Tuesday, November 10, 2009
Nestle pursuing Fairtrade certification for Kit Kat
The Daily Mail has reported that Nestlé is in discussions with the Fairtrade Foundation in the UK about certifying its Kit Kat brand as Fairtrade. We don't know if this will happen yet, but the Fairtrade Foundation did award a Fairtrade mark to a token Nescafé product in 2005. See:
Earlier this year, Cadbury's had its Dairy Milk chocolate Fairtrade certified. This was welcome and has obviously put other companies under pressure, but as world cocoa prices are currently above the price that Fairtrade certification guarantees, there is little extra cost to the companies. As The Guardian reported back in March:
Fairtrade terms require buyers to commit to a minimum price of $1,600 a tonne. For more than two years the open market price has been climbing and yesterday reached $2,213. This is the longest period prices have stayed above the guarantee price and the International Cocoa Organisation yesterday predicted a third year of "production deficit". This makes a Fairtrade commitment more affordable than in previous years.
The advantage for farmers comes because there is a Fairtrade premium and when prices drop the minimum price sets a floor that means they still make a profit. Also various criteria on issues such as child labour have to be guaranteed.
Which raises the question, if Nestlé believes it is able to make these guarantees for the cocoa going into its Kit Kat, why has it not taken the action it promised in 2001 to end child slavery in its cocoa supply chain as a whole? Why pursue Fairtrade for one product, while boycotting a meeting called by Senator Horkins, one of the initiators of the Horkins-Engel protocol?
We can learn from history. When Nestlé gained a Fairtrade mark for its Partners' Blend brand of coffee, this was used in a national advertising campaign.
This failed to mention that just 0.02% of its coffee purchase was covered by the scheme, involving 0.1% of the farmers dependent on Nestlé. Nor did it acknowledge that Nestlé has been criticised for driving down prices for the millions of coffee farmers dependent on it - sometimes below the cost of production. The Fairtrade Foundation received some criticism for giving an award for such a small commitment from Nestlé. See:
The advantages to Nestlé of receiving a Fairtrade mark for Kit Kat is explained in the Daily Mail article: "It would boost the image of Kit Kat's parent, Nestle, which has been criticised over its ethical standards."
Such a boost would be totally unwarranted. The farmers in the scheme may benefit, but for those outside it would be business as usual, except now Nestlé could use the Fairtrade product to divert criticism.
How much good PR Nestlé would achieve is also open to question. An evaluation of its Partners' Blend launch shows that it also drew attention to its malpractice. See:
As with Nestlé's Twitter PR Disaster last month, sometimes it shoots itself in the foot. See:
But we can expect Nestlé to use any certification in trying to divert criticism. In 2006 when Senator Horkins called on the chocolate companies in the US to explain why they had not met their promise to end child slavery in their supply chains within 5 years of the 2001 agreement, Nestlé boycotted the 18 September meeting. However, a few days later on 25 September 2006, it sponsored a meeting at the ruling Labour Party Conference in the UK celebrating the 200th anniversary of the outlawing of slavery. Without any sense of shame, the title of the event was: "Is Slavery History?". See:
Nestlé has been taken to court in the US by the International Labor Rights Fund over its failure to act on its commitments. You can find a 2009 update on the Nestlé Critics site:
This was one of the issues raised in a complaint to the UN Global Compact Office in July 2009. Nestlé violates the principles of this voluntary initiative and uses it as public relations cover. See:
If Kit Kat is certified as Fairtrade, we will continue to list it on the boycott products list, along with Partners' Blend coffee. The boycott puts pressure on Nestlé to make changes to policies and practices to bring them into line with standards adopted by the World Health Assembly. Making those changes will benefit far more people than a token Fairtrade product and the boycott has been essential for forcing the changes we have achieved. See:
In evaluating Nestlé's motives, we shouldn't forget that the Chairman, Peter Brabeck-Letmathé, has said that Nestlé should only support charities if it will benefit his shareholders and the reasoning here will be the same. See:
I have my quote ready if this does go ahead: Mike Brady, Campaigns and Networking Coordinator at Baby Milk Action, said: "Nestlé is already using a Fairtrade mark on a token product representing just 0.02% of its coffee purchase to try to divert criticism of its trading practices, which have been blamed for driving down prices for millions of coffee farmers. While the coffee and cocoa farmers in Fairtrade schemes should benefit, if proper independent audits are done, that provides little comfort to the vast majority of suppliers outside the schemes. Legal action has been taken against Nestlé in the US over its failure to act on child slavery in its cocoa supply chain, despite public claims that it is doing so, and we have already seen it trying to divert this criticism by, for example, sponsoring an event on the abolition of slavery at the Labour Party Conference.
"When Nestlé is on the record as saying that charitable contributions should benefit its shareholders, we should not be too excited by one of the world's most boycotted companies pursuing something like this. We will continue to include Kit Kats on the list of boycott products and recommend that anyone who is concerned about promoting real change for people in developing countries support the boycott and buy their products from companies with positive business values, not just token initiatives. There are companies whose entire output is Fairtrade certified after all. Nestlé systematically violates baby food marketing standards, undermining breastfeeding and contributing to the needless death and suffering of babies around the world - the changes we have been able to force on Nestlé are because of the boycott and it will continue until Nestlé brings its policies and practices into line."