1. Nestle SA CSV Summary Report 2011

7/30/2019 1. Nestle SA CSV Summary Report 2011

1/45

Creating Shared ValueSummary Report 2011


2/45

Creating Shared Value Key Performance Indicator

Economic

Total Group sales (CHF million) (a)

Net prot (CHF million) (a)

Nutrition

Nestl Nutrition sales (CHF million) (a)

Products meeting or exceeding Nutritional Foundation proling criteria (as % o total sales) (b) (c)

Renovated products or nutrition or health considerations (d)

Products with increase in nutritious ingredients or essential nutrients (d)

Products with reduction o sodium, sugars, trans-atty acids, total at or articial colourings (d)

Products analysed and improved or conrmed via 60/40+ programme (sales, CHF million) (b) (e)

Products containing Branded Active Benets (sales, CHF million) (a)

Products eaturing Nestl Nutritional Compass labelling (% o sales worldwide) (b) ()

Products in EU with Guideline Daily Amounts (GDA) labelling on ront o pack (% o sales) (b) (g)

Products with specic portion guidance (sales, CHF million) (b) (h)

Nestl television advertising to children under 12 in compliance with policies on responsible marketing (%) (i)

Nestl contraventions o inant ood marketing policy requiring remediation (j)

Inant ormula marketing sta in higher-risk countries trained in the WHO Code (% o sta) (k)

Popularly Positioned Product (PPP) SKUs

Popularly Positioned Products (sales, CHF million) (a)

Environmental Sustainability

Production volume

Total production volume (million tonnes)Materials

Raw materials used (million tonnes)

Materials or packaging purposes (million tonnes)

Packaging source optimisation (kilotonnes saved)

Energy

Total on-site energy consumption (petajoules)

Total on-site energy consumption (gigajoules per tonne o product)

On-site energy generated rom renewable sources (% o total)

Total direct energy consumption (petajoules)

Total indirect energy consumption (petajoules)

Water

Total water withdrawal (million m3

)Total water withdrawal (m3 per tonne o product)

Biodiversity

Total size o manuacturing sites located in protected areas (hectares) (l)

20

83 6

9 4

7 2

7

5 0

3 8

1 2

28 7

5 5

9

9

21 8

9

1

5 5

10 6

45

22

4

3

9

1

1

6

7

13

4

GRI

EC1

EC1

FP4

FP4

FP7

FP7

FP6

PR1

FP7

PR3

PR3

PR3

PR7

PR7

PR6

FP4

FP4

EN1

EN1

EN3

EN4

EN8EN8

EN11

2010

93 015

34 233

7 700

73.2

6 502

3 847

2 655

36 420

5 335

97.1

98.7

21 305

99.5

7

100

4 860

9 848

43.74

23.27

4.59

70.8

88.6

2.03

12.3

63.0

67.6

1443.29

2011 perormance summary


3/45

Creating Shared Value Key Performance Indicator

Emissions, efuents and waste

Direct GHG emissions (million tonnes CO2eq)

Direct GHG emissions (kg CO2eq per tonne o product)

Indirect GHG emissions (million tonnes CO2)

Indirect GHG emissions (kg CO2 per tonne o product)

Total water discharge (million m3

)Total water discharge (million m3 per tonne o product)

Quality o water discharged (average mg COD/l)

By-products (kg per tonne o product)

Waste or disposal (kg per tonne o product)

Environmental sustainability governance

Manuacturing sites certied against ISO 14001 (% o total manuacturing sites)

Rural Development

Farmers trained through capacity-building programmes

Markets covered by Sustainable Agriculture Initiative Nestl (SAIN) programmes

Direct procurement markets covered by SAIN programmes (%)

Percentage o suppliers, key vendors, and quality key suppliers compliant with companys sourcing policy (l)

Percentage o purchased volume compliant with the Nestl Supplier Code (l)

Our People

Total workorce (number o employees) (m)

Total rate o new employee hires (%) (l) (n)

Total rate o employee turnover (%) (l) (n)

CARE gaps identied related to Business Integrit y and HR

O which: Minor

Major

Critical

Lost-time injuries among employees and on-site contractors (per million hours worked)

Total recordable injury rate among employees and on-site contractors (per million hours worked)

Fatalities o employees and on-site contractorsAverage hours o training per year per employee per category (o)

Leadership positions held by women (%) (n)

Local Management Committee members native to country in developing countries (%) (p)

(a) Sales recognition changed rom 1 January 2011 (see Note 1 o the Group Financial Statements: Changes in presentation Revenue). To provide a basis o comparis2010 gures have been accordingly restated.

(b) 2010 KPI not comparable to 2011 (see Note 1 o the Group Financial Statements: Changes in presentation Revenue).(c) 2011 assessment scope: 70% total Nestl sales volume.(d) Based on reports o approximately 75% o worldwide product development teams.(e) This KPI refects the dynamic nature o our 60/40+ programme. Assessment results are valid or a maximum o three years, only i all parameters remain equal.() Excludes total petcare and, or US only, Dreyers, Haagen-Dazs and pizza business.(g) Across EU 27 plus Norway, Switzerland, Adriatic Region, Ukraine and Moldova. Excludes plain coee, tea and water, products or Nestl Proessional,

giting chocolate, seasonings, petcare, Nestl Health Science and Nestl Nutrition.(h) Products sold as single servings and meeting/exceeding Nutritional Foundation OR sold with/via a device or equipment delivering a serving meeting/exceeding

Nutritional Foundation OR sold to caregivers with detailed instructions on adjusting servings to evolving nutritional needs. This currently represents only

a subset o the portolio with portion guidance.(i) The Nestl Marketing Communication to Children Policy was updated in 2011. Previously, a media channel or programme was dened as targeted to childreni 50% or more o its audience were children between 6 and 12 years old. As o September 2011, the percentage has been redened to 35%. The compliancepercentage shown above has thereore been calculated to refect the previous Policy o 50% audience threshold (January to August 2011) and the new 35% thresho(September to December 2011).

(j) Based on internal and external audits. Following a change in the criteria in July 2010 to dierentiate higher- and lower-risk countries, more countries are now parto the higher-risk category where the Nestl Policy and Instruction on Implementing the WHO Code applies as a minimum requirement.

(k) Higher-risk countries are those with mortality rates or under-ves o more than ten per 1000 under-ve, or more than 2% acute malnutrition (moderate andsevere wasting) among under-ves. All other countries are lower-risk.

(l) New KPI.(m) Cover s all Nestl employees including Joint Ventures.(n) Covers Nestl employees registered in the HR system (approximately 80% o all employees).(o) Covers Nestl employees whose training is tracked in the HR system (approximately 62% o all employees).(p) Covers all Nestl employees including Cereal Partners Worldwide.

GRI

EN16

EN16

EN16

EN16

EN21EN21

EN21

EN22

EN22

FP1

FP1

LA1

LA2

LA7

LA7

LA7LA10

LA13

EC7

2010

3.98

91.0

3.14

71.9

942.15

78

32.16

8.45

91

144 900

45

100

281 005

425

393

32

0

1.8

4.2

110.58

27.3

48


4/45

Table of contents 2 A message rom our Chairman and CEO

4 About this report5 Material issues6 Water

31 Creating Shared Value at Nestl32 Nutrition34 Rural development36 Environmental sustainability38 Human rights and compliance40 Stakeholder engagement

A ull online report is available onour Creating Shared Value website awww.nestle.com/csv. For moredetailed reporting on our bottledwater division, please see the Nestl

Waters Creating Shared Value Repoat www.nestle-waters.com.

Accompanying reports

Figures highlighted throughout thereport with this symbol are tracked as KeyPerormance Indicators and summarisedin the KPI table inside the ront fap.

The brands in italics are registeredtrademarks o the Nestl Group.

Annual Report 2011 Corporate GovernanceReport 2011;2011 FinancialStatements

This report summarises Nestls response to the watechallenge, alongside our other Creating Shared Valuekey ocus areas o nutrition and rural development.All are core to our value creation activities and vital or

the sustainable development and well-being ocommunities we serve and the businesses we run.


