BUSINESS ETHICS ASSIGNMENT 28/01/2012SUBMITTED TO: PROF. B. SAJUSUBMITTED BY: NEETIKA KALYANI 11MBA0043 [BATCH-A]
ETHICAL ISSUES FACED BY NESTLEBABY MILK ISSUE:The most resounding and far-reaching unethical international business practicesthat Nestlé has been involved in is the marketing and sale of infant milk formula indeveloping countries in the 1970s. This practice resulted in several premature infantdeaths because uneducated and poor mothers ceased to breastfeed and instead fedtheir babies Nestlé’s formula. Unable to understand the instructions for preparing theformula and having insufficient money to afford adequate doses of it, led several ofthem to unknowingly starve their children to death.Groups such as the International Baby Food Action Network (IBFAN) and Save theChildren claim that the promotion of infant formula over breastfeeding has led tohealth problems and deaths among infants in less economically developed countries.There are four problems that can arise when poor mothers in developing countriesswitch to formula:• Formula must normally be mixed with water, which is often contaminated in poor countries, leading to disease in vulnerable infants. Because of the low literacy rates in developing nations, many mothers are not aware of the sanitation methods needed in the preparation of bottles. Even mothers able to read in their native tongue may be unable to read the language in which sterilization directions are written.• Although some mothers can understand the sanitation standards required often do not have the means to perform them: fuel to boil water, electric (or other reliable) light to enable sterilization at night. UNICEF estimates that a formula-fed child living in disease-ridden and unhygienic conditions is between six and 25 times more likely to die of diarrhea and four times more likely to die of pneumonia than a breastfed child.• Many poor mothers use less formula powder than is necessary, in order to make a container of formula last longer. As a result, some infants receive inadequate nutrition from weak solutions of formula.• Breast milk has many natural benefits lacking in formula. Nutrients and antibodies are passed to the baby while hormones are released into the mothers body. Breastfed babies are protected, in varying degrees, from a number of illnesses, including diarrhea, bacterial meningitis, gastroenteritis, ear infection, and respiratory infection Breast milk contains the right amount of the nutrients
essential for neuronal (brain and nerve) development The bond between baby and mother can be strengthened during breastfeeding. Frequent and exclusive breastfeeding can also delay the return of fertility, which can help women in developing countries to space their births. CONSEQUENCES FACED BY NESTLEWhen news of this reached the global public in the late 1970s, it caused a boycott ofNestlé products in the United States and several European countries, which has, tothis day, not yet completely ceased. Nestlé has since stopped marketing the formulain third world countries and in their marketing policy they now maintain that breastmilk is the most appropriate form of nutrition for infants, but that women who can’t orchoose not to breastfeed can find a good substitute in using the formula.Current status of the boycott:The Nestlé boycott is currently coordinated by the International Nestlé BoycottCommittee, the secretariat for which is the UK group Baby Milk Action. Companypractices are monitored by the International Baby Food Action Network (IBFAN),which consists of more than 200 groups in over 100 countries.In parallel with the boycott, campaigners work for implementation of the Code andResolutions in legislation, and claim that 60 countries have now introduced lawsimplementing most or all of the provisions.Many European universities, colleges, and schools have banned the sale of Nestléproducts from their shops and vending machines. In the United Kingdom, 73 studentunions, 102 businesses, 30 faith groups, 20 health groups, 33 consumer groups, 18local authorities, 12 trade unions, education groups, 31 MPs, and many celebritiessupport the Nestle boycott.
