Ethical and Unethical Practice in FMCG Industry

CP 1

Define the ethical practice of marketers in FMCG Industry. Provide 10 examples each for unethical and ethical practices.

Submitted by: Akansha Sinha 11BSPHH010065

What is Ethical Practice? To know more about ethicality, we need to understand what ethical practice means. O “Ethical Practice is to honour the beliefs, morals

and values of one‟s profession and to help others through the process of decision making.”

O It applies to all aspects of business conduct and is

relevant to the conduct of individuals and business organizations as a whole.

Benefits of Ethical Practices There are significant marketing and business opportunities. O Best practice employers are regularly publicised in the

media, journals and on the Internet. O Such firms also save on industrial disputes, fines and unfair dismissal or discrimination claims. O These experience savings from lower staff turnover rates and higher levels of productivity from motivated staff. O Firms with good safety records save on accidents, lost time through injuries, fines and workers compensation on insurance premiums.

Benefits (contd…) O It builds a brand that attracts the best talent and

creates trust among the stakeholders. O Ethics program help maintain a moral course during turbulent times.

Ethical Practices in FMCG Industry

Cadbury O Fair trade practice with suppliers O Manufacturing ethically by :  treating waste water prior to disposal  Looking to improve its energy efficiency  controlling the release of gases into the atmosphere. O Ethics in distribution to wholesalers and retailers O Fair dealing with consumers through CSR activities like:  community initiatives and employee volunteering

 environmental impact.  health and safety concerns

ITC O Policy on Human Resource: ITC upholds international

human rights standards, does not condone human rights abuses, and creates and nurtures a working environment where human rights are respected without prejudice. O Food Products Policy: It is ITC's policy that its food products should provide nutritious, tasty, hygienic and convenient options to the consuming public. O IT E-Waste Policy: The lifecycle of all IT assets spanning from acquisition to disposal shall be managed in a manner which conforms to sound environmental norms as detailed in its IT E-Waste guidelines

Godrej The Soonabai Pirojsha Godrej Foundation O Inaugurated in 1985 under the leadership of the late Dr.

Salim Ali, one of the world's most honoured ornithologists, the late Dr. A.K. Ganguly (a reputed botanist) and Dr. H.N. Sethna, O The aim was to protect the 1750 acres of mangrove forest on the land owned by the Foundation and the Godrej & Boyce company. The scope of the project was further expanded by creating a research, education and conservation base.

Parle Agro O Parle has launched the „Parle Agro Frooti foundation', an

initiative designed to give back to the less fortunate in society. O As part of this recent corporate social responsibility (CSR) initiative, the company has signed up with Radio One for „Alms for Aams‟, through which listeners are asked to call in with their 'mango experiences‟. O Each time somebody does so, the Frooti Foundation donates a carton of mangoes to an orphanage. The company has also launched a website www.frootifoundation.com as a part of this initiative.

Nirma Realising the significant role of education - especially technical and managerial in socio-economic development of the nation, Nirma played a vital role by establishing the Nirma Education & Research Foundation (NERF) in 1994. The various institutes are: O Institute of Technology O Institute of Management O Institute of Pharmaceutical Sciences O Institute of Diploma Engineering.

Himalaya Drug Company O Care for Earth • Good for Earth farming: Use prophylactic sprays like Neem

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Oil, which act like a natural insect repellent, instead of chemical fertilisers. Planting Trees: Planted over 150,000 trees in three years and in return, reduced the carbon footprint significantly. Care for Good Health Runs free diagnostic centres to test people for Osteoporosis Initiated Diabetes Detection Camps across India. Trained personnel from Himalaya carried out free random blood sugar tests and referred patients for treatment if abnormal sugar levels were detected.

O Care for Environment • Environmental Management System where they have

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taken several steps to conserve water, power and reduce pollution to meet the NQA guidelines. Rainwater Harvesting Responsible packaging: Toothpaste cartons are made of 100% recyclable board, use non-toxic inks like soy ink for our Botanique range of products, etc. Care for People Rehabilitating People: is working with the Prison Authorities, Government of India, to rehabilitate prisoners by creating employment opportunities for them. Contract Farming: Engages poor farmers with small or fragmented land holdings. Farmers earn a regular income and are freed from exploitation from middle agents

Hindustan Unilever 1. Shakti: HUL identifies underprivileged women in villages and these women are trained to become Shakti Entrepreneurs, i.e. distributors of HUL products in villages to earn a sustainable income. 2. Lifebuoy Swathya Chetna: Is a rural health and hygiene educational program. The campaign aims to educate children and the community about the threat of unseen germs and basic hygiene practices. Lifebuoy has already successfully conducted pilot studies in Madhya Pradesh, Chattisgarh, Uttar Pradesh, West Bengal, Orissa and Bihar. 3. Asha Daan: The initiative began in 1976, when HUL supported Mother Teresa and the Missionaries of Charity to set up Asha Daan, a home in Mumbai for abandoned, challenged children, and the destitute. Subsequently, Asha Daan has also become a home to the HIV-positive. The objective in supporting Asha Daan was and continues to be to share the organsation's prosperity in supporting the Mother's mission of serving the "poorest of the poor.