5/45

Creating Shared Value Summary Repor t 2011

Reduction in overall water

withdrawals in our factories

since 2001

Number of Nestl Sustainable

Agriculture Initiative (SAIN)

projects associated with water

> Recipient of the Stockholm Industry Water Award

at World Water Week

> Special Distinction from French environment

ministries for watershed conservation and biodiversity

protection in the Vosges region, around the Vittel

water source

Number of factories which have

undergone our Water Resources

Review process during 2011

Investment in water and san

food security and emergency

initiatives in Cte dIvoire tha new threeyear partnership

the International Federation

Cross and Red Crescent Soc

(IFRC) and the Red Cross Soc

of Cte dIvoire

Number of wastewater treatm

plants in factories where mu

facilities are not available or

efcient enough

> In 2012 and beyond, we are committed to

enhancing performance and reporting on water

by implementing our W.A.T.E.R. commitments,

by tracking progress (see page 30) and by cont

to engage with our stakeholders (see page 40)

Reduction of additional water

used by Nestl Waters

since 2005, reaching a globalaverage of 0.63 litres per litre

of water produced

Highlights o our water eorts 2011

28% 11 301

2.25million CHF10 36%

2011 2012


6/45

2 Creating Shared Value Summary Repor t 20

Nestl is also a ounding signatory o the UN GlobalCompact CEO Water Mandate, whose reportingrequirements are refected in the structure o this report.We actively engage in the public policy debate aroundwater and advocate or better understanding o theconsequences o mistaken biouels policies. We hopethat the Rio+20 summit will deliver an unequivocalcommitment to no ood or uel. Food is or people;waste may be used or uel.

It is our rm conviction that access to adequate, saeresh water is a human right. Beyond the need or hydratioand basic hygiene, sustainable water policies shouldadequately price water to cover costs and refect its truevalue (and scarcity).

We strongly believe that or a company to be successu

in the long term, it must create value or its shareholdersand at the same time or the communities where it operateand or society at large. We call this Creating Shared ValueAnalysing our entire value chain, we have identied threeocus areas where Nestl can optimise the creation oshared value: besides water, these are nutrition and ruraldevelopment. So while water is the main theme o thisreport, you will also read about our other two priority areasas well as our progress and challenges in EnvironmentalSustainability and in Compliance; the essential oundationso Creating Shared Value. As part o this, we also reiterateour continued strong support or the UN Global Compact

and its Blueprint. Nestl is a ounding member o UN GlobaCompact LEAD.In nutrition, through our support or the UN initiative

Every Woman Every Child, Nestl committed to continuingto address todays health challenges by expanding itsglobal Healthy Kids Programme to teach children about thevalue o nutrition and physical activity. We are also creatingmore opportunities or women through income-generatingactivities and continuing to provide access to education,

At the current rate, the overuse o reshwater will severelyslow economic development. Worse, it will be the causeo massive ood shortages within the next 15 to 20 years.Exacerbating the problem will be a urther 2.3 billionpeople on the planet by 2050, adding to existing demandor ood and energy, which both critically dependon reshwater.

As the worlds leading Nutrition, Health and WellnessCompany, Nestl too, at every level, depends on reliableaccess to clean water, in order to maintain our abilityto meet our consumers needs. We thereore care deeplyabout water and remain committed to act. This year wehave reviewed the ve W.A.T.E.R. commitments we set outin our 2006 Water Report, ensuring that these continue todrive water perormance through our operations, supply

chain and with communities. We are now working on a seto perormance indicators to monitor our progress.

Water is a local issue. But the eects o local shortagesquickly become global issues in todays interlinkedeconomies. While we can have an impact through our ownoperations, a truly sustainable solution can only comerom a collaborative response rom multiple stakeholders;so we are actively promoting global dialogue on waterwhile also engaging in direct actions in our own right.

In recent years, water has moved to the top o the globalagenda. In 2008, the World Economic Forum establishedthe 2030 Water Resources Group, bringing together key

players in addressing this issue, and highlighting the criticalstatus o water availability.This group, under the leadership o the Nestl Chairman,

has elaborated a landmark report Charting Our Water Future,whose key ndings are now being transormed into concreteactions under the leadership o national governments,together with other stakeholders. This is an important rststep to bring reshwater withdrawals back into balancewith natural renewal.

A message rom our Chairman and CEO

By 2050 we will have to eed 9.3 billion people and ood production has todouble. The key is water, the scarcest natural resource on earth. At thecurrent rate o overuse, we will run out o water long beore we run out o oilThis is why we say: no ood or uel.


7/45


ocusing on women and children. These eorts on beo women and children refect our commitment to theMillennium Development Goals.

Responsible sourcing is intrinsic to our rural develogoals and we have conducted 1910 audits in 2011, to our suppliers responsible workplace commitments abeing implemented. Our traceability programme is alsreaching milestones; we began in 2010 with palm oil paper and pulp and by 2012 we will have extended it turther areas and main commodities. A particularly sechallenge is the occurrence o child labour. For a ew we have worked to urther ensure it has no place in osupply chain, so we have become the rst ood compto work with the NGO Fair Labor Association to help ubring transparency into our specic cocoa supply cha

and assist us in dening and implementing correctivemeasures, together with the other stakeholders involv

This summary report, and the more extensiveaccompanying Creating Shared Value reporting availawww.nestle.com/csv, record our progress and challeor 2011. We hope you nd them engaging and inormand welcome your input and views, which can be senthe Contact button at www.nestle.com.

Nestl ChairmanPeter Brabeck

Letmathe (left)visits a waterfacility at a farmthat delivers milkto the East African

Dairy Developmentproject factory inKabiyet, Kenya.

Peter BrabeckLetmatheChairman of the Board

Paul BulckeChief Executive Ofcer

Nestl CEOPaul Bulcke visitsa school close toour new plant inKarnataka, India.

Nestl works withlocal governmentin the region toprovide cleandrinking water and

sanitation facilitiesto village schools.


8/45


Future reportingOur objective is to increasingly align our external reportingwith good-practice guidelines, such as the GlobalReporting Initiative (GRI) G3.1 guidelines and the GRI FoodProcessing Sector Supplement, the development owhich we were involved in. Our Chie Financial Ocerparticipated as a member o the International IntegratedReporting Committee (IIRC), which was set up byThe Princes Accounting or Sustainability Project (A4S)and the GRI in August 2010.

Report boundary, scope and assurance

The inormation contained in our latest online report andthis summary covers Nestls global operations or the yeaending 31 December 2011, unless otherwise stated.

Data is provided or Nestls wholly owned companiesand subsidiaries, excluding joint ventures and suppliers,unless specically stated. The environmental data reersto actories only (excluding some recent acquisitions),and saety and health gures cover approximately290 000 Nestl employees (permanent and temporary),as well as approximately 80 000 contractors workingon Nestl sites.

Our CSV reporting is subject to independent third-partyassurance by Bureau Veritas. Their assurance statement ca

be ound at www.nestle.com/csv.

Through our Creating Shared Value reporting, we aimto share information transparently about our longterm

impact on society and how this is intrinsically linked to

the creation of our longterm business success.

Our reporting history

We have issued global Creating Shared Value (CSV) reportsevery two years since 2007, and have now migrated to ullonline CSV reporting on an annual basis. This shows ourprogress against key perormance indicators (KPIs) acrossour value chain and outlines the actions we have taken toaddress the main challenges acing our business.

Our 2011 focus: water

We supplement our online reporting with topic-specicprinted summary reports concentrating on one o our threeocus areas: nutrition, rural development and, in the caseo 2011, water.

Nestl Waters, the global leader in bottled water, alsoreports in-depth on its own activities in its Creating SharedValue Report at www.nestle-waters.com.

The CEO Water Mandate a building block

of this report

The water-ocused sections o this report mirror our eorts

in ve o the key elements o the UN Global Compact CEOWater Mandate. Five elements (Public policy, Collectiveaction, Direct operations, Supply chain and Communityengagement) each have a separate chapter and the sixth,Transparency, is ullled through the act o reporting.

Our wider communications

This summary, the ull online Nestl CSV report and thecase studies, audio content, videos and downloads online(see www.nestle.com/csv), are companions to our 2011Annual Report, which outlines our business and nancialperormance. Together, they orm an integral part o our

overall communication on CSV perormance and cover theUN Global Compact Advanced/LEAD Communication onProgress requirements.

About this report


9/45


For several years, Nestl has worked with SustainAbility,an independent think tank and strategy consultancy, toundertake a systematic prioritisation of the issues deemedmost critical and therefore material to our Company.

Based in part on a media and competitive scan,

SustainAbility identied global megatrends, assessedtheir relevance to our CSV focus areas and economic,environmental and social issues, and prioritised issues ona materiality matrix based on level of stakeholder concernand level of potential impact on Nestl. Following internal

validation of this work, key topics were discussed withexternal stakeholders in Autumn 2011 as part of our regularengagement processes (see page 40 for an overview ofour stakeholder engagement).

Megatrends

SustainAbility identied the following megatrends asparticularly important for Nestl: resource constraints,economic uncertainty, demographic shifts (includingurbanisation, ageing and the rise of middleclassconsumers), health and wellness, climate change, and

continuing technological developments.

