Saudi Press

Saudi Arabia and the world
Friday, Jul 04, 2025

After Covid-19 and COP26, multinationals should realize it’s in their own interest to lift the lid on how they do business

After Covid-19 and COP26, multinationals should realize it’s in their own interest to lift the lid on how they do business

What Nutella Teaches Us About Global Supply Chain Risks
Beloved hazelnut spread Nutella is a classic example of the benefits and costs of globalization.

Some 400,000 tons of it are produced every year by a supply chain touching almost every continent. Key ingredients such as cocoa, hazelnuts and palm oil are sourced from Africa, the Middle East and Asia, as producer countries boast about bringing their people out of poverty.

That network has come with consequences, though. Accusations that child labor was being used on hazelnut farms in Turkey pushed Nutella’s parent Ferrero to ramp up traceability of its supplies in 2019. The breakneck expansion of palm-oil production in Indonesia and Malaysia has come at the expense of vast swathes of rainforest, which Ferrero tries to counteract with sustainable sourcing and satellite monitoring of forest areas. Now environmentalists and some farmers are grumbling about the impact of the firm re-shoring some production back to Italy.

This is a breakfast staple that, even as it scrambles to keep ever-stricter tabs on supplies, seems to catch a lot of political flak.

Nutella is only one of many reminders that multinational supply chains are at the heart of global struggles like the fight against climate change and the drive to stamp out human-rights abuses. And yet this responsibility still seems to be catching firms by surprise.

The need for companies to look beyond their immediate doorstep and scrutinize every aspect of their production has been a feature of the COP26 summit, where palm-oil producers were among 100 countries pledging to halt and reverse deforestation by 2030. The issue has also been front and center during Covid-19, as lockdowns put essential workers in harm’s way for poor pay. Judging by the struggles to keep supermarket shelves stocked in the current recovery, supply-chain vulnerabilities are still being felt.

Although business has come a long way since the turn of the century, when principles for responsible investment took form, it’s time to raise the bar.

The task first lies with lawmakers. Voluntary principles and norms should give way to legislation that prods firms into lifting the lid on supply chains that are complex, opaque and long. There seems to be a failure to look beyond firms’ so-called direct Tier-1 suppliers, the final link in the chain, according to John Sherman, of the Harvard Kennedy School. That means problems down the line get ignored.

Mandatory due diligence requirements have been proposed in the U.K. and European Union, with the former threatening fines for companies using products linked to illegal deforestation, and the latter looking at a more sweeping approach for punishing environmental and human harms.

But the aim of new legislation should be to keep the benefits of globalization while reducing its harms, rather than simply crafting the biggest hammer with which to hit businesses. Governments should help firms by enforcing their own laws and principles on human rights and the environment. Legislators shouldn’t default to intervening in how companies are run, such as by demanding more on-shoring of production or changing corporate governance rules.

There should also be support available for small-to-medium-sized businesses, which might justifiably balk at the higher relative cost of supply-chain audits. One study of product standards in emerging markets estimated the cost of meeting them at $425,000 per firm. This can be provided indirectly by governments or bigger companies that can afford to spend more to improve suppliers’ standards.

Companies will naturally voice resistance — close scrutiny of supply chains can reveal nasty surprises. More rules will likely lead to higher costs. But at the same time, businesses must also realize that this will be for their benefit in the end. Fairer terms of trade will protect supply, and also boost demand from consumers.

The more trust we can place in how our breakfast got to the table, the more faith consumers will place in the products themselves. Lifting the lid on supply-chain risks should mean more lids get lifted on Nutella’s (now reusable) jars. Sometimes doing good in business is just good business.
Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Emirates Airline Expands Market Share with New $20 Million Campaign
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Trump Asserts Readiness for Further Strikes on Iran Amid Nuclear Tensions
Iran's Parliament Votes to Suspend Cooperation with Nuclear Watchdog
Trump Announces Upcoming US-Iran Meeting Amid Controversial Airstrikes
Trump Moves to Reshape Middle East Following Israel-Iran Conflict
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
Explosions Rock Doha as Iranian Missiles Target Qatar
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
Oman Set to Introduce Personal Income Tax, First in Gulf
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
G7 Leaders Fail to Reach Consensus on Key Global Issues
Mass exodus in Tehran as millions try to flee following Trump’s evacuation order
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Netanyahu Signals Potential Regime Change in Iran
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
Iran Conducts Ballistic Missile Launches Amid Heightened Tensions with Israel
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
Shock Within Iran’s Leadership: Khamenei’s Failed Plan to Launch 1,000 Missiles Against Israel
Trump's Anti-War Stance Tested Amid Israel-Iran Conflict
UK Deploys Jets to Middle East Amid Rising Tensions
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
Wreck of $17 Billion San José Galleon Identified Off Colombia After 300 Years
Iran Launches Extensive Missile Attack on Israel Following Israeli Strikes on Nuclear Sites
Israel Issues Ultimatum to Iran Over Potential Retaliation and Nuclear Facilities
×