Child Labor Dilemma
MIE 306 Business Ethics
Stephen King
Stephanie Davis
Introduction
Our team has decided to write about the dilemma of child labor in multinational corporations. Child
labor affects children at a very young age and is defined as work that is mentally, physically, socially, or
morally dangerous and harmful to children. Child labor interferes with schooling by depriving them of
the opportunity to attend school. In extreme forms, child labor involves children being enslaved,
separated from their families, exposed to serious hazards and illnesses or left to fend for themselves on
the streets (Child). The businesses we have chosen to write about are Nestle and Coca-Cola. Both of
these organizations have dealt with accusations of child labor in the past and have codes of conduct the
address the issue thoroughly.
Section One
Coca-Cola’s corporate headquarters is located at One Coca-Cola Plaza in
Atlanta, Georgia. Coca-Cola currently offers more than 400 brands in over
200 countries and serves 1.6 billion servings each day (Our Company). Some of Coca-Cola’s popular
brands include Coke, Diet Coke, Sprite, Dasani water, Fanta, Fresca, Hi-C, Mello Yello, Minute Maid,
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PowerAde, Tab, Vitamin Water, and many others. The Coca-Cola Company only produces syrup
concentrate which is then sold to various bottlers throughout the world. In 2009, Coca-Cola had
revenues of nearly $31 billion dollars. Coca-Cola’s largest ingredient used in their beverages is refined
sugar. The majority of the refined sugar in Coca-Cola products comes from sugar cane fields in El
Salvador.
Corporate headquarters:
Nestlé S.A.
Avenue Nestlé 55
1800 Vevey
Switzerland
With sales of 107.62 billion (CHF) in 2009, Nestlé is the world's leading nutrition, health and wellness
company. The company employs more than 280,000 people and has 456 factories in 84 countries.
Nestlé products are sold in almost every country in the world.
Founded in 1866 in Vevey, Switzerland, where it is still based, Nestlé has often been called "the
multinational among multinationals". Only about 1.5 percent of its sales are generated in its home
country, and all but 12 of its factories are situated abroad.
With instant coffee, baby formula, and bottled water in the mix, Nestlé crunches more than just
chocolate. The world's #1 food company in terms of sales, Nestlé is also the world leader in coffee
(Nescafé). It also makes coffee for the home-brewing system, Nespresso. The company is one of the
world's top bottled water makers, one of the biggest frozen pizza makers, and a big player in the pet
food business (Purina). Its most well-known global food brands include Buitoni, Maggi, Milkmaid,
Carnation, and Kit Kat. The company owns Gerber Products and Jenny Craig. In addition to its own
products, Nestlé also owns approximately 30% of cosmetics giant L'Oréal. (Werne)
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Section Two:
Coca-Cola’s formal governance revolves around five simple statements: Act with integrity. Be honest.
Follow the law. Comply with the Code. Be accountable. This being said, excerpts from Coca-Cola’s
Code of Business Conduct pertaining to these statements include the following: “We all must follow the
law, act with integrity and honesty in all matters, and be accountable for our actions”. A more specific
excerpt about what is expected of everyone who is employed by Coca-Cola is “Understand the Code.
Comply with the Code and the law wherever you are. Use good judgment and avoid even the
appearance of improper behavior” (Code). These excerpts show that Coca-Cola is dedicated to and
encourages ethical conduct and a commitment to compliance with the law. Regarding child labor, CocaCola has formed a separate document called the Supplier Guiding Principles in order to combat their
suppliers from using child labor. According to Coca-Cola, “the Supplier Guiding Principles communicate
our values and expectations and emphasize the importance of responsible workplace policies and
practices that comply, at a minimum, with applicable environmental laws and with local labor laws and
regulations” (Supplier). Not only does Coca-Cola outline their beliefs about child labor in the Supplier
Guiding Principles, they also use another document known as the Workplace Rights Policy in which they
acknowledge their endorsement of international human rights through the United Nations Declaration
of Human Rights and the International Labor Organization’s Declaration on Fundamental Principles and
Rights at Work. Coca-Cola also actively participates in the United Nations Global Compact.
Nestlé’s formal governance is reflected and explained in several publications, such as the Corporate
Governance Report, Articles of Association, Committee charters, Corporate Business Principles, Code of
Business Conduct, Supplier Code, etc. The basic foundation for Nestlé’s formal governance reflects the
ideas of fairness, honesty, and a general concern for people.
