Accelerate, Transform, Regenerate: Nestlé’s Net Roadmap February 2021

1 Nestlé’s Net Zero Roadmap 3 We commit to net zero by 2050 28 Using to manufacture our products contents 4 The Nestlé Net Zero Roadmap 32 Driving toward cleaner logistics 5 Measuring our footprint 37 Removing carbon from the atmosphere 6 Our total emissions by Scope 40 Moving toward carbon-neutral brands 7 Emissions covered by our pledge 44 Using our voice to galvanize action 8 Our key actions at a glance 48 Glossary 9 Sourcing our ingredients sustainably – Dairy and 14 Sourcing our ingredients sustainably – Soil and forests 19 Transforming our product portfolio 23 Evolving our packaging

2 Nestlé’s Net Zero Roadmap change is one of society’s greatest People will be at the heart of our climate actions. challenges. It is also one of the greatest risks We strive to ensure that our initiatives promote WE COMMIT to the future of our business. a just transition toward a regenerative food system for all. TO Net Solving it requires all of us to act with great urgency. As the world’s biggest food and beverage The work behind all of this is detailed, rigorous BY 2050 company, we have the size, scale and reach to and intense. It requires us to examine not only influence others and to inspire collective action. our operations but also each of our products to see how we can make them better for the planet. Now we are going beyond our commitments: And as most of our emissions occur outside we are specifying our plan to halve Nestlé’s of our own four walls, we must go on the ground (GHG) emissions by 2030 to collaborate with our suppliers and help them and to achieve net zero by 2050 – even as improve their production processes. our business continues to grow. We are making our footprint transparent and will make our At the other end of the value chain, we look progress clear. forward to working with our customers to shape their offering and with our consumers to encourage more sustainable purchasing and consumption. We need action from governments and regulators to create clear and fair rules for companies to make progress. But Nestlé must first lead by example. It is only by taking tangible actions that we can convince others to do the same. And it is only together that we can make a positive difference.

3 Nestlé’s Net Zero Roadmap Nestlé’s Net Roadmap Our path to Moving faster Scaling up Delivering our promise regeneration We’re excited to hit the soil running. We’re accelerating our work in manufacturing, Further down the greener path, we will Advanced agricultural techniques will deliver packaging and carbon-neutral brands. We’re also investing CHF 1.2 billion to help invest in new technologies and fundamental a regenerative food system at scale, supported by for future spark regenerative agriculture across our supply chain, as part of a total investment changes to our products and businesses zero emission logistics and company operations. of CHF 3.2 billion by 2025. around the globe. We will balance any remaining emissions through generations high-quality natural climate solutions that benefit people and the planet. Solving the problem means Our milestones identifying the problem. We found 100% Switch our 100% certified 100% Use more Source 50% of Nestlé emitted 92 million tonnes of deforestation global car sustainable renewable renewable key ingredients in 2018*. free for primary fleet to lower palm oil by in thermal through Now we know the extent, we know supply chain emission options 2023 all our sites energy in our regenerative the road ahead. by 2022 by 2022 by 2025 manufacturing agricultural Source *Total GHG emissions were 113 million methods by 20% of key tonnes (CO2 equivalent) in 2018, 100% of our 100% certified Cut virgin Plant 200 2030 92 of which are in scope of our UN packaging sustainable ingredients plastic in our million trees 1.5°C pledge. recyclable or cocoa and through packaging by by 2030 reusable by coffee by 2025 regenerative a third by 2025 Companies and their emissions 2025 agricultural grow over time. That’s why we’re Nestlé Waters methods by promising to be net zero based on Plant 20 million becomes 2025 our 2018 baseline, no matter how trees a year carbon neutral much our company grows. by 2025 Path to zero emissions by 2050 Business as usual By 2050, we will reach By 2025, we will reduce our Emissions by operation By 2030, we emissions by 20% (million tonnes of CO2e, 2018) will reduce our 65.6 Sourcing our ingredients emissions by 50% 7.0 Manufacturing our products net 11.0 Packaging our products 7. 5 Managing logistics 0.8 Travel and employee commuting zero 4 Nestlé’s Net Zero Roadmap 2018 2021 2025 2030 2050 measuring our

We take a whole life cycle approach to determining farmers, logistics providers and consumers. the carbon footprint of our products. It is a process To achieve net zero GHG emissions by 2050, that involves working with many others, such as we need to act throughout our value chain.

Product emissions from farm to fork

UPSTREAM DOWNSTREAM Suppliers to Nestlé Nestlé operations Customers, consumers and end of life

Agriculture Raw material Manufacturing Packaging Logistics Retail Consumers End of life Sourcing high-quality suppliers Making products. Packaging our Storing and delivering and business Our consumers For products ingredients Sourcing materials manufactured our products around channels enjoying Nestlé’s and packaging. from suppliers, and ingredients and products. the world. Offering and selling products wherever co-operatives and transporting them products to shoppers they are. direct from farmers. to Nestlé. in stores.

5 Nestlé’s Net Zero Roadmap OUR TOTAL EMISSIONS Nestlé’s total GHG emissions by Scope BY SCOPE million tonnes of CO2e, in 2018

Emissions from our direct operations, known Scope 1 as Scope 1 and Scope 2, accounted for just 5% Emitted directly 3.3 3.0% 3.3 of our GHG emissions. The vast majority of 2.5 our GHG emissions (95%) come from activities from sources we own or control such as on-site in our supply chain. As a result, that is where (coal, natural gas, fuel for company’s we focus most of our efforts. vehicle fleet). Total Scope 2 Emitted indirectly 2.5 2.2% from the generation of purchased energy like electricity and heating/cooling network. million tonnes 113of CO e Scope 3 2 All other indirect emissions 107.3 94.8% in our value chain, both upstream and downstream, such as sourcing and use of sold products. 107.3

Figures have been rounded.

