Corporate Social Responsibility and Sustainability in Business - PDF

CSR AND SUSTAINABILITY IN BUSINESS

CONTENTS
INTRODUCTION...................................................................................................................................1
TASK – 1.................................................................................................................................................1
Sustainable approach to business strategy and management...............................................................1
Strategies adopted by Nestle to operate in an ethical and sustainable way.........................................2
TASK – 2.................................................................................................................................................3
Analysing different approaches to CSR of Nestle...............................................................................3
CSR challenges faced by Nestle..........................................................................................................5
Difference between CSR of Micro, SME and corporate business and ways of measuring success....6
CONCLUSION........................................................................................................................................7
REFERENCES........................................................................................................................................8

INTRODUCTION
The current business scenario requires, sustainability, social responsibility and
exceptional performance of the companies. Now, ethical responsibility is being regarded as
an integrative component of corporate social responsibility which is destined to fulfil the
demands of the customers. Concerning this, there are many ethical problems which might
takes place in the business of the firm (Blowfield, 2013). This significantly decreases the
ethical rating of the firm and thus, lowers down its popularity between potential markets.
Even multinationals and SMEs also have low ratings and thus, are vulnerable to be accused in
unethical behaviour. Pertaining to this, it becomes necessary to examine the sustainability
approaches to business strategy and management in the present research study. The report
will be focused on analysing the ethical and sustainability approaches of the company Nestle
and will highlight different approaches to CSR of micro, SME and corporate business along
with various challenges.
TASK – 1
Sustainable approach to business strategy and management
Nestle is one of the world’s largest food manufacturer being headquartered in
Switzerland. It has its operations in 100 nations of the world and has around 511 factories
more than 86 nations all across the globe. The business principles of the company forms the
culture of the firm which has been developed from last 140 years. The company was
established because of the outcome of humanitarian act of his founder Henri Nestle. For
saving an infant’s life, Henry developed a cereal milk based product in the year 1866 because
the baby cannot be breastfed and the social responsibility is in the part of organization’s DNA
(Nestle, 2018). Contemplating in relation with the sustainability, it was formally put forward
by the world commission on environment & development of United Nation in the year 1987.
It was introduced as an agenda for examining as well as guiding the global environment and
development. Now, presently this has been moved into different areas of studies and business
practices. Sustainable approaches to business strategy and management is very vital for
Nestle as well. First of all, there has been increase in the demand from variety of stakeholders
such as employees, shareholders, government, communities and media for the firm to
consider and execute responsible business practices (Arora and Puranik, 2004). This is
because of the fact that these groups of business now need strong economic performance
from the firm along with being socially and environmentally sustainable. They must also
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adhere to the business ethics and must function morally. Thus, sustainable management has
now become an indispensable part of the Nestlé’s strategy and their routine activities.
Further, sustainable development has become a cliché which suggests that
environmental problems are very large and is being contributed by growth in the economy. A
response to this can be strict environmental regulations but this will be an adjustment amid
healthy environment and healthy growth (Reich, 2007). Consequently, there will be
controlled opportunities for the business. Nevertheless, there are some types of development
which are both socially and environmentally sustainable which does not also require
adjustment, however will have improved environment along with higher level of
development. Considering this, Nestle has found strategies that move towards all three
important goals that is social well-being, environmental problems and economic
development. Sustainable approach to business and management has created many
opportunities for the developers of environmental safe materials and processes, green
consumers and for the firm which are eco-efficiency. Nestle too have a competitive
advantage as they earn goodwill from the local communities and can view their efforts being
reflected in the bottom line (McWilliams and Siegel, 2001).
