thus creating an environment where one person’s vision of good and bad can differ completely than another’s. Even though the definition of ethics can be blurry at times there is an unwritten universal code of ethics that establishes a common line between good and bad that most people follow.

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This “universal code of ethics” has been established through millennia and changes constantly.

From the history of the world to the bible the code of ethics was established through generations learning from previous mistakes, and is passed down through the teachings of our elders. And to this day is still constantly being altered through our lives and our learning. This universal code of ethics is what establishes how we as people act in our day to day lives.

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Not only does ethics determine how we act towards people it plays into how we treat every aspect of our lives. It creates a guideline for how we live our lives, and can affect much more than just ourselves. There are many different areas of our lives that are affected by our ethics. Ethics influences how we treat people, how we treat animals, how we treat the environment and our overall affect on the community around us. Being that ethics are such a monumental part of what makes us who we are as people they have a great influence on every decision people make. Not only do ethics guide us in how we act as people they guide the businesses that we run. Just as in life there are a set of universally accepted ethical procedures that businesses are expected to follow.

Along with a universal unwritten code of ethic, each business creates their own code of ethics. This code of ethics that companies create guides how the company conducts their everyday business practices. Just as with people some companies have a better set of ethics than others. There a multiple examples of companies with great ethics and some companies that have extremely bad ethics. It can be extremely easy to let greed and profit take control of a company and to forget how important a good code of ethics is to a businesses success. If a company is found to be behaving unethically they will can be punished and fined for their wrong doing. However sometimes this isn’t a big enough deterrent to stop their unethical behaviors and they continue their poor behavior or try to hide them as best as they can from the public.

On the other hand, there are companies that are models for an ethically concerned company and their companies help their communities and employees. There are many benefits of running an ethical company opposed to an unethical company. Some of these benefits include attracting customers to the company, makes an environment where employees want to stay with the company, as well as attracts investors to name a few. By attracting customers to the company it boosts sales which in relation can then lead to more profits and a higher revenue. According to a research study Mintel fifty-six percent of Americans will stop purchasing from a brand they believe is unethical, and thirty-five percent will stop buying from that company even if there is no evidence that they are unethical (56% of Americans.) It is not good for any company to lose that many customers, and that can have a dramatic affect of a company. The profit of that company would earn reduces drastically and the stock prices would fall and possibly bankrupt the company. Nevertheless, when companies are sticking to an ethical code and employees want to stay with the company, it saves the company money by lowering hiring costs and labor turnover therefore increasing productivity and profit. According to the Society for Human Resource the average cost of hiring a new employee is 4,129 dollars (Hill 2017). This can add up to a significant amount if the company is turning over employees at a high rate contrary it can add up to significant amount in savings if the company is retaining employees. Hypothetically if a company loses one-thousand employees in on year that nets a loss of 4.129 million dollars that could have been profit.

Ethics also plays an important role in investing. If investors know that the company follows a set of ethical promises and guidelines, it creates a piece of mind for investors in that their money is being used in a way that aligns with their own ethical and moral standings. The Nestle company was founded in Switzerland in 1866 is worth about 237.3 billion dollars, employs 323,000 people and has an average annual sales of 91.23 billion dollars.

The Nestle company began in Vevey Switzerland and was originally created as one of the first infant formula companies. Henri Nestle created the company with the goal of providing a healthy and affordable product to use as an alternative for mothers who could not breastfeed. Throughout the years the company grew and eventually expanded into America in the early 1900’s and into different businesses other than breast milk, with the main one being the chocolate business. Eventually later in the 1900’s Nestle began investing and acquiring different businesses in different fields other than the food industry, for example L’Oreal a global cosmetics company in 1974 and Alcon Laboratories a pharmaceutical company.

