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Case I
Eliminating modern slavery from supply
chains: can nestle lead the way?
- In March 2017, a federal judge in California dismissed a long-running
class action lawsuit it against nestles and two more companies (Archer
Danels Co. & cargil INC) the use of forced child labor in W. Africa i.e.,
Ivory coast.
- In earlier 2015 Nestle surprised many by admitting that it had found
“forced labor” in its seafood supply chain in Thailand (South East Asia)
- Magdi Batato executive vice president a head of operations at Nestle
reported that “Nestle had uncovered child labor exploitation on fishing
boats in Thailand that supplied its factories”
- He reported details the investigation and also initiated a detail of the
action plan on how it intended to tackle the issue
- However, Nestle critics contended that the company had done this only
to fend off growing criticism against it. A low profit area of the company’s
business while not doing enough to tackle this problem in its lucrative
chocolate business.
- In Sept 2015 three class action lawsuits brought in by consumers in
Californian accused Nestle of turning a blind eye to human rights abused
by cocoa suppliers in west Africa while falsely portraying itself as a
social and ethically responsible company.

Nestle said it was committed to tackling child labor in its cocoa supply chain and had
been taking action to address (the issue) which includes,

 Increasing access to education

 Stepping up systems of age verification at cocoa farm
 Increasing awareness about the company’s code of conduct

Despite ’s assurances, the use of child labor continued and became even more prevalent in
its cocoa supply chain

Though Nestle commitment to eliminating

 Slavery
 Forced child labor and
 Human right abuse

Seemed promising

The existence of modern slavery within its cocoa supply chain posed
ethical and reputational risks for Nestle. Analysts said addressing slavery
would be a critical issue for the company going forward due to the
complexity and limited visibility of its supply chain, its reputation for
reliability among Stakeholders
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 Transparency dilemmas and

 Cost and pricing presses

Though Nestle was among the world’s largest food processing company and had great
consumer brands well known for their quality, critics find out that there seemed to be
an element of arrogance in its action. Experts pointed out that the history of Nestle’s
public relations trouble began in 1970s with allegations of unethical marketing of
body formula in less developed countries. Since then, nestle had continued to get into
trouble. For instance

 In 2008 it was blacklisted in Chinese government

 Misleading promotion of its bottled water brand

In U.k, the ECRA ethical consumer research association gave Nestle an ethical rating,
Ethicon, of 0.5/20. ECRA had found the company to be linked to social ills such as

- Child labor
- Slavery
- Rainforest distraction
- Water extraction and
- Debt reputation

Modern slavery in global supply chain

Modern slavery could be described as control by people or organizations over

vulnerable individuals in order to obtain personal profit.

- Forced labor
- Debt bondage
- Childe labor
- Wage exploitation
- Human trafficking
- Forced marriage
- Involuntary domestic servitude etc.

Where in victims well engaged in unreasonable work through physical or mental

threat

According to the 2016 global slavery index (GSI) about 40.3 million people will victims
of some form of modern slavery globally. The rate of modern slavery was reported to be
the highest in Africa with 7.6 victim for every 1000 people.

According to them (GSI) globalization had led companies to turn to lower- cost
suppliers who sourced cheaper raw material and low-wage labor in order to maximize
profit

Analyze find out that slavery was an abuse of human rights in the pursuit of profits
and that corporations had a moral duty not to indulge in or tolerate it. Several
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governments had enacted legislations which mandated that companies enlists respect
for human rights in their supply chains.

A number of anti-modern slavery regulations had also come into existence. For
instance.

 The California Transparency in supply chain Act (CTSCA)

- Signed in 2010
- Enacted on January 1,2012
- This act aimed to ensure that “large retailers and Manu factures provide
consumer with information regarding their efforts to eradicate slavery
and human trafficking from their supply chains”
 The United Nations guiding principles on business and human rights (UNGP)
- Were endorsed (approved) by the UN human rights council in June 2011
- These were a set of guidelines companies to prevent, address and remind
human rights abuses committed in business operations
- UNGP, based on three pillars
1. Protect
2. Respect and
3. Remedy
 The most prominent of anti-slavery regulations was
- UK modern slavery act
- Passed on March 26/2015
- It required business with a turnover of more than €36 million annually to
produce a ‘slavery and human trafficking statement’ ones a year report
disclosing what action they had taken to ensure their supply chains were
free of slave labor

Child slavery in Nestle’s cocoa supply chain

Nestle was a leader in the chocolate confectionary industry and used 10% of the
world’s cocoa production. It worked directly with almost 165,000 direct suppliers and
65,000 individual farmers worldwide for procuring raw materials such as

- Cocoa
- Diary
- Sugar
- Coffee etc.

