Nestle Company’s Green Business and Ethical Issues


Green business and sustainable development are interrelated and reflect the relationship of the economic benefits, marketing activities, and the possible consequences of company performance for the environment. It should be noted that the negative implications for the environment that have been caused by firm’s operations in the market have a high social cost, which is reflected in the lack or depletion of natural and other resources (Dauvergne & Lister, 2014). Thus, the two concepts express the idea that the purpose of the economic system cannot be determined by the need to satisfy the needs of consumers solely, but also improve their quality of life without harming the environment and securing it from the perspective damages using special economic methods.

Some companies have taken an initiative to account for the environmental factor; however, their intention cannot always be justified by the rightful reasons, but rather by veiling the true motives (Dauvergne & Lister, 2014). Nestle is one of the companies that have considered and applied different techniques and methods for the protection of the environment from oil pollution and other harmful wastes. Nevertheless, the researches and observations of the activities of the company showed that it has not operated for the benefit of society and the environment as they tend to claim and, in fact, resorted to the greenwashing methods. In order to understand whether the company’s activities are sustainable in nature or not, it is necessary to analyze different aspects of green business and sustainable management and their implications.

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Background

The notion of green business appeared as a consequence of the economic growth resulting in a degradation of the environment (for instance, the depleted non-renewable sources and the uncontrolled growth of waste that considerably spoiled the environment). Despite the fact that the nature and the inevitable interference in it provides a platform for the economic development, the country’s economy should include control measures of intervention and reduction of social costs caused by the business activities (Pailwar, 2014). Global frameworks and initiatives have been developed to support the international practices, and many countries have introduced and applied various measures such as eco-taxes, which should prevent the intense destruction of the environment; however, a significant disruptive impact on businesses remains high until present.

Green Business and Sustainable Management Implications

Green business opens up new possibilities for adapting products to the requirements of environmental cleanliness to ensure a competitive advantage over rivals. Such adaptation includes means of pollution control, environmentally friendly products, energy-saving commodities, goods produced from recycled materials, and so on (Zokaei, Lovins, Wood, & Hines, 2013). In general, the emergence of green businesses is the industry’s response to the new market demands. However, the scope of the business and the technology used by a company are often misunderstood by the customers or are misleading (Dauvergne & Lister, 2014).

Moreover, many researchers emphasize that rather than pursuing a similar policy in respect of the full production process; many companies use this principle only for the final product advertising. As a consequence of this, along with sustainable development and green businesses, the greenwashing emerged. Greenwashing is an attempt made by companies to earn money on the speculation of the prefix “eco” in the name of their product or the key components. There are several signs that can provide evidence that a company is trying to present the product as environmentally friendly, when, in fact, it is not (Siegert, 2013). For instance, by means of a false statement, which has a double or obscure meaning, the company can easily deceive the purchasers. Some time ago, Coca-Cola launched a bottle, which they claimed was made of the recycled material up to 30%.

However, such a statement does not give a clear answer to how much percent ranging from 1% to 29% of this bottle is indeed made of the recycled materials (Siegert, 2013). Moreover, many companies clearly demonstrate the advantages of their commodities, but remain silent about the disadvantages and pitfalls. For example, Toyota has released the electric car that is free from gasoline exhaust; nevertheless, the manufacturers did not mention anything about the origin of the electricity needed to charge the car. Regarding Nestle, the company offered the water Pure Life in a bottle for the production of which the manufacturer has used up to 15% less plastic (Siegert, 2013). However, it could be assumed that the company has pursued its economic goals through the use of the cheaper material. Further, the information by which the product is marketed as an eco-friendly can be true, but it does not mean that it is relevant at the moment.

Some manufacturers put markings on the goods indicating the approval of environmental friendliness by a third party; however, the labeling data cannot always be proved sufficient. It is worth noting that the guaranteed naturalness is not a positive aspect as a natural product is not necessarily environmentally friendly (Siegert, 2013). A sufficient example of green business is Levi’s company that created the eco-jeans made of 100% cotton denim. The buttons of this model were made from coconut shells, buttons, and zippers – from the non-galvanized metal. In addition, they used mimosa flowers and Marseilles soap to color the jeans in the indigo color.

Nestle’s Statements

According to the environmental responsibility policy of Nestle, its development is carried out at the global level. The policy stipulates that all the regional offices, markets, and production departments develop actions in accordance with the sustainable management guidelines. With regard to the environment, the company is guided by the three core principles, which are the social responsibility, the desire to respond to the needs of consumers, and the dependence on environmental sustainability so that they have access to high-quality resources necessary for the production of beverages (Environmental sustainability, 2016). Regarding the water policies, they are aimed primarily at reducing the amount of water used in the production process. Nestle is committed to complying with water conservation measures and to engaging in the timely cleaning of the resources that were affected by their activities. Also, the company cooperates with suppliers, who are committed to the conservation of water sources as well (Environmental sustainability, 2016). Moreover, Nestle collaborates with third parties to be able to cooperate effectively on the preservation and access of women and children to the water resources.

