What is How we implement Nutrition Water Rural Responsible Environmental Human rights Our people CSV CSV development sourcing sustainability and compliance Nestlé in society Creating Shared Value and meeting our commitments 2012 Full report Nestlé in society | Creating Shared Value and meeting our commitments 2012 | Full report 1 What is How we implement Nutrition Water Rural Responsible Environmental Human rights Our people CSV CSV development sourcing sustainability and compliance Nestlé in Society: Creating Shared Value A message from our Chairman and our CEO 3 About this report 6 Nestlé in Society: Creating Shared Value 8 Creating Shared Value explained 9 Nestlé Corporate Business Principles 10 Our Commitments 11 Materiality 15 Key Performance Indicators Summary 18 Consolidated environmental performance indicators 20 Nestlé in society | Creating Shared Value and meeting our commitments 2012 | Full report 2 What is How we implement Nutrition Water Rural Responsible Environmental Human rights Our people CSV CSV development sourcing sustainability and compliance A message from our Chairman and our CEO We have always believed that in order to prosper we need the communities we Left: Nestlé CEO Paul Bulcke visits serve and in which we operate to prosper as well: and that over the long term, the Nestlé‑sponsored Nutrimovil healthy populations, healthy economies and healthy business performance are programme in Guatemala City, mutually reinforcing. offering free nutritional advice to lower income consumers. We recognise that our position in society brings both opportunities and responsi- bilities: to do business in compliance with national laws, international standards Right: Nestlé Chairman Peter and our own Corporate Business Principles; and in ways that help protect the Brabeck‑Letmathe visits Nestlé environment for future generations. Institute of Health Sciences (NIHS) laboratories in November 2012 as Thus, our commitments to sustainability and compliance are based on common- part of NIHS’ inauguration. sense values; and form the foundations upon which we build our actions in Cre- ating Shared Value. We also restate our support for the UN Global Compact as a founding member of UN Global Compact LEAD – a new platform for corporate sustainability leadership. Creating Shared Value We believe that we can create value for our shareholders and society by doing business in ways that specifically help address global and local issues in the areas of nutrition, water and rural development. This is what we mean when we speak about Creating Shared Value (CSV). We proactively identify opportunities to link our core business activities to action on related social issues. That is why we have called this report Nestlé in Society: Creating Shared Value and Meeting our Commitments. This year, our print report is focused on nutri- tion, but it also covers our commitments to compliance, including human rights, progress in our other CSV priority areas of water and rural development, as well as in environmental sustainability. The scope of this online report is ambitious, reflecting our determination to meet our responsibilities and play our part in ad- dressing global challenges. Nestlé in society | Creating Shared Value and meeting our commitments 2012 | Full report 3 What is How we implement Nutrition Water Rural Responsible Environmental Human rights Our people CSV CSV development sourcing sustainability and compliance Focusing on Nutrition For us, there is no higher priority than enhancing the quality of life of our con- sumers by providing tastier and healthier food and beverage choices. Conse- quently, we are acutely aware of the escalating food and nutrition crisis, which is closely linked to the global water crisis, amongst other things. In both water and nutrition, as in many pressing global issues, it is important to take collective action. If we do not, everyone in the world, whether in developed or developing countries, will soon become aware of the consequences as both food and fresh, clean water grow increasingly scarce and expensive. As the world’s leading Nutrition, Health and Wellness Company, we have a unique opportunity to help address the food and water crises; in particular the specific nutrition challenges facing consumers at a local level: from over-nutrition to under-nutrition including micronutrient deficiencies. This ‘double burden’ of malnutrition and the stress it places on already overstretched healthcare systems is a pressing challenge for us all. This is why we have made nutrition the main theme of our 2012 Nestlé in Society: Creating Shared Value and Meeting our Commitments Summary report. We have set our actions during 2012 in the context of five key nutrition chal- lenges: advancing science to address global nutrition issues; helping mothers give children the best start in life; helping families to meet their nutritional needs; helping to meet the nutritional needs of people in emerging markets; and help- ing to meet the needs of older people and those with other specific nutritional requirements. The Focus on Nutrition section of the Summary report explains what we are do- ing to help address each one of these areas: for example through micronutrient fortification and systematic reductions in public health-sensitive ingredients (e.g. salt, sugar, saturated fats and trans-fatty acids); and by providing better advice to consumers about ingredients, portion size and their nutritional needs. It also summarises our involvement in nutrition education campaigns worldwide, in- cluding our Healthy Kids programmes, and the fundamental role that R&D plays in everything we do – from the genomic studies underway at the Nestlé Institute of Health Sciences to bio-fortification and the behavioural work we are doing across our global R&D network. We must emphasise that the nutrition challenges the world faces require con- certed collective action rather than sporadic, isolated projects. We can play a valuable leadership role in support of this concerted action. We have the capacity and, even more importantly, the determination to do so. Water, Rural Development and more This website, which is also our complete report, provides more detail on our Nestlé in society | Creating Shared Value and meeting our commitments 2012 | Full report 4 What is How we implement Nutrition Water Rural Responsible Environmental Human rights Our people CSV CSV development sourcing sustainability and compliance ambitions, achievements and commitments in all areas including nutrition, water, rural development, environmental sustainability, compliance and hu- man rights. These confirm that we have made progress in meeting our CSV, sustainability and compliance commitments during 2012. Meeting our Commitments How urgent is the food and water crisis? We have set out our ambitions to make a difference through The facts speak for themselves: key forward commitments on nutrition, water, rural devel- • There are 870 million undernourished people in the world today. opment, environmental sustainability, compliance and hu- (World Food Programme) man rights. • Two billion people – nearly one-third of the world population – suffer from deficiencies in Iron, Iodine, Vitamin A, Zinc, or a combination of these. Over 740 million people suffer from iodine deficiency disorders; Sharing your views while the World Health Organization estimates that 250 million We hope you find our Nestlé in Society communications preschool children are vitamin A deficient • Globally, an estimated 43 million preschool children were overweight informative and engaging. We welcome your input and or obese in 2010, a 60 percent increase since 1990, of which over 80% views, which you can share with us by using the “Contact live in developing countries. (American Journal of Clinical Nutrition, Us” area of our corporate website. November 2010) • Today, 31 countries face chronic freshwater stress and shortages. By 2025 this is estimated to rise to 48 countries as water withdrawal outpaces renewal. (United Nations Environment Programme) These challenges will only get more pressing as the global population rises towards a predicted 10 billion by 2100. Peter Brabeck‑Letmathe Paul Bulcke Chairman of the Board Chief Executive Officer Nestlé in society | Creating Shared Value and meeting our commitments 2012 | Full report 5 What is How we implement Nutrition Water Rural Responsible Environmental Human rights Our people CSV CSV development sourcing sustainability and compliance About this report Through our Nestlé in Society reporting, we aim to share information transpar- ently about our long-term impact on society and how this is intrinsically linked to the creation of our long-term business success. Our reporting history We have issued global reports covering our Creating Shared Value, environmen- tal sustainability and compliance performance every two years since 2007, and have now migrated to comprehensive online reporting on Nestlé in Society on an annual basis. Our 2012 focus: nutrition We supplement our online reporting with topic-specific printed summary reports concentrating, each year, on one of our three Creating Shared Value focus areas: rural development, water and, in the case of 2012, nutrition. Our wider communications Our comprehensive online Nestlé in Society report, the summary print report, case studies, audio content, and videos (all available in the Nestlé in Society sec- tion of our website) are companions to our 2012 Annual Report, which outlines our business and financial