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The Nestlé Sustainability Review: Good Food, Good Life
The Nestlé Sustainability Review: Good Food, Good Life
The Nestlé Sustainability Review: Good Food, Good Life
46 The Future
Quality Food Products and
Sustainable Development
3
Our Principles,
Values
and Culture
Our values and principles are elaborated in the Nestlé
Corporate Business Principles. These were issued in 1998 and
updated in 2002 in order to integrate all existing business
principles at Nestlé into one single document, now
incorporating our Corporate Governance Principles.
The updated version includes all nine principles of
the UN Secretary-General’s Global Compact, regarding
labour standards, human rights, and the environment.
Nestlé Sustainability Review
5
Our Principles, Values and Culture
6
Auditing Adherence to the Nestlé
Corporate Business Principles
With some 200 local internal auditors in the markets,
and a team of 25 corporate auditors reporting
to the Head of Auditing at our international
headquarters, we have a system in place which
allows us to continuously monitor that the Nestlé
Corporate Business Principles are being
implemented in all the countries where we operate.
The Principles are published on the Nestlé Intranet
site so that all employees can read and understand
the criteria used.
IN WHICH IT OPERATES.
7
Sustainable Economic
Performance and Development
9
Nestlé shareholder Company profile 2001 Nestlé reinvestment – 2001
ownership profile 2001 Sales CHF 84 698 million Reinvestment [62.9%] of net profit
Private investors 44% Net profit CHF 6 681 million Dividend [37.1%] of net profit
Institutional investors 56% Personnel* 229 765
Nestlé factories, 2001
Total number Factories* 468
Industrialised countries 253
of shareholders >250 000 * Excludes Ralston Purina
Emerging countries 215
Shares held
Total 468
in Switzerland 45.2%
was classified 0
10
Nestlé Sustainability Review
Chocolate Pharmaceutical
Sales by product confectionery products 6.1%
& biscuits 13.3%
group 2001 Beverages 28.3%
Prepared dishes
cooking aids
& pet care 25.2% Milk products, nutrition
& ice cream 27.1%
11
Assisting dairy farmers in India
raise the quality, hygiene and value
Over 30 years ago in Moga, in northern of the milk produced by some
India, support started with Nestlé 85 000 farmers in this district, helping
providing loans at favourable rates to in turn to improve people’s health,
enable farmers to build their herds of lifestyles and the region’s economy.
cattle. We also worked with the local
community to build confidence in the Nestlé is also helping with the
milk trade, without compromising construction of facilities for drinking
religious considerations. A professional water and lavatories in village schools
milk agent was established, along in the Moga factory milk district.
with well-equipped milk collection This is a partnership with the schools,
centres. Farmers are advised on good parent associations and village
breeding and feeding practices, and administrations. Another project
on the health of dairy herds. Through involves funding medicines for a local
this assistance Nestlé has helped tuberculosis clinic.
12
13
Sustainable Economic Performance and Development
14
Nestlé milk collection point in China.
Purchase of Agricultural
Raw Materials
Each year, Nestlé buys CHF 8 billion of agricultural Coffee development projects
raw materials in emerging economies – around two-
thirds of Nestlé’s total expenditure for agricultural Coffee is the world’s second-largest traded commodity
raw materials. (after oil) and the world’s most valuable agricultural
commodity. Nestlé works closely with governments, coffee
Consumers throughout the world are increasingly research institutes and other agencies to support growers,
demanding assurance that food and beverage and has established a collection of 250 high-quality coffee
products are made from quality ingredients, produced varieties for plant-improvement programmes. The best
through agricultural best practices. The most varieties for their climate are supplied to farmers,
important ingredients for Nestlé are milk, coffee, encouraging efficient coffee cultivation in new areas,
sugar and cocoa. Together these account for some or improving the yield in existing growing regions.
40% of our total raw material expenditure.