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When choosing a natural resource, the company uses those that have been developed based on the principles of environmental sustainability, and it provides technical support in relation to production methods based on sustainability tenets (Environmental sustainability, 2016). As evidenced in Graph 1, during distribution and production, Nestle vividly utilizes advanced technology to reduce wastes and uses renewable energy sources (Environmental impact of products, 2016).

The number of Projects Implemented Using the Ecodesign Tools.
Graph 1. The number of Projects Implemented Using the Ecodesign Tools.

According to the company’s statement, the product packaging is made in compliance with the highest standards. It is crucial for the company to prevent the increase in food and drink wastes that pollute the environment. Further on, Nestle invests in water resources management, food, and agriculture because it is in their business strategy for the long term (Environmental sustainability, 2016). The success of the business depends on the effectiveness of its strategy. In this regard, the company strives to maintain continuity in social investment. According to the corporate ethics, the company does not tolerate greenwashing and any marketing activities of such kind including advertising based on the demonstration of the concern about the environment rather than on the actual activities. The main objectives of company’s management are to establish priorities and to ensure transparency for the customer (Environmental sustainability, 2016). In this aspect, Nestle holds regular meetings with all the stakeholders to get feedback on what should be done with regard to water management.

Actual Performance

Despite the encouraging corporate statements of ethics, sustainability, and being environmentally cautious, many people mention the obvious tendency to greenwash, for instance, in respect of Nestle Pure Life water that was mentioned above (Dauvergne & Lister, 2014). The company positioned its bottle as an eco-product. Nevertheless, it can be argued that the company has simply lowered their eco-trail in their product. To be more precise, each year the amount of oil spent for the manufacturing of such bottles is the same as for producing petrol enough for one million cars. Needless to say that the finished bottles are to be transported (often in other countries), stored, refrigerated, which requires high consumption of energy as well (Levanen et al., 2016). Moreover, after consumers drink the water, they would discard bottles, which are then sent to a landfill. According to statistics, no more than 30% of the bottles are recycled.

Regarding the quality of the water, the researchers argue that Nestle offers to its consumers the tap water that underwent purification procedures (Watson, 2016). Thus, the company has been artificially creating the demand for a product that would potentially pollute the environment. Consequently, taking into consideration all of the factors emphasized above, it can be concluded that Nestle claimed its environmental friendliness and sustainability, but ignored the implications of manufacturing the eco-friendly commodity (Watson, 2016). These facts vary a lot with what the company claims regarding greenwashing as their activities are evident trade-offs. The greenness of the business and its environmental awareness was concluded on the basis of some of the product’s properties meanwhile the other issues that are damaging the environment were concealed. It should be noted that, in general, bottled water pollutes the environment throughout its life cycle.

In addition, the advertising depicting forest springs and waterfalls is another contradiction since the water resources shown in the commercial are not related to Nestle. According to one of the latest articles posted in the Guardian, “the water industry trades heavily on images of rugged mountains and pristine lakes to sell its products. And many companies – Nestle, in particular – spend millions of dollars trying to convince the public that their bottled water isn’t only good to drink, but is also good for the planet” (Watson, 2016, para. 16). With regard to the trueness of the company, it should not have declared the products environmentally friendly due to the fact that it does not correspond to the reality. In turn, the company should have designated that it has reduced its eco-trail. When considering an eco-product, it can be assumed that a reusable water bottle, which would be easy to carry, would be more functional and environmentally friendly, and would not add to the level of waste produced by the population.

The company’s activities do have a negative impact on the environment. For that reason, the company’s statement cannot be considered true but rather an attempt to greenwash. The products, which are not environmentally friendly harm nature and decrease the availability of resources after the production processes (Siegert, 2013). Another consequence is reflected in the social factor because the buyers get disappointed in green businesses and real eco-products are not able to enter the market and reach saturation. International regulation, independent certification, transparency, increasing buyer awareness, and public education can help prevent greenwashing in the future (Siegert, 2013). Modern eco-marketing requires competent copywriters and marketers who are familiar with the specific promotion of ecological commodities to prevent greenwashing and other gross errors. These professionals will help eco-brands to succeed and compete in the market with conventional manufacturers.

Ethical and Other Issues

The corporate statement of Nestle on sustainability dwells upon the transparency that is essential for the company and the triple bottom line (TBL). It is concerned with the three cores represented by the planet, people, and profit. The TBL ensures that Nestle corresponds to its policies, projects, and facilities. It should be noted that the company allows visibility through its annual reports. According to the latest data, the company has more than seven hundred thousand employees in farm areas around the world. As per the emissions, overall it has been able to diminish them for more than 40% during the last decade, including greenhouse gas effects (Environmental sustainability, 2016). In addition, the company stated that it had developed approximately eight thousand health-supporting commodities. Needless to say that the data is indeed impressive and the outcomes are promising.