According to the Nestle website it states their code of conduct “Nestlé’s business practices have been governed by integrity, honesty, fair dealing and full compliance with all applicable laws. Nestlé employees worldwide have upheld and lived this commitment in their every day responsibilities ever since.” If Nestle followed their code of conduct statement it would mean nestle could be considered an ethical company. However, that is not necessarily the case. Nestle states this as its code of conduct policy nevertheless the company’s actions over its lifetime have not necessarily represented ethical behavior. Being that Nestle is a Swiss company it avoids a lot of fines and regulations that other companies have to deal with. However, there have been times when the company does in fact get punished for some of its unethical behavior. One of which happened in Brazil in 2016, the company was fined after failing to inform the public of the use of GMOs in some of their food products. In an article produced by telesur it discusses the violations by nestle, “The decision was reached as a result of an inspection carried out by Brazil’s Consumer Protection Agency Senacon in 2010, which found that GMOs had been used in cake mixes, snacks and various other products being sold in the country's supermarkets....Following the court ruling, Brazilian Institute of Consumer Defense researcher Ana Paula Bortoletto praised the decision for enforcing current legislation which requires the labeling of GMO products. The sale of GMOs in Brazil was originally banned after the Institute of Consumer Defense won a lawsuit in 1998. However, in 2003 the Brazilian Ministry of Justice adopted measures that enabled the retail and use of GMO products, although a warning symbol is required for products intended for human consumption.” (Brazil) This is a just one example of how Nestle has mislead the public for monetary gain.

In India there is another case where Nestle was found doing unethical behaviors and was sued for one-hundred million dollars, in this case “Maggi was banned in India after the food safety regulator accused Nestle of not complying with food safety laws… The Food Safety and Standards Authority of India (FSSAI) had earlier said that tests deemed the instant noodles to contain "unsafe and hazardous" amounts of lead.” (India) By making these choices to put unsafe amounts of lead in their products it shows us just how nestles ethical code is flawed.

Nestle is supposed to be a company that is governed by integrity, honesty and full compliance with all laws. As shown throughout these situations Nestle does not follow its own code of ethics very well. Nestle not following a great code of ethics is not necessarily a new thing for the country. In the 1970’s there was a global boycott of nestle products. Nestle ́ boycott was not a protest against labor abuses or a resource for creating political pressure against a government. Rather, its goal was to protect mothers in third world countries from multinational corporations and the use of their baby formula. In this aspect, the boycott against Nestle was unique because its goal was to limit the power of nestle and to create a more ethical form of market capitalism targeted towards third world countries. This boycott stemmed from one of the company’s earliest products, its infant milk formula. Putting greed before the ethics of the company aggressively pushed the sale of their infant formula. Targeting less developed countries, nestle claimed that their infant formula was just as nutritious if not better than a mothers breastfed milk. In an advertisement published by nestle in Good House keeping Magazine it states “Don’t wait too long before you wean the baby. If you don’t the little one is likely to be weak and anemic… the time comes when it isn’t sufficient enough for the fast-growing body. That’s the time to begin using Nestles Food. Because nestles is so like a mother’s milk that the tiny stomach wont know the difference.” This advertisement and severe claim is extremely unethical for multiple reasons. The first of which is the problem that in order to prepare the formula one needs water, more importantly clean sanitized water. This is a problem because the areas in which nestles aggressive advertisements and marketing strategies were targeting did not have access to clean drinking water, so it was necessary for them to boil the water in order to sterilize it. But because many of these countries had an extremely low literacy rate and the company did not inform the mothers of the need for clean water. Many mothers wound up mixing the formula with polluted water which put the children at a huge risk for water born diseases and parasites.

According to UNICEF it is estimated that mothers living disease-ridden and unhygienic conditions who bottle feed their children are between it is between six and twenty-five percent more likely to die of diarrhea and four times more likely to die of pneumonia than a child who was breastfed in the same area. On top of misleading these people that the baby formula is way better than it actually Is and not informing the uneducated populations of the results of using unsanitary drinking water the people in these countries were extremely poor. With these people being poor that meant that buying baby formula put a strain on their finances. Many of these parents were stretching the formula so that it would last longer therefore costing them less money to use. This resulted in many of children not receiving nearly enough nutrients which are required for a proper functioning and growing body.

In modern countries the populations knew that if you did not give babies the proper nutrients they won’t develop the essential systems in their bodies necessary for fighting off disease and infection. Yet again Nestle knowing of these concerns decided to do nothing. Actually they did do something, they would give hospitals free formula to give the babies after birth. But once the mothers left the hospital the formula was no longer free. That would not be a problem, however the babies were already dependent on the formula at that point therefore forcing the parents to spend the money necessary to purchase the formula from nestle. Upon the public being informed of these actions by Nestle is when the boycotts had started. Activist groups took charge and forced Nestles hand. The success of these campaigns ultimately forced Nestle to change its marketing strategies in these less fortunate countries. These groups represented by the International Nestle Boycott Committee (INBC), which included a multinational organization of American and British groups as well as assemblies from other European countries.

