Critics of Nestlés environmental policies may need to back track after studying the companys achievements under its Creating Shared Value strategy.
Nestlé, whose large portfolio of brands familiar to UK consumers includes Kit-Kat (now Fairtrade in its four-finger format), Aero bars, Nescafe coffee and Shredded Wheat, like many other multinationals has been on the end of some harsh criticism from campaigning bodies critical of the companys impact on third world countries.
However, those critics may have to think again before voicing their concerns about Nestlé in particular. Nestlé has implemented a worldwide CSR strategy it calls Creating Shared Value that is guided by the companys Corporate Business Principles.
The idea behind the strategy is to go beyond compliance and sustainability and create new and greater value for its employees, shareholders and, ultimately, society as a whole. It has identified three key areas that are core to the multinationals business strategy and operations: Water: because the ongoing quality and availability of it is critical to life, to the production of food and to the companys operations.
Rural development: because the overall wellbeing of farmers, rural communities, workers, small businesses and suppliers is intrinsic to Nestlés ability to continue to do business in the future.
Nutrition: because food and nutrition are the basis of health and of Nestlés business.
Nestlé, which is in the top 50 companies in the world, employs 280,000 people and has 449 factories globally almost half of them in developing countries. The company relies on complex supply chains, involving large numbers of small-scale farmers and it has made a commitment
to help the 540,000 farmers who supply the company directly to increase their productivity, protect the environment and enjoy sustainable livelihoods. To attain this goal 950 agronomists and more than 15,000 extension workers and contractors offer support and training for farmers, governments and NGO partners throughout the world. In 2009, 165,553 farmers worldwide were trained through Nestlé programmes.
In March this year, Nestlé faced a campaign by Greenpeace over its relationship with Indonesian palm oil supplier, Sinar Mas, which led to the company being attacked on Facebook and YouTube. In response, Nestlé acted fast and suspended all purchases from Sinar Mas and made arrangements with several suppliers, including Cargill, to suspend purchasing from Sinar Mas.
Although Nestlé only buys 0.7 per cent of world palm oil production, the company is committed to contributing to effective and sustainable solutions. Nestlé originally pledged in 2009 to achieve sustainable palm oil by 2015, and according to the web site, it is making progress on certified palm oil rapidly with 18 per cent of purchases from sustainable sources in 2010. This is expected to rise to 50 per cent by the end of 2011.
Around two-thirds of Nestlés worldwide expenditure is on raw materials and nearly 40 per cent of that goes towards three main ingredients milk, coffee and cocoa. The company has set up two specific plans to ensure the latter commodities are produced, harvested, manufactured and distributed in a sustainable manner. The initiatives are The Cocoa Plan and the Beyond The Cup The Nescafe Plan which engage with farmers to ensure their community is sustainable, help them with crops, and take a holistic approach towards farming. Nestlé is also working on the palm oil issues as well as in the UK sugar, grains and dairy powders.
The Cocoa Plan, launched in October 2009, was developed by Nestlé to address the many challenges facing the cocoa industry. These include poor living and working conditions for cocoa farmers and their families, poor quality cocoa harvests and declining cocoa production. Field schools, farmer education and improved trees will help farmers increase yields and quality and buying from co-ops helps farmers work collectively to secure a better price for their cocoa and share best practise. Social projects such as building schools and providing water wells also improves the basic quality of life for these communities.
Over the next 10 years Nestlé will invest £65 million in The Cocoa Plan to help improve the livelihoods of farmers and their communities, as well as enhance the sustainability and quality of cocoa grown for generations to come. This includes the distribution of 12 million high-yield, disease-resistant cocoa plantlets by 2020 and builds on the £35 million invested in cocoa sustainability initiatives over the last 15 years.
In August 2010 Nestlé launched a similar initiative, the Nescafé Plan, consolidating the companys commitments on coffee farming, production and consumption. The Nescafé Plan contains a set of objectives which will help Nestlé further optimize its coffee supply chain. In addition to the £130 million invested over the past 10 years, Nestlé will invest £325 million in coffee projects by 2020.
Over the next five years, Nestlé will double the amount of Nescafé coffee bought directly from farmers and their associations, eventually purchasing 180,000 tonnes of coffee from around 170,000 farmers every year. All directly purchased green coffee will meet the internationally-recognized 4C sustainability standards by 2015. In addition, 90,000 tonnes of Nescafé coffee will be sourced according to the Rainforest Alliance
and Sustainable Agriculture Network (SAN) principles by 2020. Nestlé is also expanding its technical assistance programmes, in which its agronomists provide advice on farming and post- harvest practices, to over 10,000 coffee farmers a year.
And the Nestlé Creating Shared Value strategy doesnt end in the fields of developing countries. Across sites in the UK and Ireland, Nestlé is working hard to improve energy efficiency and reduce emissions. To comply with the UK Climate Change Levy Agreements and the EU Emissions Trading Scheme, Nestlé promotes energy-efficient practices by setting annual targets for each of its sites and implementing action plans to achieve them. The UK goal is zero waste to landfill and full recovery of unavoidable by-products. In 2009, the company set a target for all Nestlé UK factories of zero total waste sent to landfill by 2015 and those efforts have achieved a reduction of 57 per cent. Nestlés Girvan factory is the first to be verified by Bureau Veritas as sending no waste to landfill as of September 2010.
Nestlés cereal business (Cereal Partners UK) is investing £15.5 million in two energy-saving projects that will cut CO2 emissions by a total of 18,000 tonnes of CO2 per year, the equivalent of taking 7,200 cars off the road annually. In 2010, combined heat and power plants are being installed at factories in Staverton and Bromborough, generating electricity from a natural-gas-powered turbine and using the waste heat to generate steam for factory use.
Nestlé also works with trade associations, other food industry producers, customers and suppliers on energy-saving initiatives and awareness campaigns. In 2009/10 in the UK, Nestlé chaired a group established by the Environment Agency to develop a toolkit of Environmental Management Systems for the food industry (www.environment- agency.gov.uk), and encourages its suppliers to make use of it.