Nestlé claims that it is in full compliance with the International Code. According toNestle CEO Peter Brabeck-Letmathe, "we also carry out annual audits on WHOCode compliance with a sample of Nestlé companies, and we investigate anysubstantiated claims made by those who believe we have broken the Code.... If wefind that the Code has been deliberately violated, we take disciplinary action. Thecompany maintains that many of the allegations are unsubstantiated, out of date, oruse IBFANs own non-standard interpretation of the Code.In May 2011, the debate over Nestlés unethical marketing of infant formula wasrelaunched in the Asia-Pacific region. 19 leading Laos-based international NGOs,including Save the Children, Oxfam, CARE International, Plan International andWorld Vision have launched a boycott of Nestlé and written an open letter to thecompany. Among other unethical practices, the NGOs criticized the lack of labellingin Laos and the provision of incentives to doctors and nurses to promote the use ofinfant formulaBoycott in the media:An episode of the TV show The Mark Thomas Product produced by the BritishChannel Four in 1999 investigated the boycott and Nestlés practices concerningbaby milk. Mark Thomas attempted to find evidence for claims against Nestlé and tospeak to heads of the company. In one portion of the show he "received a tin of babymilk from Mozambique. All instructions are in English. 33 languages and dialects arerecognized in Mozambique. Portuguese is the official language. However, only about30% of the population can speak it. English is usually the second language forpeople in Mozambique.In 2001, comedian Robert Newman and actress Emma Thompson called for aboycott of the Perrier Comedy Award, because Perrier is owned by Nestlé. Analternative competition called the Tap Water Awards was set up the following year.Other Nestlé operations targeted:
Nestlé is sometimes targeted for other aspects of its operations. A Brazilian groupcalled Cidadãos pelas Águas (Citizens for Water) has called for a boycott of Nestléin Brazil over the companys extraction of water from an aquifer in São Lourenço.Some also boycott Nestlé coffee and chocolate products in favour of fair tradealternatives. (Partners Blend coffee, launched by Nestlé during 2005, has obtainedFairtrade labelling status.) Baby Milk Action has also condemned this development.In the Philippines, there exists a Boycott Nestlé campaign due to suspected laborrights violations in a factory in Laguna province. This campaign is led by KilusangMayo Uno. STEPS TAKEN BY Nestlé TO SOLVE THE ISSUE CREATEDRe-writing history:After a break of more than a year, Nestlés Code Action Report has appeared on thescene again and been distributed to health campaigners and policy makers aroundthe world. Nestlé welcomes one aspect of Resolution 54.2 adopted by the WorldHealth Assembly in May 2001. This relates to the appropriate age for introducingcomplementary foods.However, this is just one issue addressed by the Resolution. Nestlé ignores otheraspects, probably because it is already violating provisions enshrining a mothersright to information free from commercial influence. For example, Nestlé recentlylaunched an infant formula promotion campaign in southern Africa which violates thesections relating to HIV and infant feeding.In the Action Report Nestlés Chief Executive Officer, Peter Brabeck-Letmathé,states:"I can publicly assure you that Nestlé is in favour of the new recommendation as itaims at removing the ambiguity on the recommendation which prevailed up to now,and hopefully will end the long-standing debate over the optimal duration ofexclusive breastfeeding."Mr. Brabecks statement misrepresents the Resolutions adopted in the past by theWorld Health Assembly and attempts to excuse 7-years of inaction by Nestlé.Nestlé in Brazil:
It is worth commenting on the interview with José Serra, Minister of Health Brazil,obtained by Nestlé and published in the Code Action Report.The Brazilian government has taken a strong line in putting forward Resolution 54.2and has been congratulated by IBFAN and Baby Milk Action for this and other standsit has taken in support of infant health. However, the government is also underimmense pressure from the baby food industry. Last year it planned to publish theresults of its own monitoring which found violations by companies including Nestlé.Nestlé dispatched its Vice-President, Niels Christiansen, prompting newspaperarticles about industry lobbying to suppress the report, followed by claim and counterclaim. While it is known that one government department refused to discuss thereport with Mr. Christiansen, it has still not been published over a year later.In the interview published by Nestlé, José Serra, Minister of Health Brazil, states:"The Brazilian food industry was an important partner in both the formulation andrecent update of the Code [in Brazil]". It should be appreciated that this is astatement from a politician in diplomatic mode. Elsewhere the Brazilian Ministry ofHealth has written:"The outcomes of the government policies toward breastfeeding in Brazil havebecome well-known internationally. Brazil is perhaps the only country in the world tohave managed, by implementing integrated strategic actions, to take on theaggressive infant food industry marketing and reverse the disastrous impact ofuntimely weaning on infant health."IBFAN was also involved in the development of the Brazilian Code and has workedto strengthen it to reflect all WHA Resolutions and received the Order of Merit fromJosé Serra on 18th June 2000 for the actions it has developed to promotebreastfeeding.