China assistance to growers, and
While the price of coffee on the international market suitable varieties were
is out of Nestlé’s control, Nestlé works extensively As a result of expanding introduced, together with
with coffee farmers to raise the income they receive, promotion and consumption a training centre,
through training and technical assistance to increase of coffee in China, in 1992 demonstration farm, and
the quality of their coffee. This is actually the most Nestlé opened a Nescafé nursery to provide young
effective way for a farmer to increase the prices factory in Dongguan in the coffee plants. The company
he is paid. We are also the world’s largest direct southern Guandong also established a buying
purchaser of coffee from farmers. Province. There were then station to provide the
virtually no locally grown growers with the
A current concern shared by Nestlé is the low price Arabica coffee beans. Some opportunity to sell their
of green coffee on the international market. Nestlé were grown in the crops. As one result,
strongly supports long term stability in commodity southwestern Yunnan in 1999 Nestlé purchased
prices that give an adequate return to the farmer, Province, but on a very some 2000 tonnes of green
as low commodity prices inevitably lead to price small scale. Nestlé coffee beans from
volatility and high prices in the future. Although the Agricultural Services thousands of small coffee
price of coffee beans is a small part of the price provided technical growers in Yunnan Province.
of a jar of Nescafé, price swings penalise both the
farmer and coffee product manufacturers. Philippines
15
Direct coffee-purchasing in Mexico
they receive from Nestlé. This helps
Nestlé installed a direct coffee- maximise the revenue earned by
purchasing scheme in Chiapas State, the small farmer and farmers’
Mexico, over 20 years ago. All direct co-operatives. Improvements in quality
purchases are governed by formal are also rewarded with improvements
contracts set up between Nestlé in price paid.
Mexico and each individual post-harvest
treatment plant. The contract is Nestlé provides on-site training and
different depending on whether the equipment to allow coffee farmers to
plant is run by a farmer co-operative or better evaluate the quality of their crop,
by private owners who buy all or part of including roasting, grinding and
the coffee they treat from small tasting techniques. Nestlé agronomists
farmers. For the private owners, a also supply coffee seeds and
clause states that the price they pay to seedlings as well as advice on
the small farmers must be the same as cultivation techniques.
16
Sustainable
Environmental
Practices
Nestlé transforms perishable goods into safe, high-quality food
products that meet the needs of consumers. In this process
we take into account environmental considerations throughout
the supply chain, from raw materials to the consumer.
Water usage is a key environmental priority. Systematic
management of our environmental performance is an essential
factor in Nestlé’s sustainable development strategy.
Environment Progress
Report 2000
Manufacturing processes For Nestlé, manufacturing
We published in 2001 a comprehensive
Environment Progress Report 2000. A summary of is an extremely important part of the supply chain.
the major points on Nestlé and the Environment are It is here that we have the highest potential
described below in this review. to maximise eco-efficiency – that is, to maximise
the production of goods while, at the same time,
minimising consumption of resources and reducing
waste and emissions.
Integrated Approach Throughout
the Supply Chain There are many ways to improve eco-efficiency such
as through conservation programmes, by improving
Raw materials Agricultural raw materials provide capacity utilisation of factories and through other
the basis of Nestlé’s finished products. They also investments. Nestlé invests an average of
represent a significant investment. It is important that CHF 100 million per year for the protection of the
the environment from which they come is safe environment, amounting to 3% of total capital
and protected in a sustainable manner. Even though expenditure. This figure does not include regular
we do not own or operate farms, we support capital-investment projects that incorporate
and encourage sustainable agricultural practices. environmental components, nor factory environmental
operating costs.
19
Sustainable Environmental Practices
Measurement Beginning in 1997, Nestlé developed — Air acidification potential: Air acidification
a series of environmental performance indicators potential per tonne of product was reduced
(EPIs) on a consolidated basis covering and its eco-efficiency improved by 33%.
manufacturing operations. More information on the Total emissions were reduced by 18%.
methodology and indicator definitions is presented
in the Nestlé Environment Progress Report 2000. Air acidification potential Air acidification potential
As part of the EPI system, both process inputs and kg SO x equivalents per tonne 10 3 tonnes SO x equivalents
product per year
outputs were measured, in line with ISO 14031.
1997 1.74 34.2
The results that follow cover the period 1997-2000
1998 1.34 30.8
during which production volume increased by 28%.
