RESEARCH PROPOSAL

Valkeakoski, International Business

Autumn semester, 2021
Trang Dang
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CONTENTS

1 INTRODUCTION...........................................................................................................2
1.1 Research question..............................................................................................2
1.2 Who is Nestlé?....................................................................................................2
1.3 Attention.............................................................................................................2
1.4 Objectives...........................................................................................................3

2 METHODOLOGY..........................................................................................................3

3 THEORY.......................................................................................................................3

4 MAIN CONCEPTS.........................................................................................................4
4.1 Farmer Connect Program...................................................................................4
4.2 Rural livelihoods enhancement..........................................................................4
4.3 Land and land tenure..........................................................................................5
4.4 Respecting human rights....................................................................................5
4.5 Rural women empowerment..............................................................................5
4.6 Jobs creation.......................................................................................................6
4.7 Water and sanitation..........................................................................................6
4.8 Engagement in climate activities........................................................................7
4.9 Global Reforestation Program............................................................................7
4.10 Shortcomings......................................................................................................8

5 CONCLUSION.............................................................................................................. 8

REFERENCES.....................................................................................................................9
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1 INTRODUCTION

1.1 Research question

In this research proposal, the research question is:

“How can Nestlé drive their agricultural supply chains towards ethical
responsibility that helps farmers improve rights and livelihoods?”

1.2 Who is Nestlé?

Nestlé is the world’s largest food company, whose portfolio includes

nutrition, health, and wellness products. The multinational conglomerate
is operating over 2,000 brands, presents in 189 countries, and employs
about 339,000 people. It was founded by Henry Nestlé in 1866 and is
headquartered in the Swiss town of Vevey. The company performance is
driven by “Good food, Good life” mission and commitment to give
consumers the best food and beverage categories, from morning to
night. (Nestlé, n.d.a)

1.3 Attention

Agricultural supply chains are growing in complexity and are considered

as the middle of everything in food and beverage enterprises, not
excluding Nestlé. The establishment is consistently bringing in the global
supply chains innovations, expertise, technologies, financing capacities,
and safe nourishments to ever-growing populations in the face of
changing nutritious demands. The design and application of its
commodity systems are set to be resilient, sustainable, and to minimize
the environmental footprint. With such a large proportion of raw
materials coming from the farms, Nestlé is making endless efforts in
building mutually beneficial relationship with farmers to achieve
responsible sourcing and better rural livelihoods. (Nestlé, n.d.a).

Ethical responsibility that addresses environmental, social and

governance issues nowadays are increasingly important in the centre of
consumers’ purchasing decisions and behaviours. Consumers are critical
about what is in their food, where it comes from, and inquire for
essential transparency in product’s label. In response to liability and
traceability request from society, last year, Nestlé announced that it
would make logistics network transparent, and also disclosed details
about suppliers, company names and countries of origins. (Nestle
M.,2020).
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1.4 Objectives

Nestlé has 447 factories, sources from 4.1 million family farmers,
employs 205,000 people from vulnerable communities from across over
50 countries. Therefore, it is inevitable for Nestlé to ensure farmers are
sufficiently invested in with great places to live and work. (Nestlé, 2015).
The aim of the research proposal is to recognise appropriate approaches
Nestlé has accomplished and identify gaps between its business practices
and social needs that might be present for improvements in its supply
chains, in order to attain these ultimate missions: boosting health,
improving lives, and communities as a preferred corporate employer.
Overall findings and key takeaways are also summarised in this research.

2 THEORY

Formed in 1995 and registered in England, Wales, and Scotland,

International Confederation Oxfam is an independent non-governmental
charity organization working in 70 countries, whose affiliates come
together to fight against injustice, end poverty, and save lives. On the
latest report from numerous assessments in early 2021, Oxfam stated
that Nestlé has upgraded its global social and environmental policy
commitments, but had troubles to turn them into reality on a local
degree; therefore, the world’s biggest maker and distributor of foods
needs to do more to create a sustainable food system with focal points
on women, land and climate. (Oxfam International, 2021).

