Swiss food giant Nestle is branded “international war sponsor” by Ukraine’s government
Such a decision by Ukraine’s National Agency on Corruption Prevention (NACP) was made on the basis of the Swiss conglomerate’s continued business operations in Russia, its financial contribution to the aggressor state’s war budget and the apparent transfer of equipment.
Shortly after Russia’s full-scale invasion of Ukraine, the world’s largest consumer goods company decided to remain in order to provide “essential and basic foods to the local people” and “to fulfill obligations toward employees.”
While Nestle cited baby formula as an example, more than 50 of its hardly essential products such as Nuts, Nesquik, Nestea, Nescafe, Nespresso, Maggi soups, Bystrow cereals, Purina pet food are still available in Russia.
Even though Nestle claims to have “halted non-essential imports and exports into and out of Russia,” in October 2022 the Swiss giant imported technical equipment into Russia under the guise of milk powder, as evidenced by the Moscow Arbitration Court proceedings.
“Hence, the company imports not only raw materials for “essential goods”, but also tries to covertly send technical equipment to Russia for the development of its own business,” the National Agency on Corruption Prevention (NACP) stated.
According to NACP’s analysis of Russian customs data, in 2022 Nestle imported $374 million worth of semi-finished products and raw materials into Russia, while in the first 9 months of 2023 this amount was at $271 million.
The company is estimated to have paid more than $500 million in taxes to the Kremlin in 2021. However, Nestle chose not to release its financial information for 2022, most likely fearing international pressure.
In April 2023, the management of Nestlé Russia LLC appealed to the Ministry of Finance to take the necessary measures to limit open access to the operating results and financial statements of the company’s subsidiaries. The purpose of such a move is probably to avoid the imposition of sanctions on Nestle’s subsidiaries, NACP noted.
According to the Kyiv School of Economics, Nestle made $2.8 billion in revenue in Russia last year, making it one of the largest revenue-generating firms in the country, where it continues to run seven factories and employ 7,000 workers who are at risk of being drafted, as per the requirements of Russia’s Partial Mobilization Law.
Nestle is yet another fast-moving consumer goods company (FMCG) not delivering on its promises to scale back, citing the essentiality of its products and employee welfare as reasons to remain. Governments must intervene and look beyond sanctions compliance to clarify the expected standard of corporate conduct in order to stop the misuse of the essentiality argument by the world’s largest and most profitable FMCGs such as Unilever, PepsiCo, Mars, Mondelez, P&G and Nestle.