Implement responsible sourcing in our supply chain and promote animal welfare
How we implement responsible sourcing
Why it matters
A secure supply of high-quality agricultural ingredients is essential to ensuring the long-term sustainability of our business. Our responsible sourcing program plays a key role toward achieving this. It helps us to know where our ingredients come from and how they are produced, and to address environmental and social issues such as deforestation, human rights, and animal welfare. Through responsible sourcing practices, we can have a positive social and environmental impact on the communities with which we work.
What we are doing
In 2019, we continued to report transparently on the sourcing of our 15 priority raw materials. We also built on efforts to tackle deforestation, promote human rights and ensure animal welfare in our supply chains. Read more about it in our 2019 progress report.
What responsible sourcing means to Nestlé
Our responsible sourcing strategy
Our responsible sourcing strategy is guided by our Responsible Sourcing Standard (pdf, 2.5Mb) (RSS). This covers all our sourcing, whether directly through our Farmer Connect program or through our procurement department.
Where we source our supplies
Through Farmer Connect, we source directly from more than 550 000 farmers to purchase coffee, cocoa, and milk. We also provide training and support to farmers, most of whom are rural smallholders in developing countries. Sourcing staff carry out regular farm visits and assessments against our RSS requirements.
The remainder of our supplies and all our other raw materials are sourced through our Procurement department. Our procurement activities include regular auditing of all our direct suppliers against the RSS. In addition, we have identified 15 raw materials that present higher risk of environmental and/or social issues. Those risks are managed through our responsible sourcing program. The first requirement is to conduct a mapping of our upstream supply chains with our direct suppliers and carry out farm assessments with partner organizations such as ProForest and Earthworm Foundation (previously The Forest Trust).
Defining responsible sourcing
We use two key measures to assess our progress:
Responsible sourcing: Our raw materials verified as being sourced in accordance with our Responsible Sourcing Standard.
Traceability: Mapping our supply chain to know exactly where our raw materials come from, all the way back to their farm, plantation, fishery or other place of origin.
Responsible sourcing requires deep engagement with our suppliers. We expect all our raw material suppliers to conform to the requirements of the RSS, while our program of detailed assessments, carried out by expert independent partners, measures compliance. Where gaps are identified, we work with suppliers to develop and implement action plans to close these gaps.
In many cases, issues are identified that require long-term, tailored interventions – such as our Child Labor Monitoring and Remediation System (CLMRS), used in our cocoa supply chain in Côte d’Ivoire and Ghana, and our work with Verité to tackle labor rights abuses in the seafood industry. Similarly, our use of the Starling satellite system uses technology to address deforestation in our palm oil and pulp and paper supply chains. Such interventions address issues on the ground by tackling the root causes, for greater impact.
Partnering for success
Driving transformational change requires collaborative, industry-wide and multi-stakeholder efforts to share expertise and learning and scale up what works. We actively participate in several industry associations, including the Consumer Goods Forum, the Institute for Human Rights and Business Leadership Group for Responsible Recruitment and the Responsible Business Alliance’s Responsible Labor Initiative, as well as multi-stakeholder collaborations such as the Fair Labor Association (FLA), the High Carbon Stock Approach (HCSA) Steering Group, the Cerrado Manifesto and the Global Coalition for Animal Welfare. Nestlé also advocates change with national and local governments as well as industry organizations and peers to bring about real transformation.
Our focus areas
Why it matters
To ensure responsible sourcing, we need to know where our raw materials come from so that suppliers can be assessed and potential issues identified. Responsible sourcing must also be transparent, requiring accountability across the industry to drive real progress.
What we are doing
Open sourcing information for our ingredients
We believe that disclosing suppliers and other information about the sourcing of high-risk ingredients is essential if we are to demonstrate progress. For this reason, we have made public the list of suppliers and volumes we buy for our 15 raw materials.
Increasing transparency through innovative technology
Nestlé has entered a ground-breaking partnership with OpenSC, an innovative blockchain platform founded by WWF-Australia and Boston Consulting Group Digital Ventures. This technology will allow consumers to track their food right back to the farm where it came from. The platform will give anyone, anywhere access to sustainability and supply chain data. The pilot in 2019 traced milk from producers in New Zealand to Nestlé factories and warehouses in the Middle East. Nestlé is the first major food and beverage company to pilot open blockchain technology in this way.