On January 25, 1984, the company signed an unparalleled agreement. In this agreement, Nestle pledged to implement the entirety of the UNICEF code. In this code it instructed for health and hazard warnings on formula labels, and for the revisions of the information sent to doctors and mothers by the company. Thus ending the Nestle boycott and exposing the unethical behavior of the Nestle corporation. Not only have these past example exemplified Nestles lack of ethical behaviors. There are still more examples that provide evidence ultimately pointing towards unethical behavior by Nestle.

If you ask most people in today’s society they would say that water is a human right. By stating this you would agree that as humans we should all have access to water and since it is a resource in which the earth provides us it should not be owned by one person or company. There are some people who do not agree with this philosophy. The philosophy that we as people should all have free access to drinkable sanitized water. One of these people would be the chairman and CEO of Nestles Peter Brabeck. Peter Brabeck has stated “I am the first one to say water is a human right. This human right is the five liters (1.3 gals) of water we need for our daily hydration and the 25 liters (6.6 gals) we need for minimum hygiene… Where I have an issue is that the 98.5 percent of the water we are using, which is for everything else, is not a human right and because we treat it as one, we are using it in an irresponsible manner, although it is the most precious resource we have.” HE believes that nestle has the right to control the amount of water they take for their company and make it Nestles property. They take that water and put it in bottles and sell it to the public for a huge profit. This takes on a disturbing outlook when you think abut the outrageous water shortage around the world. Instead of helping the places where they take their water more often than not they take so much water that they leave the public with a shortage of water. This has happened in multiple occasions where Nestle has tapped into local water systems, and as a result the water level decreases drastically. For example, when Nestlé’s requested authorization to obtain water from Rohr Springs in 1995, in an east Texas, Eustace TX. Local residents raised concerns about the Company pulling water from the town. Eventually the company did obtain permission from the state to continue, but landowners claimed that their wells dried up after Nestle began pumping nearby. They then took the company to court, and the case went all the way to the state supreme court. Eventually after years the court ruled in favor of Nestlé. This is but one scenario in which Nestle took water from an area and faced backlash from it, nonetheless to this day Nestle remains operating using these practices.

In the United States Nestle has had a moderately good relationship with labor and the workforce. However, in countries abroad Nestles track record is not exactly spotless. For example, one of these spots on Nestles track record would be their use of child labor in their chocolate industry. Child slavery is a huge problem in parts of Africa, one of these locations would be where most of the cocoa beans are produced that Nestle uses. According to the international labor organization (ILO) claims that “An estimated 168 million children, or 10.6% of all children in the world, were engaged in child labor in 2012. Approximately 30% of those children, or 59 million (ages 5-17), are laborers in Africa. An estimated 1 in 5 children in sub-Saharan Africa are forced to work.” Nestle has openly admitted to the use of child labor use in the production of some of their products. Even on the official Nestle website they claim “No company sourcing cocoa in Côte d’Ivoire and Ghana can fully remove the risk of child labor in its supply chain. Nestlé is no different.” In February of 2018 Nestle was sued for using child and slave labor to make their chocolate. According to the suit is based of the allegations that “Nestle USA has deceived consumer by failing to adequately inform them brands such as crunch and Butterfinger may contain cocoa cultivated by child or slave labor.” The lawsuit goes further into claiming that Nestle “has not required its suppliers to remedy the practice despite being aware child and slave labor exits in its supply chain.” The claims of child and slave labor do not stop in the chocolate industry for the Nestle corporation. If you have ever purchased a bag or can of Purina dog or cat food the chances of that container containing pet food that had fish harvested by forced labor is extremely high. According to the Fisheries and aquaculture department of the United Nations Thailand produces 785,127 tones of fish for animal feed each year. And Nestle is one of the biggest exporters of that fish and sends those products into markets around the world. In august of 2015 consumers filed a class action lawsuit in California against Nestle.

The claims that Nestle had violated laws for consumer protection by failing to disclose that some of the ingredients put into its pet food products may have been sourced from the use of forced and slave labor. However, not denying the use of forced and slave labor Nestle argues that they met all legal requirements under the California safe harbor doctrine. Nestle stated “all we have to do is disclose our efforts to ensure compliance, but we don’t have to disclose every single instance.” Nestle has the knowledge that their products are being made as a result of slave, forces, and child labor yet that has not stopped them from amassing huge revenues whilst these people are suffering.

Works cited

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Updated: Feb 02, 2024
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Analysis Of an Unethical Behavior Of The Nestle Company. (2024, Feb 09). Retrieved from

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