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Peter Brabeck-Letmathe

ceo, nestle s.a.

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Peter Brabeck-Letmathe addresses the Boston College Chief Executives' Club in the Wharf Room at the Boston Harbor Hotel.

“Nestle chief rejects the need to ‘give back’ to communities”

Companies shouldn't feel obligated to "give back" to the community, because they haven't taken anything away, the Austrian-born chief of the world's largest food company told local executives yesterday.

In a stunning broadside to corporate citizenship as Bostonians have come to know it, Peter Brabeck-Letmathe- head of Nestle S.A.- said companies should only pursue charitable endeavors with an underlying intention of making money for investors.

"I think there is good reason for corporate philanthropy," Brabeck-Letmathe said, speaking to Boston College's Chief Executives' Club. "But as managers, we need to be very careful, because it is not our money we're handing out, but the money of our shareholders."

The remarks hit hard in Boston, where the loss of major corporate citizens such as Gillette Co., John Hancock and FleetBoston Financial are stirring fears of a leadership vacuum.

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Boston College Carroll School of Management Dean, Andy Boynton, and Brabeck-Letmathe greet each other at the luncheon.

"The real corporate statesmen of today would tell you that business involvement (in the community), if it's done right, has important payoffs," said Paul Grogan, president of the Boston Foundation.

But Brabeck-Letmathe said a company's obligation to the community is simply to create jobs and products.

"What the hell have we taken away from society by being a successful company that employs people?" he said.

Nestle employs about 250,000 people directly worldwide and a total of 1 million indirectly. It produces a wide range of products, including candy, baby formula, coffee and bottled water.

Paul Guzzi, president of the Greater Boston Chamber of Commerce, said community involvement shouldn't be seen as mutually exclusive to looking out for shareholders.

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Orit Gadiesh (Chairman, Bain and Company), Robert Kraft (Owner, New England Patriots), The Honorable Thomas Menino (Mayor, City of Boston), Anne Finucane (President, Bank of America Northeast), Richard Gilman (Publisher, Boston Globe), William Leahy, S.J. (President, Boston College), Gregory Summe (Chairman, PerkinElmer), Kerry Healey (Lt. Governor, Commonwealth of Massachusetts), Charles Haldeman (President, Putnam Investments), John Kaneb(Chairman, H.P. Hood), and Lawrence Fish (Chairman, Citizens Financial Group) attend the event on March 8th.

"It's important for a company to create a community that people want to be in," Guzzi said. "Philanthropy and engagement can be strategic and related to shareholder value."

Article by Jennifer Heldt Powell
Boston Herald
Wednesday, March 9, 2005