Nestlé Creating Shared Value Report 2011 Creating Shared Nutrition Rural Water Environmental Compliance Our people Value at Nestlé development sustainability Nestlé Creating Shared Value Report 2011 Visit the Creating Shared Value site at www.nestle.com/CSV www.nestle.com/CSV Download our summary report Creating Shared Value Summary Report 2011 1 Nestlé Creating Shared Value Report 2011 Creating Shared Nutrition Rural Water Environmental Compliance Our people Value at Nestlé development sustainability Contents Nestlé Creating Shared Value Report 2011 4 Creating Shared Value at Nestlé 96 Rural development Water (continued) 6 Overview 97 Rural development 155 Public policy 10 A message from our Chairman 98 Overview 156 Contributing to the and CEO 100 Context and challenges public debate 12 Our performance 102 Our systems 157 Charting our water future 14 Key performance indicators 104 Rural development impacts of 158 Testing the water cost curve 17 External assessments our factories 159 Collective action 18 Global Reporting Initiative 105 Factory impact survey 160 Managing water issues content index 106 Local manufacturing 161 Engagement and disclosure 41 Assurance statement commitment 162 Developing industry 46 Material issues 107 Farmer programmes standards 48 Materiality matrix 109 Community engagement 163 Direct operations 49 Stakeholder engagement 113 Sourcing overview 164 Water management 50 Stakeholder convenings 114 Tackling child labour 167 Performance 52 CSV Forum 2011 116 Combating deforestation 169 Supply chain 54 Memberships 118 Promoting human rights 170 Overseeing water use 56 Public policy and engagement among our suppliers 171 Supply chain initiatives 58 CSV Advisory Board 119 Milk 174 Community engagement 60 Nestlé Prize in Creating Shared 121 Coffee 175 Engagement initiatives Value 123 Sustainable coffee platforms 178 The future for Nestlé and water 61 About our reporting 124 Nespresso 126 Cocoa 128 Training farmers 179 Environmental sustainability 63 Nutrition 129 Investing in plant research 130 Improving the supply chain 180 Environmental sustainability 64 Nutrition 131 Improving social conditions 181 Overview 65 Overview 133 Animal welfare 184 Context and challenges 67 Context 134 Other commodities 185 Performance 69 Our systems 136 Hazelnuts 187 Governance and systems 71 Our global R&D 138 Vendor approval process 190 Life cycle approach 74 Education and innovation 139 Implementing the Nestlé 192 Building scientific 76 Combining taste and better Supplier Code knowledge nutrition 142 Responsible Sourcing Audit 193 Applying eco-design 78 Nutritional profiling Programme 194 Communicating environmental 80 Nutrition policies 144 Responsible Sourcing information Traceability Programme 81 Understanding nutrition is 195 Water everybody’s business at Nestlé 145 Supplier compliance 196 Climate change 82 Portion Guidance programme 197 Partnering on climate 84 Micronutrient deficiencies: change addressing the global burden 146 Water 199 Mitigating GHG emissions 85 Popularly Positioned Products 201 Moving to Natural 87 Maternal and infant nutrition 147 Water Refrigerants 89 Nutrition for the elderly 148 Overview 203 Climate change adaptation 91 Consumer information 149 Context 204 Improving energy efficiency 93 Digital tools and support for 150 Expert views 205 Expanding renewable consumers 151 The view from South Africa energy use 94 Healthy Kids Programme 153 The business of water 206 Air emissions www.nestle.com/CSV 2 Nestlé Creating Shared Value Report 2011 Creating Shared Nutrition Rural Water Environmental Compliance Our people Value at Nestlé development sustainability Contents Nestlé Creating Shared Value Report 2011 Environmental sustainability 251 Our people (continued) 252 Our people 207 Transport and distribution 253 Overview 208 Key initiatives 256 Context 210 Packaging optimisation 257 Policies and systems 214 Bottled water packaging 258 Our Corporate Business 215 Waste and recovery Principles 218 Biodiversity 261 Training and awareness 219 Our approach 262 Anti-corruption 221 Status of biodiversity 264 Human rights 222 Raw material procurement 266 Identifying and managing 224 Factory level initiatives human rights risks 226 Collaborative work on policy 267 Assessing and addressing and advocacy human rights impacts 268 Assigning organisational responsibilities 230 Compliance 269 Promoting strategic partnerships 270 Raising awareness and 231 Compliance providing training to our 232 Global principles and goals employees 234 UN Global Compact 271 Monitoring our performance 237 CEO Water Mandate 272 Performance and initiatives 238 UN Millennium Development 275 Labour practices Goals (MDGs) 277 Performance and challenges 239 Human rights and 279 Training and learning labour rights 281 Initiatives 