Nestle & UN Global Compact Principles Online Tutoring

Practices and Approaches

As Nestle is one of the signatory companies of United Nations Global Compact Principles, it not only follows the laws authorized by the UN Global Compact Principles but it has been making efforts by adopting various practices and approaches. Following are some of the Nestlé’s practices in relation to principles of UN global compact;

The company has partnered up with Fair Labor Association (FLA) to investigate and remove chances of forced labor from their supply chain and production farms (Nestle, 2014). Moreover, it is determined to remove major causes of child labor which includes initiating projects of building new schools for children (Baradaran & H., 2011). Nestle is working for improvement of the environmental performance by introducing new production techniques. For example, it has initiated eco design for water bottles which is environment friendly. It also made commitment to make deforestation zero by 2020. In compliance with one of the principles, Nestle has achieved ISO 14001, which ensures that company follows best practices on managing costs and reducing wastes of production. All these policies are implemented through Nestle Environmental Management System (Foundation Startegy Group, 2006).

Last but not the least, Nestle makes sure that compliance to all UN GCP principles are made through internal and external accountability of different departments of company including law, human resource and compliance (Nestle, 2014).

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Lessons from Business Practices

Positive Lessons

Nestle has been gaining their trust resulting in consistent employment in developed as well as in developing countries. Number of customers has also been increased since company is clear in publishing its sustainability reports and creating value for its customers (Nestlé S.A., 2002).

Nestle has gained loyal customers and employees in most of areas of the world. People from different continents have developed an obsession over Nestlé’s products as they consider it safe and healthy. Nestle has become the number one choice of employees of diversified backgrounds especially in developing countries from South Asia.

By implementing policies in relation to the UN global compact principles, Nestle has gained support and help form different governmental and non-governmental institutions from developing countries. Nestle is helping for different global causes, for example, in Philippines, new techniques for strain and farm management are improving the quality of coffee resulting in better price system for growers as well as other parties involved (Nestlé S.A, 2015).

Negative Lessons

It is difficult to implement policies with compliance to all laws and UN global compact principles. Especially in developing countries where  bad governance, energy crisis and labor problems makes impossible for multinationals like Nestle to stick to their standards as well as UN global compact principles.

Nestle needs to develop more flexible action plans which meet the needs of its stakeholders from diversified backgrounds as they belong to different countries. For example, Nestle provides on-site training to its employees under environmental management system for better management of industrial wastes and reducing costs. Same training methods will not work out for Mexico and China, as everything from employees to government structure and production methods are different in these countries (Nestle, 2010).

Business Practice Recommendations

At Nestle, notice of making any sustainable changes is made on an average of 42 days before implementation of the policy. As it is stated in collaborative agreement of 21 countries, there is a distinguished need that the company focuses on psychology and behavior for acceptance of change as a result of implementing new policy by making groups of countries based on similar characteristics (Nestlé S.A, 2015).

Nestle should emphasize more upon the conditions of supplier code while outsourcing some of its business transactions to make sure that labor is not forced into any work of Nestle. This practice especially goes for countries like Bangladesh, India and Pakistan where forced labor is a common practice (International Labor Organization, 2015).

In 2014, Nestle launched Total Reward Toolkit. As the company is training all managers including corporate and functional ones, it needs to harmonize this program as it continues to follow it in 2015.

According to Nestlé’s Environmental Sustainability Policy, it has been implementing efficient technological operations which would reduce use of energy and water sources, minimize the amount of waste and produce high quality products eliminating most type of emissions especially GHGs. As per the index of resource consumption and production volume from 2005 to 2014, it is evident that both of these variables are negatively related but it still needs to reduce its resource consumption as global warming is increasing, making it difficult for the company to maintain the same level of its index (Nestlé S.A, 2015).

As portfolio of Nestlé’s products is highly diversified, it needs to apply those production methods which will not only save cost and effort but result in using byproducts from one product into another one. It is only possible through environment friendly production techniques, minimizing the raw material waste.

Nestle has been offering its Environmental Setting Target Programme and installing resource efficient machinery in European countries. It needs to carry these production techniques and machinery to developing countries as well. For example, reduction in use of energy resources while changing products is done in manufacturing plants of Poland. However, it is equally needed in developing countries (Nestle, 2014).