MaterialitySustainAbilitys analysis, along with the stakeholderconvenings in New Delhi and London, identied a number

of issues that are new and/or rising in importance for Nestlcompared to previous years. The highestpriority issuesare highlighted by SustainAbility as follows:

The growing number of product recalls means productsafety continues to be a top concern for Nestl and thefood and beverage industry, with a specic focus on

allergens in India. Water, the theme of this report, and itscomplex links to food, energy and a range of other social,environmental and economic issues, continues to rise onthe agenda. While climate change mitigation remainsa central concern, stakeholder interest in climate change

adaptation is rising as the effects of climate change beginto make themselves felt, particularly in rural communities.Given rising obesity, unemployment and poverty in manyregions, the affordability and accessibility of healthfulfoods are becoming specic targets for industry initiatives

and stakeholder concern in Europe, the US and India, toname three regions. Ten years after the signing of theHarkinEngel Protocol aimed at ending child labour in theproduction of cocoa, supplier human rights remains a keyand growing area of stakeholder interest across a widerange of agricultural and other sectors. Finally, general

resource availability is taking centre stage as raw materialprices and commodity volatility reach unprecedentedlevels and supply appears to be becoming more inelastic.SustainAbilitys analysis of issues, prioritisedaccording to level of impact on Nestl and level of

stakeholder concern, is available in the materiality matrixat www.nestle.com/csv/materiality.

The text above is authored by SustainAbility.

Bottled waterIn addition to SustainAbilitys analysis opposite,

monitor and engage with a wide range of stakeh

and recognise that some have been concerned a

the perceived impact of the bottled water indust

the human right to water and on the environmen

Despite Nestl Waters status as the worldwide leadein bottled water, we are a small water user (our globaoperations amount to only 0.0009% o global estimatreshwater withdrawals). We use water not only in theitsel but also in industrial processes, including cleaniand cooling, and depend on a reliable supply o watesucient quantity and consistent quality to ensure thlong-term success o our business. Our vision is toprovide good quality products where consumers expto nd them and to play a leading role in promotinghealthy hydration.

We are thereore deeply aware o how precious wais and are committed to responsible water managemwhich we base on three main approaches. First, wecontinuously monitor the status o each o the sourceoperate. Second, we carry out risk assessments and measures in place to saeguard sources against any prisks. The third main approach is that we optimise the

water used during production on a continuous basis. urther, Nestl Waters shares its expertise and best pin water resource management with stakeholders in tlocal communities in which we operate. We are equacommitted to educating children, the water stewardsuture, about the importance o water or the environand the role o water in healthy hydration. Read moreNestl Waters environmental stewardship on pages

Material issues


10/45

Edward Dawutey, Waste Water TreatmentPlant Technician, tests treated water atour Tema factory in Ghana.


11/45


Water

Water has become the most pressing global environmental issuerepresenting a serious long-term risk or our business and society as a whNestl is determined to play a leading role in tackling the water challenge

The water crisisThough we have enough reshwater across the world as a whole,a growing, more prosperous andincreasingly urban population,combined with the impact o climatechange, is making water scarcitya serious reality in many parts othe world.

By 2030, demand or water isorecast to be 50% higher than today,and withdrawals could exceed naturalrenewal by over 60%, resulting inwater scarcity or a third o the worlds

population (source: 2030 WaterResources Group). With more thantwo thirds o all water being withdrawnby agriculture, ood security is also atstake i we are not able to solve theworlds water crisis.

Increasing supply and improvingeciency will only take us so ar.Meeting the rest o the challenge willrequire policymakers, civil society,agriculture and industry to worktogether to signicantly improve the

way we value, use and manage thisprecious resource.

Online resources www.nestle.com/csv/Water

www.unglobalcompact.org/ceo_water_mandate

www.nestle.com/csv/Stories

Public policy

For Nestl, as for all impacted by

waterrelated challenges, solutionsultimately depend on governments andcollaboration across sectors, so we arecommitted to actionoriented dialoguewith all stakeholders, from farmers to

policymakers, to help formulate strategiesaimed at addressing the water overdraft.> See pages 1215

Direct operations

In order to maximise operational efciency,we embed sustainable water managementinto our business and implementwatersaving programmes that help usreduce water withdrawals, increase reuse,make use of alternative water sources

and improve the water efciency ofour products. We return clean water tothe environment.> See pages 2023

Community engagement

Working with nongovernmentalorganisations, we help fund, supportand run sustainable water managementschemes, so that people living in thecommunities where we have facilities

have access to clean drinking water andbetter understand the importance ofhygiene and sanitation. In many casessuch engagement is directed at improvingconditions of communities on whom we

depend for raw material supply.> See pages 2829

Supply chain

Because we need to secure our lonaccess to raw materials, we suppomillions of farmers who supply us whighquality raw materials throughinvestment and training in good wamanagement practices, while enga

in water preservation activities witstakeholders, and sharing best pra> See pages 2427

Collective action

Through organisations such as the

initiatives of the Water Resources Gthe UN Global Compact CEO WaterMandate, the Water Footprint Netwthe Alliance for Water Stewardshipothers, we work with others to exc

ideas, foster new thinking and deveinnovative solutions.> See pages 1619

Meeting the water challenge


12/45


We admit that there are real and signicant challenges withregard to water management in our country. In this regard,we have already begun to think creatively about dierentways o preserving and protecting this precious resource,thus making more water available or economic growth andthe creation o decent jobs.

South Arica is a water-scarce country with a low rainall about 50% o the world average and one o the lowestrun-os in the world. Rainall is also highly seasonal, witharound 80% occurring within a span o ve months. Whilethis raises many concerns regarding water availabilityand security in the country, the South Arican governmentbelieves that i we manage our resources well and usewater judiciously, there will be no imminent shortage owater. Current projections indicate that South Arica will,

in all probability, exceed the limits o our economicallyuseable land-based water resources by 2050. However, mydepartment is working on innovative measures to ensurethat there will be clean water or human consumption oruture generations.

We have no option but to change our behaviour andattitudes towards water use, as part o our ongoingendeavours to build sustainable livelihoods or the peopleo our country. Indeed, i we do not change the way we useour water resources, challenges will be experienced in ourinitiatives to make more water available or economic growthand the creation o decent jobs. Water limitations will create

constraints to meet the energy generation capacity weneed or economic growth. It will also impact negatively onthe agricultural sectors ability to create jobs and provideood security or our country. The mining and industrialsectors will also experience constraints in contributing toeconomic growth and employment creation.

We thereore have a collective responsibility toproactively protect our water resources. In this regard, thework that Nestls Mossel Bay actory in South Arica hasdone in reducing its water consumption by 50% in 2010is to be applauded. It is encouraging to note thereare companies that look internally into their processesto improve the ecient use o water, thereby encouragingother water users to do the same.

We also congratulate Nestl as the winner o the2011 Stockholm Industry Water Award or its leadership,perormance and eorts to improve water managementwithin its supply chain globally. The education o thegeneral public on water conservation continues to be highlimperative. Thus, we have begun with campaigns aimedat raising awareness about water conservation and

encouraging our communities to get involved in wagingwar against water wastage. We have also commenceda programme to desalinate sea water or domesticconsumption in severely water-stressed areas.

Collectively, these interventions contribute towardsmaking more water available to allow our country to pursuthe strategic objective o growing the economy andcreating more decent jobs. To improve the collaborationwith business, we signed a Memorandum o Agreementwith the Water Resources Group (WRG), an infuentialpublic-private global network on water, supportedby the World Economic Forum and the International

Finance Corporation. The intent is to orge a partnershipwith WRG through a public-private group, chaired by aDirector-General o my department, to oversee the activitieto address critical water issues in South Arica: waterconservation, demand management and developing moresustainable management o groundwater resources.

By Edna Molewa

Expert opinion:the view rom South Arica

In our country o about 50 million people, we ace the challenge o reshwatescarcity which is exacerbated by its growing demand, pollution o its sourcesunsustainable usage and wastage. Factors such as climate changeand population growth also lead to an increase in water consumption.


13/45


We invite all citizens o South Arica to support us quest to make our country a water-conscious countrybenet o present and uture generations. As we charpolicy context, we shall continue to inuse in our appthe constitutional and human rights imperatives towaservice delivery model.

We trust that we can continue to rely on the suppovarious stakeholders, particularly companies like Neswe do our work to make more water available or ecogrowth and the creation o decent jobs.

We have no option but to change ourbehaviour and attitudes towards wateruse, as part o our ongoing endeavoursto build sustainable livelihoods or thepeople o our country.

Edna Molewa

Mrs Edna Molewa, MP, is the Minister of Water andEnvironmental Affairs in South Africa.

The comments on this page are the authors independent opinionare not necessarily shared by Nestl.


14/45


Public sector leaders and non-governmental organisationshave long dominated the debate on water policy but over thelast decade, a growing number o private sector companies(with Nestl playing a leading role) have also started toengage, on two tracks.