1999 1.21 29.3
2000 1.17 28.2
0 50 100 150 200 250 300 0 1 2 3 4 5 6 1997 77.9 25.1 1.53 0.493
1998 62.7 21.8 1.46 0.508
1999 58.8 19.7 1.43 0.479
2000 51.1 19.3 1.28 0.481
Recovered Disposed
20
Nestlé Sustainability Review
21
Protecting natural mineral water
sources through balanced eco-systems
22
Nestlé waste water treatment plant in Shuangcheng, China.
One of the objectives of The Nestlé Water Policy is to We have put in place many innovative methods
achieve optimal performance in manufacturing activities, to reduce the use of water in manufacturing. Part of
including water management. The following highlights these efforts included finding ways to re-use water
the progress in reducing water consumption and waste wherever possible, thus reducing the reliance on
water generation. fresh water supplies. When water cannot be re-used
we have a long history of providing waste water
— Water consumption: Between 1997 and 2000, total treatment systems.
water consumption per tonne of product
was reduced and water use efficiency improved — Waste water generation: Waste water discharge
by 24%. Even with very good growth in our per tonne of product was reduced and eco-
bottled water business, overall water consumption efficiency (the ability to manufacture more
was reduced by 2%. products with less waste water) improved by 29%.
The overall waste water volume was reduced
Water consumption Water consumption by 9%.
m 3 per tonne product 10 6 m 3 per year
24
Systematic Management
of Environmental Performance
From Switzerland to China temperatures consistently In 1996 the Nestlé Environmental Management System
– pioneering efforts above 30º C. Weather was (NEMS) was created to pull together all in-company
around the world therefore a key factor environmental activities and measures. NEMS has
that had to be addressed since been implemented throughout the company.
In 1932, Switzerland’s first in ensuring the factory’s
biological waste water milk supply and in The starting points for the NEMS continuous
treatment plant was built treating its wastewater. improvement process include the Nestlé
at the Maggi factory Environmental Minimum Technical Requirements
in Kemptthal, near Zurich. To build a wastewater (EMTR). The EMTR, updated in 2001, set internal
Today, Nestlé continues treatment plant that would company environmental performance requirements in
to be a pioneer in waste function under the extreme areas such as energy and water use efficiency, waste
water management. conditions found management, waste water treatment and air
The story of our first at Shuangcheng, Nestlé emissions to name but a few.
factory in China is an engineers decided to locate
example of our on-going the waste water clarifier NEMS has led to:
and innovative efforts in entirely indoors. By heating — A systematic approach that ensures respect
this field. the building, sufficient for company policy and legal requirements;
temperature consistency — The continuous improvement of environmental
Meeting the many could be maintained to performance;
challenges encountered ensure effective year-round — The achievement of compatibility with international
in developing waste water treatment. standards for environmental management systems
the Shuangcheng milk such as ISO 14001 and the Eco-Management and
products factory in 1987 The Shuangcheng factory Audit Scheme (EMAS) of the European Union;
required careful navigation opened its doors in 1990 — An expansion of mutual trust with consumers,
through political, cultural and has successfully government authorities, and business partners
and technical issues. operated since that time. through open communication and an ongoing
Nestlé now operates record of environmental improvements.
Among the most significant factories at 18 different
challenges was the weather. locations in China,
The factory is located in all with state-of-the-art AS WE HAVE GROWN FROM HUMBLE BEGINNINGS INTO
one of the harshest regions waste water treatment
THE WORLD’S LARGEST FOOD COMPANY, WE HAVE
of northeast China. During facilities.
the deep winter, which ATTEMPTED TO TAKE THE FUNDAMENTAL CULTURAL
lasts from the end of The Chinese authorities have
VALUES OF ENVIRONMENTAL PRESERVATION AND
November to early March, recognised Nestlé factories
temperatures can reach as “Advanced Enterprises in CLEANLINESS INTO EVERY COUNTRY WHERE WE OPERATE.
as low as -40º C. In the Environmental Protection“.
