Nestlé Committed to the Environment
Nestlé S.A was awarded Committed to the Environment status on the 15th June 2010.
Nestlé first published a sustainability report in 1995 and since then the company has worked to integrate environmental concerns into its business.
The Nestlé Creating Shared Value Advisory Board was established in 2009, allowing the company to draw on the knowledge and experience of a number of experts in the fields of nutrition, water and rural development. The board reports directly to the CEO and Chairman. No information on the remuneration of these board members is available.
It has a “best in class” engagement with stakeholders and continues to spread the changes throughout the organization. There is evidence that stakeholder views are fed into the process, and company policy affected as a result. Environmental information is now under the remit of the Creating Shared Value plan, which contains the company’s core corporate responsibility issues.
Through the Creating Shared Value strategy the company clearly hopes to go beyond sustainability, and links its sustainable performance to its financial performance (and return of value to shareholders). This represents a clear strategy, and belief that both environmental and economic issues should be dealt with in unison.
Governance Rating 1 (Excellent)
The company has identified the key environmental factor affecting it as water. This is consistent with others in the industry. Nestlé has a good understanding of its role and impact within its operating environments. Furthermore it has forged strong links with specialist organizations and key opinion leaders. This is evident from the creation of the Creating Shared Value board, and the ongoing expansion of the program.
The Creating Shared Value programme is an excellent example of the company attempting to understand the strategic implications of climate change and the issues concerning sustainability. Through this programme the company has sought to direct its efforts, and has to a large extent been successful However, there is the general impression that some of its efforts are fragmented due to the geographical and industrial spread of the company; there was little information available on how local operating companies are encouraged to adopt central policies.
Strategy Rating 2 (Good)
The company has a better than industry standard carbon/turnover ratio of 13.9. This falls within the projected industry range. In 2010 Nestlé committed to a review of its supply chain, including reviewing its use of Palm oil and sourcing it from renewable sources. For the last 5 years the company has shown a reduction in Green House Gas emissions.
The company reduced carbon emissions from 7.1 mtC to 6.98 mtC. This does not represent a significant drop in emissions. We would like to see the company develop a clear plan for reducing its air emissions further, with stated goals.
The company has reduced its energy consumption, partly through the use of renewal resources. There exists the opportunity of the company to expand its use of renewable energy sources further, and in some cases increase the efficiency. With correct stewardship we would expect to see a greater proportion of the company’s energy needs to be met via these means.
Nestlé has pursued interesting means of energy generation, including using spent grounds from a number of its factories, claiming a reduction of 95%. It has also deployed solar energy at a number of facilities in the US; however these do not as yet contribute a significant proportion of the facilities consumption. With further investment in this technology, and in using solar energy in a number of facilities, we expect energy consumption and associated emissions to decrease, and these facilities to become more sustainable.
The production and distribution of products consumes a relatively large amount of water. Nestlé has correctly identified this as a key issue, and has developed a good understanding of water management and recognizes its impact on the water availability in certain regions. It has developed a good water management ethos, and appears to be engaging well with local stakeholders.
The company also contributes to the Sustainable Agriculture Initiatives, contributing to the development of water management best practice. Water use declined in 2009, from 147 million m3 to 143 million m3.
Areas for concern relate to the use of municipal water plants for treating waste water from factories, and the strain they may place on those facilities, along with quality assurance questions. There is also concern regarding the extraction of groundwater from water sensitive areas.
The company was linked to the use of palm oil from non sustainable sources, and after a public campaign, committed to the use of renewable palm oil. The company should have been proactive in addressing this issue. We would like to see a more extensive policy in place regarding the management of land, and disclosure of spills or contamination incidents.
Performance Rating 2 (Good)
Nestlé has conducted life cycle assessments on a number of its products, and this is now included as standard within the product development process. The company has pursued reduction in packaging for some of its products; however it has not pursued this with the vigor that has been evident from some peers.
We would like to see product lifecycle assessments spread throughout all the products produced by the group; in particular the development of a key performance indicators concerning disposal of products.
Product Rating 3 (Average)
The company has recognized its role in educating consumers regarding the use and disposal of its products. Based on this it has engaged in a number of education programs, for example advising consumers of Nescafe to only use the amount of water required instead of full kettles. The company estimates if all consumers were to adopt this, it would save more energy that is consumed by all factories producing Nescafe. Life cycle assessments are present for some of its products. We would like to see these expanded to a greater number of products.
The company is also promoting lower impact green coffee production methods, such as limiting the use of fertilisers; attempting to reduce the energy consumption during processing and exploring new packaging methods.
In addition to this as part of its efforts to reduce emissions associated with the vehicles fleets operated the company has begun a project. Initially this will target the European Fleet, which is 44% of the company's total operating fleet.
The Ecolaboration™, launched in June 2009, represents an innovative attempt to explore and improve the sustainability of the Nespresso operating brand. Through Ecolaboration™, Nespresso has consolidated all its sustainability efforts in coffee sourcing, capsule recycling and energy-efficient machines into one concerted programme, and aims to source 80% of its coffee from AAA Sustainable Quality™ Program and Rainforest Alliance Certified™ farms, to have in place triple its capacity to recycle used capsules and to reduce the carbon footprint required to produce a cup of Nespresso by 20%.
Project and Initiatives Rating 2 (Very good)
Nestlé is making good progress in understanding its environmental impact.
As with any company of this size there are concerns regarding the establishment of common standards and the conversion of strategy into action.
These concerns are in part allayed by the commitment the company has made to engaging stakeholders and driving an environmentally conscious mode of business from the top down.
The next review is due to be conducted in early 2011.