ENTERPRISE FOR THE FUTURE: A shopkeeper stands outside his store in Punjab, India. Making small packs of products means they are more affordable for consumers.
Nestlé Chief Executive Officer Paul Bulcke will today discuss how more companies could benefit by focusing on activities that create value for shareholders, while advancing economic and social conditions in the communities where they operate.
As Co-Chair of the World Economic Forum (WEF) Annual Meeting 2011 which takes place in Davos, Switzerland this week, Mr Bulcke will form part of the expert panel debating ‘The Future of Enterprise’.
Mr Bulcke will outline how Nestlé has enhanced its competitiveness by building the Creating Shared Value (CSV) approach into its basic way of doing business.
Creating Shared Value for shareholders and communities
By focusing on three specific aspects of its core activities – water, nutrition, and rural development – Nestlé has identified those areas where it can best create value for its shareholders while also helping to address important societal challenges.
For example, in August 2010, the Company launched the Nescafé Plan in Mexico City, a ten-year CHF 500 million global investment to optimise its supply of quality coffee beans, by enhancing the livelihoods of the farmers who produce them.
Announced by Mr Bulcke, over the next five years the plan will see Nestlé double the amount of Nescafé coffee it buys directly from farmers and their associations, working to develop their skills by providing them with high-yield, disease-resistant coffee plantlets and expert technical training.
Nestlé is being supported in meeting the Nescafé Plan’s objectives in relation to sustainable farming by the Rainforest Alliance, an international non–governmental organisation, together with other partners of the Sustainable Agriculture Network (SAN) and the coffee association, 4C. Visit the Nescafé website for more information about the Nescafé Plan.
Emerging markets - Affordable nutrition
While in emerging markets around the world, Nestlé’s Popularly Positioned Products (PPPs) are fortified to specifically address some of the most common micronutrient deficiencies among lower-income consumers. Available in smaller or ‘daily-portion’ packs to be bought on a regular basis, PPPs are manufactured from local raw materials to minimise value chain costs.
For Nestlé’s Maggi brand alone, 94% of its bouillons, seasonings, noodles and fixes are fortified with iodine, equating to 90 billion servings worldwide.
In India in 2009, the Company launched a Maggi PPP seasoning fortified with iron, vitamin A and iodine, as well as a Maggi PPP noodle fortified with iron and iodine. It also enhanced its standard Maggi 2-Minute Noodles with added protein and calcium, and made them available in a smaller, more affordable PPP pack.
Another example of Nestlé’s approach to CSV is its partnership with the East Africa Dairy Development Board in Kenya and Uganda. This aims to secure and increase sustainable milk production through a programme of technical assistance to dairy farmers set to double their income over a ten-year period.
Harvard Business Review features Creating Shared Value
Nestlé’s efforts to create shared value for its shareholders and society are highlighted as best practice in the featured cover story in the current issue of the Harvard Business Review (January/February 2011), co-authored by Professor Michael E. Porter.
Professor Porter, who will join Mr Bulcke on Friday evening’s panel, suggests that the Company’s long-term view is a more effective model of business in society than traditional examples of Corporate Social Responsibility.
Along with Nestlé, the Harvard Business School Professor and leading business strategist has been influential in communicating the concept of CSV to a wider audience. Read the article on the Harvard Business Review website
Forthcoming book reveals more about the Nestlé concept
The subject received further attention this week with the online release of extracts of a forthcoming English translation of Nestlé Chairman Peter Brabeck-Letmathe’s book,
“Peter Brabeck-Letmathe and Nestlé – A Portrait. Creating Shared Value”.
Originally published in German last year, the book reveals how under Mr Brabeck’s leadership Nestlé was one of the first leading global businesses to advocate CSV.
The portrait touches on themes of importance to Nestlé’s Chairman, such as the Company’s long-term strategy, leadership, innovation, water and CSV.
Mr Brabeck chose this year’s global WEF summit to announce the availability of a selection of English chapters of the book, which also features interviews with well-known figures such as Kofi Annan, former Secretary-General of the United Nations; Professor Michael Porter; and Klaus Schwab, Founder and Executive Chairman of the WEF.
World Economic Forum website
Nescafé Plan website
East Africa Dairy Development Board film
Harvard Business Review website
BBC Global Business - Creating Shared Value Podcast