6 Nestlé’s Net Zero Roadmap Emissions covered Nestlé’s in-scope GHG emissions by operation (92 out of 113) by our pledge million tonnes of CO2e, in 2018

Progress toward net zero will be measured Scope 3 against our 2018 GHG emissions. We 65.6 Sourcing 65.6 71.4% Dairy and livestock 34.2 calculated this baseline and defined our our ingredients Soil and forests 25.0 footprint in partnership with South Pole, Other 6.4 an external consultant. Scope 1, 2 & 3 Manufacturing 7.0 7.7% In setting our targets, we have followed our products Total the Science Based Targets initiative’s (SBTi) criteria. They provide a clearly defined pathway Scope 3 for coupling future-proof growth with reductions Packaging 11.0 11.9% 7.0 in GHG emissions. As our Scope 3 emissions our products make up 95% of our footprint, we are addressing Scope 3 million tonnes more than 80% of these. The SBTi approved 92of CO e 2 Managing 7.5 8.2% our targets in November 2020. 11.0 logistics This data is our starting point. As we enhance Scope 3 our ability to identify and measure emissions, 7.5 and better use the data that has been disclosed Travel and employee 0.8 0.8% by our suppliers and others, our monitoring commuting will improve. We intend to also share our Figures have been rounded. science-based methodology for calculating 0.8 GHG emissions to help push new frontiers in climate data transparency for the food and What’s not included Scope 3 Scope 3 beverage industry. As a company at the start of its net zero Consumer use Purchased services, journey, following SBTi guidelines for now we of sold products leased assets, capital have excluded the following emissions from our 12.7 million tonnes goods, investments net zero pledge: of CO2e 8.6 million tonnes of CO2e 7 Nestlé’s Net Zero Roadmap OUR KEY ACTIONS AT A GLANCE

Sourcing our Evolving Driving toward Moving toward ingredients sustainably our packaging cleaner logistics carbon-neutral brands Working with farmers, suppliers Packaging helps keep our food safe Optimizing routes, filling vehicles As consumers demand increasingly and communities to source ways but causes waste. Investments in more efficiently, switching to transparent and sustainable that protect ecosystems, reduce packaging innovations and new low-emission fuels and renewable products, our brands will continue emissions and enhance livelihoods. business models help keep waste electricity and using more to adapt, embracing . D airy and livestock out of landfill. rail transport. Page 40 Page 9 Page 23 Page 32 Soil and forests Page 14

Transforming Using renewable energy Removing carbon Using our voice our product portfolio to manufacture our products from the atmosphere to galvanize action Creating new, low-carbon products, Making products more sustainably Using nature’s own solutions such Forging deep engagement and reformulating existing ones by switching to renewable as agroforestry, soil management, on climate issues with farmers, using ingredients and processes electricity, using more renewable and restoring peatlands and forests industry, governments, NGOs that are good for both consumers fuels and investing to lock GHGs in the ground. and communities. and planet. in energy efficiency. Page 37 Page 44 Page 19 Page 28

8 Nestlé’s Net Zero Roadmap Sourcing our 34.2 ingredients sustainably Dairy and livestock

Dairy and livestock ingredients are As we do so, we aim to continue improving Sourcing our ingredients our largest single source of emissions. livelihoods, investing in climate and nature with Our dairy and livestock supply chains accounted Charting a course to net zero means university-led research that will help develop climate‑resilient and more equitable farming for 34.2 million tonnes of CO2e in 2018 – more driving a major shift in the way we communities. Continuously improving animal than half of the emissions created in sourcing source and produce these nutritious welfare will remain a primary focus throughout our ingredients. ingredients, investing in innovations our work. and new business models. Some of the most exciting agricultural innovations are in dairy and livestock farming, making them a vital part of the overall solution to achieve net zero agriculture. By strengthening our programs with livestock farmers to restore land, for instance, we can scale up initiatives to absorb more carbon from the atmosphere.

9 Nestlé’s Net Zero Roadmap Sourcing our ingredients sustainably Dairy and livestock

Our key actions To find the most effective ways of reducing Feeding livestock with more sustainable feed emissions, in partnership with the Sustainability We need to work with our farmers to ensure in Business Lab at ETH Zurich, we developed the feed used comes from regenerative a simulation tool to evaluate actions and agricultural practices. This will help avoid costs for dairy, which represents most of deforestation and reduce the carbon impact our livestock emissions. of feeding livestock.

Cutting the methane produced by animals Making farms more productive Methane produced during digestion, known through better herd management as enteric fermentation, is the most challenging Supporting agripreneurship will help increase source of emissions to mitigate in . We the productivity and livelihoods of farmers, will support innovation in rumen modification by developing models that reduces emissions, mainly through and helping them adopt successful business the inclusion of feed additives and dietary practices. The use of training, investments, supplements, with the help of dedicated better technologies and professional herd research and development (R&D) support management all play a significant role in for the Agriculture team. driving continuous improvement.

10 Nestlé’s Net Zero Roadmap Sourcing our ingredients sustainably Dairy and livestock

Our key actions (continued) Grassland management and Measures include: increasing carbon storage in the soil • Improving manure management, Soil is an excellent . By introducing including the use of biogas digesters. regenerative agricultural practices such as • Creating an R&D accelerator to drive better paddock management and silvopasture – innovation in dairy. the practice of integrating trees into areas where livestock forage – and switching to • In , expanding our Dairy Farming Institute organic fertilizers, we can improve the and launching a Grain Competence Center ability of farmland to store carbon. to coordinate research and encourage knowledge sharing. Helping suppliers become more innovative • Piloting net zero farms, including partnering Our support for R&D into new technologies with the US dairy industry and academia to will help increase the efficiency of dairy farms, implement new technologies and economically maximizing output while using minimum energy viable practices. and improving animal welfare. Working with our suppliers, we will focus on collecting and validating emissions data, helping improve accuracy and enabling us to work more effectively together in different countries.

