Sustainability Series: Nestlé
February 22, 2009
Founded in 1867 by baby formula inventor Henri Nestlé, Nestlé is now a multi-billion dollar operation that employs more than 275,000 people across the globe. Holding the number two spot for 2008 in the Food Sector category of the Dow Jones Sustainability Index, Nestlé is a world leader in nutrition, health and wellness. Their popular brands include Nescafé, Taster’s Choice, Coffee-Mate, Lean Cuisine, Nestlé Crunch, Powerbar, Good Start, Carnation and Arrowhead.
We talked to Nina Backes, Corporate Spokeswoman for Nestlé, about the steps a company can take to create shared value between shareholders and society.
How does your business define sustainability?
At Nestlé, we have adopted the concept of Creating Shared Value (CSV), which is a fundamental part of our business strategy. In order to make long-term investments that both benefit the public and benefit our shareholders, we need to create value for the people in the countries where we are present. This includes the farmers who supply us, the employees who work for us, our consumers and finally, the communities where we operate.
How are you incorporating sustainable practices into your business?
The Creating Shared Value model is integral to our business strategy and applies at every stage of the value chain.
On the supply side, we are helping farmers improve earnings – and assuring our supply of quality raw materials – by giving farmers free technical assistance and making available micro credit loans.
In the realm of manufacturing and the environment, over the last 10 years, we have grown our production by 76%. At the same time, we’ve reduced our energy consumption by 3% and our water withdrawals by 28%. Over a shorter time period, we’ve reduced packaging sources by 326,000 tons.
We’ve also improved workers' earning capacity and created a skilled workforce.
In 2007 alone, 65,647 employees in developing countries received formal classroom training. Forty-two percent of local Management Committee members in developing countries are nationals of that country.
Finally, at the consumer end of the chain, we are bringing more nutritious products to ever-greater numbers of consumers. More than 6,000 products were renovated for nutrition or health considerations in 2007.
What are your short term and long term goals?
Our goal for both is to create value for both Nestlé shareholders and the societies in which we operate. We regard this as a long term commitment that doesn't change. If you look at our engagement with farmers, especially in milk, cocoa and coffee, you can see a commitment that lasts decades, irrespective of political, social or environmental conditions. More specifically, we’ll be focusing on our core areas of water, nutrition and rural development. For example, as water management in our direct operations is a key deliverable for us, we are setting ourselves an annual water use reduction target of 3%.
Where do you think you'll have the biggest impact?
We focus our CSV efforts on three areas: nutrition, water and rural development. Nutritional value has been a focus since 1867, when Henri Nestlé invented the first milk and cereal product that saved the lives of infants around the world. We focus on water because it is key to ensuring both global food security and the future of our business. And we focus on rural development, working directly with farmers to increase productivity, improve our access to quality raw materials and stimulate economic development in surrounding regions.
How do you measure your progress?
Our current Creating Shared Value report contains 64 Key Performance Indicators (KPI), with two more added online since the report was published. In consultation with external expert stakeholders, we have determined that these KPIs are most material to our business and we are tracking these on an ongoing basis.
How do retailers factor into your efforts?
Retailers are important partners for any food company's sustainability efforts. We are engaged with them individually in many parts of the world on specific schemes that cover various aspects of sustainability, from sourcing to packaging. McDonald’s, for example, was keen for us to supply them with our Partners' Blend Fair Trade Certified coffee in Spain.
More generally, we favor multi-stakeholder approaches and work together with other food chain stakeholders to develop common practices. The EU’s Food Chain Sustainable Consumption Roundtable is one joint effort established by the food industry that gathers suppliers, manufacturers, retailers, consumers, EU and national policy makers, researchers and NGOs to work towards uniform environmental product assessment methodologies that are scientifically reliable and comparable across the EU.
Why are sustainable business practices important to the food industry?
Any industry that wants to meet the expectations of its shareholders must deliver growth, and the food industry is no exception. The world's population is not only growing, but also becoming increasingly urbanized. In 2008, for the first time in history, more people are living in cities than in rural areas. It follows that we have to become much smarter in the way we use our resources to feed people. This is especially true when one considers that the supply of agricultural land and water is not increasing.
Why are sustainable business practices important to the consumer?
We are noticing that in some parts of the world, consumers are becoming more and more interested in whether the products they buy have been manufactured by responsibly and sustainably acting producers. At Nestlé, long-term sustainable business practices have always been at the center of our activities and explain the company's success over the last 142 years.
In upcoming issues, we will feature interviews with food companies that are making strides in their sustainability efforts. If you are interested in telling us more about what your company is doing to get involved please contact Allison Bloom email@example.com.