Debate on corporate responsibility, sustainability and globalisation
Peter Brabeck-Letmathe, the Chairman and CEO of Nestle spoke recently at the Annual Tomorrow’s Company Lecture.
He was forthright, challenging and robust on a range of issues relating to globalisation, corporate governance, CSR and sustainability and drew on the recent report on Tomorrow’s Global Company
Set out below are some his assertions. What do you think?
He said that it was a total myth that in a more globalised world consumers are becoming increasingly homogenous and that you can now sell the same products across the globe.
He pointed out that consumers are now in his view more diverse than ever. The fall of the Berlin Wall has led to far more individual nations and within nations, devolution to the regions and greater sensitivity to regional languages has meant that just within Europe there are far more recognised languages than there were fifty years ago.
Regional differences in taste remain and are in many ways stronger then ever.
As a result, Nestle sells a massive number of varieties of their products with a huge number of different labels.
So much for the global consumer.
So what about the model of the global corporation? Brabeck-Letmathe says that this is a disastrous model as it means that a company is unable to respond to the different local markets, sensitivities and needs across different regions and nationalities.
What you need to do, he says, is combine back-office global economies of scale and organisation with local autonomy and local customer facing management.
Next up – sustainability. Here he takes on some big issues and was not afraid to challenge some conventional wisdom.
Carbon labels on products? No – they can be hugely misleading. Encouraging consumers to buy English tomatoes that have been grown in heated greenhouses consuming huge amounts of energy rather than tomatoes from Kenya just because of the air miles is a huge mistake. The Kenyan tomatoes need less energy to grow and they help to sustain livelihoods in the developing world. To focus purely on superficial CO2 measures can miss the rounded judgement that we should all be making on the social, economic and environmental factors.
Biofuels? No thanks. Brabeck-Letmathe said he had just come back from Brazil where he said thousands of acres of rainforest had been cleared to make way for energy crops at a massive cost to the environment.
He had some pretty sharp words for shareholders too. Nestle wants to attract long term investors and he has taken the policy decision that he will not give quarterly earnings guidance. He does not want to fall into the trap of managing the quarterly figures rather than managing the company for the long term.
Some robust views from the Chairman and CEO of one of Europe and the world’s largest companies.
What do you think?
For more information about Tomorrow’s Company, see
http://www.tomorrowscompany.com/