Why it matters
Land, soil, trees and water are vital resources in all the habitats where our raw materials are sourced. We are committed to protecting these natural resources for all the people who rely on them. We work collaboratively to preserve the health of these habitats, sharing water resources, eliminating deforestation from our supply chain, improving soil management, protecting the oceans and preserving biodiversity.
What we are doing
Together with partners Airbus and the Earthworm Foundation, we began using the Starling satellite system to monitor 100% of our global palm oil supply chains in 2019. This technology has changed the way we manage deforestation risks in our palm oil supply chain by allowing us to better understand the complex deforestation patterns around palm oil-producing areas. We now see where deforestation occurs, indicators of what drives it, and who may be involved. We use this information to identify deforestation cases and risks and to prioritize actions within our supply chain.
In our pulp and paper supply chain, we use Starling to help us determine where forest losses are resulting in deforestation and degradation of high-conservation-value forests. Throughout 2019, we trialed this technology in four prioritized landscapes in our priority sourcing locations – northwest Russia, southeast US, British Columbia in Canada, and Sumatra – to develop base maps of forest cover type. Subsequent monitoring of forest cover change will commence in 2020.
Our suppliers are now engaging with the mills that are at risk of being linked to deforestation, and we are increasing resources for on-the-ground verification and engagement.
We expect 90% of our raw materials to be verified deforestation-free by 2020, up from 77% as of April 2018. We will continue to work with smallholder farmers and large suppliers alike to be close to 100% deforestation-free within the next three years.
Collaborating on managing landscape approaches
Landscape approach is about balancing competing demands for land use in a way that supports people’s well-being and livelihoods, resource management and environmental considerations. It covers complex and varied factors that cut across many issues – not just protecting trees, but also water conservation, food production, animal grazing, climate change and more.
Addressing such complex issues cannot be done in isolation. Collaborative action is needed, at local, regional and national levels. For this reason, Nestlé is participating in public collaborations between private companies, producers and buyers, and NGOs to address landscape and deforestation issues collectively. For example, deforestation linked to soya production is increasingly high on the agenda of NGOs and the media. This is a particular issue in the Cerrado area of Brazil, one of the world’s most important ecosystems. Nestlé has signed a statement of support for the Cerrado Manifesto, which aims to halt deforestation in this region.
Similarly, in Sumatra, Indonesia, we are working with other brands and suppliers on two initiatives for sustainable land use planning in our palm oil origins, while in Côte d’Ivoire and Ghana we are working with the Cocoa and Forests Initiative.
Why it matters
Nestlé opposes all forms of human rights violations, including forced and child labor, and other forms of labor rights abuses. By taking action to respect and promote human rights within our supply chains, we can help transform the lives of the world’s most vulnerable people and contribute toward achieving the Sustainable Development Goals.
What we are doing
Tackling child labor
To tackle child labor in our cocoa supply chain in Côte d’Ivoire and Ghana, we have developed our CLMRS. Through this, we can identify the causes and incidents of child labor and take remedial action through community-wide solutions, as well as those tailored to individual needs. In 2019, we published our second report (pdf, 5.7Mb) on child labor in our supply chain. Read more about our work to address child labor.
In our hazelnut supply chain, our partner the Fair Labor Association carried out a social impact assessment (SIA), building on our previous audits, as these identified issues but not causes. The SIA provided valuable information on what needs to be improved. As a result, we are now working with three suppliers to target specific actions, such as providing access to education for children and safe places for them while their parents are working. Read more about our work in the hazelnut supply chain.
Driving responsible recruitment
Forced labor continues to be a systemic issue in many agricultural supply chains, with recruitment fee debt bondage being the most widespread expression of this. In many parts of the world, it is common for workers – especially migrants – to bear the cost of obtaining work, such as travel, visas and medical expenses. Workers get into debt to pay these costs, then find they can only pay the interest on the debt from their wages, with the debt tying them permanently to a role over which they have no control. In many cases, their passports may be withheld until the debt is paid off.