11 Nestlé’s Net Zero Roadmap Sourcing our ingredients sustainably Dairy and livestock

Dairy and livestock supply chain emissions Actions to reach our 2030 emissions goal1 and reductions, 2018 to 2030 million tonnes of CO2e By 2030, Making farms Feeding livestock with reduce emissions to more productive -2.7 more sustainable feed through training and -8.4 better herd management

Projected 2030 Other livestock business-as-usual Caring for grassland -2.3 actions emissions to store more carbon by using regenerative -3.2 agriculture and Helping suppliers 29.3million tonnes organic fertilizers become more of CO2e million tonnes -1.0 energy efficient 50.6of CO2e Cutting the methane produced by animals Making the most -3.2 during digestion through of manure and using nutrition changes biogas digesters 2018 emissions baseline -0.5 plus our forecast company growth (16.4 million tonnes of CO2e) to 2030

1  These actions have been defined based on research and data as at December 2020. The contributions to emissions reductions may be subject to change over time. 12 Nestlé’s Net Zero Roadmap Sourcing our ingredients sustainably Dairy and livestock

Our projected reductions by 2030 Looking to 2050 Our actions will reduce the emissions from We will continue to support family-operated sourcing our dairy and livestock ingredients by farming systems through regenerative 21 million tonnes by 2030. This represents 23% agricultural practices that help reduce the of our in-scope 2018 carbon footprint. carbon footprint of dairy farming. Activities will also include investing in partnerships For fresh milk, reductions in to develop technologies to help take farming will largely be made through improvements to the next level of sustainability. in productivity in less advanced economies. For milk derivatives, some of our suppliers are already developing ingredients with a lower carbon footprint and we will continue working closely with them in this complex area.

13 Nestlé’s Net Zero Roadmap Sourcing our 25.0 ingredients sustainably Soil and forests

Good food depends on diverse and A key step in this journey will be to work Sourcing our ingredients quality ingredients, so protecting the with our suppliers and farmers to improve 25 million tonnes of CO e emissions in 2018 ecosystems where they grow is vital transparency around where our ingredients come 2 from and how they are produced, as part of an were generated through the sourcing of our to our long-term success. overall commitment to drive up standards. This agricultural ingredients. A significant quantity of the ingredients we will include working with others to strengthen purchase come from natural ecosystems, which land rights for local communities and the concept are under pressure from agriculture: 27% of our of Free, Prior and Informed Consent (FPIC). in-scope 2018 footprint can be linked back to People remain at the heart of our climate these agricultural ingredients. actions, whatever the initiative or scheme. We are going to accelerate our efforts to protect We aim to deliver new economic opportunities and restore these areas, working with farmers for young people and women in rural communities, and suppliers to enhance biodiversity and limit and protect food and nutrition security. We will GHG emissions. This includes avoiding/eliminating support young agripreneurs to implement deforestation and natural habitat conservation regenerative agricultural practices. as well as planting hundreds of millions of trees to unlock the power of agroforestry and in tackling emissions.

14 Nestlé’s Net Zero Roadmap Sourcing our ingredients sustainably Soil and forests

Our key actions With the support of South Pole, we have Agroforestry and shade management developed a model to calculate the GHG Some crops, such as cocoa and coffee, grow mitigation potential of agricultural land that better in the shade. We are encouraging farmers assesses various actions and their costs. to plant more shade trees to protect these crops Delivering against our zero deforestation from heat stress and other threats such as commitment and removing carbon through excessive rainfall. Shade trees also improve water agroforestry and regenerative agriculture are management and biodiversity, and absorb carbon key to reaching net zero. As part of a strategy from the atmosphere to drive down emissions. of more ambitious engagement with our We also support alley cropping, or planting suppliers, we are now broadening these between hedgerows, which can bring similar programs to accelerate progress. benefits when growing crops such as cereals, fruits and vegetables.

15 Nestlé’s Net Zero Roadmap Sourcing our ingredients sustainably Soil and forests

Our key actions (continued) Improving soil health Preventing and remediating land use change This is the start of a broader and much larger Improving soil health makes land more The conversion of natural landscapes for global conservation and restoration strategy productive. We will help improve agricultural ingredients in our supply chain is estimated to remove more carbon and deliver important practices such as no tillage, cover cropping, to account for between 25 and 35% of our total ecosystem services in the landscapes we source multiple crop rotation and switching to organic ingredient emissions. For key crop supply chains, from. Our ambition is to make conservation fertilizers for most of our soil-grown ingredients. such as cocoa, coffee, palm oil and soybean, and restoration standard practice throughout These practices will support nutrient uptake, the proportion can be even higher. our supply chains. water retention and fertility, and restore the Our zero deforestation commitment forms soil’s carbon content. a critical element of our journey to net zero. Composting of agricultural waste, such as Alongside new partnerships and initiatives, empty fruit bunches from palm oil plantations, farm‑level assessments, sustainability is another inexpensive way of enriching the soil. certifications and satellite monitoring systems will continuously scrutinize and prevent forest Agroforestry in border areas cover and land use change. Field margins and farm borders offer important opportunities to support our climate goals. Where forest degradation has happened, Forest and peatlands can be restored, or we have ambitious reforestation plans and are specific projects such as windbreaks introduced, set to plant at least 3 million trees in key sourcing helping to enhance ecosystem resilience. locations by 2021, and a further 3 million by 2023. We have also invested CHF 2.5 million in critical forest conservation and restoration in Côte d’Ivoire.

16 Nestlé’s Net Zero Roadmap Sourcing our ingredients sustainably Soil and forests

Soil and forests supply chain emissions Actions to reach our 2030 emissions goal2 and reductions, 2018 to 2030 million tonnes of CO2e By 2030, Preventing reduce emissions to deforestation in -2.0 Agroforestry off-farm -8.0 our supply chain

Projected 2030 Restoring degraded business-as-usual emissions On-farm agroforestry – -2.0 forests and peatlands planting trees and -5.0 other plants around million14 tonnes and among crops Installing palm oil of CO2e mill effluent methane million tonnes capture systems 37of CO2e Improved agricultural -1.0 practices like cover cropping, using organic -5.0 fertilizers and multiple 2018 emissions baseline crop rotation plus our forecast company growth (12 million tonnes of CO2e) to 2030

2  These actions have been defined based on research and data as at December 2020. The contributions to emissions reductions may be subject to change over time. 17 Nestlé’s Net Zero Roadmap Sourcing our ingredients sustainably Soil and forests

Our projected reductions by 2030 Looking to 2050 By 2030, we forecast a 44% reduction in We want our work to support resilient landscapes GHG emissions from investing in soil health and communities. In the coming years, we aim and forests compared to our 2018 in-scope to transform our relationship with suppliers and baseline. Up to 80% of the target can be move to a collective level of engagement, addressed through carbon removals delivered investing in collaborative actions that impact by agroforestry, improved agricultural practices wider regions. and tackling deforestation. We must work to ensure no further loss of Forest conservation and the restoration of natural high‑carbon stock or high-conservation value landscapes are some of the most cost-effective land, and implement policies and initiatives that and impactful ways we can mitigate GHG restore these ecosystems. This is part of our emissions. Other measures, such as changing ambition to deliver sustainable landscapes where agricultural practices, may be more expensive production, sustainable livelihoods and protection in the short term but are better suited to local go together. conditions. An important part of what we need to do next is to help find the right actions for different local contexts.