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Excerpts from Nestle Corporate Business Principles: (p.14)
“Nestle is against all forms of exploitation of children. The Company does not provide employment to
children before they have reached the age to have completed their compulsory education, as defined by
the appropriate authorities. Nestle expects its industrial suppliers and business partners to apply policies
that have the same standards as the Company’s Business Principles and reserves the right to audit their
compliance.”
“Nestle abides by national laws in all countries in which it has operations and complies with the
International Labour Organization (ILO) Convention 138 on the Minimum Age for Employment and the
ILO Convention 182 on the Worst Forms of Child Labour. The ILO recommendations are based on the
United Nations Convention of the Rights of the Child (Article 32);
Nestle offers its co-operation with the relevant United Nations agencies, governments and the business
community in their efforts to deal with the problem of child labour, which include the encouragement of
universal primary education and all aspects of economic development worldwide.” (Business Principles)
Excerpts from Nestle Supplier Code: (p. 4)
“The Nestlé Supplier Code establishes non-negotiable minimum standards that Nestlé ask of their
suppliers, their employees, agents and subcontractors to respect and to adhere to at all times when
conducting business.”
“The use of child labour by the supplier is strictly prohibited. Child labour refers to work that is
mentally, physically, socially, morally dangerous or harmful for children, or improperly interferes with
their schooling needs. “(Suppliers)
Business Managers should use these governing documents as a guide and reference point immediately
whenever a situation concerning even the possibility of child labor arises. The ethical principles that
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relate to the child labor dilemma and should be used by managers to further guide their actions and
decisions come from Hosmer and are: Personal Virtue, Government Requirements, Individual Rights,
and Contributing Liberty.
Section Three
Coca-Cola’s organizational culture has many advantages regarding child labor. Coca-Cola’s ethics
governance prohibits child labor, prohibits forced labor and abuse of labor, eliminates discrimination,
regulates work hours and wages, and provides a safe and healthy workplace for all employees. These
values that Coca-Cola instills help them to manage the dilemma of child labor by ensuring their
stakeholders that Coca-Cola and its suppliers are committed to putting an end to the practice of child
labor. An excerpt from Coca-Cola’s Supplier Guiding Principles states that “The Supplier Guiding
Principles are a vital pillar of The Coca-Cola Company’s workplace accountability programs. These
programs are driven by the belief that good corporate citizenship is essential to our long-term business
success and must be reflected in our relationships and actions in our workplaces and the workplaces of
those who are authorized to directly supply our business” (Supplier). The beneficial consequences for
Coca-Cola of having such a defined code of conduct for both its business internally and its suppliers is a
universal understanding by stakeholders and the consumers of Coca-Cola products that the company
does not tolerate any form of child labor.
There are many advantages to Nestlé’s organizational culture and ethics governance in the dilemma of
child labor. Because Nestle has been accused of child labor in the past the company has gone above and
beyond to assure the public as well as their stakeholders that they have zero tolerance for child labor.
Nestle has an entire website dedicated to improving the conditions for farmers in the cocoa industry.
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“The Cocoa Plan represents an ongoing commitment to the welfare of the cocoa industry and its
workers.” (The Cocoa Plan)
A good consequence of Nestle having all of these guidelines and reference points is getting favorable
attention from consumers. This takes the attention away from the past allegations of child labor and
puts the attention on the present initiative being taken to fix this problem. Another benefit of having
such a detailed code of conduct for both its business internally and its suppliers is a universal
understanding by stakeholders and the consumers of Nestle products that the company does not
tolerate any form of child labor.
Section Four:
Coca-Cola’s organizational culture does not have many, if any disadvantages regarding child labor. CocaCola has been accused of benefiting from child labor in sugarcane fields in El Salvador. According to the
Human Rights Watch, up to 30,000 Salvadoran children, some as young as eight years old, are working in
El Salvador’s sugar cane plantations (Lobe). Because of the accusations, Coca-Cola has incorporated
child labor into their Supplier Guiding Principles program and also taken steps to address child labor in
sugarcane harvesting. As a result, Coca-Cola has eliminated all of the bad consequences that are likely
to arise due to child labor.
