Companies that sell infant formula milk and wish to qualify as members of the FTSE4Good indexes are likely to have to show in future that they are strongly committed to responsible marketing.
FTSE is proposing to tighten its criteria on the marketing of breast milk substitutes, which currently say only that companies must not breach the World Health Organization’s International Code on Marketing of Breast Milk Substitutes. The code advises against encouraging mothers to feed their babies milk substitutes in the early months of life.
The existing criteria already exclude eight companies – Abbott Laboratories, Bristol-Myers Squibb, Danone, H J Heinz, Nestle, Novartis, Royal Numico and Wyeth.
In a consultation paper outlining a strengthened position, FTSE proposes firms ‘show compliance’ with the WHO code rather than just demonstrate that they are not in breach of it – and adds that this ‘should be reflected in strong management, monitoring and corrective systems’.
FTSE proposes companies apply the code in all countries, regardless of whether individual governments have actually adopted it.
The index provider suggests companies adhere to the code as a minimum requirement, even where national regulations demand less.
The proposed criteria would require a company to:
name the people responsible for implementing the code at board and country level
be able to show it has management systems in place for clearly communicating company policy on the marketing of breast milk substitutes
have whistleblowing procedures that allow employees to report any non-compliance ‘in a way that protects them from possible negative consequences of such reporting’
systematically monitor compliance.
FTSE says managers must have systems in place to police infractions of the code and to investigate and respond to any cases of alleged non-compliance reported by third parties.
They should report to the company board each year on internal monitoring, external reporting and what action they have taken in cases where the code has been breached. The reports need to be verified by a third party.
Breast milk substitutes is the third topic reviewed by FTSE4Good. It revised its environmental criteria in May 2002, and its criteria on human rights were reviewed this spring.
Any changes to the criteria on breast milk substitutes will not be made until September at the earliest, when FTSE’s advisory committee meets to consider responses to the consultation.
Nestle said: ‘We are already excluded on the existing criteria, so tightening them will serve to reinforce this’.
The company added that it had previously had ‘dialogue’ with FTSE4Good on the issue, and that baby milk products represented two per cent of its turnover.
The Baby Milk Action campaign group said the FTSE4Good criteria were ‘brilliant’, assuming they were not watered down during the consultation, which is open to interested parties.