Track One is being dened by companies that aredeveloping technologies that can enable society to get moreproduct more ood, energy, income, employment perdrop o water. There are three broad segments. The rstcomprises companies that develop productivity-enhancingseeds and agricultural technologies. A second segmento companies is developing new technologies or treatingwater and wastewater. The third segment comprisescompanies that provide users with just-in-time and

just-whats-needed inormation, such as on the probability

o rainall, on soil moisture, on water and on ertilizerrequirements. Precision agriculture can produce much morecrop per drop than traditional methods can, and industriesand cities can use much less water too.

Track Two is motivated by the understanding thatgrowing concerns o water scarcity and quality can becomea threat to a companys social licence to operate. Companieshave responded in several ways. Some have made largedonations to activist groups in the hopes o buying peace;others have ocused on the water standards that they canthen meet in their plants. The most ar-sighted o thesecompanies, however with Nestl a leading example among

them recognise that while companies have to managewater and other resources eciently behind their actorygate, society (along with companies and their suppliers)needs an equitable, eciency-stimulating, and predictablelegal and regulatory environment that governs all water usesin a watershed. These companies also believe that privatebusinesses have useul and legitimate inputs to make intothe policy ormulation process.

I have seen, rst-hand, two examples where companiesare engaging on this big stage.

The rst example was in Brazil, where improving thequality o public sector perormance is, arguably, the biggesystemic challenge acing the country. Eight years ago, anewly elected Governor o one o the largest states realisedthis but did not have the people or tools to address theproblem. The Governor approached executives rom twoo Brazils most successul high-morale companies (InBevand Gerdau). Together, they laid down two basic groundrules: that they would assist only i the eort were led bythe Governor, and there would be very careul avoidance oeven the hint o a confict o interest. The companies thenprovided human and nancial resources, which the stateused to execute a hugely successul management shock

a process that is now being emulated in a dozen otherBrazilian states.

The second example is in Pakistan, where theChie Minister o the largest province is pulling togetherpublic and private expertise to address the existentialchallenges o water productivity and water security.The private eort has been led by the local private sector,with multinationals led by Nestl playing a strongsupporting role.

Nestl engages or three reasons. First, its corporatephilosophy o Creating Shared Value plays a major role,because Nestl in Lahore is not just the milk actory,

but includes the 190 000 armers who provide milk tothe actory. These armers tell Nestl that water is a majorchallenge not only or their cattle, but or their cropsand their amilies.

Second, Pakistan is an important and protablemarket or Nestl and the Company realises that itscorporate well-being is dependent on a moreprosperous and secure country.

By John Briscoe

Expert opinion:the business o water

Water insecurity looms as one o the great challenges o the 21st century,and it is one that policy makers and business leaders must ace together.


15/45


And third, while Nestl is, o course, a multinationain any place (like Pakistan) it is at least as much local ainternational. One o Pakistans most ar-sighted busileaders is a major shareholder, and Nestls sta is alexclusively Pakistani. And every Pakistani knows just vulnerable his or her country is when it comes to watAnd so Nestl like InBev and Gerdau in Brazil is puits management know-how at the service o reorminpolitical leaders, and encouraging other domestic andinternational companies to do the same.

Dealing with the growing and changing threat o winsecurity is one o mankinds great, existential challeThe glass is certainly hal empty. But it is also hal ullpolitical leaders increasingly engage with the undamo reorm, and as business leaders understand that th

an issue where they can, in partnership with progresspolitical leaders, make a big, systemic dierence.Dealing with the growing and changing

threat o water insecurity is one omankinds great, existential challenges.

John BriscoeProfessor John Briscoe was Senior Water Advisor andBrazil Country Director for the World Bank. He is now theGordon McKay Professor of the Practice of Environmental

Engineering at Harvard University.

The comments on this page are the authors independent opinionare not necessarily shared by Nestl.


16/45


The global context

The ever-expanding demand orwater by the worlds growing, moreprosperous and increasingly urbanisedpopulation, combined with theimpacts o climate change policiesand responses, mean that water is oincreasing strategic importance orbusiness and economic prosperity. Yetwater scarcity is a reality in many partso the world and with it, livelihoods,human health and entire ecosystemsare under threat.

In 20 years, demand or water willbe 50% higher than today and a third o

the worlds population will experiencewater scarcity, aecting the productiono staple oods, while reshwaterwithdrawals are expected to exceednatural renewal by over 60% by 2030(source: 2030 Water Resources Group).Expanding supply and improvingeciency will only ractionally reducethis gap, so policymakers, civil societyand businesses need to work togetherto dramatically improve how water isvalued and managed.

Our contribution to

public policy debate

Water has been an issue o concernand action or us since the 1930s,when we built our rst wastewatertreatment plant. Today, we remainactive and concerned, exemplied bythe engagement o Nestl Chairman

Peter Brabeck-Letmathe with the WorldEconomic Forum (WEF) over manyyears, including its Annual Meeting inDavos, Switzerland, in January 2011(see www.weorum.org).

Since 2008, we have also playeda leading role in the 2030 WaterResources Group (WEF-WRG);ormed with the International FinanceCorporation o the World Bank Group,McKinsey & Company and a consortiumo business partners. Under theleadership o Mr Brabeck-Letmathe, theWEF-WRG seeks new insights into waterscarcity, explores the opportunities and

costs o possible solutions, and ostersresults-based stakeholder dialogue.Beyond the debate, we also want to bepart o the solution with our own eortswithin the context o a cost-eective,comprehensive strategy.

Charting Our Water Future

Ater a year-long collaboration, theWEF-WRG published its landmarkreport, Charting Our Water Future, inNovember 2009. As well as providing

a clear insight into global challenges,the work also provides practical tools tohelp stakeholders compare the impact,scale, cost, trade-os and eectivenesso dierent measures and technologiesto reduce the water gap at a watershedlevel, enabling water management tobe integrated into wider economic andsocial decisions.

Public policy

Collective action

Direct operations

Supply chain


Public policy

The global issue o water overdrat cannot be solved by the private sectoralone. To stimulate concrete action, we are heavily involved in the publicpolicy debate, and are convinced that committed engagement with relevantstakeholders at watershed, government and international levels is the rightway to develop eective strategies.


17/45


Goals

Participate in the public

policy debate on balancingwater withdrawals withnatural renewals.

Contribute to actionorienteddialogue that will increase

the efciency of water useat a watershed level, todeliver a balanced regulatoryframework.

Actions

Engaging in public

sector dialogue withnational governments andintergovernmental fora.

Chairing the 2030 WaterResources Group and

leading the World EconomicForum water effort.

Performance

Water cost curves tes

in India, Pakistan, SouAfrica, Jordan, MexicoMongolia, with the WaResources Group.

Participation at high le

in publicprivate sectodialogue in several forincluding World EconoForum, World Water Wand Chatham House.

Key challenges

Engaging effectively with

governments to demonstratethat water shortage can beovercome at an affordablecost.

Although our pilot projects

are encouraging, gettinggovernment buyin andleadership remains crucial.

Global

Major water challen

for us all

Long daily treks to colle

and carry water (6 km oaverage by African womand children, according IFRC), no access to imprwater sources, and no a

to adequate sanitation adifcult realities for manBetter public policy andgovernance are importato Nestl because they aon the critical path towa

universal access to cleawater for every pe

an ambition wwe wholehear

support andthe same timein workingtowards solut

that tackle watsecurity issues fac

by millions of people wealso minimising the riskour own business.

6km


18/45


5000 10000 15000 20000

23

5

4

3

2

1

0

1

2

3

4

5

6

7

8

Potential

volume (hm3)

Marginal cost

(Pesos/m3)

Real-time irrigation

Optimal irrigation farming

Replacing domestic toilets

Domestic leaks

Dry cooling

Water-free urinals

Commercial leaks

Replacing showersReuse irrigation parks

Pressure control sub-division

Network industrial leaks

Repairing leaks

Tailing basin management

Irrigation by sprinkler

Localized irrigation

New deep wells

Potential groundwater extension

New dams for irrigation

Aquifer rechargeImprovement of secondary efficiency

Aquifer recharge with infiltration from wells

Reuse of treated water not in portfolio

Aqueducts not in portfolio

Reverse osmosis desalination

The 2030 Water Resources Group water cost curve: Mexico

P Oer

P Industry

P Public-Urban

P Agriculture

Source: 2030 Water Agenda (National Water Commission o Mexico)

The water cost curve is a keytool, designed to add to stakeholderunderstanding by providing acomprehensive assessment osupply- and demand-side leversthat can bring water withdrawals inindividual watersheds back into linewith natural renewal.

India, or example, has longinvested heavily in large-scale waterinrastructure but managing its waterresources remains a key challenge.

In Charting Our Water Future, theWEF-WRG analysed 140 measuresand selected 37 that could help closeIndias projected supply/demand gapacross 19 major catchment areas. Ithe cheapest options were selectedor managing water resources,annual expenditure in 2030 would beUSD 5.9 billion.