Nestle primary sourced cocoa from

- Co-ops
- Farmers

In Ivory coast and Ghana, Nestle Purchased around 414,000 tons of cocoa annually
for chocolate and confectionery as well as beverage.
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Since the late1990s Nestle and its competitors and received negative publicity and
media coverage over their use of child slave labor and the lack of transparency within
their cocoa supply chain.

Despite the fact that Nestle’s corporate business principles and supplier code
prohibited both child and forced labor, nestle was aware that cocoa beans from ivory
coast were producing child labor. At the same time and his rivals vied for market
share and profit, cocoa formers suffered due to low income attributed to the fall in the
price of cocoa beans. . Many farmers felt that child labor was a viable option in order to cut
production and work coast

As the result child, child slavery had become extremely prevalent (wide spread)
throughout the cocoa supply chain the practice of child labor was rampant (un
controlled) in the local industry where in harvesting and processing of the cocoa plant
was left to children, often.

 Un paid
 Living in slavery
 Some children were sold by their parents to the traffickers
 Many were kidnapped
 Denied sufficient food
 Caring heavy loads
 Using machetes etc.

An independent journalist LJ Vanier who studies the situation said that

“The rules and regulations are so lax (very bad) that there is no government to step in
and stop the atrocities (or cruel act). This horrific state of child slavery is also the perfect
cheap labor for candy companies that went to sell you chocolate for dirt cheap prices. ``

The growing awareness about child slavery working in the production of cocoa led to
consumer questioning where exactly their chocolate was coming from and who was
making it?

In 2001 following a great pressure outrage from civil society group, media and the
general public, eight chocolate manufacturing companies in the USA including Nestle,
signed the Harkin-Engel protocol, to investigate the labor practice and eliminate the
worst form of child labor in the processing of cocoa in Ivory Coast and Ghana in 2005.

Harkin-Engle protocol

- Sometimes referred to as the cocoa protocol.

- Is an international agreement aimed at ending the worst form of child
labor
- The protocol was negotiated by the USA senator Tom Harkin and USA
representative Eliot Engle
- The industry’s promised to reduce labor in ivory coast and Ghana by
70%
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In 2005, a lawsuit was filed against

 Nestle
 Archer Daniels Midland Co,
 Cargill Inc.

By three former child slavery victims originally from mail who alleged that these
companies aided and abetted human rights violations through their active
involvement in purchasing cocoa in ivory coast.

The lawsuit claimed that the companies were aware of the child slavery problems and
offered financial and technical assistance to local farmers to procure the cheapest
source of cocoa.

In court documents the three plaintiffs (those who came to from Mali) claimed that
“they had been trafficked from their homes and put to work on plantation in ivory
coast”

They also described how they had been,

- Whipped
- Beaten and
- Forced to work for 14 to 16 hours per day

So that the lawsuit accuses Nestle of making false assertion to consumers and not
disclosing that its suppliers relied on child laborers to procure cocoa at the point of
purchase

Nestle said that the claim against it should be dismissed because the lawsuit was
without approval and such kind of case need “proactive (constructive) and multi
stakeholder effort” were required to eradicate child labor, not lawsuits,

Paul bakus,

President of corporate affairs, Nestle USA said that,

“Forced child labor is a complex, global social issue in foreign countries that is not going
to be solved by lawsuits in US courts against the very companies that are lending the
fight to help eradicate it”

After the first dismissal in 2008, the case was examined again and the lawsuit was
reinstated (restore) by the US court of appeals in san Francisco in 2014 on the ground
that the plaintiffs had valid reason to accuse Nestle of pursuing profits more than
human well-being

In oct 2009 Nestle launched a companywide initiative called “the Nestle cocoa
initiative plan” (TNCP) in collaboration with international cocoa initiative (ICI) in
order to ensure a sustainable future for the cocoa industry worldwide and the
communities depending on it
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The goal of TNCP was

 To help cocoa farmers run profitable farms

 Respect the environment
 Have a good quality of life
 For the children to benefit from an education
 See cocoa farming as a respectable profession

To achieve this, nestle committed CHF 110 million to the plan for 10 years and
promised to source 230,000 mt of cocoa through TNCP by 2020. Despite the industry’s
assurances, critics contended (claimed) that the worst forms of child labor continued
in ivory coast.