McDonald‟s

1. Product Quality and Safety: McDonald‟s is committed to ensuring that the foods and beverages they serve to their customers are safe. They work with their suppliers who monitor, test and track ingredients. 2. Environmental responsibility -- focus on energy efficiency, sustainable packaging, waste management and green restaurant design 3. Environmental Scorecard for McDonald's suppliers to measure and reduce their water, energy, air and waste impact 4. Sustainable fish supply -- in 2007, more than 91% of fish for McDonald's originated from sustainable fisheries 5. Rainforest Protection Policy -- in place since 1989, commitment to refuse beef sourced from rainforest areas 6. Evolution of nutrition information disclosure which began in 1973 -completed rollout of Nutrition Information Initiative 7. Workplace recognition -- recognized by the Great Place to Work Institute in over 30 countries where we operate

Marico 1. Energy • Improved truck loading efficiency at our factories leading to reduced fuel consumption • Designed the new plant at Baddi in an energy-efficient manner. Learning from here is being replicated across all manufacturing locations. 2. Water • Reduction of water consumption at Jalgaon plant by 36% • Rainwater harvesting across manufacturing sites 3. Use of recycled paper at Kaya Skin Clinic 4. Reduction in PVC Consumption by 90% in plastic bottles

Henkel Henkel Smile • MIT (Make an Impact on Tomorrow) – Employee engagement Henkel supports the volunteer work carried out by its employees and retirees through in-kind, product and financial donations, and specialist advice. • HFI (Henkel Friendship Initiative e. V.) – Emergency fund In a crisis or disaster affecting people and their communities, HFI provides financial or in-kind assistance directly where it is needed most. • Social Partnerships – Corporate and brand engagement for the common good. Support social initiatives in the communities where their sites are located throughout the world.

Unethical Practices in FMCG Industry

Proctor and Gamble O Proctor and Gamble came up with an ad campaign that

termed Head and Shoulders as world‟s number one antidandruff shampoo suggesting that it renders 100% dandruff free hair. O There was no research or evidence to back the statement.

In fact such a statement was made in Europe too and P&G was made to take off this advertisement. O It is a case of false claims.

Fair and Lovely O A recent research by Electronic Journal of Business

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Ethics and Organization Studies has revealed that fairness cream sellers overstate product benefits. Illiterate and poor segment of our society actually buys their false and misleading statements These creams play with customers‟ emotions. Contain ingredients such as steroids, bleaching agents, mercury, and many more harmful products. According to a research, these creams can lighten the skin colour up to 20% but not more than that.

Nestle O Promoting infant formula with misleading and harmful

strategies that violate the International Code of Marketing of Breast milk Substitutes and put babies at risk. O Using suppliers that violate human rights (e.g. purchasing milk from Mugabe, buying cocoa from suppliers that uses child slaves) and destroy the environment (e.g. palm oil from rainforest). O Price fixing - In Feb 2013 Nestle was fined over $60m for colluding to raise chocolate prices in Germany, while price fixing investigations continue in the US and Canada.

Amul O The Rs 3,000 crore Gujarat Co-operative Milk Marketing

Federation (GCMMF) has been accused of dumping milk in West Bengal by the animal resource development minister of West Bengal. O Two major issues are involved,  the federation is not sourcing the required amount of milk

locally. Currently, the federation packages over 1.5 lakh litres of milk in West Bengal of which at least 50 per cent should have been sourced locally.  Secondly, the federation is packaging milk in West Bengal beyond the permissible limits.

Cadbury O No transparency on some cocoa sourcing unfair trade O O O

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practice No public timetabled commitment for future cocoa sourcing Acknowledges the use of child labour in the industries Unethical marketing policies like showing use of cocoa butter instead of palm oil - as harvesting palm oil involves removing palm tree in a forest area which could house wildlife animals which renders them homeless. This shows that Cadbury had neglected the welfare of animals just for the sake of cutting cost in their manufacturing.

Coca-Cola O In 2000, Coca-Cola opened a plant at Plachimada, a O O

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village in Kerela to produce 1.2m litres of coke every day. The conditional licence granted by the local panchayat authorized the use of motorised pumps. The company, instead, installed high power electric wells to withdraw water, as a result of which, the water level fell from 45 to 150 meters below the surface. The company also started dumping waste outside, causing a serious health hazard. The overexploitation of water happened in Kaladera, Jaipur too.

Pepsodent O Pepsodent was reintroduced in the market in 1995 with a

claim that it has 102% anti bacterial superiority compared to an ordinary Dental Cream. O A case was filed by Colgate against this claim. O To this day, Lever has not proved that Pepsodent had 102% anti bacterial superiority. O It again is a case of false claims and misleading the consumers.

PepsiCo O Claimed it had achieved “positive water balance” in India. O When questioned by The India Resource Centre in 2010,

they were provided with an audit conducted by Deloitte Touché Tohmatsu India Pvt Ltd, based on 2009 figures provided primarily by PepsiCo, and released in 2010. O PepsiCo's claims on water in India are designed primarily to manage the business and reputational risks that the company faces with regard to its water usage in India and globally. O PepsiCo is on a fast track to manufacture an image of itself as a global leader in water conservation, and PepsiCo's claims of returning more water than they use is a public relations exercise by the company to blunt the growing and real criticism of its water management practices in India and elsewhere

Johnson and Johnson O The company “made false and misleading statement about the

safety and efficacy of Risperdal, and paid illegal kickbacks to health care professionals and long-term care pharmacies to induce them to promote or prescribe Risperdal to patient populations, such as children, adolescents and the elderly, for which there was no FDA approval O Johnson & Johnson and its drugs unit will pay $2.2 billion to the U.S. government and 45 states to end civil and criminal investigations into unethical drug marketing practices.

Hindustan Unilever O Hindustan Lever told to pay Rs 5,50,000 for unfair trade

practice. O Hindustan Lever has been pulled up for unfair trade practice by a consumer forum here which directed it to pay Rs 5.5 lakh to a purchaser of one of its detergents for not giving him Rs 5 lakh prize money according to a scheme launched by it. O The verdict came out as, “The opposite party (company) indulged in unfair trade practice by launching a flawed scheme with a view to promote sales by lottery, not fair to all”

Thank you