3 METHODOLOGY

The methodological approach used was qualitative analysis design. The

author reviewed and analysed two sets of publications, which were
articles, including data from other researchers, and documents existing
on Nestlé’s and other reputable websites. The method chosen gave
thorough and deep context to this type of open-ended research question,
also indicated human character in issues discovered and explored. It also
helped the author gather precise data of the popular business brand,
regardless of geographical locations. Results were trustworthy and
conveyed as text. The author has worked on secondary sources by
skimming and breaking them down into areas of concerns related to
variables of research question.
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4 MAIN CONCEPTS

4.1 Farmer Connect Program

Farmer Connect Program is one among many Nestlé’s initiatives, which

fill the needs of rural and people development in long-term Creating
Shared Value approach. It focuses on acquiring organic resources directly
from small-scale peasants through contract farming. The selective
measures equip agricultural workers with trainings, technological
support, practical assistance, and technical insights. This is aimed to
magnify farmers’ expertise so they can increase productivity, reduce
costs, keep environmental impact at a minimum and deploy more
qualified safety actions. Over the years, contract farming has integrated
thousands of sons of the soil into the supply chain. It has proven to
contribute symbiotic value to Nestlé and farmers’ livelihoods. For
instance, their income has been protected with the sell-back price is
made unsusceptible from the volatile market price. (Nestlé, 2020, p.29)

Over a greater expanse of the program, farm workers’ agronomic

knowledge and skills are admittedly crucial in food system. In that regard,
Nestlé continuously trains and enables young labourers by providing
apprenticeships and supporting them in the management of their farms.
Nestlé realized that competencies and hands-on traineeship secure
young people with employability and prepare them for feed-the-world
tasks. The company locally and internationally collaborates with
recognized partners to customize agripreneurship programs delivering to
farmer communities. (Nestlé, n.d.b)

4.2 Rural livelihoods enhancement

Diseased trees, declining yields, lack of access to capital service and

market, land scarcity, poverty, climate change are factors that threaten
the livelihoods of small crop growers. To support farmers further, Nestlé
has been working closely with local authorities to help develop
cultivation industry, investing annually in infrastructure, veterinary
services, and microfinancing assistance. As a response to well-being and
economic returns issues of farmers and their families, the commissioning
company offers advice and guidance on dietary diversity, donates food
bank to support households and develops additional remuneration
streams to raise their finances. Besides, entrepreneurship training
programs are also introduced to teach the vulnerable make use of their
excessive produce from kitchen gardens to generate extra income for
more nutritious food purchasing. (Nestlé, 2020, p.28-30). In collaboration
with cocoa-growing societies, the Nestlé Cocoa Plan was born with the
cope of “better farming, better lives, better cocoa”. In 2020, it has made a
certain number of impressive outcomes, such as 87% farmers received at
least one training session, a cumulative total of 53 schools and 131
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bridging classes were built and refurbished, 127,550 children in Côte

d’Ivoire benefited from the Child Labour Monitoring and Remediation
System. (Nestlé Cocoa Plan, n.d).

4.3 Land and land tenure

In 2014, Nestlé formally announced for the first time “Commitment to

Land and Land Rights in Agricultural Supply Chains” as one of its policies
to aid sustainable farming and livelihoods and stand against any forms of
illegal land grabs and forced evictions that have adverse impact on
agricultural communities. In the appendix release, the multinational
manufacturer declared solidly that it held zero tolerance to unlawful land
acquisition and demanded its suppliers to respect land rights. In order to
achieve that goal, the corporation adheres to all legal frameworks,
engage with stakeholders to ensure that governments, other relevant
groups, and farmers are efficiently cooperating. It researches,
implements country-based and international practices, issues regular on-
progress reports, identifies the gaps, to help men and women access to
land and natural resources with proper land titles. Through sharing
techniques about plant genetics, soil sciences, fertilizers, the Swiss
enterprise aims to develop land usability, improve yields and incomes for
cultivators. Examples of the best practices are no tillage, multiple crop
rotation, organic fertilizers. All support nutrition uptake, water retention
and restoration for the soil. (Nestlé (n.d.c), Nestlé, 2021, p.47, Emerald
Network Ltd., 2021, p.18).