summer, the heat Peter Brabeck-Letmathe, CEO, Nestlé S.A.,
is extreme, with Nestlé Environment Progress Report 2000
25
Sustainable Social
Development
27
Safe work environments We emphasise the need
develops Nestlé brands using exclusive access to
the technological expertise necessary for their for safe working environments, and regularly audit
manufacture, be it in vitamin-enriched noodles, milk the safety of our work conditions, which must meet
products with immune-system enhancing ingredients, Nestlé corporate standards. Our companies’ Safety
or Nesquik chocolate drinks. The technology and Health Committees typically meet at least once
to produce Nescafé, for example, is in constant a month to develop and maintain a safe working
evolution. Nestlé brands are therefore vehicles environment. The company’s global policy is detailed
for the transfer of technology and know-how across in the document Nestlé Policy on Health and Safety
our companies and across national boundaries in at Work. As part of this, the following elements are
both developing and developed countries. mandatory on all Nestlé sites.
28
Four largest Nestlé markets: women in middle
and senior management
% women % women % women
in middle in senior of total
management management workforce
29
in the Philippines, our starting hourly wage is the Nestlé European Council for Information and
2 1/2 times the legal minimum. Where our auditors Consultation (NECIC), which meets annually with
find that lower than average wages are being paid, all the European trade union representatives.
or overtime limits are exceeded, corrective actions This consultation process was initiated by Nestlé
are taken. in 1990, four years before Article 13 of the
Council Directive (European Union) 94/45/EC made
We also make sure that working hours and overtime it mandatory.
pay complies with local laws and conditions.
We provide a wide range of additional benefits for
employees, as appropriate for each country.
In Mexico, for example, we support programmes to
help our employees complete their basic and
secondary studies. In Chile, we provide financial
assistance to help workers acquire their own housing.
30
Safeguarding employment Child labour Nestlé is against all forms of
during restructuring Business restructuring is an exploitation of children. The company does not
evolving and sometimes painful process, and provide employment to young people before they
during 2000 restructuring activities took place in all would have completed their compulsory education
20 of our major markets. Nestlé takes a long term, and expects its business partners and industrial
rather than short term approach, and endeavours to suppliers to apply the same standards. In all countries
avoid adverse impacts on employees. Wherever where we operate, the Head of Human Resources has
operations no longer fit our business strategy, we confirmed that our practices comply with our
prefer not to close factories but to sell them as going Principles on human resources and the workplace
concerns, which is usually more complex and time- and child labour. Nestlé abides by national laws in all
consuming than closure, but gives a more positive countries where it operates, and Nestlé complies with
final result. In the United States, for example, Nestlé the United Nations Convention on the Rights of the
divested its roast and ground coffee business without Child as well as ILO Conventions 138 and 182.
any loss of employment.
Even though we do not own agricultural land, and
When we must close factories, we do all we can raw materials are primarily bought from processors
for our employees. We offer them the opportunity or traders, we are currently working with the UK,
to transfer, we help them find new jobs, and US and Côte d’Ivoire governments, NGOs, process
we provide severance pay and early-retirement traders and other chocolate manufacturers to
packages. In Canada, for example, when our assess and eliminate forced child labour in cocoa
Alexandria plant was closed, an action centre was set farming where it may exist.
up off-site and equipped with computers, telephones
and fax machines, and employees were provided Nestlé offers its co-operation with the relevant United
with specialist counselling and training. In Mexico, Nations agencies, governments and the business
we closed our Durango factory during 2000 to community in their efforts to deal with the problem
concentrate production at our Lagos de Moreno of child labour. These efforts include the
factory. We offered as many people as possible encouragement of universal primary education and all
the option to transfer, and severance terms aspects of development.
to others that were significantly better than the
legal requirements.
31
Sustainable Social Development
32
Relationships with Consumers
and Society
Quality, safety and nutritional value Our business Nestlé’s basic consumer value proposition is that
success is totally dependent on the extent to which people can trust the quality and safety of the
we fulfil our consumer’s needs and requirements. food or drink when they open the wrapper or
The billions of people who buy our products package. We have one unbending standard of food
daily are free to choose our competitors’ products safety, and the Nestlé Seal of Guarantee cannot
over ours, and quality is our basic approach to go on the package of food produced until newly built
the consumer. or acquired factories meet a standardised, detailed
and very rigorous set of requirements. These
are laid out in extensive, formalised procedures
and standards that must be verified, and
they typically exceed the legal requirements,
as well as the prevailing practices, in the countries
where we operate.
