Nestle's Social Irresponsibility in Developing Nations

In late 2002, Oxfam,2 a relief group based in London, revealed that Nestlé SA (Nestlé), one of the largest manufacturers of food products in the world, was claiming compensation of $6 million from Ethiopia, one of the poorest countries in the world.Nestlé was making this claim because, in 1975, the then communist government of Ethiopia had nationalized a company called the Ethiopian Livestock Development Company (ELDC), without paying compensation for nationalization. The ELDC was at the time, a subsidiary of a German group called Schweisfurth.

Nestle had acquired the Group in 1986. The claim was widely reported in the media and Nestlé came up for severe criticism from all quarters. People were shocked that one of the most successful companies in the world (profits in 2002 - $5.72 billion) would stoop so low as to demand compensation from a poor, needy country (per capita income in 2002 - $100).In addition, the nationalization had been undertaken by a previous government, and there seemed little reason for Nestle to rake up an old issue and demand such a huge sum. The compensation claim seemed to show that the company lacked a sense of social responsibility. Several relief agencies world over, called for a boycott of Nestlé's products.......