4.4 Respecting human rights

Based on the conducted Human Right Impact Assessments and CARE

audits, Nestlé developed and put forward Labour Rights Roadmap in May
2017, with a range of tools were mapped out to tackle noticeable human
rights issues. Its top-down analysis was developed by applying external
data sources that could be broken down into commodities and countries.
As the results showed the risks presenting in all raw material supply
chains, the company proposed action plans with priorities, how and
where to act in that same year. The firm has been working with and
through governments, suppliers and farmers, international organizations
to make sure workers receive a living wage, have adequate
accommodation, access to basic services, combat child labour and forced
labour, ensure safety and health, protect freedom of association and
bargaining powers, avoid at all costs discrimination. In 2017 and 2018,
grievance mechanisms and access to remedy were equally rolled out and
strengthened the implementation. In the thinking of how to support
farmers, Nestlé joined Fair Labour Association and the Living Income
Working Group, led by ISEAL, Sustainable Food Lad and GIZ. (Nestlé,
2017).
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4.5 Rural women empowerment

In rural areas and along the entire value chain, the global food giant has
invested technical assistance, training benefits, high-yield techniques,
and disease resistant practices in more than 130,000 women as of today.
The “Nestlé Action Plan on Women in the Cocoa Supply Chain” is the first
commodity-focused gambit among many other initiatives of the Nestlé
Cocoa Plan to intensify support for peasant women. (Nestlé Cocoa Plan,
n.d).

In Pakistan, another well-known scheme called Nestlé BISP Rural Women

Sales Program launched in 2017 also targets to uplift “poorest of the
poor” women’ lives and put them towards a prosperous future. It assists
women retailers to reach needed finance, standard up their business and
exaggerate the size of their existing one up to three times. Furthermore,
by improving nutrition knowledge and inspiring gender equality, the
action plan ensures that the rural women find means to propel
themselves and their families out of poverty. (Nestlé Pakistan, n.d).
Recently, the program has proved its ongoing success and was
inaugurated also in Nigeria in August 2021. (Nestlé Central and West
Africa Region, 2021)

4.6 Jobs creation

To help millions of people who are living in extreme poverty navigate and
overcome barriers of unemployment, Nestlé is governing these three
global tactics: Global youth initiative, Global Alliance for YOUth, Nestlé
Gender Balance Acceleration Plan. Together with its locations expansion,
the Swiss brand is teaming up with foundations, organizations, academia,
and private sectors all over the world to provide work for the next
generation farmers and agricultural seasonal workers. Specifically, Global
Alliance for YOUth has relieved the redundancy burdens across
demographics. In defiance of young people’s lack of experience, it offers
tuition, economic opportunities and encourage them to become
entrepreneurs. The projects are set to bring together 21 international
companies to help employ 15 million youths by 2022 and further benefit
10 million by 2030. (Nestlé, n.d.b).

4.7 Water and sanitation

Since 2002, in wide-ranging rural regions of Africa, Nestlé has partnered

with the International Federation of Red Cross and Red Crescent Societies
(IFRC) to roll out WASH activities covering water, sanitation and health
awareness. From villages to schools, water safety practices,
infrastructure, and sanitation facilities were promoted, renovated, and
monitored. Wells have been being built; latrines have been being
installed. Water borne diseases and public health issues were brought to
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the table and examined in regular sessions. As a clear impact, the project
has demonstrated Nestlé’s achievements to refine vulnerable farmers’
livelihoods with accessible drinkable water and cleaner local
surroundings. Their lives have been fundamentally made better from
Nestlé’s water efficiency and management. Nowadays, the multinational
enterprise persists in this endeavour by concentrating to direct the
flagship Caring for Water strategy in four substantial areas: agricultural
supply chains, communities, factories, and watersheds. (Nestlé, 2020,
p.44-48).

