Supply Chain Central to Nestlé's Sustainability Targets

Nestlé's Non-Financial Statement for 2024 sharply focuses on integrating sustainability into its corporate governance, complying with the Swiss Code of Obligations.

The company aligns with the new European Union’s Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS), ahead of tightening regulations in Europe.

This strategic positioning allows the integration of ESG standards deeply into its business processes.

The Board of Directors at Nestlé is pivotal in ensuring that the company’s strategic choices are reflective of its long-term environmental and social pledges.

According to the report: “Nestlé’s strategy is designed to integrate sustainability at its core, ensuring every decision considers the potential impacts on society, the environment and the business."

Commitment to Climate Goals

Standing firm on its commitment to reach net-zero emissions by 2050, Nestlé presents a structured roadmap highlighting significant short-term targets, including a 20% reduction in absolute emissions by 2025 and 50% by 2030.

Its method of tackling climate change includes adopting frameworks like the Task Force on Climate-related Financial Disclosures (TCFD).

However, its potential to meet these ambitious targets remains under observation.

Underlying challenges lie with transition risks due to climate change, which might impact the availability and costs of critical raw materials like cocoa, coffee and dairy.

The company recognises that "Climate-related risks such as heatwaves, drought and water stress may impact raw materials," affecting both their quality and yield.

Advancing human rights and responsible sourcing

Human rights are an integral element of Nestlé's sustainability agenda, especially within its supply chains.

Adhering to Article 964j of the Swiss Code of Obligations, the company enhances its due diligence to mitigate child labour risks and promote fair labour practices.

Nestlé's involvement with the Child Labor Cocoa Coordination Group (CLCCG) also indicates a robust effort to eliminate child labour within cocoa-producing regions like Côte d’Ivoire and Ghana.

Moreover, Nestlé strengthens its relations with NGOs and other international bodies, enhancing transparency and engaging stakeholders meaningfully.

“We are committed to fostering positive relations with workers, representative bodies and trade unions,” the report details, highlighting ongoing dialogue with entities like the International Union of Food Workers (IUF).

Embracing circular economy

Nestlé's strong push towards a circular economy, especially in packaging, reduces the dependency on virgin plastics.

The company collaborates with the Ellen MacArthur Foundation, among others, to advance packaging circularity and reduce plastic use substantially.

While promising, the scalability of such innovations, including reuse-and-refill systems, is under observation.

Nestlé’s participation in global initiatives like the Business Coalition for a Global Plastics Treaty reflects its acknowledgment of plastic pollution as a critical, systemic issue requiring collective action.

Through a Double Materiality Assessment (DMA), Nestlé identifies and addresses 39 material sustainability impacts throughout its value chain.

“Our materiality assessment helps ensure a comprehensive understanding of each impact’s potential ramifications," states the corporate sustainability report, underscoring the intent to improve management's accountability and transparency on key issues from biodiversity to gender equality, with 15% of executive compensation linked to sustainability outcomes.

Despite bold ambitions, questions remain on the practical implementation of Nestlé's sustainability promises.

As regulatory and consumer pressure increases, Nestlé’s strategy may serve as a model for multinational corporations striving to navigate the complexities of modern sustainable business practices.

“Our mission is to advance regenerative food systems at scale,” explains Antonia Wanner, CSO at Nestlé.

“Achieving this is not without challenges, and I’m excited to come together with fellow sustainability professionals across public and private partners to share candid challenges and strategies for continuing to improve our impact.”

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