18 Nestlé’s Net Zero Roadmap Transforming our product portfolio

Using our R&D experience and Our core strategy is in line with this shift and resources, we are accelerating that means engaging the one billion consumers innovation and making our portfolio a day who buy our products by offering more foods and beverages that are good for fit for the future. them and good for the planet. Trends show growing consumer demand for low-carbon products such as plant-based foods and drinks.

19 Nestlé’s Net Zero Roadmap Transforming our product portfolio

Our key actions We will lower the environmental We will improve how we measure impact of our recipes and manage emissions Our process of constant improvement is We will establish clear key performance our competitive advantage, reducing our indicators (KPIs) and refine our central data environmental footprint while continuing tracking systems to better measure progress to contribute to healthy and nutritious diets. and improve the allocation of emissions and reductions to specific businesses. It is crucial that we educate our employees about and provide them with the More broadly, we expect to align GHG knowledge, skills and tools they need to make accounting methodologies across our brands informed decisions around product development. so that it is easier to make comparisons and consult with brand managers around translating We will help our portfolio and product managers corporate targets into business-specific ones. incorporate GHG emissions information more effectively into their decision-making, including selecting which ingredients to use and continuously improving our ecodesign tools used in R&D. To support this, we will make more environmental impact data about ingredient supply chains available at the product level.

20 Nestlé’s Net Zero Roadmap Transforming our product portfolio

Reducing future emissions Actions to reach our 2030 emissions goal growth: our 2030 goals3 million tonnes of CO2e Evolving product Implementing more By 2030, reduce offering toward more sustainable, circular emissions by -4.2 sustainable options -0.2 business models

Improving the efficiency of our Shifting toward more machines sustainable alternative -0.2 million tonnes ingredients like -6of CO2e -1.4 plant‑based foods

3  These actions have been defined based on research and data as at December 2020. The contributions to emissions reductions may be subject to change over time. 21 Nestlé’s Net Zero Roadmap Transforming our product portfolio

Our projected reductions by 2030 Looking to 2050 • The forecasted growth of 44 million tonnes Dietary shifts – particularly toward plant-based of CO2e refers to the total forecast company diets – are the most important thing that we, growth by 2030. as a global community, can do to keep our food • As product portfolio actions encompass the full system within environmental limits. scope of a product life cycle, including sourcing, We will strive to continuously reduce the packaging, manufacturing and logistics, environmental impact of our ingredients and we have chosen to showcase them in recipes and investigate ways to transparently a separate way to avoid double counting. communicate these impacts. By engaging with • The levers already identified by our businesses consumers, we can increase demand for these will mitigate 14% of the GHG emissions products, which in turn will help us toward our associated with our forecasted 44 million tonnes net zero pledge. of CO2e by 2030. They include: • Evolving our product offering to include more sustainable options. • Switching to plant-based ingredients – specifically in our frozen meals and pizzas and dairy categories. • Implementing more sustainable, circular business models. • Improving the energy efficiency of equipment such as machines.

22 Nestlé’s Net Zero Roadmap EVOLVING 11.0 OUR Packaging

Key to our efforts is our Institute of Packaging Packaging helps to keep our food safe Packaging our products and fresh and is essential for the Sciences in Lausanne, . The Institute distribution and storage of our products. is the first of its kind in the food industry and We emitted 11 million tonnes of CO2e is working on research to accelerate efforts to in 2018 through our product packaging Although it reduces food waste and associated bring safe packaging solutions to the market ready for sale. emissions, packaging itself can be a significant that have a low environmental footprint. source of GHG emissions. It accounts for around This work requires collaboration and innovation 12% of our in-scope 2018 carbon footprint. on a global scale. By working with partners from The issue of plastic waste ending up in the materials scientists and packaging specialists to environment is also one of the most pressing community groups, NGOs, governments, suppliers global challenges the world faces. and other companies, we want to create lasting Building on a decade of action, we have committed and impactful change. to make 100% of our packaging recyclable or reusable by 2025 and to reduce our use of virgin plastics by one-third in the same period. So far, 87% of our total packaging and 66% of our plastic packaging is recyclable or reusable. Tackling this challenge requires a wide range of actions and we know we need to go further.

23 Nestlé’s Net Zero Roadmap evolving our Packaging

Our key actions Transforming how we make, use, reuse and recycle • Increasing the amount of low-carbon our packaging can play an important role in our energy used for the production and journey to net zero. For 2030, that means: recycling of packaging. • Improving packaging design, including • Collecting and co-processing post-consumer switching from composites to single materials, waste (in the absence of a well-functioning and introducing reusable and refillable options. waste management system) to prevent the • Leading the shift from virgin plastics to further flow of plastic into the environment food‑grade recycled plastics by developing and to provide a valuable resource for energy a market for these materials. and other new products. • Helping to increase end-of-life recycling rates to tackle packaging waste and reduce the amount of raw materials we use.

