Nestlé Chairman and CEO Peter Brabeck-Letmathe visiting a Mexican coffee farm in Jicotepec during a training session for the coffee growers

Henri Nestlé founded our company in 1866 on a single product, an infant cereal, which was created to save the life of a neighbor’s child. From that time onwards, the fundamental strategy of our company has been to create value for society, and in doing so create value for our shareholders.

As a result of this strategy, over the past 141 years Nestlé has grown from a small family-owned business to become the world’s foremost nutrition, health and wellness company.

However, Creating Shared Value for society and investors means going beyond consumer benefit. The very first edition of the Nestlé Corporate Business Principles stated that: "Our investments must be good for the company and for the countries where we operate."

Creating Shared Value also means bringing value to the farmers who are our suppliers, to our employees, and to other parts of society. It means examining the multiple points where we touch society and making very long-term investments that both benefit the public and benefit our shareholders, who are primarily pension savers or retirees.

Over a period of decades, we have worked with millions of milk and coffee farmers to make them better suppliers, and in so doing, have helped them to climb out of poverty and to prosper. Today, we work with about 600,000 farmers globally, providing free technical assistance, infrastructure and over CHF 29.9 million of micro-credit loans. About half our factories are in rural areas in the developing world, and have a profound impact on family income, quality of life, and the future for the next generation.

Creating Shared Value additionally means treating the environment in a way that preserves it as the basis of our business for decades, and centuries, to come. Ending dangerous trends in air and water pollution and mismanagement is basic to our being able to sustain a growing food and beverage business. We all share one home - planet earth - and the future of our business is inextricably linked to the future of the planet.

Creating Shared Value means thinking long term, while at the same time delivering strong annual results. One of the fundamental Nestlé Corporate Business Principles is that "We will not sacrifice long-term development for short-term gain".

We aim for (and have achieved) consistent improvements in annual performance through what we refer to as ‘The Nestlé Model’: annual organic growth of 5% to 6%, combined with a sustainable annual increase in the profit (EBIT) margin. But we resist short-term temporary business and social solutions. For instance, we have purposely avoided being listed on stock exchanges which require reporting of quarterly earnings, because we believe this can lead to business thinking which is too focused on the short-term.

Creating Shared Value means thinking long term, while at the same time delivering strong annual results. One of the fundamental Nestlé Corporate Business Principles is that 'we will not sacrifice long-term development for short-term gain, Peter Brabeck-Letmathe, Chairman and CEO, Nestlé

As a result of this approach to business, independent research on the Nestlé brand indicates that globally we are rated very highly on "Fulfilling our responsibilities to society", and particularly in developing countries. The strength of the Nestlé brand, including its performance in this area, is fundamental to the success of our company. It is a result of taking our relationship with society seriously over many decades, and building a brand based on Creating Shared Value.

However, we are not satisfied with the status quo. For instance, we are increasingly focused on providing affordable, nutritious foods to lower-income populations in developing countries. In 2007, working with national governments, we opened large, state-of-the-art factories in rural areas of Brazil, China and Pakistan, to produce food with high nutritional value at an affordable cost for the local population.

Our Creating Shared Value report is a first step in providing data on a global level on this subject. It is an integral part of our company reporting, together with the 2007 Nestlé Management Report of financial results. It follows a publication two years ago on Nestlé, in which Harvard’s Mark Kramer and Professor Michael Porter established a framework to examine our company in Latin America in terms of Creating Shared Value. As a result, we have defined a multi-year plan for a step-by- step expansion of our measurement of Creating Shared Value. Access to global information has been a significant internal limitation on our reporting, but our new GLOBE business information system will, for the first time, allow us to provide global Nestlé information in many areas where it is currently unavailable.

We began planning our Creating Shared Value report with a study of outside views on what is most relevant for us to report, and thank the SustainAbility organisation for their help in this. We have also sought stakeholder feedback via an engagement process in different regions of the world facilitated by AccountAbility International. As a result, included in the report is a summary of Nestlé activities in relation to the Global Reporting Initiative, the UN Global Compact Principles and the UN Millennium Development Goals.

As I prepare to hand over the Chief Executive Officer role to Mr. Paul Bulcke, I reflect on the past 11 years as Nestlé CEO, during which time we have increasingly sought to engage with society and to communicate about the interdependent relationship of Nestlé with the people of the countries where we operate.

In my continued role as Chairman of Nestlé, I will remain committed to assuring that we continue to expand our thinking and engagement in this area. Our Creating Shared Value report is part of an evolving process, and I hope that it helps you to understand and evaluate Nestlé’s interdependent relations with people and the planet.

Peter Brabeck-Letmathe
Chairman of the Board and Chief Executive Officer