Creating shared value
Nestlé's purpose is to unlock the power of food to enhance quality of life for everyone, today and for generations to come. This purpose drives us to make a positive impact on people, pets and the planet - now and in the future. We are committed to supporting a just transition to regenerative food systems that can nourish the world.
Understanding our material topics
To reflect shifting trends and stakeholder priorities, we regularly conduct a materiality assessment to identify where Nestlé has the greatest impact on society and the environment, and which impacts are most important to our business success. In 2022, we worked with an independent third party to interview 55 internal and external stakeholders to make the assessment. The top-rated topics are covered in this section and all material topics are covered in detail in our Creating Shared Value and Sustainability Report (pdf, 16Mb).
We aim for our food to be tasty, nutritious, sustainable, and accessible and affordable to everyone, across all life stages. Our extensive portfolio ranges from beverages and meal solutions to confectionery and healthcare nutrition products. We are improving the nutritional profile of our products by adding more whole grains, proteins and fibers while reducing sugars, sodium and saturated fats - without compromising taste. In 2022, we updated our systems and policies to further improve the healthiness and taste of our products.
Uncle Tobys Oat Milk range in Australia is made with 100% Australian oats and has a Health Star Rating of four out of five.
Providing transparent information about our products is central to maintaining people's trust. In 2022, for the first time, we benchmarked our entire global portfolio against the Health Star Rating (HSR) system, a nutrient profiling system used by the Access to Nutrition Initiative and on front-of-pack labels in some countries. We are also reporting separately on specialized nutrition products like infant foods and medical nutrition, which are not covered by the HSR system. Nestlé is the first company to disclose the nutritional value of its entire portfolio, ranging from occasional treats to nutritious foods and beverages for daily consumption, to our specialized nutrition offerings.
Further, to communicate transparently about the nutritional composition of our products, we will continue to display locally relevant front-of-pack nutrition labeling schemes, such as Nutri-Score. In our Creating Shared Value and Sustainability Report (pdf, 16Mb), we disclose the nutritional value of local portfolios in 13 countries using their respective government-endorsed front-of-pack labeling systems. This transparency is part of Nestlé's efforts to grow and expand the nutritious segments of our portfolio, including plant-based, children's and healthy aging products.
The nutritional value of our portfolio*
|Excluding PetCare (79% net sales*)||Including PetCare (97% net sales*)|
|Net sales from products with a Health Star Rating of:|
|HSR of less than 1.5||21%||17%|
|HSR of 1.5 to less than 3.5||22%||18%|
|HSR of 3.5 or above||37%||30%|
|Net sales from specialized nutrition products without Health Star Rating:|
* Excludes products that are not foods or beverages for consumption, and some recent acquisitions.
Product access and affordability are more important than ever given the social and economic instability and supply chain constraints the world is facing. Nestlé remains committed to providing essential food products in markets worldwide.
We also continue to offer a wide range of affordable and micronutrient fortified products, totaling 129.2 billion fortified servings of affordable nutrition products in 2022. New offerings include Bunyad Iron+ in Pakistan and expansion in Nestlé East and Southern African Region (ESAR) of Nestlé Everyday, an affordable, medium-fat milk powder enhanced with locally sourced ingredients containing calcium, iron, vitamins and zinc.
To help fight deficiencies, Bear Brand tailors the micronutrient fortification of its products to the specific nutritional gaps of each market where it is sold.
We advertise our products according to strict guidelines - especially when it comes to how we communicate to children and how we promote breast milk substitutes. In 2022, we announced plans to update our Marketing Communication to Children Policy with a commitment not to market confectionery, ice cream or water-based beverages with added sugars to children aged under 16 years. This will meet the strictest standard in the industry. In 2022, we also announced plans to update our policy on the responsible marketing of breast milk substitutes, with a commitment to unilaterally stop the promotion of infant formula globally for babies aged 0 to 6 months.
Quality and safety for consumers is Nestlé's top priority. This applies to our entire portfolio, from foods and beverages to systems and services. Quality assurance and product safety is one of Nestlé's Corporate Business Principles, while our Quality Policy (pdf, 2Mb) guides our actions in this area. Our global, independently verified quality management system is our platform for guaranteeing food safety and compliance with quality standards in conformance with laws and regulatory requirements, ISO norms and internal standards.
We carefully revised our quality management systems in 2022 and are placing even greater emphasis on reinforcing a quality and food safety culture, strengthening competencies, performing more frequent and targeted testing, enhancing verification, and making better use of data for prediction and detection of incidents.
In 2022, our greenhouse gas (GHG) emissions remained decoupled from business growth, as we achieved higher revenues and lower absolute emissions. Scope 1, 2 and 3 GHG emissions within the boundaries of our Net Zero Roadmap have now reduced by 6.4 million tonnes compared with a business-as-usual scenario. These emissions have fallen below our 2018 baseline for the first time since introducing our Roadmap, despite revenue growth over the same four-year period. Emissions reductions are the result of a wide range of projects in our agricultural supply chains, as well as in our factories.