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However, Nestle continues to receive criticism that affects its TBL. For instance, the company is criticized for the use of underage workforce. Also, there have been numerous cases when the customer’s health status has decreased after purchasing Nestle’s products. Consequently, child labor accepted by the company and unsafe commodities affect the TBL of the firm (Watson, 2016). It is understood that it is a challenging task to monitor the outsourced positions because Nestle gives jobs to the representatives of almost 190 nations globally. Nonetheless, it does not justify the illegal use of child labor. Unfortunately, it takes its toll on the company in the long-term, and it is crucial for the leadership to reevaluate its management and make the necessary amendments to it.

Apart from that, it was assumed that the firm utilizes the UN Global Compact and other practices to draw away the public attention from the serious recurring issues. For example, it was mentioned that this strategy was applied to distract people from the corporate malpractice that took place in the company. The company faced a strong disapproval for aggressive marketing that violated the existing international practices (Watson, 2016). As mentioned earlier it exploited children and caused environmental degradation, which was especially strong in the water sources. Despite the fact that Nestle planned to establish the value chain it failed to create the road map and designate some problems as more crucial. Thus, Nestle needs to analyze its key performance indicators and plan the initiatives to make enhancements throughout a balanced scorecard for sustainability.

Addressing the Ethical Considerations

The most crucial task of the organization is to adapt to the target market so as to ensure not only customer satisfaction but also the collective well-being. The responsible marketing concept includes concern for the welfare of customers in the long-term and not responding to their short-term needs solely (Zokaei et al., 2013). The perception of this worldview as well contributes to achieving the company objectives of growth and profit.

The company, which decided to take the path of responsible marketing, is to articulate the ethical rules, which it will follow in its dealings with the market, customers, stakeholders, and employees. The ethical problem arises each time when the leadership tends to neglect the moral norms for personal gain or corporate profit. Under the pressure of cost reduction objectives, sales growth or improving the short-term profitability leaders may resort to such methods as greenwashing despite the fact that the leading value of the company reflected in its statement is achieving sustainability (Zokaei et al., 2013).

It is in the best interest of firms to opt for ethical behavior not only for the moral reasons but also because the abandonment of this position can lead to very serious losses at the individual, organizational, and external levels. The company that was publicly accused of unethical behavior may suffer major wastage due to the drop in sales and a loss of confidence of the customers. For instance, Nestle has been accused of unethical behavior already, which was associated with the campaigns of powdered milk for babies sold in the third world countries (Zokaei et al., 2013). In the most general sense, it has harmed the functioning of the entire economic system and reduced brand loyalty.

It is advisable that the company considers the Responsible Care Global Charter as a guide to the enhancement of its key performance indicators (Siegert, 2013). It should reevaluate its corporate leadership culture, protect and secure the environment as well as people, boost its chemical management approaches, interact with all the business associates to eliminate the possible contradictions, encourage active involvement of the key stakeholders, and support sustainability.

Conclusion

Green business is an economic activity aimed at preserving the well-being of the society through the effective use of natural resources as well as ensuring the return of end-use products in the production cycle (Zokaei et al., 2013). Nestle’s practices of sustainable management should focus on the implementation of renewable energy sources; production efficiency; improving the waste management system; enhancing water management system; and conservation and effective management of ecosystems (Levanen et al., 2016). In its turn, sustainable management suggests further economic diversification and qualitative growth instead of quantitative. In general notions, green business requires green technology, green products, and green jobs. Therefore, Nestle should be guided by such tenets to be able to enhance its performance in the market.

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References

Dauvergne, P., & Lister, J. (2014). The politics of “big brand sustainability”. Cambridge, MA: MIT Press.

Environmental impact of products. (2016). Web.

Environmental sustainability. (2016). Web.

Levanen, J., Hossain, M., Lyytinen, T., Hyvarinen, A., Numminen, S., & Halme, M. (2016). Implications of frugal innovations on sustainable development: Evaluating water and energy innovations. Sustainability, 8(1), 1-17.

Pailwar, V. (2014). Business environment. Delhi, India: PHI Learning Pvt. Ltd.

Siegert, L. (2013). Sustainable development approaches in the food and beverage industry. Hamburg, Germany: Anchor Academic Publishing.

Watson, B. (2016). The troubling evolution of corporate greenwashing. Web.

Zokaei, K., Lovins, H., Wood, A., & Hines, P. (2013). Creating a lean and green business system. Boca Raton, FL: CRC Press.

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