No breaks for Nestlé in its relentless pursuit of global supply chain sustainability
If you're one of the thousands of people across the globe heeding Nestlé's advice to 'have a break, have a KitKat' this lunchtime, it might be worth taking an additional moment to consider exactly how the world's largest food company is working to ensure its snacks are sustainably and ethically produced.
There’s a hidden irony behind that infamous slogan of Nestlé’s crown confectionary product. The KitKat strapline has been a loyal servant for the Swiss firm for the past 75 years; transcending from a corporate selling point into a social quip aimed in jest at those taking life just a bit too seriously. But when it comes to CSR, Nestlé itself is refusing to pause for a break in what has become a relentless pursuit of becoming a globally-recognised sustainability leader.
While sustainability and CSR reports are most often used to highlight notable carbon cuts, increased recycling efforts and water usage reductions, these environmental aspects form just a small slice of the cocoa-dusted cake.
In the Group’s annual Nestlé in Society report, released earlier this week, Nestlé indicates a desire to take ‘sustainable business’ to the next level. Yes, significant carbon reductions are mentioned – an impressive 42% reduction against a 2005 baseline – and yes, water consumption features heavily – a healthy 41% reduction per tonne of product produced off the same baseline – but it is the societal aspects of the report that stand out the most. Nestlé isn’t just trying to transform the way it operates; it’s trying to transform its entire supply chain, and the livelihoods of its consumers – which, when you think about it, is the majority of the world’s population.
Eighty-four international ‘Healthy Living’ programmes were launched by Nestlé last year, all with the aim of promoting a better diet and exercise among children. Meanwhile, the report notes that more than 6,000 job opportunities were handed to young professionals struggling to find work in 2015, and the company worked with the International Federation of the Red Cross and Red Crescent Societies to provide water sanitation to areas that need it most.
Second to none
All of this might just sound like the Rowntree’s Fruit Pastilles, Rolo and Milkybar owner dancing to the tune of good PR. But for Nestlé’s global head of public affairs Janet Voûte, the firm simply isn’t content with coming second when it comes to sustainability and CSR leadership – an ethos underpinned by the high level of ambition in its latest report.
“We’ve put sustainability reporting in place so that it creates an internal cycle that encourages our departments to compete for external recognition,” Voûte says at edie’s Sustainability Reporting Conference last month. “All of our departments want to be at the top of their respected fields – we don’t want to be second on the Dow Jones Index or in the Oxfam rankings. This is our internal motivation.”
But while positive recognition is one driving factor, Voûte is also quick to highlight the ‘selflessness’ of Nestlé’s CSR approach. “Implementing and reporting on sustainability is our way of unleashing creativity to make a better world,” she adds. “It’s a new way to deliver impact and we use our reports to tell our story to the world. Sustainability isn’t an afterthought anymore – it’s the way we do business.”
The Nestlé in Society report is certainly a testament to that ‘way we do business’ mindset. Brimming with 39 specific CSR commitments, the 45-page document it’s as much a behemoth of sustainability pledges as it is a beacon of business best practice; covering in-house reductions, supply chain ethics, the health and wellness of its customers, and everything in-between.
Nestled in among the Group’s new consumer health incentives and zero-waste-to-landfill updates lies further proof that new CSR initiatives being introduced by Nestlé are benefitting thousands of individuals – both upstream and downstream in its supply chain.
Nestlé currently employs 760,000 farmers – more than half of which have been, or are in the process of being, trained through capacity-building programmes. These programmes help eradicate child labour, improve working conditions and support sustainable developments that farmers are introducing.
As Nestlé UK’s responsible sourcing manager Robin Sundaram explains: “We’ve been around for 150 years and the only way we’ll be around for another 150 years is to make sure our supply chains are as sustainable as possible.”
On a global level, Nestlé is taking great strides to improve the transparency of its supply chain, ensuring that any ethical misdemeanours are subsequently dealt with. But look a little closer to home and the efforts the company is putting into its supply chains become even more apparent. The company is the first major UK confectionary company in the hospitality and foodservice space to source 100%-certified ‘sustainable’ cocoa for its chocolate and biscuits.
Moreover, the firm is also driving a new sustainability movement within the dairy industry – with a specific focus on supporting the development of young farmers. Off of the back of similar efforts made by Starbucks and Mondelez International’s sustainable-sourcing programme, Nestlé has linked up with dairy producer First Milk to help develop ‘the next generation of sustainable dairy leaders’.