Progress on our roadmap to 20% reduction in greenhouse gas emissions
by 2025 and 50% reduction by 2030 and net zero by 2050
In addition to these emissions reductions, we secured 4.3 million tonnes of GHG removals by implementing nature-based solutions that transfer GHGs from the atmosphere into carbon stores. These removals take place within our supply chain and the landscapes where we source our raw materials, and help to restore forests, wetlands and peatlands, or improve land management.
We are proud of our progress, but know there is more to do to reduce Nestlé's absolute emissions on our way to net zero by 2050. We are still adapting our approach in response to what we learn. Many of our emissions reduction and removal activities will take time to implement but we remain confident they will yield rapid results to keep us on track. Our commitment to help farmers in a just transition toward regenerative agriculture supports our climate-related agenda.
Reducing dairy emissions is essential to Nestlé's climate ambitions, so we are exploring changes to cow feed, manure management, pasture coverage and renewable energy use, among others.
Our alignment with the Taskforce on Climate-related Financial Disclosures
|Board's oversight||Oversight of climate-related risks and opportunities is embedded at the highest level. The Board has oversight of climate-related matters and monitors progress toward related goals. The Board's Sustainability Committee reviews Nestlé's sustainability agenda and the Audit Committee is informed of the content of our non-financial reporting and of the audit process for selected assured metrics.|
|Management's role||The Executive Board is responsible for executing sustainability strategies, including our Net Zero Roadmap, through an ESG & Sustainability Council. At operational level, an ESG Strategy and Deployment Unit drives implementation.|
|Climate-related risks and opportunities||
Climate change is considered a material risk for Nestlé. Within our Enterprise Risk Management framework, we conduct an annual assessment of climate change risks and review the strategy and plans to mitigate them. We assess related financial risks using a discounted cash flow methodology.
Our assessment establishes:
|Impacts of climate-related risks and opportunities|
|Resilience of the organization's strategy|
|Processes for identifying and assessing climate-related risks|
|Processes for managing climate-related risks|
|Integration into the organization's overall risk management|
|Metrics & Targets|
|Metrics used to assess climate-related risks and opportunities||In addition to the indicators published last year, for 2022, we have added the percentage of key raw materials sourced through regenerative agriculture methods as a major component of our Net Zero Roadmap for increasing climate resilience.|
|Scope 1, 2 and 3 greenhouse gas (GHG) emissions||In 2022, 70% of carbon savings generated came from interventions in raw material sourcing and 30% came from other value chain efficiencies and innovative product categories. This demonstrates our ability to mitigate climate risks and embrace opportunities.|
|Targets used to manage climate-related risks, opportunities and performance||We review our Net Zero Roadmap for achieving planned GHG emissions reductions for 2025 and 2030 annually to validate that our activities are keeping us on the path to net zero and are helping mitigate and adapt to climate risk throughout our value chain.|
In 2010, Nestlé was one of the first companies to commit to end deforestation in its supply chains. By the end of 2022, 99.1% of our primary supply chains for meat, palm oil, pulp and paper, soy and sugar were assessed as deforestation-free.
From experience, we know that the last percentage points are the hardest to reach due to the volume sourced from thousands of smallholders who require customized technical assistance at a local level. We remain focused on achieving our deforestation-free commitment.
Our vision continues to be that none of our packaging, including plastic, ends up in landfill or as litter. As with carbon, we are moving beyond peak virgin plastics, reducing the volume we use while our business continues to grow.
We have a strategy that supports our vision and addresses both product design and infrastructure systems. By reducing unnecessary packaging, designing better packaging for reuse and recycling systems, modeling fair collection systems and supporting good regulation, we aim to support the transition to no waste in landfills or nature.
As a signatory of the Ellen MacArthur Foundation Global Commitment, our aim is to have 100% of our packaging designed for acceptance in recycling systems. By 2025, more than 95% of our packaging will be designed for recycling. We are on track to reduce our use of virgin plastics from 2018 levels by one-third by 2025: at end of 2022, we had reduced our use of virgin plastics by 10.5%.
Reuse and refill systems are also important. We have run over 20 packaging reuse pilots in 12 countries, providing products in our Nestlé Waters business and with partners such as Loop, Aldo and Carrefour. However, we recognize that more needs to be done and will work with retail partners to increase and scale up reuse and refill systems.
In France, we launched a pilot with Carrefour testing new refillable solutions for Nescafé, confectionery and pet food in the bulk aisles of two hypermarkets.
