It can be said that trust is a soft issue, often based more on perception than fact. But without facts, there is no basis for establishing trust.

So let me quickly give you some key facts and figures about the corporation I have now been running for two and a half years.

Nestlé is the world's leading food and beverage company, with sales of about CHF 72 billion. It has 230,000 employees worldwide and operates 520 factories in 82 countries. Our products are available universally, including such remote markets as North Korea, and they are sold under a number of brands such as Nestlé, Nescafé, Nestea, Maggi, Buitoni, Perrier and Friskies.

Our company belongs to more than 200,000 shareholders, none of whom can own more than 3 percent of the stock. It has traditionally taken a long-term view of its business development - contrary to many of its competitors - and even during periods when financial markets pressed for short term shareholder value, Nestlé built up very strong positions in emerging and developing countries. Today,
Nestlé is about twice the size of its nearest competitor in the food and beverage sector. This amounts to a clear leadership role which we are quietly proud of, and which we absolutely want to maintain.
Clearly, such a prominent position also implies increased visibility and scrutiny by the public and the media, as well as by all organizations, groups and movements that take an interest in corporations.
Such interest is legitimate and we, as a supplier of branded goods, should be the last to complain about it.

The company I lead has been in business for over 130 years. Since the days of its founder, brands have been a mainstay of our development and we strongly believe them to be one of the key elements of our success.

A basic reason we have grown to be the world's largest food company is that consumers have learned to trust our brands and the people behind them. A critical aspect was, and still is today, to find the right balance between globalizing some of our brands to achieve the necessary economies of scale and yet make and maintain them meaningful to our local consumers, so that they can establish the important emotional link with them. The Nestlé solution to this challenge was the establishment of a clear hierarchy of very few corporate strategic global brands that now cover almost all our products, as well as the parallel usage of regional and local product brands and product denominations.

Additionally, we introduced the Nestlé Seal of Guarantee and emphasized our corporate logo whenever appropriate. This was done because we recognize that the consumer has a right and, increasingly, an interest to know more about the company. This Seal of Guarantee is a visible sign of our corporate responsibility for the safety and quality of each of our products, and fundamental to our effort to maintain consumer confidence and trust in our corporation. In order to be able to give this quality and safety assurance, we developed a Nestlé Quality Management System, which is compulsory for each of our operational subsidiaries and which collects the experience of our Research & Development, on which we spend CHF 800 million a year.

For a company such as Nestlé, economic success depends on winning the public's approval every day in every country where our products are sold. There is no guarantee of consumer loyalty, and each brand and product has to earn and merit consumer preference every single day of the year. Look at it this way. The average retail price of our products around the world ranges between 25 centimes and CHF 2.50. In order to reach CHF 72 bn in sales, billions of consumers need to make a conscious decision to spend their hard earned money on a Nestlé brand. Moreover, they need to repeat that purchasing decision, again and again, in order to sustain a given business.

However, there is not one single product in our portfolio that cannot be replaced by something else.
And with the possible exception of Kit Kat bars and Swiss chocolate, there are very few Nestlé products that consumers feel they absolutely have to buy in order to stay alive.

But many of our products do serve a very important function for people; to give families as well as singles the ability to prepare tasty and nutritious meals quickly - and thus allow them to keep a balance in this fast-paced world between job, family, and social life.

This is increasingly also true of the developing world, where it is estimated that more than 500 million people have moved out of poverty and entered the cash economy in the last 10 years, and who want to have access for the first time to industrial products. We at Nestlé try to meet their needs by launching "Popularly Positioned Products", which can be substantially lower priced by utilizing local
raw material and packaging, and eliminating unnecessary convenience options such as micro-waving.
These products complement our traditional products aimed at the middle class and above throughout the world.

As the burden of meal preparation still falls disproportionately on women, these convenience food products, such as instant noodles enriched with micronutrients, are particularly important for the hundreds of millions of women who have entered the paid work force in the past decade.
However, one thing is common to all consumers, namely the demand for food safety and their interest in knowing how the corporation involved assumes its overall social responsibility. People want to buy from companies they can trust.

When we refer to Corporate Image or trust in a company, we are talking about opinions, emotional, spontaneous reactions, formed by and based on sometimes accurate and once in a while misleading information. This information is brought to the public by the media, often strident, sometimes slanted.
Campaign groups, such as Greenpeace, owe much of their undeniable public punch - and their considerable financial means - to a skill in creating and exploiting media events which do not always convey factually correct information. While such groups often perform a valuable role as whistle blowers, they also play a propagandist role, which plays on consumer fears by selective presentation of facts and opinions to suit their case.

