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Nestle’s success in India: Shared value or conscious capitalism?

It is 1961 in Moga, Punjab and Nestle is launching its operations in India. The company’s founder, Henri Nestle’s covenant for social responsibility said: “positively influence the social environment.” Along the same time,  late Indian Prime Minister, Indira Gandhi was sowing the seeds of her legacy through India’s green revolution, providing higher yield crops for agriculture.

Five decades later, Nestle has played a critical role in “rescuing a million people from crushing poverty,” according to a study titled “Creating shared value- Impact of Nestle’s Moga factory on surrounding area” by the Mexico-based Third World Center for Water Management.

Starting with 180 farmers supplying milk, Nestle launched its corporate social responsibility initiatives with an assured income to farmers, improvements in socio-economic conditions and in creating loyalty among the local population.The factory now employs over 2400 people, has over 86,000 suppliers and indirectly impacts another 45,000 individuals.

The Moga plant is more hygienic than the nearby Government-run hospital. Today, villagers practice hygiene in their homes thanks to strict quality standards introduced by Nestle. Over the last 50 years, they have grown to trust a “long-term symbiotic relationship,” with the business, the study points out. The relationship between the business and the community has become a “long-term relational interaction and not merely transactional relationship.”

Nestle has initiated a successful corporate social responsibility model that works in Indian conditions by using the concept of shared value. The company’s Agricultural Extension Services provides training to farmers and women on a variety of agricultural topics. A Healthy Kids Program provides children in schools with clean drinking water, teaches them about nutrition and the importance of physical activity.

Nestle’s social responsibility initiatives  resemble the concept of conscious capitalism whose four pillars are higher purpose, stakeholder orientation, conscious leadership and conscious culture. The company began its operations in India with a higher purpose, enabled stakeholders to be a part of the conversation and provided a conscious leadership and culture that has lasted over five decades. So, was it shared value or conscious capitalism? Or, does it go back to Henri Nestle’s covenant that was inclusive of the community in which the business operated? It dates back over a 150 years, but it still holds true.