In Nov 2011 Nestle commissioned “Fair labor Association” (FLA) to assess its cocoa
supply chain in ivory coast, the goal of the assessment was

 To map stakeholders involved in Nestlé’s cocoa supply chain

 To analyze the associated labor risks in its cocoa supply chain

A team of 20 local and international experts visited a total

- 7 suppliers
- 20 co-ps
- 2 co-ps union
- 87 farmers

In all 500 interviews will conducted with farmers and other stakeholders in supply
chain including

 Local community member

 Local government
 NGO
 Suppliers and nestle staffs

The FLA released the result of its finding continued evidence of child labor in the ivory
coast the research found 56 workers under the age of 18 of whom 27 were under 15
years of age

A team of 20 local and international experts visited a total

- 7 suppliers
- 20 co-ps
- 2 co-ps union
- 87 farmers

In all 500 interviews will conducted with farmers and other stakeholders in supply
chain including

 Local community member

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 Local government
 NGO
 Suppliers and nestle staffs

The FLA released the result if its finding continued evidence of child labor in the ivory
coast the research found 56 workers under the age of 18 of whom 27 were under 15
years of age

- Moreover, Nestle, claims that it had made progress toward meeting the
Harkin-Engle protocol fell flat when a 2015 report from the payson center
for international development of Tulan university, sponsored by the us
department of labor found that the number of children engaged in cocoa
production in ivory coast has increased 51% of 1.4 million in 2013
compiled to 791,181 children engaged in such work in 2008-2009.

Regardless of how, nestle defended itself stating,

“Cocoa supply chain is long and complex-making it difficult for food companies to
establish exactly where their cocoa comes from and under what conditions it was
harvested”

Payson center for international development

-Was founded in 1998 by William and Easmon Kelly

-With the focus of information and communication technology in international
development

When customers filed the three class-action lawsuits against

Nestle,
the Hershey co,
and Mars, INC

for illegally using child labor in its manufacturing processes in September the same
year, the company’s inability to keep its supply chain more transparent was put to the
public attention once more. According to the complaint

“Nestle as one of the largest companies in the world, can dictate the term by which
cocoa beans are produced and supplied to it, including the labor condition in the supply
chain. But through its own inadequate efforts over the course of decades Nestle is
presently not able to trace (track) all of the cocoa beans that make up its chocolate
products back to the cocoa plantation on which they are grown, much less ensure that
the cocoa beans are not the product of child or slave labor and mean while nestle
continues to profit from the child and forced labor that is used to make its chocolate
products that is shameful.

Nestle’s initiatives to address the case

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Following the finding of the FLA investigation, nestle set out to address child labor by
implementing the FLA’S 11 recommendations, which included tightening the Nestle
supplier code,

 Increasing responsibility from the difference levels of suppliers as well as

 Building a rigorous and comprehensive internal monitoring mechanism

Nestle renewed its promised from 2001, it was taking steps to gradually end child
labor in cocoa growing regions by examining individual situation and addressing the
root causes.

“The use of child labor is unacceptable and goes against everything Nestlé stands for. Nestlé is
committed to following and respecting all international laws and is dedicated to the goal of eradicating
child labor from our cocoa supply chain,” the company said in a statement

Child labor monitoring and remediation system

step 1: The Community Liaison Person (CLP) Visits the Households and Farms of Every Member of the
Nestle Cocoa Plan Co-operative Gather Basic Information on the Issue

Step 2: A child is Spotted (or Self-declares) Engaging in a Hazardous Activity

Step 3: This Information is Entered into a Centralized database via Mobile app

Step 4: At the Co-operative Level, the Child Labor Agent (CLA) Verifies the Information and Validates the
Report Submitted by the CLP