33
Developing foods and drinks
develop and adapt Clinutren by
for senior citizens
working side-by-side with a panel of
As people grow older, appetite tasters and with chefs and residents of
generally diminishes and taste and retirement homes.
mouth-feel requirements change.
Nestlé has therefore developed special, A team of scientists and sensorial
dedicated food and drink products to experts from the Nestlé Research
cater to these needs. Centre analyse both the nutritional
balance of these products and the
Clinutren, for example, is a line of effects on body systems.
products that includes milk-based
flavoured drinks, soups, and prepared Nestlé also develops and manufactures
meals that are nutritiously balanced to liquid-based foods for bed-ridden and
suit the needs of senior citizens. We terminally ill patients.
34
The Nestlé Research Centre located near Lausanne, Switzerland.
36
Listening to consumers Nestlé lists a telephone
number (mostly toll-free) as well as local addresses
on each product package, giving phone access to
Nestlé Consumer Services in 80 markets. Their role is
to deal with consumer requests, to answer questions
and to engage in dialogue.
37
Responding to consumer desires –
However, when consumers voiced
a Canadian case study
concern about the planned change,
In April 2001, a study carried out by Nestlé Canada listened to their
Nestlé Canada resulted in a decision, views and reversed the decision.
for economic reasons, that its Nestlé One of the thousands of letters sent
Smarties, Aero, Kit Kat, Coffee Crisp to the company stated: “As the parents
and Mirage products would no longer of a six-year old girl with a peanut
be manufactured in a peanut/nut-free allergy, we cannot begin to tell you
environment. The measure was what this means to us and our
to be effective as from January 2002, daughter, Kristen. You have truly set a
and Nestlé initiated an allergy alert standard that will be difficult for any of
campaign targeted at consumers your competitors to match.“
of these products to warn them of
the change.
38
Our Principles, Values and Culture
Advertising to consumers
and children Nestlé makes a determined effort
to advertise in a responsible way, not misleading
consumers regarding the benefits of a product,
and not encouraging dangerous or irresponsible
consumption. We also monitor to ensure that
our advertising does not contain objectionable
content and does not depict discriminating
or offensive attitudes to religious, political, ethnic,
cultural or social groups. Equally important,
we avoid advertising on programmes that include
such content.
40
Marketing of breast-milk substitutes Infant formula marketing audits In addition to the
In 1981, the World Health Organization (WHO) internal control measures in each country, Nestlé
adopted the International Code of Marketing of regularly audits its companies around the world on a
Breast-milk Substitutes as a recommendation to all range of business practices and procedures. Acting
its member governments. independently from line management, our
international auditors verify adherence to the
In all countries, Nestlé ensures that its marketing International Code by each company in all developing
conforms to each country’s implementation of the countries where we have operations. All negative
International Code as applied in legislation, findings are brought to the personal attention of the
regulations or other measures. In addition, in all CEO of Nestlé S.A. In 2000, four cases resulted in
developing countries (over 150), whether or not disciplinary measures being taken against the
governments have taken action to implement the managers who violated our instructions. These
International Code, Nestlé voluntarily applies it in standard measures include freezing of salary,
its entirety. withholding of bonuses, change of position, and
termination. In addition, Nestlé is instituting a new
ombudsman system that allows any employee to
draw attention to potential violations of the
International Code by the company, outside the chain
of command of line management.
41
Infant formula marketing audit
in Argentina
42
43
Our Principles, Values and Culture
Programa Nutrir – Brazil. Kid’s Club – United Kingdom. Zakoura Foundation – Morocco.