“No one else has put as much effort and detail into a movement like this,” Sundaram claims. “The concept is part of our overall sustainability programme. We’ve been buying milk from First Milk for about 15 years, but we didn’t know who the farmers were. In order for them to produce better-quality milk and in order for us to create a more resilient and sustainable sourcing process, we decided we needed to establish a stronger relationship with our farmers to really understand them and get them to understand us.”
Life as a dairy farmer can be a volatile experience. In the past three years alone, there have been three significant peaks and falls in the value and demand for milk as a global commodity. A failure to compensate and budget for these economic shifts could potentially wipe-out entire suppliers – something Nestlé is clearly keen to avoid, which is where the First Milk partnership comes in.
On the farm
The Next Generation Dairy Leaders Programme is a two-year scheme offering young farmers (there are currently 106 signed onto the initiative) a ‘give-and-take’ approach to introducing sustainable practices. “Once we’ve got our new farmers, we need to help them become more business-smart and understand the end-to-end supply chains,” Sundaram explains.
“We need farmers to develop a broader mind-set to acknowledge global trends and wider supply chains of their product. Once they’ve gained this understanding, there’s nothing to stop them becoming sustainability leaders in this field.”
Nestlé and First Milk’s Next Generation programme is split into seven training sessions. The first two – which have already been completed – sees farmers introduced to the concepts of benchmarking in order to highlight the levels of quality Nestlé expects in its supply chain. Sundaram believes that, if these benchmarks can be met, the farmers will be able to realise substantial financial benefits.
The remaining five sessions cover a range of topics including financial management, media training, best-practice collaborations and even ‘dairy politics’. By the time that final session comes around, Nestlé hopes to have accreditation of the training programme in place from the Agriculture and Horticulture Development Board (AHDB).
If this accreditation can be put in place, Nestlé envisions the programme being extended to ‘second-years’ who are keen to learn from the example set by the pilot project. Sandaram also aims to have the UK plan spread out across the globe to create a ‘tribe of leaders’ covering the cocoa, coffee and dairy sectors.
To strengthen this bridge between business and supplier, Nestlé is also now sending monthly updates to its farmers, highlighting how the organisation is performing, and arranging factory visits throughout the year. The end-goal is to create a symbiotic relationship – if Nestlé and its farmers can both offer potential sustainability advantages for each other, the whole process becomes smoother and, crucially, more resilient.
“It’s a comprehensive and robust process that we’ve deliberately put in place, and it’s a massive task that still has a long way to travel, but it’s our way of working,” adds Sandaram. “It costs more to do it, but from the top-down, we realise that it is the right thing to do and it is important that we do it.”
Nestlé’s collaborative approach to supply chain sustainability doesn’t end there. The Group is also working with Forest Trust, the National Trust, the National Farmers Union, the Fair Labour Association and the World Animal Protection to implement better practices across various supply chains involving a spread of commodities. More than 10,000 independent supplier audits have been carried out over the last five years, with more on the horizon.
This thorough approach is beginning to pay off for Nestlé when it comes to palm oil sourcing. Previously targeted by Greenpeace for a lack of transparent reporting in its palm oil supply chain, the company has evidentally performed something of a U-turn and was last week highlighted as a leading company by Greenpeace in this area.
The next big step for Nestlé, Sandaram says, is extend this collaborative mindset to a broader spread of suppliers, NGOs and businesses to further boost the productivity of its CSR programmes. As a case in point, Sandaram is now communicating with the relevant departments at both Sainsbury’s and Tesco to push the sustainable supply chain agenda here in the UK.
“We have to collaborate with a whole host of people – that’s the ambition,” Sandaram concludes. “We have the right mind-set in that we want to tackle it and we are working to introduce to right process to actually tackle it.”
Disruptive partnerships: can collaboration change the world?
It is clear that while individual businesses can make great strides in their own operations, transformational change at scale will require broader collaborative partnerships. At edie Live in May, Nestlé’s resource efficiency lead will be speaking on the Resource Efficiency stage; discussing the effective partnerships the Group has forged to drive positive change.
From specific strategies and solutions to analysis of the broader issues at play, the Resource Efficiency theatre is a must-attend for any business, large or small, seeking to reduce their consumption, minimise their waste outputs and mitigate risk in their supply chains.
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