Step 5: ICI Analyses the Data Coming from a Co-operative, Identifies Trends and Suggests a Palette of
Remediation Activities that will be Implemented by ICI with the Support of the CLA and CLP

Step 6: ICI, or one of its Local Partners, Implements or distributes Remediation Support to the Child
and/or their Parents In 2017,

Step 7: The child is monitored to ensure the process is successful, and the Effectiveness of the
Remediation Activities is Critically Revived on an on-going basis

In 2007, 51% of Children Identified are no Longer in Child Labor

In 2016 the CLMRS was extended to a further 29 cooperatives taking the total of 69 by
2016 (CMRS) covered

 37,130 farmers
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 3,933 children

Who were involves in hazardous tasks on cocoa farms. Half of identified children were
included in CLMRS

 Sent to school
 Incoming activities were developed for their families
 Nestle built 40 school in ivory coast despite this all allegation that the company
was not doing enough continued

Earlier in 2010 Nestle entered in to a partnership with the Danish institute for
Human rights (DIHR) to support its commitment to respecting human right as stated
in the company’s corporate business principles. As part of this commitment, Nestie
developed and implemented an 8- pillar human right due diligence program (HRDD)
with the aim of making Nestle approach to human rights strategic, comprehensive and
coordinating

As part of the program, Nestle continued to tackle child labor in its cocoa supply chain
in ivory coast by focusing on

 Vulnerable groups girls,

 and children’s migrant workers

Batato was appointed executive vice president and head of operations at NestLe in
October 2015. All 500 of Nestle production plants worldwide were under Batato’s
control

He also responsible for Nestle rural development activates and purchasing. Nestle
operated a child labor and women’s empowerment steering group, chaired by Batato,
which identified

 Measures
 Take decisions and monitor progress

nestle admits to forced labor

Following the allegation that it was using labor to catch and process for its popular
fancy feast cat food, in early 2015

Nestle commissioned verite, a human right watchdog, to conduct an investigation in to

sin of its production sites in Thailand

Verite conducted a three-month assessment in to the possibility of forced labor and

human trafficking in Nestle’s Thai supply chain

The investigation was targeted specially at the vessel to market place shrimp and
fishmeal supply chain
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Verite interviewed more than 100 peoples including about 80 workers from Myanmar
and Cambodia as well as

 Boat owners
 Shrimp term owners
 Site supervisors and
 Representative of Nestles suppliers

It visited

 Fishing boats
 Fish meal packing plants
 Shrimp farms and
 Clocked fishing boat in Thailand

Verite found indicators of forced labor human trafficking and child labor present in
land and sea-based workers at the sites assessed. These indicators include

 Deceptive recruitment practices

 Little or no employment protection for workers
 Restrictive on the freedom of movement of workers and
 Instance of both verbal and physical abuse

According to the vertie study

 Workers were either sold as slaves to seafood suppliers in Thailand or

 Trapped in the fishing industries through
- False promises and
- Debt bondage

Often trafficked from Thailand’s neighboring countries such as Cambodia and

Myanmar

While nestle had publicly accepted the findings of the report, verité said the problem
was not unique to Nestle supply chain but rather “systemic in nature” within the
vulnerable migrant worker communities in Thailand.

Nestie, the world’s largest pet food company, has been accused of utilizing slave labor
and human trafficking to distribute, promote and sell its purina brand fancy cat food
while making its involvement in human rights violation from the general public

Melani barber

A woman who brings a case against nestle, alleged Nestle had violated consumer
protection status by failing to disclose that some ingredients in its cat food products
contains seafood which was sourced from forced labor.
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According to mealani barber

“By hiding this form public view, nestle has effectively tricked millions of consumers
into supporting and encouraging slave labor of floating prisons”

The alleged violation was brought under the

1. The California unfair competition law (UCL)

2. The California legal remedies act (CRA)
3. The California false advertising law (CFAL)

Nestle applied, for the lawsuit to be dismissed arguing that it could depend on the so-
called “safe harbor” provision, as the company had made specific discloses on forced
labor issues as required by the California transparency in supply chain acts (CTSCA)
of 2010

After fending off (defend) allegations, in Nov, 2015 Nestle took observers by surprise
when it publicly admitted that its seafood supply chain was tainted (contaminated) by
modern slavery

Following verities’ investigation, Nestle launched an action plan to seafood source from
Thailand which include a series of action to protect workers from abuses and improve
working condition

Criticism

Some analysts felt that this was just an attempt by Nestle to cover up bigger allegation
of child labor in its profitable (lucrative) chocolate making business. In order to escape
the charges of being an unethical company, Nestle had admitted to slavery in seafood
suppliers, a low profit area of the company’s business in Thailand.