Testing the water cost curveUltimately, solutions are needed orwatersheds, river basins and aquiersand the WEF-WRG already leads theway through several multi-stakeholderpilot projects to assist governmentsin setting priorities and developingstrategies.

In Mexico (see cost curve above),an intense eort has been madeto carry out rigorous prospectivescenarios in each o the countrys

13 hydrological-administrative regions.In order to achieve balanced supplyand demand or water, it will benecessary to concentrate on our lineso action: increasing the modernisation(relining primary and secondarychannels) and the technication oirrigation districts and units; continuingwith the construction o inrastructure

to supply areas o growth; boostingeciency o drinking water andsanitation systems; and increasing thuse o ecient technologies in homebusinesses and industry.

The WEF-WRG is also supportingco-ordinated action to deepen theMongolian authorities understandingo water resources, uture demand anthe ull range o possible solutions, andevelop a Mongolian Water Initiativeimplementation plan.

Online resources

www.nestle.com/csv/Water www.weforum.org


19/45


Global

Stockholm Industry Water Award

At World Water Week, theStockholm Industry Water Award(see www.siwi.org/siwa) was

presented to Nestl in recognitionof our improved managementand efciency of water use in ouroperations. Since 2001, we havereduced water withdrawals by 28%,

from 7.6 litres of water per kilo of

Mongolia

Bringing local stakeholders

together

The World Economic ForumWaterResources Group is led by NestlChairman Peter BrabeckLetmathe

is actively seeking coordinated acinvolving all stakeholders at nationand international levels.

Above: A World EconomForumWater Resources Group mein Mongolia, cohosted by the Ofc

of the President of Mongolia and thWater Resources Group in June 20

Jos Lopez, Nestl Executive VicePresident, Operations, meets the K

and Queen of Sweden at the StockIndustry Water Award ceremony inAugust 2011.

We have identied water as the biggest challengeor uture ood security, and beyond that, oreconomic growth. This is probably the mostprestigious award in this area or a company andit will strongly encourage us to continue withour eorts.

Peter BrabeckLetmathe

Chairman of the Board

product to 3.17 litres, and aim toreduce water use by a further 10%

by 2015.Below: Nestl Chairman

Peter BrabeckLetmathe acceptsthe Stockholm Industry WaterAward on behalf of the Company.


20/45


Managing water issues

We have embedded responsibility orwater into our business units, providinga solid cross-unctional platorm tomanage water-related issues. Our WaterTask Force, chaired by Jos Lopez, setshigh-level strategy, while our OperationsWater Task Force translates this intooperational targets, objectives and KPIs,enabling us to ace current and uturechallenges, and delivering competitiveadvantage through responsible watermanagement.

The Nestl Water Task Forcealso co-ordinates the Companys

involvement in the various collectiveaction initiatives, which translate ourambition to contribute to solutions tothe global water crisis.

Engagement and disclosure

Nestl is a ounding signatory othe UN Global Compact CEO WaterMandate, a unique private-publicinitiative in which 87 companiesincluding Nestl are working withenvironmental organisations and

other stakeholders to support waterdisclosure, public policy engagementand the human right to water. Weactively participate in the Mandatesworking groups on these areas oengagement, and publish a publicCommunication on Progress (COP)every year; this report orms our2011 COP.

In 2011, the Mandate held twoworking conerences in Copenhagenand Stockholm. Initiatives underwaythrough the working groups include: Water Disclosure Guidelinesto advance a more standardisedglobal approach to corporate waterdisclosure; the Water, Business and HumanRights report o the Institute orHuman Rights and Business, to whichwe contributed. A specic guidebookon how companies should implementthe right to water and sanitation isalso underway;

a Water Action Hub, bringingtogether companies, governments,NGOs and communities at a basinlevel. On the ground, collective actioninitiatives are ongoing in SoutheastAsia and South Arica as well ascontinued engagement in theinternational water policy arena.

Stockholm International

Water Institute

We also play an active role in

Stockholm World Water Week in orderto exchange ideas and innovationsamong experts, practitioners anddecision-makers. This is an annualevent hosted by the StockholmInternational Water Institute and atthe 2011 event, themed Water inan Urbanising World, the StockholmIndustry Water Award was presented

Public policy

Collective action

Direct operations

Supply chain


Collective action

The water challenge is a global issue that calls or joint action. Nestl iscommitted to learning rom others, as well as sharing our own learning as a ounding signatory o the UN Global Compact CEO Water Mandate,and as an active member o national and international networks.


21/45


Goals

Demonstrate leadership in

voluntary multistakeholderinitiatives, which recognisewater issues as shared risksand responsibilities andpromote water stewardship.

Pursue collective actionin watersheds relevant toour operations to balancewater use.

Actions

Acting in all workstreams

of the CEO Water Mandateand being one of the rstcompanies to contributeto the Water CarbonDisclosure Project (CDP).

Advocating for commonstandards through ISO14046, the Alliance forWater Stewardship (AWS)and the Water Footprint

Network. Engaging in local waterpreservation and stewardshipinitiatives in countriesincluding Colombia, Indiaand France.

Performance

Appointment to AWS

International StandardDevelopment Commitrst draft standard byQ1 2012.

Harmonisation of CEO

Mandate and Water Creporting requirement

Ecological corridors Nestl Waters SwitzerECOBroye programm

Key challenges

Selecting appropriately

from a multitude of risk andimpact assessment tools,which are set to expand.

Coordinating andharmonising across initiatives

to deliver local, practical andmultistakeholder solutions.

Switzerland

Nestl Waters

partnership approac

Since acquiring theHenbrand in 2007, Nestl WECOBroye programme fostered local partnersh

to help preserve naresources and

maintain farmeincome in thisof SwitzerlanThe initiativeswhich will be

extended by the

stakeholders theminvolve farmers establisecological corridors a1500 hectares of farmla

to preserve and stimulatlocal biodiversity; organltration in a tributary oRiver Broye to improve swater quality; and a biogdigester to turn organic

waste into clean energy,controlled by Nestl Wa

Left: MichelMarcuard, a Nestl WatWater Resource Champcarries out sampling at

the ltration area servinthe Nestl Waters plantin Henniez, Switzerland

1500hectares


22/45


to Nestl. As well as participating inWorld Water Weeks, we collaboratewith the Institutes experts on specictopics including the water impact oood waste.

CDP Water Disclosure Project

We believe that transparent disclosureis vital to aid nancial and policydecision-making and thereore activelyparticipate in the CDP Water DisclosureProject. We helped extend the Carbon

Disclosure Project questionnairebeyond carbon to include water, andwere among the rst companiesto contribute to the CDPs WaterDisclosure report in 2010, and again in2011, detailing how we assess, manageand respond to water-related risksin our operations and supply chain.We have also been part o the CDPSupply Chain Leadership Collaborationinitiative to assess our suppliers sinceits creation in 2007.

Water Footprint Network

We are a member o the WaterFootprint Network, ounded in 2008,and participate in a working group,providing response options romthe private sector aligned with thework we conducted in the 2030 WaterResources Group. We have also

Nestl continues todemonstrate how importantwater is to its long-termsuccess by assigningboard-level responsibilityor its Company-wide waterpolicy and taking localaction to reduce its exposureto water-related risk.

Marcus Norton

Head of CDP Water Disclosure

shared our water managementexperiences in Vietnam, India, theUK and Colombia.

Addressing key challenges:

Developing standards for assessing

water use impact

Due to the current lack o globalstandards, organisations around the

world apply dierent methodologiesto assess the impact o water use.We support internationally consistentmeasurement and managementtools, processes and practices, andwe are actively participating in thedevelopment o a new ISO 14046Standard Water Footprint Requirements and Guidelines. Basedon a lie cycle approach, the standardwill deliver principles, requirementsand guidelines or assessing thewater impact o products, processesand organisations. It will also denehow dierent water sources andreleases, and local environmental andsocio-economic conditions, can beconsidered. This standard is expectedto be complete by 2014.

Alliance for Water Stewardship

As a participant in the recently ormedAlliance or Water Stewardship (AWS),we are working with others towardsestablishing a voluntary certication

programme over the next two years,allowing water managers and usersto demonstrate compliance with, orsupport or, new International WaterStewardship Standards. This voluntarystandard will help companies tomeasure, manage and engage withothers, improve water stewardshippractices beyond their own activities,and will complement regulatory eortsto reduce water-related impacts.

Online resources www.nestle.com/csv/Water www.cdproject.net/water www.allianceforwaterstewardship.org

France

Product environmental

communications to consumers

Nestl France, Nestl Waters andNestlNespresso are participating in national experiment on environmentacommunication to consumers in Franc

The initiative, launched in July 2011by the French Ministry of Ecology,

Sustainable Development, Transportand Housing, communicatesenvironmental performance

(greenhouse gas emissions, water,biodiversity) of products from Vittel,

Nescaf andNespresso. The yearlongproject will explore what is requiredto introduce environmental labellingon products in France. A similar

test on consumer goods assessmenthas been started by the EuropeanCommission, in which we participatewithNespresso,Nescaf, Vittel,

KitKatandPurina Gourmet. We are

also cochairing the Steering Commiteof the European Food SustainableConsumption and ProductionRoundtable, together with theEuropean Commission, to develop

a harmonised methodology to assessthe environmental performanceof food products.

