In a move to increase transparency surrounding its breast milk substitutes (BMS) marketing practices, Nestlé is detailing its compliance with the policy and procedures set out in WHO’s International Code on the responsible marketing of BMS. This follows Nestlé reporting 107 instances of non-compliance last year, which have now been corrected. As traceability and ethical branding are becoming increasingly important to consumers, this transparency is crucial.
“Our report demonstrates that the majority of instances of non-compliance happen at trade level. To reduce the instances of non-compliance, we should continue to train our employees and third-parties’ staff on the importance of implementing our policies,” a Nestlé spokesperson tells.
The company also advocates for collective action, clear legislation and enforcement by authorities in the different countries in which it operates. “Being transparent means being honest with our challenges so that we can foster collective support toward a common endeavor,” adds the spokesperson
“When we see cases of non-compliance, we stop them and take necessary action. We know transparency is important to our stakeholders – from parents to governments to non-profit organizations and public health leaders – and we remain wholly committed to maintaining their trust by sharing not only our successes, but also our challenges and efforts to address them,” details Leanne Geale, Executive Vice President, General Counsel, Corporate Governance and Compliance at Nestlé.
Nestlé publicly reports on our compliance with the WHO Code each year. The report is addressed to the stakeholders it interacts with in a constructive dialogue, from governments to investors, to non-governmental organizations and public health leaders.
“This document is a key component of our WHO Code Compliance Management system. It provides an overview of non-compliances attributable both to Nestlé and to third-parties in direct contractual relationship with Nestlé. It also outlines the key events of the past year and will serve as a tool for measuring our progress over time,” explains the spokesperson.
Nestlé’s detected instances of non-compliance with the Nestlé Policies and Procedures implementing the WHO Code worldwide have remained relatively steady in recent years, with 103 and 117 being reported in 2017 and 2018, respectively. However, the company notes that no systemic instances of non-compliance (involving a deliberate breach scheme throughout the organization) were reported through its different auditing capabilities or whistleblowing mechanisms.
More workforce training is needed
In light of its instances of non-compliance, the company acknowledges the need to continuously train its employees and distributor staff on the importance of implementing the WHO Code. Also, interactions with the healthcare system and healthcare workers remains an area of vigilance where the company has published its policies and controls.
While 61 percent of the non-compliance is traced back to a third-party in a direct contractual relationship, 39 percent of instances are linked to Nestlé. The root cause most often reported is the “lack of awareness of the rules” (48 percent). The company notes that this is due to high staff turnover, with employees often not being properly equipped to understand the local law, as well as Nestlé rules and those of our competitors.
Meanwhile, 30 percent of cases were due to a gap between Nestlé’s rules and applicable law in a given country. In such situations, the company appears too restrictive for retailers in the marketplace. Some markets referred to “price wars” between online and offline retailers to attract consumers to their platforms or stores.
Nestlé says that many e-commerce retailers can be highly aggressive, attempting to gain website traffic by offering promotions for stage one and stage two infant formulas. Due to lenient regulation, e-commerce retailers do not face legal risk. In addition, products from Nestlé Infant Nutrition, well-recognized by consumers, are used by online platforms to leverage this strategy.
Traceability is key
In light of the report, Nestlé recognizes the need to continuously improve and has taken steps to increase transparency further. This includes reporting publicly on challenges, cases of non-compliance as well as corrective actions.
“By transparently sharing our experience, we believe we can inspire improvements across the industry and foster collaboration with civil society organizations and governments. We hope to see our industry peers continuing to improve their compliance with the WHO Code. We will continue to play a leading role through constructive engagement and work together to contribute to a healthier future,” the company states.
Geale adds that transparency is a fundamental element of trust. “Being transparent with our stakeholders is the basis for honest dialogue and accountability.”
“Storytelling: Winning with Words” tops Innova Market Insights’ Top Ten Trends list for 2020. As part of this, consumer purchasing decisions are increasingly driven by the story behind their food, with transparency being a crucial element. Notably, 57 percent of global consumers say that the stories around a brand influence their purchase decision. Younger consumers, in particular, are concerned about ethical choices with 73 percent of Millennials being concerned about the environmental and social impact of what they do and the choices they make.
The road to improvement
Looking forward, Nestlé states that it must maintain and integrate its policies into its business practices. “We are implementing this approach globally, adapting to local legislative and commercial contexts. All instances of non-compliance, which are outlined in this report, have been corrected. When we observed deliberate and severe breaches of the rules, we took exemplary actions, such as dismissals and warning letters against employees or third parties in our sphere of influence,” it details.
Specifically, it is taking five corrective actions that have already been or will be implemented following the report:
Develop an online training tool on WHO Code compliance for both desktop and mobile devices to complement existing materials. Roll out the tool from Nestlé markets to direct and indirect customer organizations in late 2020 and 2021. Monitor outreach.
Use FTSE4Good and ATNI respective assessments on the marketing of BMS to educate their auditors and assessors on sensitive practices, such as donations, and distributors’ responsibility.
Ensure WHO Code compliance annual report is written with language understandable by a wider audience. Share 2019 report with employees through communication from the Executive Board to increase education and engagement.
Release Healthcare Professionals (HCP) Code Implementation Guidelines as a follow-up to the HCP Code published in 2019.
Review internal investigation practices and consider merging guidelines to standardize processes for improved efficiency, where possible.
In June, the multinational highlighted its support for the BMS marketing restrictions detailed in the Call to Action published by a host of organizations, including WHO. The previous month, WHO, UNICEF and the International Baby Food Action Network had also released a report flagging the need for new legal measures to prohibit the promotion of BMS to health workers and in health facilities. The organizations stated that COVID-19 is leaving an opening for the BMS industry to “capitalize on the crisis.”
