Eliminating Modern Slavery from Supply Chains: Can Nestlé Lead the Way?
| Case Code: BECG159
Case Length: 18 Pages
Period: 2015 - 2018
Pub Date: 2018
Teaching Note: Available
| Price: Rs.500
Industry: Fast Moving Consumer Goods
Countries: Europe; Global
Themes: Corporate Sustainability, Business Ethics, Supply Chain Management
Abstract Case Intro 1 Case Intro 2 Excerpts
Modern Slavery in Global Supply Chains
Modern slavery could be described as control by people or organizations over vulnerable individuals in order to obtain personal gain or profit. Modern slavery included forced labor, debt-bondage, child labor, wage exploitation, human trafficking, forced marriage, involuntary domestic servitude, or any other practice wherein victims were engaged in unreasonable work through physical or mental threat. According to the 2016 Global Slavery Index, about 40.3 million people were victims of some form of modern slavery globally. Of these people, about 24.9 million were in forced labor. The rate of modern slavery was reported to be the highest in Africa, with 7.6 victims for every 1,000 people in the region..
Child Slavery in Nestle's Cocao Supply Chain
Nestlé was a leader in the chocolate confectionery industry and used 10% of the world's cocoa production. It worked directly with almost 165,000 direct suppliers and 695,000 individual farmers worldwide for procuring raw materials such as cocoa, dairy, sugar, coffee, etc. Nestlé primarily sourced cocoa from co-ops and farms in Ivory Coast and Ghana. Nestlé purchased around 414,000 tons of cocoa annually for chocolate and confectionery as well as beverages. The cocoa supply chain includes many intermediaries between the farmer and consumer. Small farmers typically sell their cocoa harvest to local middlemen for cash. The middlemen work under contract for local exporters, who, in turn, sell cocoa to international traders and the major international cocoa brands....
Nestle's Initiatives to Address the Issue
Following the findings of the FLA report, Nestlé set out to address child labor by undertaking the recommendations the FLA had made to it which included strengthening the Nestlé Supplier Code, increasing accountability from the various tiers of suppliers, and developing a robust and comprehensive internal monitoring and remediation system. Reiterating the promise made in 2001, Nestlé said it was taking action to progressively eliminate child labor in cocoa-growing areas by assessing individual cases and tackling 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," 20 the company said in a statement...
Nestle Admits to Forced Labor
Following allegations that it was using slave labor to catch and process fish for its popular Fancy Feast cat food, in early 2015, Nestlé commissioned Verité, a human rights watchdog, to conduct an investigation into six of its production sites in Thailand. Verité conducted a three-month assessment into the possibility of forced labor and human trafficking in Nestlé’s Thai supply chain. The investigation was targeted specifically at the vessel-to-market place shrimp and fishmeal supply chain. Verité interviewed more than 100 people, including about 80 workers from Myanmar and Cambodia, as well as boat owners, shrimp farm owners, site supervisors, and representatives of Nestlé's suppliers. It visited fishing ports, fishmeal packing plants, shrimp farms, and docked fishing boats in Thailand...
Though Nestlé was applauded for its admission of forced labor within its seafood supply chain and its move toward transparency, some analysts felt that this was just an attempt by the company to cover up bigger allegations of child labor in its profitable chocolate making business. They felt that in order to escape the charges of being an unethical company, Nestlé had admitted to slavery in seafood suppliers, a low-profit area of the company’s business, in Thailand. Some critics saw Nestlé's actions as a public relations stunt to alleviate the criticism it had received for abetting child slavery in Ivory Coast....
The Way Forward
Nestlé received some respite in March 2017, when US district judge Stephen V. Wilson dismissed the case on child slavery in Africa on the ground that the complaint "seeks an impermissible extraterritorial application of the Alien Tort Statue which means companies can be sued in the US for actions outside the country but only when some conduct touches and concerns the US with sufficient force."...
Exhibit I: Prevalence of Modem Slavery (per 1,000 population), by Region and Category
Exhibit II: Number and Prevalence of Persons in Modern Slavery,by Category, Sex and Age
Exhibit III: Anti-Modern Slavery Regulations
Exhibit IV: Children's Involvement in Child Labour and Hazardous Work, 2000-16
Exhibit V: Nestle's Cocoa Supply Chain Map in the Ivory Coast
Exhibit VI: Child Labor Monitoring & Remediation System
Exhibit VII: Growth of CLMRS
Exhibit VIII: Nestle's Human Rights Due Diligence Program - Achievements 2016
Exhibit IX: Responsible Sourcing of Seafood - Thailand Action plan 2015-2016
Exhibit X: Nestl's Media Coverage Related To Slavery
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