Creating Shared Value in the supply chain

Introduction to Nestlé Produces some of Britain’s most popular brands E.g. KIT KAT®, NESCAFÉ®, SMARTIES®, GO CAT®, SHREDDIES® Over one billion KIT KATs produced in the UK every year The world’s leading nutrition, health and wellness company Employs c330,000 people across 83 countries More than 7,000 people work across 19 UK sites £300 million worth of products exported every year to over 50 countries

Nestlé's culture Corporate business principles are basis of organisation’s culture Guide behaviours and ways of operating Protect stakeholder interests Consumers Human rights and labour practices Employees Suppliers and customers The environment Nestlé's principles embedded in its approach to Corporate Social Responsibility

Corporate Social Responsibility (CSR) CSR involves considering business impacts on all stakeholders Nestlé's raw materials grown in wide range of countries Important to take a broad view of its responsibilities Nestlé's initiatives aim to create value for all Creating Shared Value

Creating Shared Value (CSV) An integral way of doing business for Nestlé Based on codes of conduct and business principles But goes beyond legal compliance Focuses on sustainability Aims to create value in 3 key areas Water, Rural development, Nutrition

Creating shared value in the supply chain Each stage of supply chain adds value to next 2/3 of Nestlé global expenditure on raw materials 40% of this goes on 3 ingredients – milk, coffee, cocoa Issues in supply chain affect quality and quantity of raw materials (e.g. cocoa beans)

Issues facing Nestlé Nestlé operates within complex supply chain Thousands of farmers in many different countries Farmers may use old methods Supplier countries often have poor infrastructure Growing shortage of labour and skills as younger people leave cocoa farming Threatens supply of materials

The Cocoa Plan Launched in 2009 in Cote d’Ivoire Aims to: Investment of £67m over 10 years Aims to: Help cocoa farmers be more profitable through training and Fairtrade premium pricing Provide education for their children Improve respect for the environment Enhance quality of life Ensures high quality, sustainable supply of cocoa for Nestlé

Benefits of the Cocoa Plan Investing in plant research Higher quality seedlings produce typically 50%–200% more cocoa Enables cocoa farmers to grow more and sustain a higher income Investing in training farmers To understand better crop and pest management techniques To improve awareness of child labour issues Improving social conditions Partnership with the World Cocoa Foundation builds and repairs schools within cocoa farming regions School becomes viable option for parents/children and reduces risk of child labour Fairtrade Crops are certificated under the Fairtrade label Nestlé pays premium price for beans Improves growers’ levels of income, helps future growth of communities

Communicating with stakeholders Cocoa plan is evolving, growing programme Effective communication helps to: Identify emerging issues Shape responses Drive improvements Nestlé communicates through Annual and CSV reports Supplier Code Corporate and Cocoa Plan websites Partnerships e.g. Fair Labor Association, Red Cross, governments