Involvement in Communities
An important part of the way we do business is to be — Nestlé Brazil has created a long term Programa
fully integrated into the communities in which we Nutrir programme in which Nestlé employee
operate, on a long term basis. volunteers use games and activities to teach good
nutrition to marginalised families. The goal is to
We have published a separate report Nestlé in the reach 500 000 children;
Community that demonstrates our commitment
to the health and well-being of these communities. — Nestlé Russia has developed a programme,
recommended by the Russian Ministry
The nature of our commitment varies according of Education and the Russian Institute of Nutrition
to the needs of the country, but focuses on three for inclusion in the primary school curriculum,
areas: Nutrition, Health, and Socio-Economic to teach young children the basics of good
Development. Nestlé in the Community gives brief nutrition. Currently 100 000 children are enrolled;
descriptions of a large number of projects in
65 countries. Examples include: — Nestlé UK has been a principal sponsor of Kids’
Clubs network since 1996. This national charity
provides safe, affordable “out-of-school” care
— South Africa: a non-governmental organisation for children while their parents are at work;
called EcoLink has been supported by Nestlé from
its inception. Organisational development, — Nestlé USA supports Reading is Fundamental,
communications, and funding, have helped the USA’s largest non-profit organisation
to enable 150 000 people in local communities committed to literacy, and ALCON Laboratories
to establish sources of clean drinking water have provided free eye-surgery supplies for over
and improve their diet with vegetable gardens; 37 years in the Medical Mission programme
around the world.
— Nestlé Australia supports a wide range of
community activities through its Nestlé Community
Fund, including the Australian Theatre for
Young People and the New Children’s Hospital
in Sydney;
44
EcoLink – South Africa. EcoLink – South Africa. Polio drops – India.
45
The Future
47
Consultation with external parties As indicated We do not, of course, always agree with what is
previously in this report, Nestlé has been an early being said by dialogue partners, and do not
leader in holding consultations with labour abrogate business decision-making to others. But we
organisations, and continues these consultations. are interested in communicating with
We have also taken part in recent UN-sponsored external parties on topics of concern to hear
consultations on various topics. different points of view and to search for practical
solutions to problems where they may exist.
Currently, Nestlé is participating in a process to Nestlé intends to increase focus on such
examine potential problems of forced child labour external communication, while at the same time
on cocoa farms in West Africa. This is being done managing our own business and reporting on
on an industry-wide basis, in consultation with adherence to the Principles that we have so very
governments, labour organisations, and NGOs, consciously established.
as well as other members of the cocoa and chocolate
industry. We strictly monitor that no child labour
is used in Nestlé facilities, reject industrial suppliers
who do so. We hope that the constructive dialogue
that has been started on this issue will continue, and
that these discussions will result in pragmatic
approaches to doing what is best for workers in
Western Africa. If successful, this effort may lead
to collaborative processes that can be used with
other issues.
48
Good Food, Good Life
Other publications and
how to contact Nestlé
The following publications are also Data source
available from Nestlé S.A. in Vevey, The main quantitative and
Switzerland. Should you wish to receive qualitative information
a copy of any of these or have any in the report is based on
questions or comments arising from answers to questionnaires
The Nestlé Sustainability Review please that were sent to the heads
write to us at the following address: of our 20 most important
markets. These represent
Nestlé S.A. over 80% of total sales for
Public Affairs the Nestlé Group of
Avenue Nestlé 55 Companies. Unless stated
CH – 1800 Vevey otherwise, figures given
Switzerland relate to the year 2000.
www.nestle.com
Additional information was
based on interviews with
— Nestlé Management Report to Shareholders heads of various
— Nestlé Half-yearly Report departments at the Nestlé
— Nestlé Corporate Business Principles headquarters in Human
— The Basic Nestlé Management and Leadership Principles Resources, Environment,
— Environment – Progress Report 2000 Public Affairs, Quality
— The Nestlé Water Policy Management, Agricultural
— Nestlé in the Community Services, Consumer
— Nestlé Research and Development at the dawn Services, and on
of the 21st Century consolidated information
— Nestlé in China, Nestlé Technical Assistance in Agriculture where available.
and the Development of Coffee Growing
— Nestlé in India 1962-1992
— Nestlé – Hundred and Twenty Five Years