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 Indirect economic impacts G4-DMA, Procurement practices G4-DMA, G4-EC9, G4-LA14, Investment G4-DMA, Child labor G4-DMA, Forced or compulsory labor G4-DMA, Supplier human rights assessment G4-DMA, Local communities G4-DMA, Animal welfare G4-DMA, Compliance G4-DMA (Society), Supplier assessment for impacts on society G4-DMA Responsible sourcing through our procurement activities The Nestlé Supplier Code sits at the heart of every business relationship with our suppliers. The code reflects our commitment to conducting our business activities in full compliance with applicable laws, and to being guided by integrity and honesty. It sets out the non-negotiable minimum standards and best practices that we require our suppliers and their own suppliers – right down to the individual farm level – to respect and adhere to when doing business with us. Simple pictorial versions of the code are made available to overcome variations in language and literacy levels. Implementation of the Supplier Code’s requirements is embedded into our internal procurement procedures and objectives, using approaches that are tailored to the nature of the supply chain, the type of supplier and our commercial relationship with them. However, as each supply chain has its own characteristics and issues, we’ve also developed the Nestlé Responsible Sourcing Guideline (RSG), along with category-specific requirements for our priority ingredients and materials. The guideline helps our suppliers improve practices, where necessary, at farm or plantation level, with Nestlé’s requirements often going beyond legal or international requirements. The guideline follows four general principles: • Suppliers are expected to engage in a process of continuous improvement; • Suppliers should conduct their business with Nestlé in an open and transparent way; • Nestlé will support suppliers not yet able to comply with all aspects of the RSG, but who are committed to becoming compliant over time and demonstrate continuous, tangible progress; and • Suppliers are to continuously monitor and verify their performance and progress, complying with independent assessment where necessary. Our policies and standards Rural development is one of three priority areas for our business, as highlighted in the Nestlé Corporate Business Principles, which lay the foundations for everything we do. The relevant principle states: We contribute to improvements in agricultural production, the social and economic status of farmers, rural communities and in production systems to make them more environmentally sustainable.” Nestlé’s Corporate Business Principles Our ambitions to support rural development are set out in the Nestlé Commitment on Rural Development, and are consistent with the UN Sustainable Development Goals (also known as the Global Goals) on poverty and hunger, nutrition, education, gender equality and environmental sustainability. In addition, the Nestlé Commitment on the Responsible Use of Materials from Agricultural Origin applies to the upstream value chain back to the primary production level. As part of our drive to ‘remove the worst, promote the best and improve the rest’, its principles span continuous improvement, transparency along the value chain, supplier accountability and support, and credible verification. The Nestlé Supplier Code sets out the non-negotiable minimum standards and best practices that we require our suppliers and their own suppliers – right down to the individual farm level – to respect and adhere to when doing business with us. Implementation of the Supplier Code’s requirements is embedded into our internal procurement procedures and objectives. In addition, the Nestlé RSG helps our suppliers to improve practices, where necessary, at farm or plantation level, and ensure they meet or exceed internationally recognised standards. To maintain best practice, all our teams are guided by a series of policies, procedures and documents, including: • The Nestlé Commitment on Rural Development; • The Nestlé Supplier Code; • Nestlé’s Responsible Sourcing Guideline; • The Nestlé Commitment on Natural Capital; • The Nestlé Commitment on the Responsible Use of Materials from Agricultural Origin; • The Nestlé Commitment on Farm Animal Welfare; • The Nestlé Commitment on Land & Land Rights in Agricultural Supply Chains; • The Nestlé Commitment on Child Labour in Agricultural Supply Chains; • The Nestlé Commitment to reduce food loss and waste; and • The Nestlé Commitment on Labour Rights in Agricultural Supply Chains. Our commitment documents, derived from these policies and procedures, provide accessible information on the specific pledges we have made about key issues, such as farm animal welfare and labour rights. Nestlé in society – Creating Shared Value and meeting our commitments 2015 94
Nestlé in society: Creating Shared Value Nutrition, health and wellness Rural development Water Environmental sustainability Human rights and compliance Our people G4-26, G4-27, Procurement practices G4-DMA, G4-EC9, G4-LA14, Investment G4-DMA, Child labor G4-DMA, Forced or compulsory labor G4-DMA, Supplier human rights assessment G4-DMA, Local communities G4-DMA, Animal welfare G4-DMA, Compliance G4-DMA (Society), Supplier assessment for impacts on society G4-DMA, G4-SO9 Engagement and collaboration As well as focusing on delivering our rural development agenda, we engage with stakeholder groups to foster a supportive policy environment that will facilitate progress towards our commitments. Our employees work with many external partners in rural areas to deliver development activities, depending on the particular set of skills and knowledge that is needed. Strong partnerships with governments are particularly important as they set the regulatory framework, and provide the goods and services to support rural development. We increasingly recognise the need to work closely with them to share knowledge and gain understanding, particularly at a technical level. Examples of our activities include: • The Nespresso AAA Farmer Future Program (see case study), an initiative to broaden the AAA Sustainable Quality Program’s social scope beyond farm level and enhance farmer welfare through the creation of a retirement savings plan; • Engaging in the IDH Sustainable Coffee Program (SCP), a public–private consortium of coffee industry representatives, trade and export partners, civil society organisations, governments and standards bodies that aims to address underinvestment, poor production practices and adverse climatic conditions in a pre-competitive manner. By aligning efforts, knowledge, standards and financial instruments, the SCP is helping develop country-specific approaches to sustainable coffee production, and to help millions of coffee farmers become more resilient; • Co-founding the Partnership for Indonesia Sustainable Agriculture (PISAgro), a public–private partnership established by the Government of Indonesia, along with business and civil society stakeholders; and • Co-founding the World Economic Forum’s (WEF) New Vision for Agriculture. The partnership works to achieve goals around food security, economic opportunity and environmental sustainability in Indonesia and the region. Nestlé in society – Creating Shared Value and meeting our commitments 2015 95
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