24 Nestlé’s Net Zero Roadmap evolving our Packaging

Our key actions (continued) Expanding the market for food-grade Scaling up reusable and refillable While we implement these activities, we will recycled plastics options for consumers continue to support the respect and promotion At the time of writing, more than 3% of the We continue to offer consumers a shopping of human rights in the downstream recycling waste packaging we use contains recycled plastics – experience free of single-use packaging through supply chain of Post-Consumer Resin (PCR) this will increase significantly. We have made collaboration with companies like Loop, MIWA material through accountability and engagement a significant commitment to lead the shift from and Algramo. of the most relevant actors – the key waste virgin plastics to food-grade recycled plastics stream suppliers. and to accelerate the development of innovative Improving waste management solutions under the We support the design and implementation principles of the . Less use of effective, mandatory Extended Producer of virgin plastics means less use of fossil-based Responsibility schemes. We are also working derivatives and associated emissions. to improve recycling rates and infrastructure in 20 countries, which account for more than 50% of our plastic usage. In 12 countries, we aim to collect and recycle or recover as much plastic as we use, addressing over 10% of our total plastic usage.

25 Nestlé’s Net Zero Roadmap evolving our Packaging

Packaging and products supply chain emissions Actions to reach our 2030 emissions goal4 and reductions, 2018 to 2030 million tonnes of CO2e By 2030, Recycling more Switching from reduce emissions to packaging at end of life composite/mixed materials -1.8 -0.5 to mono-materials

Projected 2030 Switching to business-as-usual low-carbon energy Increasing the recycled emissions for plastic production -1.7 content of other plastics -0.4 10.1million tonnes Reducing packaging Other actions, including of CO2e and scaling up reuse moving from plastic million tonnes -0.7 and refill 16.2of CO2e -0.4 to paper packaging

Increasing PET plastic -0.6 recycled content 2018 emissions baseline plus our forecast company growth (5.2 million tonnes of CO2e) to 2030

4  These actions have been defined based on research and data as at December 2020. The contributions to emissions reductions may be subject to change over time. 26 Nestlé’s Net Zero Roadmap evolving our Packaging

Our projected reductions by 2030 Looking to 2050 We expect that significant reductions in emission From 2030, there is huge potential to increase intensity will be achieved from 2025 onward by our ambitions around reusable packaging and further increasing the recycled content in our bio‑based plastics. This will be driven by new packaging, the use of low-carbon energy in our technologies that enable further emissions supply chain, and the broadening of recycling and reductions, such as net zero synthetic plastics co-processing where we operate. made from CO2 converted to hydrocarbons, using renewable electricity.

27 Nestlé’s Net Zero Roadmap Using renewable energy 7.0 to manufacture our products

Cutting emissions begins with energy efficiency We are the world’s largest food and Manufacturing our products beverage company. That means our and continues with the move toward less manufacturing has a significant footprint, energy‑intensive processes. At the same time, Making our products accounted for we will continue to ramp up our use of renewable 7 million tonnes of our CO e emissions in 2018. and accounts for around 7% of our 2 electricity to reach 100% by 2025. In 2018, in-scope 2018 emissions. 34.5% of our electricity came from Building on our existing track record, we are renewable sources. making fundamental changes to reduce this As we increase the use of electricity from even further. renewable sources, we also increase market demand, incentivizing providers to invest in new infrastructure such as wind and solar farms.

28 Nestlé’s Net Zero Roadmap Using renewable energy to manufacture our products

Our key actions We will power our manufacturing renewably We will phase out refrigerants with We will increase the proportion of renewable a high electricity that we use through power purchase We will continue to phase out refrigerants agreements, green tariffs, renewable energy with high global warming potential (GWP), certificates and on-site production to achieve such as hydrofluorocarbons, in our industrial 100% renewable electricity by 2025. refrigeration systems. We will replace these with new, natural refrigerants with zero or low Alongside established forms of renewable GWP, such as ammonia, CO and hydrocarbons. electricity, such as wind and solar, we will also 2 work with suppliers to increase the availability of renewable thermal energy generated from sources, such as biogas and , by 2030.

We will improve efficiency to lower emissions Further emissions reductions will be delivered by increasing the efficiency of our operations. Many energy efficiency projects are already planned for sites across the globe, ranging from LED lighting systems to optimizing energy consumption during non-production times and recovering heat energy.

29 Nestlé’s Net Zero Roadmap Using renewable energy to manufacture our products

Manufacturing supply chain emissions Actions to reach our 2030 emissions goal5 and reductions, 2018 to 2030 million tonnes of CO2e By 2030, reduce emissions to Increasing the Improving energy share of renewable efficiency at our plants electricity -0.7

Projected 2030 -2.7 business-as-usual emissions Reducing FERA (fuel and energy related Increasing the -0.7 activities) emissions million3.8 tonnes share of renewable of CO2e million tonnes -1.8 thermal energy 9.7of CO2e Reducing waste -0.04

2018 emissions baseline plus our forecast company growth (2.7 million tonnes of CO2e) to 2030

5  These actions have been defined based on research and data as at December 2020. The contributions to emissions reductions may be subject to change over time. 30 Nestlé’s Net Zero Roadmap Using renewable energy to manufacture our products

Our projected reductions by 2030 Looking to 2050 We are working hard to improve the efficiency By 2050, we will reduce our direct emissions of our operations, and the projections in our related to energy to zero by using 100% roadmap are the minimum we expect to achieve. renewable energy. We expect to maximize gains in efficiency first, Based on today’s technology, we expect that supplying our remaining energy needs through a small fraction (around 1%) of direct emissions renewable sources. linked to refrigerants will remain. There may We will reduce emissions by 20% by 2025 also still be some Scope 3 emissions related and 50% by 2030, driven by energy efficiency to fuel and waste, which we expect to address measures and increasing the amount of through close collaboration with our suppliers. renewable electricity we use to achieve 100% by 2025. The amount of renewable thermal energy we use will increase by 2030.

31 Nestlé’s Net Zero Roadmap Driving toward 7. 5 cleaner logistics

In our top 100 distribution centers, GHGs Limiting global warming to 1.5°C will Managing logistics require major changes to the way we decreased by close to 40% between 2016 Transporting and distributing our ingredients and move goods around the world. and 2020. products accounted for 7.5 million tonnes of our Technology plays a crucial role in helping us Our 2050 ambition will be realized through CO e emissions in 2018. meet our objectives. We are already a digitally 2 a cleaner, leaner logistics network that delivers enabled, data-powered business, and we Our primary sources of logistics emissions ingredients from the farm to our factories, are exploring new ways in which we can use in 2018 (million tonnes CO2e): and our products to distribution centers analytics, automation, artificial intelligence and • Inbound transportation: 3.2 around the world. machine learning to make our operations • Outbound transportation: 3.6 We will continue to reduce emissions across even more efficient. • Energy: 0.4 transportation by maximizing the use of space • Waste: 0.02 in our vehicles, reducing fuel consumption and switching to lower emission fuels. In our distribution centers, we will cut energy use, switch to renewable electricity, phase in natural refrigerants and replace -based machine handling equipment. We are also reducing waste for disposal, and will cut waste caused by products that have gone bad or reached their end of life by 5% year on year.