4.8 Engagement in climate activities

Rainfall, heat waves, pests and diseases, downturned nutritional quality

of foods are the aftermaths of climate change which unfavourably affects
smallholder farmers. Without appropriate agriculture innovations, raw
ingredients farming can remain frailly viable when meeting the extreme
challenges. For that reason, Nestlé is using its resources and financial
investments to transform business functions in order to tackle the
damages, achieve Net Zero and support food growers. “Net Zero
emissions” is a goal positioned to balance the produced greenhouse gas
(GHG) emissions and the taken-out ones, which are the main contributor
to climate change. The giant business firm is accelerating its efforts to
reduce dairy and livestock supply chain footprint, protect ecosystems,
keep waste out of landfill, optimize logistics’ transportation, switch to
renewable electricity. Men and women, young agripreneurs in rural
neighbourhoods and their livelihoods are at the heart of all initiatives and
schemes. In term of responsible sourcing, Nestlé has also partnered with
farmers and the Sustainability in Business Lab at ETH Zurich to apply
methane reduction practices and professional herd management. (South
Pole, n.d).

According to Climate Action 100+ assessments, the consumer goods and

services group has so far met the criteria of short-term (up to 2025),
medium-term (2026-2035), long-term (2036-2050) and Net-zero (by
2050) GHG emissions benchmarks and determined to hit the targets.
(Climate Action 100+, 2021).

4.9 Global Reforestation Program

Launched in June 2021, Global Reforestation Program is a part of

essential forward-looking Forest Positive Strategy, which promotes forest
conservation and regenerative production, such as agroforestry and
intercropping. The pledge comes about from 2021, commits to restore
and grow 200 million trees by 2030. Having seen the value and
effectiveness of conservation, Nestlé has taken proactive actions to keep
natural ecosystems from being degraded. By buying from suppliers who
are actively conserving and restoring forests, the organization believes
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that it is promoting livelihoods and respecting human rights. It

investigates Forest Positive suppliers, acknowledges, and rewards them
by buying their merchandise at premium prices and in significant
quantities. By incentivising forest protection, the world’s largest food
company brings direct benefits to smallholder farmers and increase their
resilience. It is globally working in partnership with One Tree Planted,
PUR Projet, South Pole, Earthworm Foundation, Proforest, Airbus.
(Nestlé, 2021, p.9,46,57,60).

4.10 Shortcomings

On an official release of Ethical Consumer Research Association Ltd of

United Kingdom, Nestlé was outlined with a few major grounds why
buyers refused to purchase from. On environmental classification, in
2019, Nestlé was named one of the top three plastic contaminators
among other thousands of global megabrands. Break Free From Plastic
campaign group also asserted that Nestlé would continue to one of the
worst polluters if it does not urgently change its policies. On people
ranking, the company was tracked down that its sourcing capacity
percentage through its Cocoa Plan only stood at 44%. Due to the fact that
Nestlé was praised by the campaign Stop the Traffik, it is expected to
deliver 100% certified chocolate stocks for its upstream logistics. As a
consequence, the incident put Nestlé down in the category of Worker’s
Rights. On Supply Chain Management hierarchy, Nestlé was reported to
poor investigation. No complete and obvious timetable for scrutiny of
suppliers was marked, no proof of frequent evaluation and corrective
work was declared. (Ethical Consumer, 2020).

5 CONCLUSION

As claimed from the beginning of this research, agricultural supply chains

are massive processes that include many countries, many product types,
many regulations, many involved parties with challenges appear from
every stage before reaching homes and users. Nestlé is a vast company.
Even though it has tremendously attempted to control the colossal
material flow to fit in societies’ demands with commitments and policies,
obstacles and gaps are unavoidable. Sourcing and procurement teams
are responsible to comply Nestlé’s policies. On that account, they are
desired not only to focus on price, quantity and stability, but also
transparency and social issues along their execution. To improve farmers’
rights and livelihoods, from top management all the way to farm gates,
Nestlé must review and update their sourcing national-level policies,
have on-progress reports, distribute proactive activities and reactive
solutions at defined intervals of time. In addition, in each country it
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sources from, the mega brand should have proficient procurement

representatives who work with suppliers, local leaders, governments,
trade union groups, smallholder farmers to understand thoroughly, avoid
murkiness, detect the risks and decide where to place the attention.
Moreover, farmers should have more access to grievance mechanism
technologies and tools that can report directly to jurisdiction department
within Nestlé. The evidence is clear, only with all means of business
transparency and senses of ethical responsibility, Nestlé can deliver
positive impact for the most vulnerable food producers in its supply
chains.

6 REFERENCES

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https://www.nestle.com/aboutus

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