At the recent launch of the Food & Drink Federation’s flagship sustainability programme, Ambition 2030, Dr Emma Keller, Head of Sustainability at Nestlé, shared her thoughts on the company’s own sustainability journey and the initiatives it has implemented along the way.
The manufacturing industry is facing into a world where sustainability issues are no longer philanthropic. In previous generations, initiatives or activities around sustainability or the environment were undoubtedly seen as a nice to have, and a feather in the cap of organisations wanting to be seen to be doing the right thing; however, they are now real business drivers and bottom line issues that are impacting businesses on a day-to-day basis.
This is certainly the case at Nestlé. Globally, it is estimated that there is 25% less wheat being planted, a commodity the company relies on heavily. “This is genuinely starting to hit our bottom line and business planning,” said Emma. As such, the company sees sustainability as not just the domain of an individual team, but rather an issue that spans the entire business.
“This includes our procurement team whose budgets can change landscapes – they are the ones making decisions on what, how and where we buy. We believe that if a business model doesn’t include sustainability, then it’s not a sustainable business model.”
Employee and management buy-in is a key part of any sustainability journey and Nestlé has focused heavily on colleague engagement, which has incorporated three elements – hearts, minds and hands. ‘Hearts’ has seen the company building internal sustainability champions to engage all its 8,000 colleagues in the UK on nature; for example, visiting farms to get a better understanding around the origin of the raw materials. “This piece is really key; if you get that right it can really start to change mindsets”, Emma added.
“If a business model doesn’t include sustainability, then it’s not a sustainable business model.”
Businesses run on data, and so the ‘mind’ piece has seen a great deal of development around KPIs, putting data governance in place and getting a grip on the numbers. Emma added: “This not only helps us understand the cost of action, but also the cost of inaction. That enables us to see sustainability is an investment, not a cost.”
The ‘hands’ piece then centres on the strategy and action plan for change. “You’ve got to meet teams where they are now”, Emma continued. “Going in with a transformation plan which tells people to reach for the stars, when they haven’t even gone to the moon, is going to be really difficult. Establishing the steps to help them get on that journey is really key.”
The sustainability business case
Traditionally, approaching the board with a business case around sustainability has been something of a hard sell, particularly if it’s an investment that will cost the business in those early years. Therefore, Emma highlighted that manufacturers need to throw the kitchen sink at the business case and get all teams involved.
That means asking questions around what the business is facing; whether that’s regulatory pressure, extended producer responsibility (EPR) fees, packaging tax, the consumer case, NGOs, and how the business case incorporates brand and business reputation.
“Resilience is key”, Emma continued. “Nestlé is a company that’s been around for 159 years and we want to be around for 159 more. That fundamentally depends on nature and a balanced ecosystem. If that collapses, so too does our business. So building that into the business case is really important.”
“Data not only helps us understand the cost of action, but also the cost of inaction. That enables us to see sustainability is an investment, not a cost.”
She added that sustainability shouldn’t be about asking how much it will cost, but rather, how much is being invested in the future? All businesses have R&D budgets, strategies around how to future-proof operations, and will be working hard on NPI and NPD. Sustainability is no different. “If we’re not investing in sustainability, we’re not going to be a relevant business,” said Emma.
Perhaps more so than any other manufacturing sector, food and beverage is fundamentally linked to ecology, biodiversity and the natural world around us – a fact that is certainly not lost on Nestlé.
As a company dependent on nature, Nestlé is also dependent on farmers. Much like the manufacturing sector itself, the average age of farmers is increasing (over 60 globally), and so the company is working closely with the Food & Drink Federation to make the industry more desirable, enticing young people into the sector to offer new insight into farming, making it exciting and ultimately more profitable.
“Farmers often tell us that if they’re not in the black they can’t go green”, added Emma. “Therefore, part of our job as a business is to support them, help them take on risks, and offer support and incentives on the journey to transition.
“Farmers take all the risks, whether that be in relation to supply, the weather, pests, using alternative ingredients or trade. We simply buy what we want from them. So how we can help them on that journey is vital.”
When it comes to incentivising farmers, Nestlé purchase large quantities of dairy in the UK. Across that particular supply chain the company has been working closely with one farming cooperative for over 20 years and know all the individual farmers within it, and as such has built up a strong relationship.
Emma continued: “The key foundation of this relationship is that it builds trust. So, when we ask farmers to go on this weird and wonderful net zero journey with us, or move towards more regenerative farming, it’s easy for them to get onboard. That level of trust means they know we’re going to stick with them if dairy prices crash, and we’re going to be there to support them. They have to be able to come with us on the journey.”
“Farmers often tell us that if they’re not in the black they can’t go green.”
Another commodity that is in high demand at Nestlé is wheat. The company works on a landscape model in areas such as East Anglia that involves all the actors in that environment – supply actors (typically farmers), demand actors (Nestlé itself), but also other businesses and organisations such as Anglian Water and local councils – all parties that have a demand on that particular landscape.
Emma added: “We want good volumes of wheat; Anglia Water want cleaner water, flood resilience, etc. What we can do collectively, therefore, is look at each of our desired outcomes and work collaboratively to achieve them. For example, farmers can apply for funding that will allow them to change their practices, install hedges, plant trees etc. It’s a completely different way of working, but it’s really innovative.”
Cocoa
From a global supply chain point of view, Nestlé also depend heavily on large amounts of cocoa, the majority of which comes from smallholdings in regions of the world where many farmers live under the poverty line. This is a challenge the food and beverage sector has been grappling with for quite some time.
To this end the company has launched an income accelerator programme, designed to help close the living income gap for cocoa farming families. “This involves sitting down with farmers and actually listening to what their challenges are, and this has enabled us to recognise some very basic issues”, said Emma.
For example, Nestlé typically purchase cocoa at the same time it is harvested. However, the money the farmer earns from the harvest has often been spent by the time any children in the family are due to attend school (which usually occurs much later in the year, long after harvest time), creating a barrier to children’s education. Therefore, by making a simple change to its payment plan, Nestlé were able to ensure that money would be available for children to go to school.
In addition, Nestlé has traditionally paid the farmer for the crop, who is typically male. By splitting the income between the male and the female of the household, the company identified that the money was being spent very differently.
“The female was investing in community initiatives, for example. Again, more money was being spent in a way that was helping”, added Emma. “And we invested in practices such as pruning, which can be quite demanding for farmers, but it can actually double the yield and increase the pest resilience. As a consequence, farmers were earning more because they were producing more. So there are a variety of ways to incentivise and work with farmers, but you’ve got to listen to them.”
Takeaways
Emma added that for sustainability journeys to be truly impactful there has to be a board down / bottom up strategy. Getting the C-suite onboard and having sustainability as part of their agenda is vital. However, just as important is having the strategy driven from the bottom up. If you start with one and don’t do the other, the message will get lost.
Resilience is also fundamental; knowing what’s coming, what the company is facing and recognising where to lead and where to follow. “We can’t do everything, but we do recognise we’re Nestlé; we’ve got more resources and we should be taking that step forward”, Emma continued.
“We can all sit back and wait for policy but actually, policy takes time. It will only be able to get to a certain level, so voluntary action is always going to be important. We need leaders to show us what’s possible, and then policy can catch up. So let’s not sit back and wait. Let’s keep moving the dial or we’re going to sit in a space of incremental change rather than being really transformative.”
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