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-LA15, Investment G4-DMA, G4-HR1, G4-HR2, G4-HR4, G4-HR5, G4-HR6, Assessment G4-DMA, G4-HR9, G4-HR11, Human rights grievance mechanisms G4-DMA, G4-HR12 Percentage of contracts and significant investment agreements that include clauses incorporating human rights concerns, or that have undergone human rights screening Significant investment agreements 2013 2014 2015 100% (2) Contracts 100% 100% 100% n/a n/a Significant suppliers identified as having significant risks for incidences of child labour Suppliers (cases) 2015 393 2014 627 2013 685 Total number of operations, and percentage of suppliers and contractors that have undergone human rights screening 2013 2014 2015 Suppliers and contractors 100% 100% 100% Operations 21 56 255 Number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms Filed 2015 119 2014 148 2013 71 Addressed and resolved Human Rights Impact Assessments completed 2015 2 2014 1 2013 1 Number of significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk 2015 610 2014 348 2013 51 2015 103 2014 119 2013 71 Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labour 2013 2014 2015 Operations 0 0 0 Suppliers 149 174 114 Total number of supplier incidents of discrimination 2015 41 2014 90 2013 65 Total hours of employee training and number of employees trained on policies and procedures concerning aspects of human rights that are relevant to operations Total hours of employee training 2015 9 020 2014 6 864 2013 10 612 Number of employees trained 2015 11 242 2014 7333 2013 13 793 Nestlé in society – Creating Shared Value and meeting our commitments 2015 238
Nestlé in society: Creating Shared Value Nutrition, health and wellness Rural development Water Environmental sustainability Human rights and compliance Our people G4-LA15, Child labor G4-DMA, G4-HR5, Supplier human rights assessment G4-DMA, G4-HR11 Child labour Nestlé is firmly opposed to all forms of child exploitation. We are committed to preventing and eliminating child labour wherever it occurs in our supply chain. To achieve this, we work with a range of different stakeholders to develop and implement meaningful solutions. Together, we have set up mechanisms to provide comprehensive monitoring, implemented effective remediation activities and provided targeted support where needed to local communities. Applying a comprehensive strategy Our Nestlé Corporate Business Principles clearly state our opposition to all forms of child exploitation, and uphold the elimination of forced and compulsory labour. In addition, the Nestlé Supplier Code includes a strict prohibition on child labour and requires that all our direct (Tier 1) suppliers are independently audited. It builds upon definitions from the ILO, Nestlé’s Corporate Business Principles and experiences from Nestlé’s own operations. Our commitment Eliminate child labour in key categories In 2015, we maintained our commitment to fight child labour as a member of the Child Labour Platform. The Nestlé Commitment on Child Labour in Agricultural Supply Chains – drawn up in consultation with expert external stakeholders, including the FLA, the DIHR and the International Cocoa Initiative (ICI) – is our strategy to tackle child labour in agricultural supply chains. Key elements of the strategy, which covers suppliers in all tiers of Nestlé’s raw material supply chains, include: • Oversight: we operate a Child Labour and Women’s Empowerment Steering Group, chaired by Executive Board member Magdi Batato, to identify measures, take decisions and monitor progress; • Responsibility for management of the issue: overall management responsibility by a named business unit for each high-risk category of raw material, and management of the situation at the country level; • Targeting high-risk commodities and children at risk: assessment of the risk to children’s rights, which include protection from economic exploitation and work that may be dangerous to their health, safety or morals and that may hinder their development or impede their access to education; a clear strategy to address the issue and its root causes, a focus on vulnerable groups (the children of migrant workers, girls, orphans and trafficked children), proactive work with suppliers, and termination of all business with suppliers unwilling or unable to comply; • Improving understanding and competence: engaging specialist partners, providing staff training and guidelines to tackle child labour, and dialogue with civil society organisations; and • Delivering transparency: communicating our commitments to suppliers and stakeholders, operating a complaints mechanism, monitoring progress, and reporting on actions and progress. Our objectives By 2015 – Complete action plans to reduce child labour in our cocoa, hazelnut and vanilla supply chains, with 60 000 farmers trained on child work/labour practices, 60 schools built or renovated and 80% of co-operatives covered by a child labour monitoring and remediation system (100% by 2016). By 2018 – Child labour risk assessments done for all 12 high-priority categories of raw ingredients and responsible sourcing strategies deployed to monitor and mitigate occurrences of child labour. While our new objective for child labour risk assessments covers all 12 high-priority categories, child labour has been identified as a particular issue in our hazelnut, vanilla and cocoa supply chains. With low levels of income – about USD 2 (CHF 1.98) a day – vanilla farmers cannot always meet their basic needs, and often turn to children (usually from within the family unit) to help with farming. Child labour in our cocoa supply chain is a complex issue and gathering reliable evidence about attitudes and perceptions, as well as what’s happening on the ground, is vital, but challenging. Therefore, we invited the FLA to help us examine our cocoa supply chain in Côte d’Ivoire, where child labour is still a reality. The FLA believes that the Nestlé Cocoa Plan and our participation in other initiatives provides a good foundation, but also sees a need for increased monitoring and accountability throughout the various tiers of the supply chain. Our priority categories of raw material and countries of origin are currently cocoa in Côte d’Ivoire, hazelnuts in Turkey and vanilla in Madagascar. We regularly review priority areas to ensure we are focusing on those countries and supply chains most at risk. Where cases of child labour are found, we expect suppliers to consider each instance on an individual basis and always seek to solve the problem in the best interest of the child or children involved. To help suppliers in their assessments, we have developed an online e-learning tool to create greater awareness about which situations constitute child labour and how best to counteract it. We have also introduced a new objective specifically to address the issue of child labour in the vanilla supply chain. Read more in the Rural development chapter. Nestlé in society – Creating Shared Value and meeting our commitments 2015 239
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