Some anti trafficking groups remained doubts of nestle activities, seeing them as a
tactic to reduce other pending civil lawsuit proceeding in its cocoa supply chain.

Some analyst contended (argued) that Nestle’s attempts to eliminate child labor from
its global cocoa supply chain were not acceptable due to its insufficient transparent
self-monitoring mechanism

 FLA investigation aid not accurately represent the condition on Nestle’s cocoa
farm because the vast majority of Neste’s cocoa farm (about 75% of them) were
not part of the TNCP
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The key forward

Nestle received some relief in march 2017 when us district judge Stephen V. Wilson

 Dismissed the case on child slavery in Africa on the ground that the complaint.
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Case II
‘Enrich Not Exploit’: Can New CSR Strategy Help the Body Shop Regain
Glory?
What is CSR strategy?
Corporate social responsibility (CSR) is the comprehensive plan companies use
to design, executed and analyze their corporate social responsibility initiatives.
Some of responsibilities are:
 Environmental sustainability initiatives
 Community volunteering
 Non-profit work and charitable giving
What is The body shop?
- The British cosmetic skincare and perfume company
- Founded in 1976 by Anita Roddick
- The currently has sell of 1000 products in 3000 stores
Founded in 1976 by anita roddic the body shop regarded as a pioneer of
modern CSR. The beauty retailer, which was strongly associated with social
activism like
 Opposition to animal testing
 Developing community trade
 Developing self esteem
 Campaigning human rights and
 Protection of the planet
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Through these initiatives, body shop had cultivated a loyal customer base
But following its acquisition by beauty care giant L’oveal in March 2006, both
body shop and Roddick came under severe criticism
The criticism was
 Tested cosmetics on animals
 Exploited the sexuality of women
 Sold their products by making women feel in scale
Body shops profits collapsed following its acquisition. Its sales dropped as a
number of new competitors joined on the natural goods and launched their
own green cosmetic lines. Body shop’s ethical message diminished as well, and
the firm admitted that it has been relatively quieter on the sustainability front
for some years.
To re-establish itself as the world’s most ethical and truly sustainable global
business, body shop announced a new CSR commitment with the focus on
 People
 Product and
 The planet
The commitment entitled ‘Enrich not Exploit’ outlined 14 new sustainability
targets to be achieved by 2020 that touched all areas of the business
According to Jeremy Schwartz, chairman and CEO of the body shop said that,
“The body shop can be both a force for good and a successful, profitable
business, we want out ‘Enrich Not Exploit’ commitment to inspire a new
generation of customers, supporters and especially millennials who truly care
about how the company operates. Re- establishing the body shop as a leader
will come from delivering our ambitious aim to be the world’s most ethical and
truly sustainable global business.