We sponsored 12 assessors to attend Verité’s four-day Ethical Recruitment Auditor workshop in Malaysia. The objective of this training was to build assessment team competencies in identifying forced labor risks in migrant workers’ journeys. The focus was on the recruitment process, as indicators of these risks can easily be missed in employment site assessments. Among those trained were five internal assessors from our direct palm oil suppliers who conduct sustainability assessments of their suppliers’ (Nestlé’s upstream supply chain) practices; five third-party assessors from our NGO partners who conduct independent assessments in our supply chains; and two auditors who conduct Sedex Members Ethical Trade Audits and Roundtable on Sustainable Palm Oil audits of our suppliers.
Improving access to grievance mechanisms
In a collaboration with Sime Darby Plantation (SDP) in Malaysia, we have piloted a project to help eliminate human and labor rights abuses in our shared palm oil supply chain. A highly enhanced helpline co-developed by ELEVATE and the Responsible Business Alliance allows workers to report on working conditions, recruitment, safety and other labor issues.
This robust helpline is the first of its kind in the palm oil sector and utilizes ELEVATE’s cutting-edge Laborlink mobile worker survey platform, which aims to assess actual and potential human rights risk, deliver mitigation plans, and track effectiveness of actions taken. Technology-enabled communication channels allow workers to voice their concerns through the channels that are most appropriate for them, including SMS, Facebook Messenger and a toll-free number, accessible seven days a week during peak call times. Issues raised are handled via clear protocols, with consistent attention to follow-up and resolution of issues. The objective is to significantly reduce the risk of human and labor rights abuses by giving workers an opportunity to report issues directly to trained helpline officers.
The one-year pilot in 2019 covered 24 mills and plantations, and 5909 workers in SDP’s supply chain. Based on the learning gained, the helpline will be strengthened and rolled out progressively across SDP. We also aim to expand access to the system to the broader Malaysian palm oil industry.
Applying new technology to support seafood workers
Together with our partners the Issara Institute, we are using new technology and innovation to tackle human trafficking and forced labor in Thailand’s seafood industry. Workers in our supply chain have been given access to Issara’s Golden Dreams smartphone app, which enables them to voice their opinions about employers and recruiters and to share views with other workers. A ratings function helps workers to make better-informed choices and also to alert companies within the supply chain to potential abuses, both at the recruitment stage and in the workplace. Users of the app can also access the latest information on their legal rights, as well as hospitals and support organizations such as NGOs.
As well as raising workers’ awareness of their rights, Golden Dreams is helping to increase transparency throughout the supply chain and improve our supplier’ understanding of workers’ conditions.
Improving worker livelihoods and living conditions
Our partner Earthworm Foundation has worked with one of our supplier’s operations (one mill and one estate) in Indonesia to ensure wages and working hours are in accordance with regulations and improve workers’ conditions. As a result of the project, workers’ housing has been renovated and improved, with septic tanks installed in houses accommodating 60 families, and wells provided to enable 62 families to access clean water. In addition, protective equipment has been supplied to 411 plantation workers and school transportation provided for 90 students, while workers have been empowered to participate in the labor union.
Why it matters
We believe the best food comes from animals raised with high animal welfare standards and practices. Improving safety and welfare creates healthier, stress-free animals, which has both a direct and an indirect impact on food quality and safety.
What we are doing
Moving toward cage-free eggs
We made good progress in 2019 on our commitment to source only cage-free eggs in Europe, and are on track to meet our target of 100% by the end of 2020. We are working with the Global Coalition for Animal Welfare to explore how this commitment could be expanded to the rest of the world.
In Brazil, we have launched a trial called CowSense, using advanced sensors to monitor the health, activities, and well-being of cows, 24/7. The data will help inform farmers on the behavior and health of their animals. Read more online.
In November, we held a Supplier Day with major suppliers to discuss the changes required to improve welfare standards for broiler chickens. Engagement with retailers is planned for 2020 to see how the transition to higher welfare standards can be accelerated between now and 2026.