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Corporate Social Responsibility and Ethics: A Case Study of Nespresso

Learning outcomes

The total word limit for Part 1 of this TMA is 2000 words.

The total word limit for Part 2 of this TMA is 250 words.

This TMA is intended to assess the following:

· your knowledge and understanding of key concepts and ideas covered in Blocks 6 and 7 of B100

· your ability to select and apply information and arguments from a case study

· your ability to apply module ideas to a practical situation as presented in a case study

· your ability to use academic and business and management language appropriately and effectively to communicate your ideas

· good academic practice in citing sources of information appropriately

· your ability to reflect on your learning during this part of the module.

Part 1: Case study analysis

Part 1 of this TMA will be marked out of 90 marks.

The total word limit for Part 1 of this TMA is 2000 words.

Note that Questions 1 and 2 cover material from Block 6; and Question 3 covers material primarily from Block 7.

After having read through the case study below, answer the following questions.

Part 1 questions

Question 1

Using Carroll’s pyramid of Corporate Social Responsibility (CSR) and information from the case study, identify and discuss the corporate social responsibilities of Nespresso in the context of sourcing coffee from South Sudan. Also briefly explain which of Carroll's four dominant attitudes (or their combination) to CSR were adopted by Nespresso in this instance. (40 marks)

Question 2

Identify key ethical issues in the case study and discuss how they can be dealt with by Nespresso drawing on at least two perspectives on ethics (deontological, consequentialist, virtue ethics or types of justice) discussed in this module. (30 marks)

Question 3

Explain what globalisation drivers are and, using information provided in the case study, discuss how each of the four globalisation drivers relates to Nespresso’s global operations, including operations in South Sudan. In your answer, think about which of them (or their combination) is likely to be of most importance to this company in the context in question. (20 marks)

The good, the bad and the ugly: sustainability at Nespresso

The single-serve coffee maker supports growers, but also creates a lot of waste. Its story illustrates the power and limitations of corporate sustainability programs.

Marc Gunther

The sustainability story at Nespresso, a company that sells coffee machines and single-serve capsules, is a mix of the good, the bad and the ugly.

Part 1: Case study analysis

On coffee sourcing, the company – part of Swiss multinational Nestle – is an industry leader, training coffee farmers and paying premium prices. In the last few years, it has invested in reviving coffee production in war-weary South Sudan. That’s good.

But the company’s single-serve aluminum pods create unnecessary waste. A valuable, energy-intensive resource winds up in landfills. That’s bad.

Nespresso won’t say how many of its pods get recycled. Transparency is an essential ingredient of sustainability. So that’s ugly.

The coffee pod company has a hefty corporate sustainability program, including a 38-point list of commitments detailing how it plans to create value for its suppliers, consumers and society, as well as for its shareholders. Nespresso’s efforts help illustrate the power of corporate sustainability programs to make meaningful change, but also show where they fall short.

Nespresso introduced the first single-serve coffee machine back in 1986. Growth took off in the 1990s in Europe, and about 15 years ago, Nespresso arrived in the US. It has opened boutiques in tiny locales such as Newport Beach, California, and New York’s Madison Avenue, and last year the company introduced a coffee machine called the VertuoLine, which makes the 250ml (8oz) cups of regular coffee that Americans favor, along with the petite cups of espresso popular in Europe.

Nespresso doesn’t disclose revenues or profits, but it’s a big, global operation: 10,500 employees sell coffee in 62 countries. As of 2012, Nespresso sold more than 27bn of its sleek aluminium capsules worldwide.

Nespresso has reinvested its earnings into its supply chain, notably in South Sudan, with the help of the anti-poverty NGO TechnoServe. South Sudan’s economy currently depends on oil and foreign aid; coffee has become its first major agricultural export.

Nespresso CEO Jean-Marc Duvoisin spoke with the Guardian about the company’s sustainability efforts, branded as The Positive Cup. He also spoke at the Shared Value sustainability conference earlier this month in New York, as part of Nespresso’s efforts to gain traction in the US coffee pod market, which is dominated by Keurig Green Mountain.

“It’s very interesting for me, because South Sudan is the place where coffee began — it’s the cradle of coffee,” Duvoisin said. George Clooney, who is the face of Nespresso in Europe, suggested that the company work in South Sudan, he said. “Coffee production helps to pacify regions. That’s basically because you have families who can produce on small lands, and they have stable income.”

Nespresso invested about 700,000 Swiss francs (about $800,000) and plans to spend another 2.5m CHF ($2.7m) in South Sudan. With TechnoServce, it helped organize three coffee cooperatives, built three wet mills to process coffee and exported 10 tons of coffee last year. It aims to reach 8,000 farmers by 2020.

More broadly, Nespresso has since 2013 rolled out a global program for coffee called AAA Sustainable Quality in collaboration with The Rainforest Alliance. Some 63,000 farmers have been certified under the program, about 80% of those supplying Nespresso, according to its website. They are paid 30%-40% above the standard market price for coffee.

“It’s a rigorous and comprehensive program, with real investment in the farmers,” Tensie Whelan, the president of the Rainforest Alliance, said. “They are able to pay the producers well and be there for the long term. This is really what we should be doing through all of our value chains.

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