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-EN10, G4-HR11 Salient human rights issues 1 Freedom of association and collective bargaining Rights holders Employees Farmers On-site contractors Suppliers & farm workers • • • • 2 Working time • • • • 3 4 Workers accommodation and access to basic services • • • • Consumers Local communities Safety and health • • • • • 5 Living wage • • • • Governance Lead function Human Resources Human Resources Human Resources Safety, Health & Environment Human Resources 6 Child labour • • CO-PRO Support functions Procurement (CO-PRO) CO-PRO CO-PRO Human Resources; CO-PRO; Agriculture (CO-AGR); Engineering; Manufacturing; Supply Chain; Sales; Group Risk Services; Security CO-PRO; CO-AGR Strategic business units (SBUs); CO-AGR 7 Forced labour • • CO-PRO SBUs; CO-AGR 8 Land acquisition • CO-PRO Operations 9 10 11 Access to water and sanitation • • • • • CO-Water Operations Access to grievance mechanisms Discrimination • • • • • • Compliance Public Affairs Data protection and privacy • • • Market Compliance Committees References in this report Our people, p276 Our people, p275 Our people, p275 Rural development, p98 Our people, p281 Our people, p275 Rural development, p98 Human rights and compliance, p239 Rural development, p113 Human rights and compliance, p229 Rural development, p98 Human rights and compliance, p234 Water, p141 Human rights and compliance, p237 Human rights and compliance, p248 In 2015, we very much focused our work on identifying salient human rights issues, and we are committed to addressing each of these issues through the implementation of our action plans. We examine each of these issues in more detail in the sections of the report highlighted above. Some, such as safety and health, are covered in greater detail than others. This is simply because we have been active in those issues for longer, and does not reflect their relative importance to our business or our stakeholders. We are committed to addressing all of the salient issues we have identified. Nestlé in society – Creating Shared Value and meeting our commitments 2015 228
Nestlé in society: Creating Shared Value Nutrition, health and wellness Rural development Water Environmental sustainability Human rights and compliance Our people G4-HR11 Identification process Business risks versus risks to rights holders Since 2008, we have had in place a process whereby we evaluate the impacts that human rights risks might have on the company, whether from a reputational, operational or legal perspective (see page 233). This exercise has been extremely useful for us not only in identifying the main risks for the company but also in developing targeted actions to manage them effectively. The concept of salience adds another dimension to the definition of risks by focusing exclusively on rights holders. This had a direct impact on the way we look at risks and how we evaluate them. For example, instead of trying to quantify the potential impact of child labour on our reputation, we tried to assess the level of severity (in terms of scale, scope and remediability) that child labour represents for children deprived of access to education and having to carry out hazardous tasks in our direct and agricultural supply chains. Interestingly, this shift of emphasis from business risks (materiality) to risks to rights holders (salience) has not significantly changed the outcomes of our human rights risk assessment process: most of the risks that are high (or severe) for rights holders had already been identified as high for the company. In our view, this is mainly due to the combination of two factors. With more than one billion Nestlé products sold every day, we are a major consumerfacing company, with a high international profile and exposure. This is reinforced by the fact that, with the widespread use of social media, among other factors, there are no longer local risks for multinational companies: any issue that we face in our operations or supply chains at the local level has a direct impact on our reputation globally. This certainly applies to human rights impacts that would have a severe effect on rights holders. Some items were added to the list of salient issues, though they had not been identified as high risks for our business. An example was access to grievance mechanisms. While the likelihood that our reputation is affected – or our operations disrupted – by a lack of access to a grievance mechanism is low (business risk), this was considered to be a high risk to rights holders. Based on our experience, more effort needs to be made to ensure that all our employees – the workers employed in our direct and indirect supply chain, local communities and consumers – have an effective way to raise concerns about human rights-related issues and non-compliances. The list of 11 salient issues is based on a thorough internal and external consultation process. Internally, the first list of salient issues was proposed to the HRWG in early 2015. This list was based on the results of the Human Rights Risk Assessment Matrix 2014. This matrix builds on the company’s experience evaluating human rights issues. It is based on the results from the different monitoring tools and processes we have in place, combined with the experience of the members of the HRWG themselves, and the expert inputs from our main partners in this area, the Danish Institute for Human Rights (DIHR) and the Fair Labor Association (FLA). Once consolidated internally, the list of salient human rights issues was presented and discussed at the Nestlé stakeholder convening that we organised in Washington DC, USA, in December 2015. Participants in the human rights breakout session represented some of the leading non-governmental organisations (NGOs), UN organisations, law firms, business associations and experts from academia on the topic of business and human rights. The stakeholders proposed the following changes, which have all been reflected in the final version of the salient human rights issues: • Split child labour and forced labour, which were initially combined as one salient issue. These two issues have different geographical scopes and different root causes, and should, therefore, be looked at and dealt with separately; and • Add discrimination as an issue that cuts across all the salient human rights issues. While stakeholders understood that – based on our own data, results and experience – discrimination may not have been identified as a salient issue, they strongly suggested that this issue be incorporated into the action plans that will be developed for the 11 salient issues next year. While all stakeholders agreed on the growing importance of data protection and privacy, some of them challenged the salience of this issue for a company like Nestlé, in particular compared to IT companies, for example. However, based on further internal considerations, we decided to keep this issue on the list mainly because of its scale (risk to all our employees and consumers). Governance structure Each salient issue will be managed by a specific function within the company with the active support of relevant functions. This will improve our overall governance structure on human rights and make the work and mandate of the HRWG more operational. In addition to its original role, the HRWG will be in charge of monitoring the proactive management of the 11 salient issues. To facilitate this work, we publicly committed to develop action plans and targets for each salient issue by the end of 2016. Nestlé in society – Creating Shared Value and meeting our commitments 2015 229
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Nestlé in society Creating Shared Value and meeting our commitments 2015

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