32 Nestlé’s Net Zero Roadmap Driving toward cleaner logistics

Our key actions By modeling emissions reductions across Maintaining and improving eight geographical clusters, we have identified operational efficiency 11 important areas where we can make Investments in IT will allow us to fill vehicles significant cuts to emissions. These include and plan journeys more efficiently. This helps improving existing transport modes and shifting avoid empty miles by connecting inbound and to less carbon-intensive ones, implementing outbound transport, further reducing emissions. lean logistics and developing roadmaps tailored We need to use transport modes in a smart way, to specific regions and businesses. such as shifting to lower emission intermodal transport routes like rail and shipping. This also means minimizing air freight as much as possible. Our lean-logistics transportation hub (T-Hub) program will play an important role in the short and medium term. The program will create 19 offices at regional and local levels, and centralize the management and coordination of transport, using real-time visibility tools and advanced analytics to enable the proactive management of goods movements and vehicle optimization. By 2022, T-Hubs will be responsible for 80% of our total transport spend.

33 Nestlé’s Net Zero Roadmap Driving toward cleaner logistics

Our key actions (continued) Shifting to the lowest emission options We can enable this transformation through: In our own operations, we will switch our global • Helping develop the right regulatory fleet of vehicles to lower emission options environment, specifically policies and by 2022 and to offset any remaining emissions. public investment supporting intermodal We will initially reduce emissions by shifting transport and rail corridors. to vehicles adhering to the EURO V and VI • Supporting technological development, emissions standards. commercialization and public investment, In partnership with our logistics suppliers, for electric, hydrogen and biogas infrastructure, we will shift away from fossil fuel-powered including charging stations. transport to fuels with lower or zero tailpipe • Engaging logistics providers (especially truck emissions. These include hydrogen, electricity and ocean freight, and truck manufacturers) to and powered vehicles, where these fuels accelerate the provision of low-carbon solutions. have not been produced in competition with food crops. Because no company can achieve this alone, we are actively connecting with green logistics programs, the logistics industry, government organizations and NGOs, as well as benchmarking and auditing organizations.

34 Nestlé’s Net Zero Roadmap Driving toward cleaner logistics

Logistics transportation emissions Actions to reach our 2030 emissions goal6 and reductions, 2018 to 2030 million tonnes of CO2e Introducing Removal of EURO 4 By 2030, electric trucks and below diesel trucks reduce emissions to -1.4 for short-haul trips -0.1

Introducing Launching trucks Projected 2030 powered by biogas business-as-usual electric trucks -0.07 emissions -0.6 for long-haul trips Improving the sustainability of ocean freight Increased million6.5 tonnes -0.05 of CO2e -0.5 intermodal transport million tonnes Switching more journeys 10of CO2e -0.04 to rail Making sure we fill -0.4 vehicles efficiently -0.002 Avoiding air freight 2018 emissions baseline Introducing plus our forecast company hydrogen-powered growth (3.22 million tonnes -0.3 trucks to our fleet of CO2e) to 2030

6  These actions have been defined based on research and data as at December 2020. The contributions to emissions reductions may be subject to change over time. 35 Nestlé’s Net Zero Roadmap Driving toward cleaner logistics

Transportation: Transportation: Projected reductions by 2030 Looking to 2050 We will reduce absolute emissions by The new infrastructure and technologies needed 3.5 million tonnes of CO2e from inbound and to transform transport and help the switch to outbound transportation, or a 4% reduction from alternative forms of fuel are developing rapidly. our in-scope 2018 baseline. In relative terms, we By 2050, hydrogen and long-haul electric powered can reduce emissions per tonne kilometer of vehicles, with their zero tailpipe emissions7, will transported goods by 11% by 2025 and 35% play a key role in our transportation mix across by 2030. all distances. will also play an important role in the decarbonization of ocean freight. Until 2025, the operational efficiencies of vehicle fill, reduction of empty backhaul, route optimization and switching to intermodal transport will make the biggest contribution to emissions reduction. Electric vehicles for short haul will make a significant contribution toward our 2030 emissions reduction objectives.

7  Real emissions (distinct from tailpipe emissions) from hydrogen and electric trucks depend on their source. If electricity for a truck is generated through coal, emissions are still high. 36 Nestlé’s Net Zero Roadmap Removing carbon from the atmosphere

We see enormous potential for the Removing GHGs using natural solutions, as well removal of GHG emissions from the as technologies such as and atmosphere as a way to counterbalance carbon storage, are not alternatives to tackling high emitting activities. However, these those emissions that we cannot developments will play a role in helping us reach reduce directly. our net zero goal. By investing in these solutions More than two-thirds of our emissions come from now, we can help ensure they are ready to deliver sourcing ingredients, so this is where we see the at scale by 2050. biggest opportunities. By 2030, we plan to remove 13 million tonnes of CO2e emissions from the atmosphere by prioritizing actions we can take now, while we develop projects that will pay off in the future.

37 Nestlé’s Net Zero Roadmap Removing carbon from the atmosphere

Harnessing nature’s own solutions Natural climate solutions (NCS), such as As well as on-farm actions, we strive to agroforestry, silvopasture and the restoration work in local partnerships to prevent the loss of forests and peatland, are actions that physically of high-carbon stock and high-conservation remove CO2 from the atmosphere. They are the value land, and invest in the restoration most important methods we currently have of degraded forests and peatland across for carbon removal. They allow us to maximize our sourcing regions. Throughout, our actions carbon storage and deliver a wide range of will support robust livelihoods in the areas co-benefits. This includes supporting a transition where we source our ingredients. away from intensive monoculture farming toward more diverse agriculture that benefits biodiversity and supports community resilience to climate change.