Luckily, there is a filter; namely an individual's accumulated knowledge, experience and personal outlook on life. A consumer who has purchased a certain brand for years is unlikely to jump on any bandwagon trying to induce him away. Add to this a healthy mistrust of media hype and a natural disposition to trust one's own judgement. People who follow a company's development over time, as shareholders or as observers of economic life, are not likely to be stampeded into a campaign because a pressure group has suddenly discovered some alleged irregularity somewhere.

Nevertheless, the rapid pace of social, political and technological change has clearly increased the consumer's need for authenticity - and that desire has been magnified by the evident scarcity of integrity, honesty, and consistency in the public arena. What this means for corporations is quite clear: presence and visibility are vital in order to build up that capital of trust.

Trust is created slowly. It stems from consistency between word and deed, from carefully argued positions and from the willingness to adapt to new situations and to learn. It also comes from the courage to say things clearly and straightforwardly, even though such action will provoke negative reactions in some quarters... and if such is the case, to openly say it if things have gone wrong.
Today's marketplace is also open to many attitudes and ideas that are often mutually exclusive - but expressed with great vigor and conviction. Pressure groups exploit this climate and attempt to mobilize public sentiment against companies or even try to dictate corporate conduct through threats. In the United States, this very day, several hundred companies are - theoretically at least - being boycotted
for one reason or another. While few of these appeals ever have a significant economic impact, they nevertheless can absorb management time and risk producing an adverse public perception. They are also attempts to undermine trust in companies, institutions, and, as occurred in Seattle, in our free market society.

As you know, Nestlé has had to deal with a number of highly contested and sometimes quite acrimonious debates. We have not always handled them with skill, and some could probably have been laid to rest sooner. Yet I am struck by one fact: our corporate reputation has not suffered in spite of decade-long campaigns and public debate. I am convinced that two elements played in our favour:
Nestlé has managed to build that "institutional" trust in broad segments of the public, through an unquestionable priority given to the quality and security of its products, and we has learned over time to show a high degree of consistency in handling difficult issues in a transparent and responsive manner. In other words, trust has been nurtured throughout this period.

This was very noticeable during the bitter fight about infant nutrition. While the media stopped paying much attention to this issue in the mid-1980s with the passage of the WHO Code and with the end of the boycott in the United States, there are still groups in the UK, particularly around universities, and groups in some other countries who continue to voice concern.

Let me say first of all, that Nestlé is by no means perfect, and things were done in the past that showed a lack of understanding for the concern that many people had about this issue. Even today, with more than 230,000 employees, we can make mistakes.

But it is worth understanding the origins of our Company and how we built a reputation of trust over 130 years. Our first product was an infant food, developed by our founder, Henri Nestlé, which saved the life of a baby whose mother could not breastfeed. During a time when infant mortality and sanitary conditions were worse in Switzerland than in most developing countries today, this food was soon in demand in many countries throughout Europe and around the world because of its life-saving properties. And from the beginning, Henri Nestlé and the Company preached that women should breastfeed, if at all possible. In 1869, Henri Nestlé began his book Memorial on the Nutrition of Infants, by saying: "During the first months, mother's milk will always be the most natural nutriment, and every mother able to do so, should herself breastfeed her children".

This product still has a vital role. For a working mother in the developing world who has no paid pregnancy leave, who is forced to go back to work when the child is two or three months old, who leaves the house as 6:30 in the morning and returns at 8 o'clock at night, infant formula plays an essential role in assuring the well-being of her child. If such a child does not receive formula, it will be fed instead a whole host of unhealthy foods, including sugar water, rice water, whole cow's milk, and things that are even worse. But the marketing of infant formula needs special treatment, so as not to discourage breastfeeding.

Fortunately, The WHO Code for Marketing of Breast-milk Substitutes, passed in 1981 as a recommendation to all member states of the WHO, provides a framework for marketing of these products. The WHO Code as implemented in each country covers the vast majority of our sales, and we have a minimum standard we apply in all developing countries we refer to as the "Nestlé Instructions to Implement the WHO Code".

To assure these standards are met, we conduct 2 auditing processes, one internal and one external. Internally, we have a program of systematic audits of our companies, and over 130 such audits have been conducted in the past 5 years.

I, as CEO, personally review each violation identified, and decide on action to be taken, including freezing of salaries, cancellation of bonuses, and dismissal, if a willful violation of the Code is confirmed.