Strategies adopted by Nestle to operate in an ethical and sustainable way
The fundamental guiding principle of the firm is to ways of making business a
creating shared value strategy tool. Nestle comply with the laws, code of conducts, business
principles and sustainability along with focuses on creating value for the shareholders as well
as communities in the areas of water, nutrition and rural development. Furthermore, the firm
also determines five major fields for commitment with forty-two liabilities i.e. offering
products and services with high standard of safety and nutrition quantity, promotion of
healthy food environment, engagement in the climate policy, making sure sustainability and
water efficiency, rural development, improving livelihood of the workers, complying to the
human rights in each and every business activity (Crane, Matten and Spence, 2008). Some of
the sustainable and ethical approach adopted by Nestle are being defined as follows:
 Encouraging women – The other section of the vision of Nestle is to respect the way
of thinking and culture of others along with the other facts of the community. In
Germany, the firm made an effort to train as well as encouraged women into the
leadership roles. The firm has actively participated in the cross mentoring project
from the year 2007 that motivates persona growth and career development of key
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female workers. Besides this, Nestle also gets benefited from greater diversity at
varied levels of leadership (Arora and Richa, 2013). Those female workers who
successfully completes the programme mentors the junior female employees within
the company. The company continue the contribution of female employees in this
cross mentoring scheme ensuing their achievement to-date.
 Diverse workforce – As per Nestle, diversity within the workplace helps in bringing
varied ways of thinking, building more competitive as well as innovative teams and
leads to have better decision making within the organization. The firm has a major
objective to have pool of talent which significantly reflects the diversity of the
communities in which the firm carries out its operation. They even want to promote
such culture that helps diversity in all of its forms on the gender balance. Nestle is
also making efforts for executing development plans for women in order to help them
to progress in their upcoming roles and accountabilities (Johnson, Whittington and
Scholes, 2011).
 Extinguishing wastewater – Talking in relation with wastewater, in UK the firm
considers it as a bio-digestion. For the purpose of ensuring liquid effluents being
generated by them to be safe prior they get release, municipal wastewater treatment
facilities are being used by the company. Furthermore, if the amenities are not
according to the environmental standards, the firm operates the treatment plant. One
of the confectionery factory of Nestle UK has made an investment of CHF of around
4.9 million in an anaerobic digestion system. This system helps in converting the solid
and liquid sewage waste into clean water & methane gas by making use of natural
biological digestion process. Because of this, 1000 tonnes of CO2 will be saved every
year and will cut solid waste of around 4000 kg every day.
 Fairness and honesty – To remain ethical and to show ethical behaviour, Nestle
carries out their business activities by a set of principles founded on fairness, honesty
and concern for people (Shamir, 2005). Moreover, they make sure that all these three
key values should not be negotiated by anyone working within the company and thus,
should be visible all across the firm. The motto of the company “good food, good
life” detents this belief and depicts that irrespective of their power and supremacy in
the F&B industry, Nestle also pays attention on the well-being of the community and
the environment all across the firm.
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TASK – 2
Analysing different approaches to CSR of Nestle
Throwing light in relation with the corporate social responsibility (CSR), it identifies
that the firm is required to take into consideration the social and ethical influence of its
business decision on the environment in which they carry out their operations. For Nestle,
CSR is a commitment of the firm to behave ethically and make maximum contribution
towards the economic development of the nation along with making improvement in the
quality of life of the employees, local communities and society at broader level (The Nestlé
concept of corporate social responsibility, 2018). Regulatory as well as legislative outlines set
only minimum level of operating standards being predictable out of businesses. However, last
corporate failures from years significantly depicts that all these mechanism still offer space
for vital corporate negligence. In addition to this, the concept of CSR for Nestle is based on
the creating shared value model which consists of three levels. The bottom level is related
with compliance i.e. laws, principles and codes of conduct. The middle level is sustainability
which includes protecting the future and the last one is creating shared value through
reducing poverty, improving health and empowering people. Some of the corporate social
responsibility initiatives of Nestle are discussed in the subsequent paragraph:
 Reducing child mortality rate
 Improvement in the maternal health (Porter and Kraemer, 2011)
 Eradication of extreme level of poverty as well as hunger
 Making sure environmental sustainability
 Achievement of universal primary education
 Development of partnership at the global level
 Promotion of gender equality and empowerment of women
 Setting kindergartens in rural areas
 Mentoring of small and medium enterprise in the food industry
For Nestle, corporate social responsibility is not considered as a thing which is levied
on them from the outside however it is considered as an inherent element of the company’s
business strategy and principles that gives direction to the way firm carries out its operations
(Jenkins, 2004). There is a significant role of business and CSR in Nestle and is being
explained below:
For business For society
 Nestle focusses on high quality as well  Economic and social development of
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as reliable sourcing.