Above: A consumer in aParisNespresso boutique scans thebarcode of aNespresso product to

learn about its environmental impact.


23/45


Colombia

Improving water management

Through the SuizAgua project, we workwith the Swiss Development Agencyand a consortium of Swiss companies in

Colombia to assess water use impactalong the product life cycle. The projectseeks to improve water managementin dairy operations and the supply chainin Florencia and Bugalagrande, by

estimating water use in traditional andsilvopasture systems, helping farmers

A workshop for dairy farmers and tfamilies in Montaita, Ecuador, exp

local water challenges.

with water stewardship and improving

the environmental performance ofour products.

Below: Nestls LeonardoManrique (wearing blue cap) joins dairyfarmers and their families in Montaita,

Ecuador in planting new saplingsfollowing a workshop on water value

and conservation.


24/45


Driving operational efciency

As part o our commitment to driveoperational eciency, we are ocusedon reducing water withdrawal andincreasing reuse, using alternative watersources such as rainwater harvesting andcontinually working to improve the watereciency o our products. We aim toreturn clean water to the environment.

Determining water management

action plans

Assessing the water-related risks acingour actories is crucial to identiyingwhere to prioritise our water management

eorts. The risk o reduced water quantityor quality physical risk is oten linkedto local competition among domestic,industrial and agricultural users.

Our actories are widespread in allcontinents and thereore share the samegeographical distribution o water stresslevel aced by our suppliers, customersand consumers. From our CombinedWater-Stress Index, which takes anaverage o two leading publicly availablewater-stress indicators (water withdrawals

to availability ratio; estimated annualrenewable water supply per personor 2025), we evaluate that 40% o ouractories are located in water-stressedregions, and 10% are situated in areaso severe water scarcity. Especially inwater stressed areas, we strive to be themost ecient water user. We conductWater Resources Reviews in these

actories rst a process through whichwe evaluate the long-term availability owater resources around our actories,and through which we engage withstakeholders rom academia, civil societyand the public sector in order to addresswater management beyond our actorygates at a watershed level to raiseawareness, identiy key issues and deviseaction plans.

The approach outlined above ensuresthat our operations not only respect thehuman right to water, but at the sametime consider collective, long-term, localwater sustainability.

We carried out Water ResourcesReviews around 11 sites in 2011 and atotal o 100 actories worldwide.

Improving water efciency

We aim to be the most ecient wateruser among ood manuacturers.We withdrew 143 million m3 o water in2011 , or 3.17 m3 per tonne o product ;this is 4% down rom 2010.

Since 2001, water withdrawals haveallen by 28% , while our ood and

beverage production volume increasedby 73% . For example, our bottled waterbusiness, Nestl Waters, which is arelatively small water user, needs water toll the bottle, but also or additional usessuch as cleaning and cooling.We have reduced our global averageo this additional water to 0.63 litres perlitre o bottled water produced through

Public policy

Collective action

Direct operations

Supply chain


Direct operations

While acknowledging that we have made good progress over the yearstowards greater water eciency, we know there is much more to do.We will continue to pursue rigorous water management standards andwater-saving programmes throughout our operations.


25/45


Goals

Be the most efcient

water user among foodmanufacturers andlead in water resourcemanagement.

Continuously improve

water efciency across ouroperations, further reducewater withdrawals anddischarges, and return cleanwater to the environment.

Actions

Embedding sustainable

water management intobusiness decisions bypreserving wateravailability and quality,and by improving the

environmental performanceof our products, includingtheir water efciency.

Implementing programmesto reduce water withdrawal

and reuse water, usealternative water sourcessuch as rainwater harvestingand invest in watersavingtechnologies.

Performance

254 watersaving proj

run in our factories,Water Resources Reviprogramme conducted100 Nestl sites to datCHF 28 million investe

watersaving and cleaprogrammes during th

28% reduction in watewithdrawals since 200while our food and bev

production volume incby 73% .

Key challenges

Developing and supporting

collective action withinwatersheds from whichour factories withdrawwater, because most waterstewardship challenges

lie beyond our factory gates. Maintaining progress in

water efciency whiledelivering business growth.

Africa

Returning clean wat

the environment

A USD 2.2 million invest

at our factory in Tema, Gprovided a new wastewtreatment plant to improon the local municipalfacilities. The plant bega

operations in 2010 and tthe wastewater from thefactory as well as the adNestl Distribution Centin full compliance with lenvironmental legislatio

our own standardsAlthough legisla

in the DemocrRepublic of Co

requires nothmore than a s

tank, our newewater treatment

plant at theMaggfactory in Kinshasa be

operational in October 2Left: Nestl F

Manager Luc Niesseron Kwamina Quaison of theMinistry of EnvironmentScience and Technology

Nestl waste water treaplant in Tema, Ghana.

2.2million USD


26/45


Water withdrawal versus productionvolume, 2001 2011

175

150

125

100

75

50 | | | | | |

2001 2003 2005 2007 2009 2011

P Total production volume

P Total water withdrawal

Index

a number o site-level initiatives,representing a 36% improvementbetween 2005 and 2011.

Watersaving projects

Between 2001 and 2011, the wastewaterrom our actories was reduced by38% by recovering water romproduction processes and reusing itor other applications, rom coolingto landscape irrigation. In 2011, werecycled 7.8 million m3 o water, as weseek to reduce water discharge.

Treating wastewater effectively

We use municipal wastewatertreatment acilities wherever possible,but where these are not ecientenough, we invest in our ownacilities, returning treated water tothe environment according to locallegislation and internal standards,whichever is more stringent. We have301 on-site treatment plants, and in2011 invested CHF 6 million on new

and improved acilities.We discharged 93.9 million m3o water in 2011, with an average o68.6 mg Chemical Oxygen Demand(COD) per litre .

Online resources www.nestle.com/csv/Water www.nestle.com/csv/Environment www.nestlewaters.com

Nigeria

Optimising water reuse and efciency

The Agbara manufacturing complexis one of two Nestl factories inNigeria, producing a wide range of

brands and products includingMaggicubes,Milo and Cerelac. The closeproximity of our food manufacturingplant and the Nestl Waters plant atAgbara has enabled us to install a

connection so that all surplus waterfrom the Nestl Waters deep wellis used by Nestl Nigeria plants,

leading to a reduction in the waterratio (m3/tonne of nished product)and an annual water saving of

100 000 m3. The Agbara factory alshas its own water treatment facilitywhich achieves the legal limitsof COD 90 mg per litre and BOD(Biochemical Oxygen Demand)

of 50 mg per litre for treated efuenreturning to the environment.


27/45


Continuous improvement, driven by Nestl Continuous Excellence, hasresulted in a range of watersaving initiatives at many of our factories:

Location

LaVie, Vietnam

San Pellegrino, Italy

Agbara, Nigeria

Anderson, USA

Shuangcheng, China

Guelph, Canada

Lipa, Philippines

Initiative

Frequency inverteradjusts water owfrom wells according toproduction needs

Treated rinse water

reused for washingglass bottles andpasteurisation

Surplus water frombottled water productionsent to nearby Nestl

Nigeria for reuse

Membrane Bioreactorsystem uses treated rinsewater from productionlines to cool the plant

Recycling of cow

water condensate forboiler use

Frequency invertersoptimise water ow;capacity of water tanks

increased

Rainwater collectedfrom new CoffeeMatewarehouse roof used incooling tower

Annual water savings

150 000 m3

119 000 m3

100 000 m3

86 000 m3

86 000 m3

62 000 m3

9 600 m3

Italy

Using water twice

At the Nestl Waters San Pellegrinoplant, we have developed a cascadsystem enabling water to be used nonce but twice, for rinsing and was

of the bottles, which saves water wstill meeting all requirements in hyand product quality.

Nigeria

Providing free, clean drinking

water to Nigerians

Philippines

Recovering and reusing rainw

Our Lipa factory has constructeda system that collects rainwaterfrom catchment areas such as the

CoffeeMate warehouse roof, andsupplies it to the cooling tower for as makeup water. This is expectedenable the factory to reduce its ovewater withdrawals by around 10 00

Local residents collect clean drinkingwater provided by the Nestl factoryin Agbara, Nigeria.


28/45


Partnerships on water impacts

in the supply chain

We are encouraging ecient watermanagement practices at a watershedlevel or example, through ourleadership o the SAI water andagriculture working group, and byimplementing and testing methodsdesigned to increase water useeciency on arms.

