Nestlé in society Creating Shared Value and meeting our commitments 2015

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Nestlé in society: Creating Shared Value Nutrition, health and wellness Rural development Water Environmental sustainability Human rights and compliance Our people G4-2, Investment G4-DMA, Non-discrimination G4-DMA, Freedom of association and collective bargaining G4-DMA, Child labor G4-DMA, G4-HR5, Forced or compulsory labor G4-DMA, Supplier human rights assessment G4-DMA, Human rights grievance mechanisms G4-DMA, Anti-corruption G4-DMA, Compliance G4-DMA (Society), Customer health and safety G4-DMA, Customer privacy G4-DMA, Compliance G4-DMA (Product responsibility) Our role in human rights and compliance Our Creating Shared Value proposition is based on compliance with our business principles, corporate policies and commitments, national laws and international standards. We aim to be exemplary in respecting human rights and good labour practices throughout our business activities. By assimilating the highest business standards and codes into our policies, management systems and activities across the globe in this way, we seek to eliminate issues such as child labour; work against corruption and bribery; make it easier to report and address potential breaches of compliance; and assess human rights impacts. We believe this will make us more effective in our approach to compliance. Nestlé became one of the first companies to adopt the UNGP Reporting Framework developed by Shift and Mazars. Together with external stakeholders, we have identified a list of 11 salient issues – those human rights at risk of the most severe negative impacts through our activities and business relationships. Going forwards, they will provide the framework to monitor our progress against international standards, including the UNGP. The year in brief Challenges Actions Achievements Confidentiality and transparency Our human rights approach must balance the dual needs of confidentiality and transparency, while respecting local realities. Respecting human rights Through our Human Rights Due Diligence Programme (HRDDP), we continue to make our approach to human rights strategic, comprehensive and unified across all our business activities. 1st Nestlé became one of the first companies to adopt the UN Guiding Principles Reporting Framework for human rights issues. Child labour We are addressing the issue of child labour in the harvesting of some of our raw materials. Importantly, we must also understand its root causes, to ensure behavioural change is sustainable. Compliance Our people, and others we affect, need to understand and use our internal and external grievance tools. Anti-corruption We need to make sure that our standards are applicable and that our people have the tools they require to prevent and avoid bribery and corruption at all levels. Monitoring child labour By the end of 2015, 120 067 cocoa farmers and community members had been sensitised to child labour as part of the Child Labour Monitoring and Remediation System (CLMRS). Enabling better integrity and grievance reporting Our internal Integrity Reporting System is now operational in 100% of our markets. 5000 suppliers and 1000 downstream business partners have been instructed about our ‘Tell us’ external grievance reporting system. Training We have defined standards on anticorruption training, and continued to deploy our online compliance courses, including translated versions for local markets. 3 183 Cases of child labour remediated in the cocoa supply chain. 1 457 Complaints resolved through our internal and external compliance systems. 22 729 Employees trained in our compliance and anti-corruption standards. Nestlé in society – Creating Shared Value and meeting our commitments 2015 222
Nestlé in society: Creating Shared Value Nutrition, health and wellness Rural development Water Environmental sustainability Human rights and compliance Our people G4-2, Investment G4-DMA, Non-discrimination G4-DMA, Freedom of association and collective bargaining G4-DMA, Child labor G4-DMA, G4-HR5, Forced or compulsory labor G4-DMA, Indigenous rights G4-DMA, Supplier human rights assessment G4-DMA, Human rights grievance mechanisms G4-DMA, Anti-corruption G4-DMA, Compliance G4-DMA (Society), Customer health and safety G4-DMA, Customer privacy G4-DMA, Compliance G4-DMA (Product responsibility) Material issues Nestlé uses a formal materiality process to identify the most important issues for our stakeholders and our business. The results are communicated in a materiality matrix. Our material issues are also considered and mapped with regard to their degree of importance in different parts of the Nestlé value chain. In the value chain, ‘Agriculture’ includes smallholder farmers with whom we do not have direct relationships and ‘Tier 1 suppliers’ refers to suppliers in direct commercial relationships with Nestlé. The Nestlé value chain Agriculture Tier 1 suppliers Nestlé Retail/ business channels Consumers Each material issue is made up of a number of sub-issues, which are highlighted during the research process. They are used as a lens to help define the scope of analysis. In this section, we have provided a synthesis of the findings related to human rights and compliance. Three material issues fell under the banner of human rights and compliance that were rated as being of concern to our stakeholders and of strategic importance to our business: business ethics, which includes consumer privacy; executive compensation; fair tax; governance and transparency; business integrity; and fraud, bribery and corruption; human rights, including labour relations, and issues in the upstream supply chain, such as child labour and rights linked to land ownership; and food safety. Upholding ethical principles in our business and supply chain is fundamental to who we are as a responsible business and underpins our licence to operate. Ensuring the highest standards of food safety and quality is essential to maintaining the trust we have built in our business and is fundamental to our business success. Our responsibility to respect human rights across our supply chain is critical to the security and wellbeing of our workforce and suppliers. Our stakeholders are working to enhance disclosure of tax payments, implementation of anti-corruption measures, appropriate executive compensation and adoption of the best food safety practices. They are acutely concerned about human rights and, as we advance our work on child labour and land rights, we have an opportunity to collaborate more with our stakeholders. The table below shows the outcomes of Nestlé’s most recent materiality analysis in 2014. The UNGP Reporting Framework has been adopted since then, so the 11 salient issues are not necessarily reflected in their entirety in this table. However, they will be taken into account in Nestlé’s next materiality analysis in 2016. MATERIALITY ISSUE VALUE CHAIN KEY: Moderate Significant Major Agriculture Tier 1 suppliers Nestlé Retail/ business channels Consumers Business ethics Upholding ethical principles in the business and workplace. Sub-issues defined • Consumer privacy: the handling and protection of sensitive personal information that individuals provide in the course of everyday transactions with companies. • Executive compensation: fair compensation for executives to reward personal and company performance. • Fair taxes: payment of taxes in accordance with laws and in a way that is proportionate to size and contributes to society. • Governance and transparency: developing structures that enable oversight, accountability and transparency at all levels of the business. • Fraud, bribery and corruption: zero tolerance towards deception, trickery, breach of confidence, abuse of power or an offer of advantage to gain unfair or dishonest advantage. Nestlé in society – Creating Shared Value and meeting our commitments 2015 223
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Nestlé in society Creating Shared Value and meeting our commitments 2015

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