 The workforce of the firm is skilled and
loyal.
 The products and services of the firm
are of superior quality which can
compete successfully in the market.
 Improved level of government
regulatory functioning.
the whole society with greater level of
stability.
 Improved level of earnings by the
suppliers.
 Job stability for the employees and
increased stability (Craig-Smith and
Lenssen, 2009).
 Higher quality of life for the
consumers.
CSR challenges faced by Nestle
Nowadays, stakeholders are taking interest in the business activities and thus, firms
are making efforts to make sure that their partners behave in the society in a responsible
manner. Like other firms, Nestle has also introduced some code of conducts for their key
stakeholders such as suppliers, customers, government etc. to make sure that the other firm’s
policies and practices does no vanish their reputation. The concept of corporate social
responsibility carries varied sense based on the stakeholder along with certain situation of the
firm’s expectations. Sometimes, it happens that a CSR project initiates in reaction to crisis
that the firm may suffer in the end (Arora and Richa, 2013). Nestle is continuously making
efforts to positively influence the families, societies, planet and individuals as a socially
responsible firm all around the globe. Aligning with this commitment, the company also pays
attention on three main pillars for creating shared value i.e. nutrition, water and rural
development. As discussed above there were many approaches being used by Nestle in
relation with CSR, however they come across with numerous challenges and issues as well.
Explanation of these is being done underneath:
 Lack of community participation in CSR activities – Sometimes, local community
does not show interest towards CSR activities as they have little knowledge in regards
with corporate social responsibility. There is lack of communication amid the firm
and the society at the grass level.
 Issues of transparency – It is being regarded as one of the key issues brought forth by
the study. Nestle is of the view that there is lack of transparency on the local
executing agencies because they do not pay suitable attention towards disclosing data
on their programs, use of funds and impact evaluation. Due to this, there is negative
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report of transparency which influence the trust amid firm and the local communities
(Perrini, Russo and Tencati, 2007).
 Narrow perception about CSR initiatives – There is no agreement between local
agencies in regards with the corporate social responsibility projects. Because of this,
frequently there is duplication of activities by the corporate houses in the field of their
intervention. It gives way to competitive spirits amid the local executing agencies
instead of constructing collaborative approaches on issues.
Difference between CSR of Micro, SME and corporate business and ways of measuring
success
In the developing economy, CSR is being regarded as one of the important
competitive tool and it also faces many criticisms from Micro, small and medium and
corporate business units. Micro as well as SME business units achieves growth in a unique
business environment. However, the parameters for effective corporate social responsibility
remains the same for micro, SME and corporate businesses (Horrigan, 2010). It is very
fascinating to note here that micro as well as small and medium enterprise carries out their
function and operation with the presence of very limited amount of resources and often they
too have a limited vision in relation with the goals of the firm which is generally emphasized
on generation of higher level of profits. These firms are generally believed to mainly focus
economic necessities instead of focusing on the social goals. This is because of the fact that
they have very limited resources and financial base. Nevertheless, today CSR is not just an
issue for large corporates like Nestle, however it is also for micro and small and medium
enterprise having limited amount of resources and market power. Now, SME is also
considering CSR as an important tool as through this they can achieve competitive edge in
the market and can contribute effectively towards sustainable development and poverty
reduction all across the globe (Corporate Watch, 2016).
Nestle overview corporate social responsibility as the need of the market and adopts it
as an important marketing tool for achieving an edge over the other competitors in the
market. The approaches of CSR are quite different in micro, small and medium and large
corporates business. This is because of the fact that in micro and SME units, the owner and
manager considers ethics as a crucial issue, discussing the requirement of trust as well as
openness, selected relation amid supplier, honest transactions with the workers and finally,
religious based orientations to ethics. On contrary to this, in large firms like Nestle, formal
tools are proved more effective such as social and ethical standards, code of conduct, basic
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principles etc. These are being used as they need huge investment of time, energy as well as
finance (Spence, 1999).
