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|COURSE NAME||Business, Society and the Planet||COURSE
|Business Values Assessment – Part A|
|Craig Hurley||Campus /
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CRICOS Provider No. 00103D The Faculty of Business
School of Business
Business, Society and the Planet
Business Values Assessment – Part A
Prepared for: Craig Hurley
Page 2 of 11 Business Values Assessment: Nestle and Ferrero
Consider the Corporate Social Responsibility performance and stated values of two
Nestlé and Ferrero
Italian company Ferrero and Swiss based Nestle are two food production companies with
chocolate confectionary as the primary product division. Both companies began as small
manufacturers in the early 1900s with a handful of products and both have grown to become two
of the largest multi-nationals in the industry with consolidated turnover in 2014 of more than 14
billion Swiss Francs (Nestle) and 8.4 billion Euro (Ferrero) per annum: up from 11.7b and 6.7b
respectively in 2009 (see Image One). Both companies are today present in more than 50
countries around the world.
It may seem a little unfair to compare the companies because Nestle is the third top consumer
products company in the world (following Samsung and Apple 1) while Ferrero is a private,
family-owned organisation with less diverse range of interests. However, while the scale is
different, the confectionary business models are similar and comparable.
Image One: Allan A, & Ridley J.
The confectionery market is a relatively insensitive one with regard to economic fluctuations and
has shown stable growth consistently over the decades. The industry has seen a compound
annual growth rate of 3% over the past 5 years and a market consumption volume of 2.1% over
the same period. In 2013 a total of 7.1 billion kilograms was produced2.
1 Deloitte, pg19
2 Woods L, pg1
Page 3 of 11 Business Values Assessment: Nestle and Ferrero
The two companies are globally dominant; owning iconic chocolate confectionary brands. Nestle
produces KitKats, Smarties and Wonka products while Ferrero produces Nutella, Tic Tac Kinder
Surprise and of course Ferrero Rocher. However, both still meet strong opposition in some of
their local markets. Ferrero has over 70 subsidiaries of its parent company Ferrero International
S.A. while parent company Nestle S.A. has over 140 subsidiaries. Both companies have
production plants and farming/agricultural enterprises in 1st and 3rd world countries.
Whilst research shows that Ferrero has for many years consistently promoted its social
responsibilities (a philosophy of the organisation based on the founder’s aim to “work, create,
donate3”), it is fair to say that both organisations have taken to reporting on their Corporate Social
Responsibility with greater vigour over the past five or so years; particularly as public awareness
has grown around farming and manufacturing practices in the chocolate confectionary industries
especially those regarding the use of slave labour, milk cartels and the raw material extraction of
palm oil and cocoa.
Comparing Nestlé and Ferrero
Both companies’ Consolidated Financial Statements are very factual list of numbers, with no
commentary at all. The PR takes place in their respective Code of Ethics and Corporate
Social Responsibility report (Ferrero) and Corporate Business Principles and Creating
Shared Value Report (Nestle). Both companies use their principles documents to outline
their respective cultures and values and to highlight their commitment to sustainability and
corporate social responsibilities (CSR).
Their approach to reporting tells us that both companies experience external pressures, and
to a lesser extent internal pressures, to improve their CSR activities. In fact Nestlé’s CSR
reporting continues to improve dramatically in detail and depth, as reported by its CEO in
2014; “This latest revision differs from the previous two versions in that the ten principles of
business operations are specifically linked to on-line copies of more detailed principles,
policies, standards and guidelines.4”
Nestle has dealt with many social corporate responsibilities publically; ranging from issues with
their product promotion of a synthetic milk formula in 3rd world countries, supply chain issues in
the deforestation for palm oil resource, toxic farming practices around cocoa production and
endemic child labour in factories and farms in their supply chains. This has been a trigger for
much of its CSR activity.
When placed against the Dunphy Scale (see Image Two) Nestle of 2003 is transitioning from the
‘No Go’ rejection stage to the ‘Don’t Tell Us, lack of response phase and then is very publically
dragged to the middle stage ‘Reluctant Acceptance’ where compliance and risk reduction
became a strong aim of the organisation. Reviewing Nestle in 2014, if the self-reporting is to be
believed, Nestle is marching strongly into the next stage ‘Demonstrable New Profit From
Learning’ making 38 green commitments that the organisation aims to meet by 2020 or earlier, to
support their long-term goal of “Creating Shared Value5”.