241 Responsible advertising and marketing 283 Employee health and wellness 243 Advertising to children 285 Diversity 245 Infant food marketing 288 Safety and health 246 Product safety 289 Performance 248 Consumer privacy 292 Initiatives 249 Governance 295 Employee engagement www.nestle.com/CSV 3 Nestlé Creating Shared Value Report 2011 Creating Shared Nutrition Rural Water Environmental Compliance Our people Value at Nestlé development sustainability Creating Shared Value at Nestlé For a company to be successful in the long term and create value for its shareholders, it must also create value for society. We call this Creating Shared Value (CSV). Creating Shared Value encourages businesses to create economic and social value simultaneously by focusing on the social issues that they are uniquely capable of addressing. In 2006, Nestlé became the first organisation to adopt this approach, but our history of working together with society stems back to our roots. For maximum impact, Nestlé has focused its Creating Shared Value efforts and investments on three areas – nutrition, water and rural development – as these are core to our business activities and vital for our value chain. CSV builds on a strong base of performance in environmental sustainability and compliance, as illustrated in the CSV Pyramid above. In addition, we recognise the vital role of our people and the importance of engaging and collaborating with other organisations. www.nestle.com/CSV 4 Nestlé Creating Shared Value Report 2011 Creating Shared Nutrition Rural Water Environmental Compliance Our people Value at Nestlé development sustainability CSV at Nestlé Overview A message from our Chairman and CEO Our performance Material issues Stakeholder engagement CSV advisory board Downloads Nestlé Prize The Nestlé Prize in Creating Shared Value (CSV) is awarded every other year to encourage and reward innovative projects. Chairman & CEO “We strongly believe that for a company to be successful in the long term, it must create value to its shareholders and, at the same time, to the communities where it operates and to society at large.” www.nestle.com/CSV 5 Nestlé Creating Shared Value Report 2011 Creating Shared Nutrition Rural Water Environmental Compliance Our people Value at Nestlé development sustainability Overview Creating Shared Value (CSV) is a holistic and sustainable approach to business, which addresses the needs of society, while meeting the needs of shareholders. Since its foundation in 1866, Nestlé has always been concerned with its impact on the surrounding environment and communities, adopting the highest Swiss standards in all of its global operations. As a result, our corporate culture has been built on the belief that in order for us to succeed as a business, we need to ensure that the communities and environment around us also prosper. CSV formalises this belief, translating it into a series of concrete and progressive measures and goals, and reporting on these to ensure we continually improve our positive impact as well as highlighting the challenges we face. We have many CSV activities that have been in operation for several years and even decades; as we adapt our approach to fit the needs of the local communities where we operate we can draw upon this wide range of experience as we continue to extend our impact. The Nestlé CSV Pyramid CSV builds on a strong base of performance in environmental sustainability, and compliance with international laws and codes of conduct as well as our own business principles. Together, these make up the core dimensions of our business approach, as illustrated below. Creating Shared Value As the first organisation to adopt CSV, this constructive approach to business is now well established at Nestlé. Spanning our entire global operation, the scale and reach of our activities gives us considerable experience on which to build. For maximum impact, we have focused our CSV efforts and investments on three areas where we believe there is the greatest opportunity to drive value for our shareholders and society at the same time. These are: www.nestle.com/CSV 6 Nestlé Creating Shared Value Report 2011 Creating Shared Nutrition Rural Water Environmental Compliance Our people Value at Nestlé development sustainability Nutrition As the world’s leading nutrition, health and wellness company, we believe that our future lies in helping people to eat a healthier diet. Using our science-based approach, we are helping improve nutrition, addressing deficiency in vitamins and minerals at one end of the spectrum and obesity at the other. Water Water scarcity is becoming a serious reality in many parts of the world. By making the six elements of the UN Global Compact CEO Water Mandate central to our efforts, we are