Underpinning the discussion in regards with the strategies or approaches to corporate
social responsibility of micro, small & medium and corporate business it can be said that the
same level of motivation for attention to CSR is being applied at the roots of all these
business units. These motivations can be intrinsic and instrumental. But, there are some vital
difference in CSR practices of micro and SME and corporate businesses. Firstly, micro and
SMEs are normally managed by their owner and this only lead to modifications in
commitment to corporate purpose. Further, these firms are more personal than in the case of
large companies like Nestle. Thirdly, SMEs have limited resources as big firms (Smith,
2014). They give their focus on CSR activities but these firms are more likely to less focus on
trappings i.e. CSR communication. In sum, while size matters, not at least in the ways things
need to be performed, micro, small and medium enterprise do have numerous similar reasons
for getting engaged in corporate social responsibility that large firms have.
CONCLUSION
Thus, to conclude it can be said that from the last several years, social responsibility
has become an increasingly important factors for the organizations. By complying with the
ethical laws, behaving socially responsibly and sustainable development, all supports in
bolstering the image of the company and build its brand in the market.
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REFERENCES
Books and journals
Arora, B. and Puranik, R., 2004. A review of corporate social responsibility in India.
Development, 47(3), pp.93-100.
Arora, R. and Richa, G.D., 2013. Corporate Social Responsibility– Issues and Challenges in
India. International Journal of Research in Finance & Marketing, 3(2).
Blowfield, M., 2013. Business and Sustainability. Oxford: Oxford University Press.
Craig-Smith, N. and Lenssen, G., 2009. Mainstreaming Corporate Responsibility. Chichester:
John Wiley & Sons Ltd.
Crane, A., Matten, D. and Spence, L.J., 2008. Corporate Social Responsibility: Readings and
cases in a global context. Abingdon: Routledge.
Horrigan, B., 2010. Corporate Social Responsibility in the 21st Century: Debates, Models
and Practices across Government, Law and Business. Cheltenham: Edward Elgar
Publishing Ltd.
Jenkins, H., 2004. A Critique of Conventional CSR Theory: An Sme Perspective. Journal of
General Man agreement, 29(4), pp.37-57.
Johnson, G., Whittington, R. and Scholes, K., 2011. Exploring Strategy. 9thed. Financial
Times Prentice Hall.
McWilliams, A. and Siegel, D., 2001. Corporate Social Responsibility: A Theory of the Firm
Perspective. Academy of Management Review, 26(1), pp.117-127.
Pachauri, R.K., 2004. The rationale for corporate social responsibility in India. The
Financial Express, 22
Perrini, F., Russo, A. and Tencati, A., 2007. CSR Strategies of SMEs and Large Firms.
Evidence from Italy. Journal of Business Ethics, 74(3), pp.285-300.
Porter, M.E. and Kraemer, M.R., 2011. Creating shared value. Harvard Business Review,
89(1/2), pp.62-77.
Reich, R.B., 2007. Super-capitalism: The Transformation of Business, Democracy, and
Everyday Life. New York: Random House Inc.
Shamir, R., 2005. Mind the gap: Commodifying corporate social responsibility. Symbolic
Interaction, 28(2), pp.229-253.
Spence, L.J., 1999. Does Size Matter? The State of the Art in Small Business Ethics',
Business Ethics: A European Review 8(3), pp.163-174.
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Online references
Corporate Watch. 2016. What’s wrong with Corporate Social Responsibility? The arguments
against CSR. [Online]. Available through: <https://corporatewatch.org/content/whats-
wrong-corporate-social-responsibility-arguments-against-csr>.
Nestle. 2018. [Online]. Available through: <https://www.nestle.in/csv>.
Smith, N.C., 2014. When It Comes to CSR, Size Matters. [Online]. Available through:
<https://www.forbes.com/sites/insead/2013/08/14/when-it-comes-to-csr-size-matters/
#6232593652a2>.
The Nestlé concept of corporate social responsibility. 2018. [Online]. Available through:
<
https://www.sharedvalue.org/sites/default/files/resource-files/Nestle_Corporate_Social_
Responsibility_in_Latin_America.pdf>.
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