We advocate for well-planned regulation to enable collection, sorting, reuse and recycling systems. We support regulations like extended producer responsibility and deposit return systems. We are also highly committed to supporting UN negotiations for a high-ambition Global Plastics Treaty as a legally binding agreement to end plastic pollution.
In addition to our own actions, we need to foster large-scale changes throughout our supply chain, if we are to support a just transition to regenerative food systems.
We aim to address environmental and social impacts for 14 priority raw materials by assessing whether they have been produced sustainably. Produced sustainably means that the origin of the materials is known and the way they are produced has been assessed as compliant with our environmental and social requirements. The 14 priority raw materials are cereals and grains; cocoa; coconut; coffee; dairy; fish and seafood; hazelnuts; meat, poultry and eggs; palm oil; pulp and paper; soy; spices; sugar; and vegetables. We have set specific environmental and social requirements for each raw material. We aim for 100% of these materials to be produced sustainably by end of 2030.
We are helping farmers in our supply chain transition to regenerative agriculture practices. Regenerative agriculture is an approach to farming that aims to improve soil health and soil fertility, protect and enhance biodiversity, and preserve water resources. As agriculture accounts for the majority of our GHG emissions, and healthy soil and biomass can capture increased levels of carbon, this approach is central to achieving net zero.
Soil moisture sensors and plant stress-level sensors are helping farmers in our supply chains determine when to irrigate, how often and with how much water.
In 2022, we published the Nestlé Agriculture Framework (pdf, 18Mb), which describes our vision for agriculture as a central building block of more regenerative food systems. The framework contains common principles and techniques that may be expanded on for specific crops. Most importantly, farmers are at the center of our model. Where introducing regenerative agriculture practices generates initial risks or costs for smallholder farmers, we may provide technical, collaborative or financial assistance to support a just transition. Our Nescafé Plan 2030 and income accelerator program for cocoa-farming families are examples of how we are supporting farmers.
We also established the Nestlé Institute of Agricultural Sciences, a new center that builds on our existing agricultural expertise. Its aim is to translate novel agricultural science into concrete applications and identify promising agricultural technologies, with a focus on plant science, dairy livestock and agricultural systems.
Regenerative food systems put people at the center. By respecting and advancing human rights in our value chain, we are building a foundation that contributes to a resilient future for our planet and its people. In 2021, we outlined our approach and salient human rights issues in a new Human Rights Framework and Roadmap (pdf, 11Mb)
In 2022, we published our Data Protection and Privacy action plan (pdf, 800Kb) In 2023, we will publish the remaining action plans for each of our salient issues, describing the actions we intend to take, the collective action needed to help tackle root causes and key indicators for measuring the effectiveness of each plan. Our framework and action plans will help us protect people, first and foremost, as well as stay ahead of emerging human rights due diligence legislation in the markets where we operate.
As part of our Nestlé needs YOUth initiative, in August we brought together all our existing youth innovation initiatives in one place on the Nestlé Youth Entrepreneurship Platform (YEP). This digital platform supports young innovators and entrepreneurs who want to gain new knowledge and skills, test an idea or grow their businesses in areas ranging from food science and technology to the development of products and services, including sustainable packaging and regenerative agriculture. Nestlé created access to economic opportunities for a total of 1.7 million young people in 2022, bringing the total since 2017 to 5.6 million.
The Nestlé Youth Entrepreneurship Platform is a one-stop shop where young people can gain access to knowledge and facilities, such as our technology centers and international network of R+D Accelerators.
Helping to improve farmer incomes
Our income accelerator program aims to improve the livelihoods of cocoa-farming families and tackle the root causes of child labor risks in cocoa production, while advancing sustainable farming practices.
Poverty is the main reason that children work on cocoa farms. Building on more than a decade of experience with our Nestlé Cocoa Plan and our Child Labor Monitoring and Remediation System, this innovative approach aims to incentivize cocoa farming families to make sustainable changes that will help move them closer to a living income.
Through the accelerator, we pay a cash incentive directly to cocoa-farming households for activities such as pruning to increase crop productivity, planting shade trees to increase climate resilience, growing additional crops or raising livestock to diversify income, and enrolling children in school. Our suppliers send the payments when costs are typically high - like the back-to-school period. We also help farmers and women in the household access the training and resources needed to make the changes.
CHF 500 the amount families can earn annually in the first two years
To enable these payments and bring about lasting change, we are shifting our sourcing to segregated cocoa supplies that can be traced from the farming family all the way to our factory.
The income accelerator program is expanding a successful pilot of 1000 farmers in Côte d'Ivoire to a further 10 000 families. We will assess the results, adapting where necessary, before extending the program throughout our global cocoa supply chain by 2030.
We plan to extend the program to all cocoa-farming families in our global cocoa supply chain by 2030.
Explore more of our Annual Report
The Annual Report contains our Annual Review including Creating Shared Value highlights, the Corporate Governance & Compensation Reports and our Financial Statements