Secondly, in 1999, we began a process with the health authorities of member states of WHO to judge if our policies and practices are in line with the WHO Code recommendations as applied in their countries. The WHO Code assigns to governments the official responsibility for monitoring the Code in each country.

About 4 months ago, I gave to the WHO Director-General a report about our compliance with the WHO Code. In the report, 54 governments or appointed monitoring bodies provided written, official evidence that Nestlé's policies and practices conform with the WHO Code. Only one country, Samoa, has written to say that we don't, and we are in contact with that government to reach resolution. This
process continues, with additional countries confirming each month that Nestlé complies with the WHO Code.

Furthermore, we do not stop at simple compliance, but actively support public health efforts in the countries where we operate. For instance, In Mexico, the health ministry has called Nestlé, "An extraordinary partner for breastfeeding, perinatal health, and Reproductive Health programs." In Chile, where I worked with Nestlé for many years, and where my own children were born, we recently received from the current government a special award for the multiple contributions we have made to
the public health of the country. These are only 2 of many examples around the  world of how we have established strong consumer trust and a successful long-term business.

Still, we recognize that some organizations have a different interpretation of the World Health Organization Code recommendations than we do. To those organizations, we say, please join us at the table at the World Health Organization and let's resolve our differences.

The Director General of the World Health Assembly, Dr Gro Harlem Brundtland, has invited both industry and infant formula action groups to join in discussions to resolve once and for all the differences which exist in interpretation of the WHO Code, so that efforts can be directed to implementing the Code in a practical way in each country.

Nestlé, both directly and through the industry trade association, has said yes to Dr Brundtland's invitation, and stand ready to participate in an open, transparent dialogue. However, we understand that after a year, the WHO is still waiting for the campaign groups to accept her invitation. We sincerely hope that they will accept Dr Brundtland's invitation, as it is Nestlé's desire that we resolve contentious issues so that we all spend less time debating the Code, and more time actually making it
work. We want clear standards so that all competitors are held to the same standards to which we hold ourselves.

We also recognize the legitimacy of NGOs to call to the attention of manufacturers and governments violations of the Code. However, to make the Code work in each country, we need a common criterion, which is the decision of each government concerning the implementation of the WHO Code in their country. For instance, here in Europe, the May 1991 European Directive on infant formula and follow-on formula is the official EU implementation of the WHO Code, but some campaign groups have refused to accept it as being legitimate. Thus, the controversy continues in some quarters.

Also, complete facts of potential allegations need to be given to governments and to manufacturers.
To make the Code work, all parties - governments, manufacturers, and NGOs - need to be working together. Fortunately, this does happen in a number of countries, including such diverse nations as Malaysia, Singapore, Australia, Switzerland, and Zimbabwe.

We could easily forgo the Infant Formula business: infant formula in developing countries accounts for less than one percent of our business. But as a responsible executive I have to ask myself: * does the product have a legitimate and useful function? * does our marketing respect a mother's freedom of choice and the superiority of breastfeeding? * are we acting in an ethically and economically defensible way?

Since I can answer "yes" without any reservations, we have no intention to stop providing this valuable product. The Company remains open to discussion with anybody, we will correct mistakes that can occur. But also, we will not stand idly by when an interpretation of the Code, grossly divergent from that of WHO and its member states, is used to slander us.

As I said, building trust is a slow process. When I look at the debate over genetically modified food, I believe that we have to face several more years of acrimony. The discussion, like most of the really lively ones, suffers * from a lack of knowledge and understanding in large segments of the public, * from a refusal by some to consider the wide body of scientific literature on the issue, as well as the 30 plus years of experience with organisms such as genetically modified soy, * from the lack of leadership of political authorities in some countries, * and a certain commercial opportunism by some players.

I want to point out here that Nestlé is only marginally touched by this discussion, as we have no commercial advantage if we use GM soy or GMO-free soy. If we have a positive public stand which supports careful use of gene technology, it is because vis-à-vis the enormous challenge of continuing to supply an ever growing population and, at the same time, diminish the unsustainable negative environmental impact of our present agricultural system, we recognize that the responsible research
and application of gene technology could become a solution to this extremely important issue.
There are other arguments that speak for a rational approach to genetic engineering. I would, however, like to raise the issue of the risks. As consumers, we are often confronted with horrifying questions: "What if?" What if the genetically modified plants indeed show a higher incidence of allergenicity 20 years down the road? What if there are really modified plants that seed out 20 miles from where they were planted?