3 Ferrero (2009) pg 28
4 Brabeck-Letmathe & Bulcke, pg3
5 Nestle (2015)
Page 4 of 11 Business Values Assessment: Nestle and Ferrero
Nestle may not have learned all the lessons from past public scrutiny however as a recent
examination revealed Nestlé’s poor water usage in California during the current drought6. After
promoting its ethical commitments in 2012 on water usage, 2015 sees the company still wasting
over 30% of its 700 million gallons per annum! Nestle may just be publishing more and more
sophisticated forms of greenwashing to cover for its non-ethical behaviours and lack of targeted
Image Two: Dunphy D, Griffiths A & Benn S.
By comparison, Ferrero appears to have been a more principled social organisation with values
reporting and acknowledgment since its inception 65 years ago. No doubt, remaining in the
Ferrero family has been a strong influence over this aspect of the organisation’s culture and
stated values. Based in a country, too, that culturally accepts the need for corporate social
responsibility, Ferrero joins other Italian-based companies in creating the highest number of
SA8000 certified facilities in the world7.
Against the Dunphy Scale, Ferrero appears to be at the Efficiency stage; continuously developing
new processes, programs and practices to improve results under its CSR. Despite a lesser public
focus on its palm oil practices it has produced reports on palm oil targets over four years, even
announcing one year ahead that targets had been achieved. Overall, Ferrero releases much less
detail on its business function than Nestle but appears to be able to handle negative events with
less reputational damage than Nestle.
Explaining Differences: Nestlé & Ferrero
Geert Hofstede’s study into the dimensions of national culture8 highlighted differences
between nations based on four key areas; Individualism, Power Distance, Uncertainty
Avoidance and Masculinity/Femininity. What Hofstede’s work highlights is that national
6 Neate R.
7 Gazzabocca L.
8 Hofstede G.
Page 5 of 11 Business Values Assessment: Nestle and Ferrero
cultures differ on how a country’s people values are shaped and reflected through these
areas. A nation’s culture in turn impacts on how CSR regulations are imposed and followed,
on employer and employee attitudes to CSR and how organisational practices are
In relation to this theory it appears that developing nations (where the Power Distance is
greater) initially focus on wealth creation with little focus on environmental impact but as
prosperity increases and Power Distance decreases cultural values change to reflect a desire
for both prosperity and sustainability. As a company based in Italy, Ferrero‘s culture benefits
from a long established country with a strong desire for sustainable practices. Switzerland,
Nestlé’s base, likewise has a strong history of environment and science focus which should
positively impact on how one of its largest company’s conducts itself. While Italy is
particularly focussed on sustainability, national differences are probably negligible in this
Explanations for differences between the organisations I believe lies elsewhere. That Ferrero
is a family owned organisation; where the family has a strong influence over the company
values and aspirations is a more significant factor. Management for Nestle, as a public
company, is responsible for different reporting obligations with less personal influence over
Quality of Reporting: Social Accounting at Nestlé and Ferrero
Zadek et al (1997) proposed eight key standards of quality that can be applied to
organisations to examine the level of social accounting procedures. The standards help
identify whether a company is auditing and reporting to a necessary level; one which
identifies pressures, risks and stakeholders and one that demonstrates a suitable level of
accountability and transparency.
Both Nestlé and Ferrero self-report on their social responsibilities and research identifies that
both companies are working towards a level of socially acceptable accountability and
transparency but are yet to integrate them fully into their every day business.
A schedule of comparisons of the two companies against the Zadek standards on social
accounting (see Appendix One) shows that in terms of CSR strategies and activities, Ferrero
and Nestle are fairly analogous with similarities across most of the standards.
It should also be noted that external verification is a flawed process; data is not complete and
sometimes not comparable, there is often a lag in data releases (for example Nestlé’s 2014
Bureau Veritas report includes data from 2011 and 2012.) and companies will always focus
on their good initiatives in more detail than their non-compliant areas. I found that due to
some of these problems there were at times conflicting reports where one company awarded
a gold medal to Nestlé while another gave an F (fail!) for the same reporting period.
Page 6 of 11 Business Values Assessment: Nestle and Ferrero
Nestlé and Ferrero Company Values
Ferrero values outlined in the company Code of Ethics are loyalty and trust, respect and
responsibility, integrity and sobriety, passion for research and innovation. It appears from the
research undertaken that Ferrero does have ethically based reasons for engaging in CSR
while also balancing the aim to respond to the demands of society with business reasons.
