Around two-thirds of Nestlé’s worldwide expenditure is on raw materials and nearly 40% of that goes towards three main ingredients – milk, coffee and cocoa.
Many of our commodities rely on complex supply chains, involving large numbers of small-scale farmers in developing countries. We are committed to helping the 540,000 farmers who supply Nestlé directly to increase their productivity, protect the environment and have sustainable livelihoods.
Nestlé Supplier Code
The Nestlé Supplier Code seeks to extend our own Nestlé Corporate Business Principles to our supply chain, sets out certain non-negotiable minimum standards and sets out what we expect from our suppliers and extends to any farmers or primary producers which the particular supplier relies on.
Responsible Sourcing Program
The Responsible Sourcing Program puts the Nestlé Supplier Code into practice and seeks to identify and eliminate any social, ethical and environmental risks across our supply chain. The Program also provides a framework for Nestlé and its suppliers to work together to improve sustainability performance and address any non-compliance issues with our own Code and other social and environmental norms and legislation.
In addition, working closely with Nestlé, certifiers (such as Rainforest Alliance, 4C Association, UTZ CERTIFIED and Fair Trade in the case of coffee and cocoa) carry out verifications or audits to ensure compliance with their respective standards.
The Cocoa Plan sets out a comprehensive framework of direct cooperation with cocoa farmers. In 2010 Nestlé Oceania visited key co-operatives in Côte d'Ivoire to develop our knowledge and understanding of the conditions facing farmers there.
Nestlé Oceania works closely with UTZ CERTIFIED and commenced buying UTZ CERTIFIED beans in 2010. Whilst the percentage is small - 4 percent in Oceania in 2010 - this will increase as the availability of Cocoa Plan cocoa, certified by UTZ CERTIFIED, grows.
Sourcing of coffee and issues associated with certification, such as Fair Trade, and working with farmers, is managed on a global basis.
In 2010 we announced The NESCAFÉ Plan, which will see a doubling of the amount of coffee bought directly from farmers and their associations.
Our Nestlé Professional wholesaling business imports Partners' Blend, our Fair Trade certified coffee, for sale to their customers.
While palm oil is not a major raw ingredient for us - Nestlé globally uses approximately 320,000 metric tonnes, which equates to 0.7 percent, of the world's production of processed palm oil - we are working with the industry to find solutions to the complex problem of palm oil cultivation and deforestation.
In 2010 we formed a partnership with the global non-profit organisation, The Forest Trust (TFT), to fight the destruction of rainforests and peatlands by identifying and excluding suppliers linked to deforestation. The work has begun with palm oil, and we are studying our supply chains to determine similarly ambitious targets for pulp and paper.
Nestlé is the first global consumer goods company to become a TFT member.
We are an active member of the Roundtable on Sustainable Palm Oil (RSPO) and we have committed to source, by 2015, only palm oil from sources certified as sustainable. We are committed to sourcing 50percent of total group volume from sustainable sources by the end of 2011. An action plan has been prepared with TFT to help us to achieve these targets.
Any future decision regarding our selection of suppliers and supply strategy will be based on the compliance with the Responsible Sourcing Guidelines and the overall Nestlé Supplier Code.
In Oceania, we purchase some 7,000 tonnes of palm oil annually with 1,600 tonnes direct from New Britain Palm Oil who is an RSPO certified company. In 2010 Nestlé Oceania began purchasing GreenPalm certificates for the balance of our palm oil supply. GreenPalm is an independently certified trading scheme program whereby RSPO-certified palm oil producers receive GreenPalm certificates when they register an amount of their palm oil output. One GreenPalm certificate represents a metric tonne of palm oil produced in a sustainable manner.
Sourcing in Oceania
It is our preference to purchase locally wherever possible and we purchase a range of commodities from farmers and suppliers based in the Oceania region. As such, the broader agro-economic, and social and environmental factors which affect the region's agriculture, affect our business too.
We seek to understand emerging challenges and the agricultural context through various stakeholder forums, including our own Creating Shared Value Advisory Board - represented by members with expertise in agriculture, natural resource management and water - and the Sustainable Agriculture Initiative, which we participate in globally and regionally.
Our approach regarding the use of genetically modified (GM) ingredients is based on national regulations, availability of raw materials and consumer attitudes and perceptions. Accordingly, Nestlé Oceania requires suppliers to demonstrate that only non-GM ingredients are supplied. This is supported with Identity Preservation systems where appropriate. We conduct ongoing audits of our suppliers to ensure compliance with our requirements.