In India, or example, a new pilotproject led by SAI and run by theInternational Crops Research Instituteor the Semi-Arid Tropics (ICRISAT),uses a simple water impact calculator

to determine the amount o waterrequired under diering landormand irrigation conditions. Tests onrice, potatoes, tomatoes and ruit atve locations in Gujarat, Rajasthanand Andhra Pradesh revealed thatwater use could be reduced to around3040% by using the calculator,without aecting yields. ICRISATwill conduct urther tests on maizeand cotton during the monsoonperiod, and is also looking into the

easibility o armers providing datavia mobile phones.

Assessing water use in coffee

production

Growing coee, a major ingredientin many Nestl products, uses asignicant amount o water, andsometimes takes place in countries

where water is already scarce.To better understand and quantiypotential risks to key productioninputs such as water and to coeeitsel, we launched a study in 2011 inpartnership with the Swiss Agency orDevelopment and Cooperation (SDC),the International Water ManagementInstitute and EDE Consulting. Theinitiative includes: a global assessment o theconsumptive water use (waterconsumed in the production processwithout being returned) o coeeproduction at arm level;

a two-year, site-specic studyat Dak Lak in Vietnam.

In response to the rapid growtho Robusta coee productionin Vietnam, which has led todeorestation and land degradation,the study will promote the valueo water among smallholdersand recommend practical waysto optimise water use.

SAIN water projects

The Sustainable Agriculture Initiativeat Nestl (SAIN) is our initiativeto support armers and promotesustainable development worldwide,which celebrated its 10-yearanniversary in 2011. SAIN ocuseson a broad range o commoditiesincluding milk, coee and cocoa,and enables us to address some key

Public policy

Collective action

Direct operations

Supply chain


Supply chain

The answer to many water challenges is beyond the scope o Nestl aloneand we ully recognise the important role o our suppliers. Through ourinteraction with millions o armers we are committed to join our eorts totheirs, to develop good water management practices and nd eectivesolutions at watershed level.


29/45


Goals

Help ensure that water

is managed effectivelythroughout the agriculturalsupply chain.

Protect the livelihoodsof 25 million people

involved in Nestls entireupstream supply chain andsecure reliable access toraw materials.

Actions

Engaging in water

preservation activities withlocal stakeholders.

Sharing sustainable wateruse best practice andguidelines with other food

companies. Promoting sustainable

development in 46 countriesthrough the NestlSustainable Agriculture

Initiative (SAIN).

Performance

A new Sustainable

Agriculture Initiative(SAI) pilot project in Insuggests that water uscould be reduced by a3040%.

Implementation ofResponsible SourcingGuidelines for 12 of oucommodities and exteof our Water Guideline

Suppliers of AgricultuRaw Materials.

Key challenges

Implementing good water

management practicesacross complex supplychains.

Delivering the waterstewardship message

beyond those suppliers withwhom we interact directly.

Sensitising farmers tothe value of water inthe frequent absence of

adequate pricing structures.

Colombia

Investing in supply c

water management

In the new central coffe

mill in Jardn, Antioquiathe water infrastructuredesigned to reduce wateconsumption by half andtreat 100% of the waste

The rstNespressoAAA coffee from

the mill wasproduced in2011, andincluded in th

rst AAA LimEdition grand cr

Dhjana, launchedin September.

Left: The newcommunity processing cin Jardn, Colombia, cobyNespresso, enables cfarmers to mill and dry cmore efciently.

50%water saving


30/45


challenges in water managementand irrigation. For example: three arms in El Pial, Venezuelahave planted trees to control soilerosion, provide shade or livestockand reduce water loss to evaporationand run-o; 90% o the wastewater processedat the Gerberbaby ood actory in

Fremont, United States, is returnedto the local aquier by irrigatinglocal crops; our chicory supplier in Gujarat,India, built a rainwater collection pondto mitigate the decline o the localwater table; in China, water use at our coeedemonstration arm in Yunnan Provincewas reduced by 80% in 2010 throughthe introduction o new post-harvestequipment; a partnership with the SwissCollege o Agriculture is using theupdated RISE 2.0 (Response-InducingSustainability Evaluation) tool toimprove the sustainability o water usein Mexicos dairy industry at 13 armsin the Torreon municipality.

Nespresso AAA programme

In Colombia, one o the mostimportant coee sourcing countriesor Nespresso and the country withthe highest number o individual

AAA armers, the two main prioritieso the AAA programme are to join theeorts o the local coee authoritiesto regain the declining productivityo recent years and to address watermanagement, one o the main issues othe coee industry in the region.

At the end o 2011, 37 000 armersin Colombia have already joined theAAA Programme. Nespresso has beenworking closely with the FederacinNacional de Caeteros de Colombia

and other partners to create innovativeand ecient solutions to addresswater conservation issues. The rsto these has led to the installation o17 000 water treatment units including2700 in 20102011. The secondinitiative has been the co-nancingand implementation o a central mill inJardn, Antioquia (see page 25).

Local community partnerships

in Greece

In Greece, a Nestl Waters projectis supporting local communitiesin reducing potential threats to thequantity and quality o regional waterresources. The initiative, which beganin 2007, has involved hydrogeologicalinvestigation, assessing the

vulnerability o the local groundwaterand the identication o potentialdrilling sites in less water-scarceareas. Our engagement with localstakeholders in the planning processhas helped secure a win-win approachor the local authorities, the armersand their communities, and Nestl.

Guidelines on responsible

sourcing and water

We have recently begun introducingguidelines on the responsible use owater in agriculture. The guidelinesapply to all relevant agriculturaland orest-based raw materials andcomplement our Supplier Code andthe Responsible Sourcing Guidelines(RSGs) that we are developing andimplementing or 12 major agriculturalmaterials and packaging materials.The water guidelines contain generalrequirements on water managementin agriculture as well as specicprovisions or water-stressed areas.

We have also recently adaptedthe ten main principles o SAIs Waterand Agriculture Programme, throughwhich we engage with armerson areas such as water eciency,irrigation, pollution, drought-tolerantcrops and preventing leaks. From theseprinciples, we have introduced NestlsWater Guidelines or Suppliers oAgricultural Raw Materials to a series ocommodities through our responsiblesourcing guidelines. New materials

have also been developed to inorm,train and educate sourcing personnel,support sta and armers.

Online resources www.nestle.com/csv/Water www.nestle.com/csv/RuralDevelopment

www.nespresso.com/ecolaboration www.saiplatform.org

India

Partnerships and

awarenessraising

A 2010 joint study by Nestl and theInternational Water ManagementInstitute into the water intensity of miwheat and rice production in the Punja

determined that groundwater levelsare falling rapidly due to agricultural

overuse. Nestl India thereforedesigned a programme to raiseawareness among Punjab dairy farme

and another for school students, tohighlight the effects of overexploitatof groundwater and the remedialaction possible.

In 2011, we also joined aDepartment of Agriculture project to

learn about Systems of RiceIntensication (SRI): innovative paddycultivation techniques promoted byNGOs in Southern India that increaseyields using fewer seeds, pesticides a

fertilizers, and less water. The studycompared SRI and nonSRI yields for tsummer harvest and if results arepositive, we will extend the techniqueto our milk suppliers.

Above: Nestls AmanBajaj Sood (left) and farmer HarinderKaur take part in a Farmer WaterAwareness Programme provided nearthe Nestl factory in Moga, India.


31/45


South Africa

Addressing longterm drought

The Western Cape region of South Africahas experienced lengthy droughts foryears, leaving the Wolvedans dam, near

Mossel Bay, only 10% full at times. Inresponse, our Mossel Bay milk factoryinstalled equipment that enablescondensate from production lines tobe reused, helping halve water usage

between October 2009 and May 2010.Beyond our factory gates, a SAIN project

Farmer Anton Roets measures irrigat Goue Akker Farm, which supplie

milk to the Nestl factory in MosseSouth Africa.

to optimise water use further up thevalue chain is engaging with 17 dairyfarmers, ve of whom work within the

dams catchment area, to increase milkproduction. Local experts, includingNestl Agricultural Services, are providingtraining and nancial assistance to helpwith soil moisture monitoring, soil fertility

management, irrigation scheduling and theuse of droughtresistant crops.


32/45


Water, hygiene and sanitation

Since 2007, we have worked with theInternational Federation o Red Crossand Red Crescent Societies (IFRC)and the Red Cross Society o CtedIvoire to provide water and sanitationacilities and hygiene training in CtedIvoire. More than 60 000 adultsand children have already beneted,and the programme will be urtherextended in the next three yearscovering 55 schools, 65 communitiesand at least 53 000 beneciaries in thecocoa-growing areas o Cte dIvoire.