Nestlé values stated on the company website outline “a set of principles based on fairness,
honesty and a general concern for people9”. Nestle appears to engage in CSR activities
more due to the demands of society and for business reasons; it is not evident that ethics are
a significant driver for Nestlé’s CSR activities.
Does the evidence stack up? Most recent CSR reports from both companies are
comprehensive; they include policies, reports, data, ratings, achievements and noncompliance issues. Yes they focus on the elements that favour them but also have an
unprecedented level of transparency on issues where improvement is required.
Overall results however are that, regardless of the catalyst or impetus that drives each
company’s CSR activities, the world is slowly getting a better, more environmentally
sustainable product. Both companies aim to have further advances such as Ferrero’s target
“for 2015 is to obtain 100% of our total supply of palm oil certified as sustainable.10”
At our first meeting on 27 August, we discussed Nestle with regard to water usage problems
other group members also raised palm oil and baby formula as other CSR issues of the
company. We were suspicious about the company and cynical about their CSR efforts.
Began looking for a similar company in a different country. Disregarded Cadbury after
finding zero reporting on CSR after 2003 (what are they hiding?!) and began looking at
Ferrero. This company appeared to be trying to do their business with a better CSR model
than Nestle, was in the same industry and seemed, on initial investigation, a good fit for this
A second meeting with the group, on 17 September, reviewed the research we had all been
conducting and shared our findings; there were a number of things we found interesting.
Some in my group found it interesting that both companies used a pillar system to outline
their principles, others were more interested in the way external groups such as Shop Ethical
and World Vision rated the companies. We also learned that Nestlé’s sustainability in
chocolate confectionary is actually quite good but the ratings of the parent company impact
on the company’s confectionary ratings. I found the group discussion did make me look for
certain data to support (or not) the conversations we’d had. I spend a lot more time on the
verifiable, external comparisons than I may have without that group influence.
Initially as a group I believe we considered Ferrero the more sustainable company, but as our
research continued comparing just the chocolate confectionary aspects of the organisations it
9 Nestle (2015)
10 Ferrero (2009) pg 70
Page 7 of 11 Business Values Assessment: Nestle and Ferrero
started to look as though Nestlé has overtaken Ferrero in the level of CSR activities and
This interesting company comparison highlighted the enormous challenge facing
governments and compliance organisations in the area of CSR. There is so much information
available but at the same time, a lack of clarity around the information. It is the gaps in
information that probably tell us the most. For example why didn’t Nestle offer its 2014 data
on its transportation activities to Bureau Veritas and Ferrero focus on its altruistic Foundation
and not make mention of its class action settlements? One would need much more time to
investigate thoroughly to learn the actual performance level of these two companies in CSR.
From the brief investigation undertake here, it is evident that these global companies are
both engaged in significant levels of CSR activities but also engage in non-compliant and at
times non-ethical activities. It does appear, however, that the essence of CSR is embedded
more deeply into the company culture at Ferrero than at Nestle.
Page 8 of 11 Business Values Assessment: Nestle and Ferrero
PRINT & ONLINE
Allan A, & Ridley J, Chocolate wars: the big four, 20 January 2010, [image]. Retrieved
from http://www.theguardian.com/business/interactive/2010/jan/20/cadbury-kraft-nestle-marsferrero 15 September 2015.
Brabeck-Letmathe & Bulcke, June 2014, The Nestlé Corporate Business Principles. Retrieved
from http://www.nestle.com/asset-library/documents/library/ 5 September 2015
Bureau Veritas, 18 June, 2015, Bureau Veritas assures Nestlé 2014 CSV report, [media release] Retrieved
Crane, A & Matten, D, 2010, Business Ethics: managing corporate citizenship and sustainability in the age
of globalization (3rd ed.) Oxford: Oxford University Press
Deloitte, Global Powers of Consumer Products 2015: Connecting with the connected consumer, Aust Ed.
Retrieved from http://www2.deloitte.com/content/dam/Deloitte/au/Documents/consumerbusiness/deloitte-au-cb-powers-consumer-products-2015-250615.pdf
Dunphy D, Griffiths A & Benn S, 2003, Organizational Change for Corporate Sustainability, Routledge.