38 Nestlé’s Net Zero Roadmap Removing carbon from the atmosphere

How we will remove 13 million tonnes of CO2e from the atmosphere by 2030 Plant vegetation around water sources Switch to organic fertilizers wherever possible Shade management agroforestry and wildlife corridors Organic fertilizers also improve the structure Shade trees protect crops such as coffee from Riparian buffers are uncultivated green areas of the soil and its ability to hold water and excessive heat. They also increase organic matter that protect water sources from pollutants and nutrients while avoiding the damaging in the soil, increasing its capacity to retain water erosion typically caused by nearby land use. runoff caused by synthetic alternatives. and store carbon. Trees planted for shade also They act as filtration systems between sequester carbon themselves. agricultural and urban land and bodies of Adopt more sustainable agriculture practices water, improving water quality while also Farming techniques like no tillage, crop rotation Restoring forests and peatlands capturing carbon. and cover crops reduce soil disruption. This Healthy ecosystems store significant amounts of helps to avoid nitrogen depletion, reduce carbon. Forest restoration creates carbon sinks Integrate trees into grazing land in soil erosion and control pests and weeds. and protects waterways, wildlife and biodiversity. a synergistic way Peatland restoration, in addition to capturing Trees on grazing land can support grass yields or Plant trees and shrubs large amounts of carbon, maintains water tables enhance production, providing additional fodder. to create natural protection and reduces fire risks. Natural barriers created through intercropping Use local compost and alley cropping protect crops against severe Using compost made from organic waste weather and erosion. This improves yields such as coffee pulp can enrich the soil, building and helps capture carbon. up organic matter and improving both soil structure and its potential to store carbon.

39 Nestlé’s Net Zero Roadmap Moving toward carbon-neutral brands

In parallel with our corporate net zero Other brands already committed to carbon emissions pledge, individual Nestlé neutrality include Garden of Life, Garden Gourmet brands are on a journey to achieving and Nespresso by 2022, and Sweet Earth by 2025. Many more are set to follow. product or brand . Nespresso delivered carbon-neutral coffee through insetting in 2016, and Ready Refresh became carbon neutral through emission reductions and the purchase of carbon offsets in 2020.

40 Nestlé’s Net Zero Roadmap Moving toward carbon-neutral brands

Brand highlight: Nestlé Waters Switch to renewable and alternative fuels in our supply chain By 2025, we are committed to 100% renewable electricity and will look to switch to biomass fuels for our trucks.

Nestlé will make its global water category carbon Achieve carbon neutrality neutral by 2025, prioritizing international brands As well as addressing waste and energy use, Perrier®, S.Pellegrino®, Acqua Panna® and Vittel® we are purchasing high-quality offsets that to achieve carbon neutrality by 2022. remove and reduce carbon. We’ll get there by driving action to: Enhance water stewardship We will maintain watersheds by replenishing Tackle plastic waste 100% of the water we use, through locally Much of Nestlé Waters’ packaging is already tailored solutions that also reduce GHG 100% recyclable or reusable. We will build on emissions. These include investments in this by committing to using 50% recycled PET nature-based solutions like wetland restoration globally by 2025, and supporting the rollout and water conservation programs. We will of alternative delivery systems. deliver on our commitment to certify all water sites globally to the international Alliance for Water Stewardship (AWS) Standard, which also covers the right to safe water and sanitation of communities.

41 Nestlé’s Net Zero Roadmap Moving toward carbon-neutral brands

How brand carbon neutrality differs from the corporate net zero pledge As well as contributing to our corporate pledge Brands Corporate by delivering emissions reductions before To become carbon-neutral certified, our To achieve our corporate net zero pledge, claiming carbon neutrality, some of our brands brands need to assess all their GHG emissions. emissions contained in the established are pursuing their own climate journey. Here, They must reduce and remove part of these carbon footprint baseline must first be reduced we explain how the journey of our brands differs emissions before offsetting the remainder as far as possible. Removals within our value from the overarching Nestlé net zero pledge. through high-quality, verified schemes. chain can then be used to address what is left. Offsetting is the practice of balancing GHG The corporate net zero pledge is guided by emissions by compensating the equivalent the SBTi, related to the 1.5°C elsewhere, outside of a company’s direct value Agreement. chain. Insetting, on the other hand, occurs inside the value chain and is a form of carbon removal. Carbon neutrality claims for our brands are guided by local regulation. In the absence of this, we follow ISO or other international standards.

42 Nestlé’s Net Zero Roadmap Moving toward carbon-neutral brands

Scope Emissions reduction rules

Brands A minimum reduction in Carbon emissions, with insetting neutrality Farm to fork and offsetting allowed (includes consumer use and end-of-life packaging) for the rest. Guided, among others, by ISO and local regulations

Scope Emissions reduction rules

20% reduction by 2025 Corporate 50% reduction by 2030 NET ZERO Net zero by 2050 TARGET Farm to store (against a 2018 baseline plus company growth) (excludes consumer use, but does include end-of-life packaging) Offsetting is not allowed; all remaining Guided by the Science Based Targets initiative (SBTi) emissions must be balanced by insetting.

43 Nestlé’s Net Zero Roadmap

Using our voice to galvanize action

Limiting global warming to 1.5°C requires Without the right regulatory and policy transformational change across environment in place, it will be more challenging industries, governments and society. for Nestlé and other organizations to reach net zero emissions by 2050 and for our collective actions Nestlé will expand its advocacy for ambitious to have a positive impact on altering the current government policies and private sector leadership trajectory of climate change. to ensure all sectors move more quickly toward this target. Because we cannot achieve our goals alone, we need to shape our advocacy and communications Our own journey to net zero depends on important around our roadmap and engage with others. new technologies, business approaches and Along the way, we will communicate our advocacy low-carbon infrastructure. It also relies on positions and share our interactions with supportive legislation that, among other things, governments and civil society. We intend to also reduces barriers to renewable energy markets, use industry-leading data to transparently show incentivizes innovation in the agriculture and forestry our progress throughout our reporting. sectors to capture more carbon, and helps to establish common standards for carbon claims.

