Global Investment Watch

Nestle is a name we know and love. However, the company has a darker side with respect to its conduct as a corporate citizen. From a human rights perspective, we consider Nestle to be a high risk investment.

The Company is a Leader But …

The world’s #1 food company in terms of sales, Nestlé is the world leader in coffee (Nescafé). It is also one of the world’s largest bottled water (Perrier) makers and is a top player in the pet food business (Ralston Purina). Its most well-known global brands include Buitoni, Friskies, Maggi, Nescafé, Nestea, and Nestlé. The company also owns Gerber Products and Jenny Craig. In addition to its own products, Nestlé owns about 75% of Alcon Inc. (ophthalmic drugs, contact-lens solutions, and equipment for ocular surgery) and 28% of cosmetics giant L’Oréal.

So let’s take a look at their darker side, shall we?

Nestle in Myanmar

According to Coop America, Nestlé is among those companies who have chosen to remain financially involved in Burma/Myanmar despite international pressure to cease business dealings that could directly or indirectly strengthen the illegal military junta there.

Company Ignores its Code of Conduct

According to the International Labor Rights Fund, in October 2006, in response to the Court’s request for further briefing on the companies’ unfair practices, Nestle, Archer Daniels Midland and Cargill argued that they should not be expected to follow their Codes of Conduct.

The ILRF writes that the companies brief argues “that their Codes of Conduct are simply ‘aspirational’ and entail no responsibility for the companies to actually engage in ethical practices. The lawyers state that it ‘simply is not reasonable to construe [the companies'] policy statements as, for example, imposing an enforceable contractual obligation on Nestle to monitor ‘its suppliers’ treatment of children’ or on ADM to ‘affirmatively act if it knew that its suppliers used child labor.’” The suit is ongoing.

Nestle Embraces Human Rights Risk

The company operates in the following countries on the AFL-CIO Country Watch List: Angola, Burma, Congo, Democratic Republic of Congo, Colombia, Cuba, Guatemala, Haiti, Peru, China, Iran, Jordan, Kazakhstan, Kuwait, Saudi Arabia, Serbia, Syria, United Arab Emirates, Uzbekistan and Vietnam. These countries are either lacking labor legislation that recognizes fundamental worker rights or they have labor legislation, but it is not enforced.

Additionally, Nestle does business in a number of other high-risk countries experiencing problems with political freedom, civil liberties, human rights abuses, labor abuses, and press freedom. Among others, these countries include: Brazil, Bangladesh, Egypt and Ivory Coast. In fairness to the company, it’s primary business activity in some of those countries involves the sale of its products.

Labor Rights Issues

Nestle workers are represented by many different unions, including the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF), the German Food and Allied Workers’ Union, the FCTA/VHTL (the Swiss food workers union), the Sindicato de Empresa de Trabajadores Nestle, and others.

Child Abuse and Slavery Charges

The company is facing a lawsuit filed in July 2005 by the International Labor Rights Fund (ILRF) and several civil rights firms alleging involvement in the trafficking, torture, and forced labor of children who cultivate and harvest cocoa beans which the companies import from Africa. The plaintiffs in the lawsuit are African nationals identified as John Doe one, two and three. The lawsuit states that Nestle, along with Archer Daniels Midland and Cargill, is involved in the purchasing and processing of cocoa from the Ivory Coast, provides financial support, supplies and training to agencies in the region, and continually monitors performance of cocoa suppliers.

Given that this has been public information since the mid ‘90s, the suit argues that Nestle should have found this as part of its due diligence. Despite Nestle’s claims that progress was being made in child labor solutions, the ILRF said that in a trip to the Ivory Coast in June 2005 it discovered that trafficking in child labor was still going on. The lawsuit against Nestle claims that the three plaintiffs were taken from their homes at 14, beaten, threatened with torture and forced to work up to 14 hours a day, six days a week, with meager meals as compensation.

Global Exchange, a San Francisco-based human rights group, joined the suit, and also filed suit against Nestle, ADM and Cargill under California’s unfair business practice law for false or misleading statements. Global Exchange alleges that no effective steps have been taken by Nestle and others to prevent the use of child labor on farms producing cocoa, and have led the public to believe otherwise. Global Exchange continues to run a campaign against Nestle, urging consumers to stop buying Nestle until it can ensure that its cocoa is no longer produced used forced and abusive child labor.

OECD Labor Charges in Japan

Also, in August 2005, the Nestle Japan Labor Union, the National Confederation of Trade Unions and the Hyogo Prefectural Federation of Trade Unions filed a complaint against Nestle Japan with the Ministry of Health, Labor, and Welfare for violating the OECD Guidelines for Multinational Enterprises. They argue that Nestle Japan has violated workers rights by forcing workers to voluntarily retire, transferring workers to distant plant locations in disregard of their need to take care of sick family members and discriminating against certain workers in wages.

Unionist Killings

A Nestle union leader in the Philippines, Diosdado Fortuna, was killed on September 22, 2005. He was shot by unidentified motorcycle-riders on his way home. According to the Campaign for Labor Rights, Fortuna had just presided over an All-Leaders meeting of KMU federations and went directly to the Nestle picket line. The union believes the killing is politically motivated.

In September 2004, Nestle workers at the Maggi factory in Singen, Germany went on strike for a week. The strike was declared when the company demanded savings of 3.2 million Euros annually if it were to agree to union demands for an employment guarantee of 2-3 years. The strike came to a successful close, and a new collective agreement was made which meets all of the union’s key demands.

Labor Unrest in Korea

In September 2003, Nestle workers in Korea declared a strike after management repeatedly refused to engage in negotiations over staffing levels and subcontracting as part of the negotiations for a new collective bargaining agreement. Nestle responded to the strike with a lock-out of workers at its only manufacturing facility in Korea, and at warehouse and distribution centers across the country. The company then made statements threatening disinvestment from Korea. Korea’s Chungbook Province Labour Relations Committee ruled that Nestle’s refusal to hold negotiations with the union and its statements threatening to move production out of Korea are “unfair and illegal labor practices.” The Korean Labour Relations Commission ordered Nestle to issue a public and written apology for the wrongdoings.