Good Food, Good Life Creating Shared Value and meeting our commitments 2018 Progress report Nestlé. Enhancing quality of life and contributing to a healthier future Creating Shared Value Individuals and families Communities Planet Reporting and governance Welcome to this 2018 Creating Shared Value progress report. Aimed at shareholders, stakeholders and other interested parties, this report shares detailed information about our issues, impacts 3 Creating Shared Value and performance against our commitments during the year. 5 Our 2020 commitments and progress Nestlé. Enhancing quality of life and contributing to a healthier future. 6 For individuals and families 7 Offering tastier and A message from our Chairman and CEO healthier choices 13 Inspiring people to At Nestlé, we believe that business diversity and inclusion within our lead healthier lives results and positive societal impact company is another example. We should be mutually reinforcing. are accelerating our efforts in this 21 Building, sharing and applying nutrition knowledge To be successful in the long term, area with a particular focus on we must create value for both increasing the number of women in 24 For our communities our shareholders and for society. senior executive positions globally. 25 Enhancing rural development We call this approach to business and livelihoods Creating Shared Value and it is When it comes to addressing an integral part of our strategy. global sustainability challenges, 31 Respecting and promoting human rights one of our key ambitions is to lead Improving the nutrition, health and the way in shaping a waste-free 36 Promoting decent employment wellness profile of our foods and future. We are committed to and diversity beverages is at the heart of what making our packaging 100% 40 For the planet we do. We want to contribute to recyclable or reusable by 2025, and healthier lives, with a particular have already taken specific action 41 Caring for water emphasis on childhood nutrition. on this initiative earlier this year. 46 Acting on climate change Our Nestlé for Healthier Kids 49 Safeguarding the environment initiative brings together all our As in previous years, we reaffirm efforts – from product our support for the UN Global 55 Reporting and governance reformulation to supporting Compact. As a founding member 56 About this report parents and caregivers. of UN Global Compact LEAD, we recognize the importance of this Paul Bulcke Mark Schneider 57 Independent assurance We are also driven to positively platform for driving corporate Chairman Chief Executive Officer statement contribute to the communities sustainability leadership and 58 Our key performance indicators where we live and work. Our Global collective engagement toward the Youth Initiative is just one of the 2030 Agenda for Sustainable many ways we make an impact. Development. We have expanded our efforts here to address youth unemployment We welcome your feedback on this and help 10 million young people report, our commitments and our access economic opportunities by performance. 2030. Our commitment to foster Creating Shared Value progress report 2018 2 Creating Shared Value Individuals and families Communities Planet Reporting and governance Creating Shared Value Creating Shared Value (CSV) is fundamental to how we do business at Nestlé. We believe that our company will be successful in the long term by creating value, both for our shareholders and for society. Our activities and products should make a positive difference to society while contributing to Nestlé’s ongoing success. Focus on key areas To better connect financial with non-financial value creation and Long-term value creation requires reporting, we worked with Ernst & focus. In consultation with experts, Young (EY) and Valuing Nature to we chose to prioritize the three conduct an impact assessment to areas where our business intersects calculate the societal and business the most with society: nutrition, value generated by our Global Youth rural development and water. Value Initiative (GYI). Launched in 2017, the creation is only possible with a solid GYI is expected to create 10 million foundation of compliance and a economic opportunities for young culture of respect, as well as a firm people over the next decade. The commitment to environmental study revealed that the initiative and social sustainability. Our generated a positive business return impact on these focus areas is on investment, and an even higher measured by progress against societal return. More details on the publicly stated commitments, results and methodology have been which are informed by our published on our website. materiality assessment and regular feedback from external groups. This impact valuation methodology has been peer-reviewed by FSG The business case for and continues to be refined Creating Shared Value through application to other We cannot maximize long-term projects. We are currently sustainable value creation for conducting an impact valuation of shareholders at the expense of our Caring for Water initiative. other stakeholders. We believe that societies will not support a business We also participated in the work that harms our communities and of the Embankment Project for overall sense of well-being. Creating Inclusive Capitalism (EPIC), which Shared Value helps ensure that we aims at shaping the broader remain relevant with consumers. conversation on long-term value creation. Read more about CSV Read more about our reporting and governance Creating Shared Value progress report 2018 3 Creating Shared Value Individuals and families Communities Planet Reporting and governance process, harnessed the Focusing on our Natural resource and water stewardship Supply chain stewardship perspectives of mainstream Climate change Over- and under-nutrition material issues investors, and involved key markets The materiality process and growth categories. Materiality is about identifying Major This was our first materiality the issues that matter most to exercise since switching from the our business and our stakeholders. Global Reporting Initiative (GRI) G4 Every two years, we plot Guidelines to the GRI Standards. Food and product safety the economic, social and Women’s empowerment Rural development and poverty alleviation We worked with DNV GL, an Community relations Human rights Changing consumer demographics and trends environmental issues that are of Business ethics Product packaging and plastic independent organization, to most concern to our external Responsible marketing and influence conduct the assessment using a Product quality stakeholders against those that formal materiality process to ensure Food and nutrition security pose risks or present opportunities Significant Resource eciency, (food) waste and alignment with the GRI Standards. the circular economy to Nestlé. Conducting a thorough Land management in the supply chain materiality analysis in this way not The issues identified were placed only helps us to identify issues we Importance to stakeholders Animal welfare Product regulation and taxation on a matrix, their position relative to need to cover in our reporting, but Employee safety, health and wellness Geopolitical uncertainty the degree of stakeholder interest Decent employment and equal opportunities Responsible use of technology also helps us to decide where to and potential business impact. Data privacy and cyber security focus our internal resources. These results represent the material issues facing our business. The Moderate Our 2018 materiality issues should not be viewed in assessment isolation; they are increasingly For 2018, the materiality process interconnected, and oftentimes Moderate Significant Major was evolved to bring both changes in one can have an impact Impact on Nestlé’s success nonfinancial and financial risk on others. identification together and to For individuals and families For our communities For the planet connect it more closely to business operations. In addition to identifying and prioritizing issues from internal and external How we map our material issues across our value chain stakeholders, the 2018 materiality assessment integrated with the How we map our material Enterprise Risk Management issues to the UN SDGs Creating Shared Value progress report 2018 4 Creating Shared Value Individuals and families Communities Planet Reporting and governance Our 2020 commitments and progress Status of our commitments New In progress Achieved For individuals Our 2030 ambition For our Our 2030 ambition is to For the planet Our 2030 ambition is to help 50 million improve 30 million is to strive for zero and families children lead communities livelihoods in communities Stewarding resources environmental impact Enabling healthier healthier lives Helping develop directly connected to our for future generations in our operations and happier lives thriving, resilient business activities communities Offering tastier and Inspiring people to Building, sharing and Enhancing rural Respecting and Promoting decent Caring for water Acting on Safeguarding healthier choices lead healthier lives applying nutrition development and promoting employment climate change the environment knowledge livelihoods human rights and diversity Launch more foods Apply and explain Build and share Improve farm Assess and Roll out our Nestlé Work to achieve Provide climate Improve the and beverages that are nutrition information on nutrition knowledge economics among the address human rights needs YOUth initiative water efficiency