As mentioned before, Nestle too, has had accusations of child labor in the past, most specifically on their
cocoa farms in the Ivory Coast. In an article titled “Slave Chocolate” Nestle CEO responds to the
allegations. “Nestlé is not the owner of any plantation," says Peter Brabeck-Letmathe, chief executive,
exasperated after seven years of protests connecting the Swiss multinational with forced child labor in
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Ivory Coast. In what he calls "basically a civil war situation," he says, "there might be a lot of other
human rights abuses than just the ones that have been picked up." He says it would be even worse for
Ivory Coast if Nestlé bought nothing.” (Ore)
Because of Nestlé’s past with the issue of child labor, they have made an active effort to incorporate
guidelines in multiple governing documents which prevents them from having bad consequences.
Section Five
Coca-Cola and Nestle have very thorough Codes of Conduct both for their businesses and for their
suppliers. However, Coca-Cola and Nestle lack a few procedures that could strengthen their stance on
ending child labor even further. Apple’s Supplier Code of Conduct clearly defines that “Apple may visit
(and/or have external monitors visit) Supplier facilities, with or without notice, to assess compliance
with this Code and to audit Supplier’s wage, hour, payroll, and other worker records and practices.
Violations of this Code may result in immediate termination as an Apple Supplier and in legal action”
(Apple). Apple incorporates a contract that gives them the ability to audit any supplier’s facility
unannounced. This could be an important addition for both Coca-Cola and Nestle because a random
audit is more likely to find an illegal action than a scheduled audit. A scheduled audit allows for the
supplier to stop all illegal activities for the duration of the audit which in turn, does not help solve the
dilemma of child labor. Apple’s Code of Conduct also allows them to immediately terminate any
contract with a supplier should and illegal activities be discovered. While Coca-Cola and Nestle probably
have this right as well, it is not clearly stated in their Codes of Conduct for either their businesses or
their suppliers.
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Works Cited
Apple Supplier Code of Conduct. Apple, 25 June 2010. Web. 25 June 2010.
<http://images.apple.com/supplierresponsibility/pdf/Supplier_Code_of_Conduct_V3_3.pdf>.
Business Principles. Nestle, 25 June 2010. Web. 25 June 2010.
<http://www.nestle.com/AllAbout/Governance/BusinessPrinciples/BusinessPrinciples.htm>.
Child Labor. International Labor Association, 25 June 2010. Web. 25 June 2010.
<http://www.ilo.org/ipec/facts/lang--en/>.
Code of Business Conduct. The Coca-Cola Company, 1 Mar. 2008. Web. 25 June 2010.
<http://www.thecoca-colacompany.com/ourcompany/pdf/COBC_English.pdf>.
Code of Business Conduct. Nestle, 25 June 2010. Web. 25 June 2010.
<http://www.nestle.com/AllAbout/Governance/CodeBusinessConduct/CodeBusinessConduct.h
m>
Corporate Governance. Nestle, 25 June 2010. Web. 25 June 2010.
<http://www.nestle.com/AllAbout/Governance/Governance.htm>.
Lobe, Jim. Coke Benefiting from Child Labor in Sugar Cane Fields. CommonDreams.org, 10 June 2004.
Web. 25 June 2010. <http://www.commondreams.org/headlines04/0610-01.htm>.
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Ore, Deborah. Slave Chocolate. Organic Consumers, 24 Apr. 2006. Web. 25 June 2010.
<http://www.organicconsumers.org/fair_trade/slavechocolate060414.cfm>.
Our Company. The Coca-Cola Company, 25 June 2010. Web. 25 June 2010.
<http://www.thecoca-colacompany.com/ourcompany/index.html>.
Supplier Guiding Principles. The Coca-Cola Company, 25 June 2010. Web. 25 June 2010.
<http://www.thecoca-colacompany.com/citizenship/pdf/SGP_Brochure_ENG.pdf>.
Suppliers. Nestle, 25 June 2010. Web. 25 June 2010.
<http://www.nestle.com/AllAbout/Suppliers/Introduction.htm>
The Cocoa Plan. Nestle, 2010. Web. 25 June 2010.
<http://www.thecocoaplan.com/welcome-to-the-cocoa-plan/>.
Werne, Peter. LinkedIn. Nestle, 2009. Web. 25 June 2010.
<http://www.linkedin.com/companies/nestle>.
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