And according to Christopher Davis , international director of CSR and

campaigns at the Body Shop , said that the new sustianabilty commitment
would broaden the body shop’s appeal to the next generation of customer and
revive its image as a pioneering force in ethical retail.
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Would the new CSR approach help the beauty retailer in regaining its past
glory as a leader of ethical business practices in retail and boost sales?
Body shop’s core value
The CSR strategy of the body shop was based on five core values
1. Activate self esteem
2. Against animal testing
3. Community fair traole
4. Defend human rights
5. Protect the planet
Support community fair trade
(CFT)
Launched in 1987
Body shop was own independently verified fair trade initiatives to help war
finalized communities improve their lives and eradicate poverty
The objective of CFT
 To source high-quality in saltines
 To provide benefits to small holders, artisans
 Develop communities by building school and health counters
 Providing clean water
 Offering education scholarship
 Body shop developed a set of fair-trade guidelines in 1994
The body shop’s fair-trade guidelines
 Community
We are looking to work with established community organizations which
represent the interest of their people
 Community in need
We targeted those group who are disadvantage in some way,
 Benefits
We want the primary producer and their wider community to benefit
from the trade
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 Commercial viability
It has to make good commercial sense meaning that price, quality,
capacity, and availability all carefully considered
 Environmental sustainability
The trade has to meet the body shop standards for environmental and
animal protection
Activate self esteem
- Valued people and their work
- The beauty retailer supported out built self-esteem particularly among
women
- Promoted diversity, acceptance and equal opportunities standards
Defend human rights
- Body shop campaigned for human rights in the media and in its stole
- Encouraging to ‘make your mark’ for human rights
Body shop’s ethical trade standards
 Employment is fleetly chosen
 Working condition are safe and hygienic
 Child labor is not used
 Working hour are not excessive
 Regular employment is provided
Against animal testing
 Body shop ensued that non-of its products were tested on animals
 Some of the animal derived ingredients is used such as honey were
obtained without causing harm to the animal the company used three
main assessment methods
1. Computer data
2. Laboratory created tissues and
3. People
To make its product safe and effective, as well as cruelty free
Protect the planet
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Body shop was an early pioneer in given business and the company constantly
explored ways to valn its business in mole environmentally sustainable way
A company set a target of kducing CO2 emissions from from stores by 50%
Using sustainable materials for use in it’s product, packaging and stores

Criticism
 Though body shop was considered the poster child of CSR, it began
facing increased scrutiny from environmental groups of its activities and
claims
 Accused body shop of exploiting consumers by promoting various
agenda, while not being any different from other corporate in its pursuit
or profit

Jon Entine
Business ethics expert
reported that the charity commission for England and wales records did
not show any charitable contribution from the company in its first 11 years
of operations.
The company was making false claims that its product being natural but
extensive use made of petrochemicals in the preparation of body shop’s
products
Formulating a new strategy
The work on the new CSR commitment starts in 2013 Christopher Davis was
promoted from
 Head of campaigns to
 Director of international corporate responsibility and
campaigns
at body shop, he responsible for:
 Developing and overseeing the implementation of the company’s global
corporate responsibility and campaign strategy
 18

Nearly for two years Christopher Davis and his team undertook a
comprehensive review of body shop’s business across of nations. The team
spent some months taking to a range of academics, thought leaders and
campaigners in order to know what the real issues facing the world were
In order to develop a new a new systematic framework for sustainability the
management at the body shop adopted the future- fit business benchmark,
which become a starting point for developing the company’s goals, David’s and
his team formulated a new CSR philosophy (strategy) under the name of
‘Enrich Not Exploit’ with the emphasis on three core pillars
1. People
2. Product
3. Planet
The new commitment replaced the earlier five core value of body shop

Enrich Not Exploit

On Feb 2,2016 body shop introduced its new global CSR strategy. The new
commitment/strategy known ‘enrich not exploit’. The aimed at making body
shop the world’s most ethical and truly sustainable global business.
The new sustainability frame work included 14 specific measurable CSR
targets based on a commitment to enrich people, product and the planet.
The goal includes doubling body shop’s CFT to
Regenerating 75 million square meters of habitat to help communities live more
sustainabley
Powering 100% of body shop stores with renewable energy
Enrich not exploit targets
1. Double CTP from 19 to 40 ingredients and help enrich communities that
produce them
2. Help 40,000 economically vulnerable people access work around the
world
 19

3. Engage 8 million people in enrich not exploit mission creating its biggest
campaign ever
Reduce by 10% the energy use in all out stores source adapted from the body
shop com
The biggest challenges
One of the biggest challenges for the management of the body shop was
 Involved all 23,000 employees of the company across 65 countries in the
new initiatives
But to make employees aware of the new commitment the company oveated
 Video clips
 Booklets and fact sheets
 Organized workshop and conferences
 Organized workshop and conferences
 Social medea outlets
Can body shop regain its former glory?
Davis was positive that the renewed CSR strategy would help the body shop
scale new heights
Because in march 3,2016 the body shop reported sales 200 million compassed
to 192.4 million of 2015
Unfortunately, other experts claimed that giving natural products with
sustainable qualities was not enough to increase sales. They believed that the
body shop was more concerned with its environmental message then with
innovation.
Thank you