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Nestlé in society Creating Shared Value and meeting our commitments 2015

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<strong>Nestlé</strong> <strong>in</strong> <strong>society</strong>:<br />

Creat<strong>in</strong>g <strong>Shared</strong> <strong>Value</strong><br />

Nutrition, health<br />

<strong>and</strong> wellness<br />

Rural development<br />

Water<br />

Environmental<br />

susta<strong>in</strong>ability<br />

Human rights<br />

<strong>and</strong> compliance<br />

Our<br />

people<br />

G4-2, Investment G4-DMA, Non-discrim<strong>in</strong>ation G4-DMA, Freedom of association <strong>and</strong> collective barga<strong>in</strong><strong>in</strong>g G4-DMA, Child labor G4-DMA, G4-HR5, Forced or compulsory labor G4-DMA,<br />

Indigenous rights G4-DMA, Supplier human rights assessment G4-DMA, Human rights grievance mechanisms G4-DMA, Anti-corruption G4-DMA, Compliance G4-DMA (Society),<br />

Customer health <strong>and</strong> safety G4-DMA, Customer privacy G4-DMA, Compliance G4-DMA (Product responsibility)<br />

Material issues<br />

<strong>Nestlé</strong> uses a formal materiality process to identify the most<br />

important issues for <strong>our</strong> stakeholders <strong>and</strong> <strong>our</strong> bus<strong>in</strong>ess. The<br />

results are communicated <strong>in</strong> a materiality matrix.<br />

Our material issues are also considered <strong>and</strong> mapped with<br />

regard to their degree of importance <strong>in</strong> different parts of the<br />

<strong>Nestlé</strong> value cha<strong>in</strong>. In the value cha<strong>in</strong>, ‘Agriculture’ <strong>in</strong>cludes<br />

smallholder farmers with whom we do not have direct<br />

relationships <strong>and</strong> ‘Tier 1 suppliers’ refers to suppliers <strong>in</strong> direct<br />

commercial relationships with <strong>Nestlé</strong>.<br />

The <strong>Nestlé</strong> value cha<strong>in</strong><br />

Agriculture<br />

Tier 1<br />

suppliers<br />

<strong>Nestlé</strong><br />

Retail/<br />

bus<strong>in</strong>ess<br />

channels<br />

Consumers<br />

Each material issue is made up of a number of sub-issues,<br />

which are highlighted dur<strong>in</strong>g the research process. They are<br />

used as a lens to help def<strong>in</strong>e the scope of analysis. In this<br />

section, we have provided a synthesis of the f<strong>in</strong>d<strong>in</strong>gs related to<br />

human rights <strong>and</strong> compliance.<br />

Three material issues fell under the banner of human rights<br />

<strong>and</strong> compliance that were rated as be<strong>in</strong>g of concern to <strong>our</strong><br />

stakeholders <strong>and</strong> of strategic importance to <strong>our</strong> bus<strong>in</strong>ess:<br />

bus<strong>in</strong>ess ethics, which <strong>in</strong>cludes consumer privacy; executive<br />

compensation; fair tax; governance <strong>and</strong> transparency;<br />

bus<strong>in</strong>ess <strong>in</strong>tegrity; <strong>and</strong> fraud, bribery <strong>and</strong> corruption; human<br />

rights, <strong>in</strong>clud<strong>in</strong>g lab<strong>our</strong> relations, <strong>and</strong> issues <strong>in</strong> the upstream<br />

supply cha<strong>in</strong>, such as child lab<strong>our</strong> <strong>and</strong> rights l<strong>in</strong>ked to l<strong>and</strong><br />

ownership; <strong>and</strong> food safety.<br />

Uphold<strong>in</strong>g ethical pr<strong>in</strong>ciples <strong>in</strong> <strong>our</strong> bus<strong>in</strong>ess <strong>and</strong> supply<br />

cha<strong>in</strong> is fundamental to who we are as a responsible bus<strong>in</strong>ess<br />

<strong>and</strong> underp<strong>in</strong>s <strong>our</strong> licence to operate. Ensur<strong>in</strong>g the highest<br />

st<strong>and</strong>ards of food safety <strong>and</strong> quality is essential to ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g<br />

the trust we have built <strong>in</strong> <strong>our</strong> bus<strong>in</strong>ess <strong>and</strong> is fundamental to<br />

<strong>our</strong> bus<strong>in</strong>ess success. Our responsibility to respect human<br />

rights across <strong>our</strong> supply cha<strong>in</strong> is critical to the security <strong>and</strong><br />

wellbe<strong>in</strong>g of <strong>our</strong> workforce <strong>and</strong> suppliers.<br />

Our stakeholders are work<strong>in</strong>g to enhance disclosure of tax<br />

payments, implementation of anti-corruption measures,<br />

appropriate executive compensation <strong>and</strong> adoption of the best<br />

food safety practices. They are acutely concerned about<br />

human rights <strong>and</strong>, as we advance <strong>our</strong> work on child lab<strong>our</strong> <strong>and</strong><br />

l<strong>and</strong> rights, we have an opportunity to collaborate more with<br />

<strong>our</strong> stakeholders.<br />

The table below shows the outcomes of <strong>Nestlé</strong>’s most<br />

recent materiality analysis <strong>in</strong> 2014. The UNGP Report<strong>in</strong>g<br />

Framework has been adopted s<strong>in</strong>ce then, so the 11 salient<br />

issues are not necessarily reflected <strong>in</strong> their entirety <strong>in</strong> this<br />

table. However, they will be taken <strong>in</strong>to account <strong>in</strong> <strong>Nestlé</strong>’s next<br />

materiality analysis <strong>in</strong> 2016.<br />

MATERIALITY ISSUE VALUE CHAIN KEY: Moderate Significant Major<br />

Agriculture Tier 1<br />

suppliers<br />

<strong>Nestlé</strong><br />

Retail/<br />

bus<strong>in</strong>ess<br />

channels<br />

Consumers<br />

Bus<strong>in</strong>ess ethics<br />

Uphold<strong>in</strong>g ethical pr<strong>in</strong>ciples <strong>in</strong> the bus<strong>in</strong>ess <strong>and</strong> workplace.<br />

Sub-issues def<strong>in</strong>ed<br />

• Consumer privacy: the h<strong>and</strong>l<strong>in</strong>g <strong>and</strong> protection of sensitive<br />

personal <strong>in</strong>formation that <strong>in</strong>dividuals provide <strong>in</strong> the c<strong>our</strong>se of<br />

everyday transactions with companies.<br />

• Executive compensation: fair compensation for executives to<br />

reward personal <strong>and</strong> company performance.<br />

• Fair taxes: payment of taxes <strong>in</strong> accordance with laws <strong>and</strong> <strong>in</strong> a<br />

way that is proportionate to size <strong>and</strong> contributes to <strong>society</strong>.<br />

• Governance <strong>and</strong> transparency: develop<strong>in</strong>g structures that<br />

enable oversight, accountability <strong>and</strong> transparency at all levels of<br />

the bus<strong>in</strong>ess.<br />

• Fraud, bribery <strong>and</strong> corruption: zero tolerance towards<br />

deception, trickery, breach of confidence, abuse of power or an<br />

offer of advantage to ga<strong>in</strong> unfair or dishonest advantage.<br />

<strong>Nestlé</strong> <strong>in</strong> <strong>society</strong> – Creat<strong>in</strong>g <strong>Shared</strong> <strong>Value</strong> <strong>and</strong> meet<strong>in</strong>g <strong>our</strong> <strong>commitments</strong> <strong>2015</strong> 223

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