Nestlé dismisses small
shareholders as unimportant
Nestlé Annual
General meeting
April 3, 2003, 3pm
Palais de Beaulieu, Lausanne
In a year when sales
increased by 5.3% to US $ 63.7 billion (net profit increased by
13.2% to US$ 5.4 billion) Nestlé faced an increased number
of criticisms about its disregard for human rights, the environment
and consumer concerns. Nestlé management attempted to deflect
criticisms with denials and public relations gloss.
In addition to Nestlé’s
disregard for infant health, there were complaints about the company’s
labour practices in Colombia, its low prices to coffee farmers,
(see footnotes) its use of PET bottles, its policy on water and
its use of Genetically Modified foods.
Patti Rundall, Policy
Director of Baby Milk Action, and representing the views of boycotting
groups in 20 countries, told shareholders how Nestlé’s
refusal to change its baby food marketing policies and practice
continue to contribute to the death and suffering of infants around
the world, and that the growing public awareness and concern was
leading to people wanting nothing to do with the company. Of special
concern is Nestlé’s attempts to stop governments bringing
in laws to protect health. Ms Rundall asked how a shareholder
like her with only 20 shares, who has attended Nestlé AGMs
for the last 10 years, could make any real impact on the company.
Under Nestlé’s constitution a shareholder must own
over US$ 200 million worth of shares in order to place an item
the Agenda. Since Nestlé itself owns a large proportion
of the shares (and noone can use voting rights in excess of 3%
of the total share capital) it is hard to see how any binding
Resolution on human rights could ever be passed. Patti Rundall
claimed that the AGM was in effect pure theatre, and that all
one could expect was yet more empty promises from Mr Brabeck.
None of the promises he made to shareholders for the last two
years have been carried out. He has also mis-led shareholders
over matters such as a damning ruling by the Advertising Standards
Authority over company claims to market infant formula "ethically
and responsibly" and then refused to make corrections at
the subsequent meeting (see Boycott
News 25).
Ms Rundall reminded
shareholders that last year Mr. Brabeck had displayed an article
from the Guardian newspaper suggesting it was time to call off
the boycott of Nestlé (see Boycott
News 31). Asking for the use of an overhead projector (which
was not forthcoming) Ms Rundall read from a more recent Guardian
article (21
December 2002) which reported on the 2002 AGM: "Nestlé's
chief executive, Peter Brabeck, chose to project a blown-up copy
of the article across the podium at the company's annual meeting,
goading all the activists present. It was deeply embarrassing
stuff..."
Commenting on Nestlé's
handling of its claim
for compensation from the Ethiopian Government at a time of
famine, the article stated: " If its executives are not
alive to the sensitivities and subtleties required to run a modern
multinational, they need to be replaced. If Mr Brabeck wants a
display for his next shareholder meeting, we'll happily forward
our thoughts in PowerPoint format."
Nestlé chair, Rainer Gut responded angrily to the intervention:
"You are talking ‘we’ as shareholders. Who is we?
Not you – it’s them. And I think each shareholder has
spoken and we have over 403 million shares and each one has a
vote. And I think its inappropriate that small shareholders try
monopolise the meetings of this sort".
Mr Brabeck responded
to the infant feeding accusations – this time with no false
promises, but a brazenly hard line claiming that Nestlé
does comply with the UN requirements and that all the problems
are about interpretation.
Other shareholders
later spoke about the total lack of women on the Nestlé
Board, which meant that decisions show no sensitivity to the impact
of the company on mothers and children.
Baby Milk Action will
be writing to Nestle to ask for a list of the shareholders that
Nestlé does consider important enough to listen to.
Footnote:
Ms Rundall also read
a statement from Oxfam about the 25 million coffee farmers which
face ruin because the low price Nestlé and other coffee
roasters pay for coffee. Oxfam claimed that other than making
promises, Nestlé has done virtually nothing to address
this problem.
At a time when WHO
and health advocates the world over are turning attention to the
rapid rise in obesity, (30% of Americans are obese and 60% overweight
- ref : Health, United States 2002)) Nestlé had no shame
in pursuing its goal of acquiring Dreyer Grand Ice Cream in the
US – a deal which is awaiting Federal Trade Commission approval
Having already acquired Movenpick and Haagen-Dazs icecreams, Nestlé
Chair Rainer Gut stated: "Once these transactions are
completed we will be positioned at the same level as the current
global leader in the sector."
Nestlé's strategy
may have negative financial implications as well as the health
impact. Investment bank UBS Warburg issued a report last year
which gave a league table of companies at risk of losing significant
income if measures are put in place by governments to limit the
promotion of 'less healthy' foods, meaning those with high fat
and high sugar. Product liability claims, as are now being seen
in the United States, are also a potential threat to company profitability.
46% of Nestlé's income is estimated by UBS Warburg to come
from 'less healthy' foods, putting it tenth on the list of global
culprits. It was not higher as it also has a large share of the
global pet food and cosmetics markets. (See The
Guardian, 27 December 2002).
For further information
Patti Rundall, Policy
Director, Baby Milk Action, 23 St Andrew's St, Cambridge, CB2
3AX
Work Tel: 01223 464420, Mobile: 07786 523493, Fax: 01223 464417
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