Public opinion is overwhelmed with apocalyptic scenarios and is exposed to such expressions as the "danger of Frankenstein" food, and very little is said about the real and potential advantages of that new technology.

Let us, by all means, discuss the risks, all of them, including the risk of not scientifically determining what the potential problems might be. To believe that, today, we can build a legal Maginot line against genetically modified organisms in order to keep them out of our clean home countries, is all the more dangerous because it is illusory. Only a real technology assessment, based upon broad practical experimentation will allow us to understand the inherent risks and feasible ways of protecting ourselves against them.

We should further ask: What are the risks of not allowing research to be done in this area in Europe?
What are the risks of once again conceding a very promising technology to the other players? What are the risks finally of neglecting a technology that could significantly contribute to resolving some of the problems agriculture has to face world-wide?

Let me quote Norman Borlaug, the Nobel peace prize winner and agricultural scientist, who told a recent general meeting of the Asian Development Bank: "Extreme environmental elitists seem to be doing everything they can to stop scientific progress in its tracks.... While affluent nations can afford to
pay more for food produced by the so-called 'organic methods', the one billion chronically undernourished people of the low-income, food-deficit nations cannot."

Of course, a company like Nestlé should not and cannot try to impose a technology on the consumer, and there always has to be full transparency for the consumer's choice. However, those of us who run global corporations also have global responsibilities and cannot take into consideration the respectable opinion of a very few against the pressing need of the overwhelming many of our globe.

We cannot elude these questions, nor can we leave the answers entirely to the Monsantos and the Novartis' of this world. A few years down the road, we are going to be asked not only if we have maximized short-term shareholder value, but also some other, more difficult questions. Among them will certainly be: What have you done to help fight hunger in developing countries? What have you contributed to the search for new, more sustainable agricultural methods? And finally, what have you
done to smooth the path for a technology that can enhance the raw materials we are using, that can produce demonstrable benefits in the products we sell to our consumers?

I for one intend to have my answers ready. Precisely because I believe that consistency is vital in building trust, Nestlé's attitude with regard to genetic engineering has not changed. Where the scientific community, through health and environmental authorities, has approved and verified the safety of genetically modified raw materials, and where they are accepted by the consumers, Nestlé
will keep on using them. Simultaneously, we assure that all products and their ingredients sold by Nestlé, undergo beforehand our stringent internal safety control and, where adequate, are openly and clearly declared. Furthermore, my company will go on making major efforts in order to inform the authorities and the public, on the opportunities and risks that genetic engineering can provide.

I believe that there is a real moral dimension to this issue, and I acknowledge the courage of the Nuffield Council on Bioethics which stated: "There is a compelling moral imperative to make genetically modified crops readily available to developing countries who want them, to help combat world hunger and poverty".

Today, the real leadership challenge is winning trust. It applies to all constituencies that a corporation is in contact with - to shareholders, employees, suppliers, customers, the authorities. Each and every one of them is crucial for the long-term economic success of a corporation. This is why part of the stakeholder versus shareholder debate is so academic. As with most things in life, balancing
conflicting interests with a long-term perspective holds more promise than a dogmatic approach.

I note with great satisfaction that the process of wealth creation through open and efficient market mechanisms seems to be better understood these days. Companies and entrepreneurs benefit to some extent from that fact. On the other hand, the intensification of competition results in a constant process of restructuring and adaptation that strains the social fabric. Nestlé, like any other corporation,
fights hard to remain competitive and in our Group too, factories are being closed and sold off. But here also, a commitment to social responsibility can alleviate the effects. We are willing to take the time and to go the extra mile to find alternative solutions. And when jobs are at stake, we will do our level best to soften the impact. Not because we are intrinsically better, but because we strongly believe that we have an obligation to our people and to the community. Over the last three years,
slightly above two thirds of jobs could be saved when we have had to close or sell factories.

To get people to trust you, you have to prove to them that you are trustworthy, and this can only be achieved if you respect them profoundly. Trust is built over a period of time through shared experience, through consistency in word and deed.

In this sense, gaining trust is the foundation of leadership. There is a difference between formal administration and natural leadership. We can manage our business without trust for some time.

However, we will not achieve long term positive results unless we can mobilize the internal forces of our companies to achieve ambitious goals. Nor could we convince our consumers and partners that doing so responds to their needs. In this sense, trust is really a recipe for success, for a continued and long-term creation of wealth that will in the end contribute to improving the standard of living for all mankind.

It's a difficult task, but I cannot imagine a more rewarding one.