Due to serious civil unrest and

the displacement o thousandso people ollowing the 2010presidential elections, the IFRCsability to implement the activitiesplanned or 2011 was signicantlyrestricted, but the Nestle projectstechnical sta was temporarilyreocused to assist 31 000 peoplein 50 communities in Cte dIvoireand neighbouring Liberia with saedrinking water and hygiene-awarenesssupport. The Nestl-IFRC programme

in Cte dIvoire is part o theglobal 20102013 partnership oCHF 2.25 million on water andsanitation, ood security and the IFRCWorld Disasters Report. In 2011, wealso supported the emergency relieoperations o the IFRC and its NationalSocieties in Japan and the Horn oArica with a total o over CHF 800 000.

Meanwhile, in India, our WaterAwareness programme has been rolledout, promoting responsible water useamong children in schools near ouractories and installing 156 drinkingountains. These now provide 66 000students with clean drinking water.

Project WET and World Water Day

Project WET (Water Education orTeachers) is an international NGOthat uses educational tools to raiseawareness o water issues amongschoolchildren around the world.Nestl Waters has been its main

sponsor since 1992, helping ProjectWET to establish programmes in adozen countries including Vietnam,China, the United Arab Emirates,Lebanon and, most recently, Egypt.

Every March, Nestl Waters marksWorld Water Day in partnership withProject WET. Children and teachersparticipate in Together or Waterestivals, to increase awareness o theimportance o reshwater or nature,healthy hydration, good hygiene and

disease prevention. In 2011, more than10 000 children and 400 Nestl Watersemployees participated in eventsacross 25 countries.

Nestl Waters brings relief

When a natural disaster occurs, watersources and distribution systems areoten polluted or damaged, resulting

in an immediate need or sae drinkinwater. Nestl Waters can play a vitalrole to provide aected communitieswith bottled water, nancial donationand logistical support, in partnershipwith NGOs or local authorities. In 201we provided disaster relie in Japan,Turkey, Thailand and the United Stateas well as some continued support inHaiti. In total we donated more than3 million bottles o water in 2011.

Online resources

www.nestle.com/csv/RuralDevelopmen www.nestle.com/csv/Stories www.projectwet.org

Nestl Waters North America donated87 truckloads (more than 3.3 millionbottles of water) to emergencyprovisions sent by the US government

to earthquakestruck Haiti.

Public policy

Collective action

Direct operations

Supply chain



Nestl helps to address local water issues in communities where we operatebecause improved water availability and access is essential or ruraldevelopment and quality o lie in the communities we depend on or rawmaterial supply. Working with others, we contribute unding, operationalsupport and training or sustainable water management schemes aroundthe world.


33/45


Goals

Contribute to the universal

goal of translating thehuman right to water andsanitation into reality.

Support this worldwide,in areas close to our

operations, by fosteringaccess to clean drinkingwater and sanitaryinstallations, as well aswater, health and hygiene

education.

Actions

Developing sustainable,

technologically adaptedcommunity watermanagement schemes,jointly with expert partnersfrom nongovernmental

organisations. Sharing best practice with

employees in all Nestl sites. Delivering water, sanitation

and hygiene projects in

schools and villages near ouroperations around the world.

Performance

Access to water and

sanitation for over100 000 people, througwork with the InternatFederation of Red Crosand Red Crescent Soc

since 2007. 40 water and sanitatio

partnership projectsworldwide in 2011, an126 factories provided

clean drinking water tcommunities in 2010. Water Education for

Teachers programmesestablished in a dozencountries.

Key challenges

Helping to change the wholly

unacceptable reality that884 million people have noaccess to improved watersources, 2.6 billion peoplehave no access to adequate

sanitation, and the poorestpay up to ten times morefor water than the rich.

Supporting effectivesolutions, which are needed

because these challengescan lead to seriouspublic health problemsand exacerbate potentialconicting demandsfor water connected to

our operations.

Cte dIvoire

Millennium Develop

Goals: Improved drin

water and sanitation

facilities

Over 884 million people the world still have to ge

their drinking water fromunprotected sources or from the local swamp. Tsanitation situation is evworse, with 2.6 billion p

having no access to impsanitation such as ush

toilets, latrines andadequate waste

disposal. Whilthese are glob

issues that reconcerted colaction, we are

committed to acwherever we can

example, through our wwith the IFRC and the ReCross Society of Cte d

Left: This boprovides a community w

source in Srihio, Cte dIt is one of the results ofproject between the IFRthe Red Cross Society odIvoire and Nestl, whicdelivered improved wate

sanitation facilities to mthan 60 000 people since

884million


34/45


Proessor Jan Lundqvist, SeniorScientic Advisor, StockholmInternational Water Institute; Stuart Orr, Freshwater Manager,WWF International; Gavin Power, Deputy Director o theUN Global Compact and Head o theCEO Water Mandate; Proessor Ismail Serageldin, Director,Library o Alexandria and Chair andMember o advisory committees oracademic, research, scientic andinternational institutions.

Towards W.A.T.E.R. KPIs

We are developing a set o keyperormance indicators that willunderpin our qualitative W.A.T.E.R.commitments and enable systematicmeasurement o perormance.This is work in progress and requireswide consultation across thebusiness and with experts to denecomprehensive, robust measuresthat we can use to track perormanceover the next ve years and beyond.We also recognise the need, and the

challenge, to track perormance interms o impacts at the watershed levelbecause this is the ultimate measureo progress towards meeting todaysglobal water challenges.

Our W.A.T.E.R. Commitments in wateruse and stewardship, rst announcedin 2006, are key to driving waterperormance through our operations,supply chain and with communities.Our commitments are being developedunder continuous review, and wecontinue to gather eedback on themrom our stakeholders. In 2011, theyunderwent an extensive internal reviewand at the same time we consultedexternally with leading experts.The result is the ve commitmentsoutlined below, which will be urtherrened as we continue to gather

eedback, including inviting commentrom water experts attending ourstakeholder convenings.

We are grateul to the ollowingexpert reviewers who have providedopinions to date, and whose commentswill be taken into account as we moveorward: Proessor Asit K. Biswas, Foundero Third World Centre or WaterManagement; Proessor John Briscoe, Gordon

McKay Proessor o the Practice oEnvironmental Engineering, HarvardUniversity; Colin Chartres, Director General,International Water ManagementInstitute;

ork to achieve water efciency

across our operationsLeading in water resource managementand excelling in the direct reduction of thdirect water use in all our facilities

dvocate for effective waterpolicies and stewardship

Promoting public policies that placevalue on water at every level

reat effectively the water wedischarge

Setting strict targets for returningclean water to the environment

ngage with suppliers, especiallythose in agriculture

Helping to improve their watermanagement with focus on impacts

at watershed level

aise awareness of water accessand conservation

Engaging employees, communities and

consumers in the water imperative

The uture or Nestl and water

This report has documented our progress and some key challenges to date ithe Creating Shared Value key ocus area o water. To conclude, we examinethe uture or Nestl in the water arena.

Our W.A.T.E.R. commitments

W

A

T

E

R


35/45


beyond sustainability, to create value forshareholders and society integrally linkedto our core business

meet the needs of the present without

compromising future generations

Comply with the highest standards

Why Water?

Because the ongoing quality andavailability o this resource is criticalto lie, the production o ood andto our operations.

Why Rural Development?

Because the overall well-being oarmers, rural communities, smallentrepreneurs and suppliers isintrinsic to the long-term successo our business.

We have identied the most ertileopportunities or Creating SharedValue, in areas that are core toour business activities and vital orour value chain. These are nutrition,water and rural development.

Why Nutrition?

Because ood and nutrition are thebasis o health and o our businessas the leading Nutrition, Health andWellness company.

In preceding chapters, we haexplored Creating Shared Valuerelation to water, the key themeyears CSV Summary Report.

In the chapters that follow, wexplore the other two ocus areo Creating Shared Value nutrand rural development with anemphasis on their relationshipto water. We also report on the oundations o Creating SharedValue: Environmental SustainabHuman Rights and Compliance,and on Stakeholder Engagemen

Online resources

www.nestle.com/csv/Nestle www.nestle.com/csv/Stories

Creating Shared Value at Nestl

It is our rm belie that, or a company to be successul over time and crevalue or its shareholders, it must also create value or society. We call thisCreating Shared Value (CSV). Based on strong oundations o complianceand sustainable business practices, this is our basic way o doing busines

Creating

Shared Value

Nutrition, Water,Rural Development

Sustainability

Protect the uture

Compliance

Laws, business principles, codes o conduct


36/45


private sector to improve the lives ovulnerable women and children.

In 2011, we became the rst oodand beverage company to pledgeits commitment. Our commitmentis anchored in creating moreopportunities or women throughincome-generating activities such asdairy arming in Pakistan and productdis

1. Nestle SA CSV Summary Report 2011

Documents

Transcript of 1. Nestle SA CSV Summary Report 2011