Retrieved from http://www.cloudcitizen.com/acceleratedsustainability/which-way-are-youheading-on-the-dunphy-sustainability-scale.html 5 September, 2015
Ferrero, 2009, Corporate Social Responsibility Report 2008/2009: Sharing Values to Create Value,
retrieved from http://www.ferrero.com/social-responsibility/sharing-values-to-create-value/ 15
Ferrero, January 2012, Code of Business Conduct, retrieved from http://www.ferrerocsr.com/reportcsr/report-5/2013 5 September 2015
Ferrero (2015) Various website sections, retrieved from 5 September to 3 October, 2015:
The story of the family: http://www.ferrero.com/the-group/a-family-history/a-great-company/
Our principles: http://www.ferrero.com/ferrero-principles/Company-principles/
Social responsibility: http://www.ferrero.com/social-responsibility/
Guzzabocca L, January 16, 2014, When a sustainable supply chain begins in Italy, GreenBiz. Retrieved
Hofstede, G, Dimensions of National Cultures. Retrieved from http://www.geerthofstede.nl/dimensionsof-national-cultures on 29 September, 2015.
Neate R, Nestlé boss says he wants to bottle more water in California despite drought, 15 May, 2015, The
Guardian, Aust Ed. Retrieved from http://www.theguardian.com/us-news/2015/may/14/nestleboss-wants-bottle-more-water-california-drought
Nestle Corporation, 2014a, Consolidated Financial Statements of The Nestle Group 2014. Retrieved
from http://www.nestle.com/assetPage 9 of 11 Business Values Assessment: Nestle and Ferrero
Nestle Corporation, 2014b, Nestlé in society: Creating Shared Value and meeting our commitments 2014.
Full report. Retrieved from http://www.nestle.com/asset/library/documents/library/
Nestle Corporation, 2015, Nestle, online response team. Retrieved
from http://mobile.reuters.com/article/topNews/idUSBRE89P07S20121026 on 5 September, 2015
Nestle (2015) Various website sections, retrieved from 5 September to 3 October, 2015:
About Us: http://www.nestle.com/AboutUs/Pages/AboutUs.aspx
Media and news: http://www.nestle.com/media/news
Wood, L, October 24, 2014, Research and Markets: Chocolate Confectionery: 2014 Global Industry Guide
for the $85 Billion Industry, Yahoo. Retrieved from http://finance.yahoo.com/news/researchmarkets-chocolate-confectionery-2014-151200479.html 14 September 2015.
Zadek S, Pruzan P and Evans P, 1997, Building Corporate Accountability-Emerging Practices in Social and
Ethical Accounting, Auditing and Reporting, Earthscan, London.
|Inclusivity||Nestlé identifies the
following groups as
fundamental to its continuing
Consumers and the general
Industry and trade
Shareholders and the
financial community; and
Suppliers (including farmers
|Ferrero identifies a large list
of stakeholders with whom
the company engages:
Page 10 of 11 Business Values Assessment: Nestle and Ferrero
|Comparability||Both companies have in place their Codes of Ethics and
have been publically reporting on their CSR since the
2000’s which allows for comparison across different
|Nestle has been a member
of the UN Global Compact
|Ferrero has been a member
of the UN Global Compact
|Completeness||As a public company Nestlé
has obligation to report in
greater detail than Ferrero.
undertakes CSR activities
with Ferrero Foundation,
Ferrero Social Enterprises
and United Kinder of the
World Social Initiatives.
|Evolution||Both companies have identified and achieved targets and
made commitments in relation to hot issue areas; such as
palm oil, cocoa production and human rights issues such as
child labour, health and safety etc
|Management Policy and
|Nestlé has continued to
produce reliable data for its
reporting on Safety, Health
and Environment (SHE)
through its internal data
capture and reporting
|Ferrero has ranked the most
attractive Employer of
Choice in Italy. The
Randstad Award is credited
each year to the most
attractive employer in 23
countries throughout the
|Disclosure||Full disclosure on mandatory
data (Annual Reports,
Financial Reports). Selective
disclosure on ethical issues
such as supply chain
The CSV 2014 document is
|Full disclosure on mandatory
data (Annual Reports,
Financial Reports). Selective
disclosure on ethical issues
such as supply chain
Also extensive disclosure of
CSR work through the
Ferrero Foundation etc
|External Verification||Nestle is audited
independently by Bureau
|Ferrero is audited
independently by Deloitte.
|Continuous Improvement||Despite work to date, human rights, social and
environmental issues are still fairly common in the
production of chocolate confectionary. Both companies
have acknowledged this and made commitments and
targets into the future to address these issues.
Page 11 of 11 Business Values Assessment: Nestle and Ferrero
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