44 Nestlé’s Net Zero Roadmap Using our voice to galvanize action

Advocating clear and fair rules Policies to transform industries Insetting and offsetting Agriculture Clear, widely accepted international standards Support for regenerative agriculture and policies that legitimize high-quality insetting and that halt deforestation, as well as certification offsetting as valid carbon compensatory tools. schemes that incorporate low-carbon agriculture into their standards. Natural climate solutions (NCS) Recognition of these solutions and their role Energy in the net zero journey, regulated by the GHG Infrastructure that increases the availability Protocol and SBTi with clear reporting rules. of renewable energy and public policy that promotes its uptake, as well as aligned Carbon pricing/carbon markets definitions for reporting consumption. Transparent carbon pricing that reflects the true cost of CO2e emissions and forms Logistics and infrastructure the basis of effective carbon markets, supported Regulations and investment that support by internationally recognized standards. intermodal transport, especially rail, and the development of electric, Environmental claims hydrogen and biogas vehicles. Internationally recognized standards to ensure that environmental claims are standardized, Packaging and can be communicated by companies in Waste management schemes and legislation a transparent, comparable and truthful way. that increase recycling in every country.

45 Nestlé’s Net Zero Roadmap Using our voice to galvanize action

Clear and fair rules advocacy Insetting and offsetting monitoring rules. We want to see NCS as Environmental claims We want to see clear standards that legitimize an allowed and recommended GHG insetting Net zero, carbon neutral, climate positive and high-quality insetting and offsetting as valid tool, regulated under the GHG Protocol and SBTi. carbon negative are among many terms now carbon compensation tools and focus on We also want them to feature in government being used by companies to communicate how outcomes rather than certifications. We also want Nationally Determined Contributions and corporate roadmaps and products are helping to see widely adopted international standards that National Biodiversity Strategies and Action Plans. them reduce their environmental footprint. ensure transparency and quality for the actions As a result, these claims can be valuable behind carbon credits. Carbon pricing/carbon markets Carbon pricing is a way to recognize the external for companies and brands, but they lack clear Natural climate solutions cost of GHG emissions and tie them to their and widely accepted definitions. This causes NCS are conservation, restoration and improved source. Carbon pricing gives an economic signal confusion and mistrust among consumers land management actions in landscapes and to emitters, while allowing them to decide and stakeholders. wetlands that remove GHGs or avoid emissions. whether to transform their activities to reduce We want to see clear international standards They could deliver almost one-third of the emissions or to pay for those emissions instead. so companies can make credible claims based emissions reductions needed to limit global Regardless of the type of carbon pricing system, on life cycle assessments (LCA) for products. warming, while costing less than comparable we are in favor of a transparent and adequate actions and supporting agricultural resiliency price that reflects the true cost of GHG emissions. and biodiversity. We also support internationally recognized We believe NCS must be widely accepted standards on how to price GHG emissions and promoted by governments and agencies, and the functioning of transparent, robust along with clear accounting, reporting and and reputable carbon markets.

46 Nestlé’s Net Zero Roadmap Using our voice to galvanize action

Policies to transform industries Agriculture Energy We need logistics providers, especially of truck Through financial incentives, we want Infrastructure that increases the availability and ocean freight, to accelerate the provision of governments to better support a wide range of of renewable energy is needed, as are more low-carbon solutions, and truck manufacturers regenerative agriculture and low-carbon energy efficiency initiatives and the adoption must increase the availability of electric, hydrogen practices, and to halt deforestation. To incentivize of best available technology, supported by and biogas vehicles. voluntary action, we would like to see certification public investment. schemes incorporate low-carbon agricultural Packaging Pledges and policies that promote the uptake practices into their standards. We want to see waste management schemes of clean energy are important, as are clear set up in every country, and legislation that We also need a broad societal understanding standards on methodology for calculating the increases recycling rates and facilitates circular of the current state of soils and biodiversity, Scope 3 impacts of renewable energy and economies (reducing the generation of virgin our collective dependency on natural ecosystems alternative fuels. We would like to see aligned plastics from oil and gas). It is also important that and the value of regenerative agriculture. definitions on accepted mechanisms for claiming there is legislation that allows recycled plastics renewable energy consumption. We support increased R&D into low-carbon to be in direct contact with food. agriculture, including seeds that support Logistics and infrastructure Packaging suppliers should switch to renewable regenerative agriculture and low-carbon We want to see government policy and public sources of energy, and suppliers with innovative fertilizers, and solutions for the traceability investment that supports intermodal transport technologies should be linked with recycling of raw materials. and rail corridors, as well as the development infrastructure. and commercialization of electric, hydrogen and biogas infrastructure.

47 Nestlé’s Net Zero Roadmap Glossary Explaining some important terms The equivalent (CO2e) In 2015, to respond to the threat of climate change, Carbon dioxide equivalent is a simple way countries around the world convened in Paris of comparing the warming potential of a range under the United Nations Framework Convention of GHGs (including carbon dioxide and methane) on Climate Change. They agreed to keep global by converting their amounts to the equivalent temperature rises below 2 degrees Celsius (°C) amount of carbon dioxide. above pre-industrial levels, and to work toward a 1.5°C limit. Carbon neutral at the product level (based on ISO 14021, 2016) Greenhouse gases (GHGs) All the GHG (or CO2e) emissions from all stages Gases that trap heat into the atmosphere, of the product life cycle, and within the specified therefore contributing to the warming of the planet. processes, have been reduced, removed or, They are often expressed as CO2e (carbon dioxide as a last resort, accounted for through a system equivalent) in terms of their GHG impact levels of offsets resulting in a product that has a carbon over time using CO2 as a reference. footprint of zero.

Net zero at the corporate level (based on the Science Based Targets initiative) Net zero emissions are achieved when anthropogenic emissions of GHGs to the atmosphere are balanced by anthropogenic removals over a specified period. The climate

metric used here is CO2 equivalent (CO2e), and all GHG emissions are in scope.

48 Nestlé’sNestlé’s Net Net Zero Zero Roadmap Roadmap Official version (English). nestle.com Translations in other languages may vary. 49 Nestlé’s Net Zero Roadmap