Governance is key to net zero success

How does a $94 billion-a-year food company meet climate targets and comply with ever-stricter ESG regulations?  Dr Emma Keller, head of sustainability at Nestlé UK & Ireland, details the challenges and successes involved in a net zero journey that spans the globe.

Nestlé is the world’s largest publicly held food company and markets 2,000 retail brands including coffee, confectionary, cereals, baby food, ice cream and pet foods. Two years ago the Swiss-based corporation announced an ambitious net zero climate roadmap and has been making significant progress on meeting its sustainability targets.

“We have been working on reducing operational greenhouse gas emissions for over a decade,” Keller explains. “Our approach is based on latest climate science and has been validated by the Science-Based Targets Initiative (SBTi) as aligned with a 1.5°C pathway. We remain focused on delivering against this plan, have already passed ‘peak carbon’ and our emissions are down on the baseline we set in 2018, even while the company continues to grow.”

The climate roadmap sets out a detailed plan to reduce emissions across a range of core activities including changing to regenerative agricultural practices that aim to transform farming systems from nature-depleting and carbon releasing, to nature-enhancing and carbon-storing.  The company is working with suppliers and farmers to incentivise on-farm practices that improve soil health, maintain and restore diverse ecosystems and safeguard water resources, Keller says. “We are transforming our product portfolio towards more plant-based products and moving our packaging to be fully reusable and recyclable whilst also reducing our use of virgin materials.

“We’re also working across more than 800 sites in 187 countries to transform our operations and logistics to 100 per cent renewable energy within the next five years. To date, all of the company’s factories and offices in UK and Ireland have transitioned to 100 per cent grid-supplied renewable electricity generated from wind power.”

ESG reporting and verification

The scale of Nestlé’s global operations require a dedicated team of in-house sustainability experts supported by a strong and growing network of sustainability champions across the business. “We believe that sustainability is part of everyone’s job and everyone has a role to play in delivering on our commitments. Collaboration is essential to go further and faster and we work in partnership with a range of organisations to meet our goals and achieve impact.

“Activities include supporting more regenerative farming practices in dairy, collaborating with peers in the sector on the flexible plastic fund, working with Derbyshire Wildlife Trust and others on a project to restore the natural habitat of the River Ecclesbourne and supporting the return of Atlantic Salmon through our Nestlé waters business. Where extra support or expertise is needed we will work with consultants and specialists to help us find the best solutions.”

After setting baseline targets in 2018, the company’s emissions increased slightly at first then peaked in 2019 and have been falling ever since, Keller says. “Our reduction targets apply to emissions in scope and cover all 3 scopes of our activities – this means we are also addressing emissions that are not under our direct control. We have used a CO2 equivalent (CO2e) calculation to forecast reduction targets per category of emissions. Alongside our focus on regenerative agriculture at scale and efforts to transform our product portfolio, we are incorporating emissions information more effectively into the decision-making to select ingredients that have a lower environmental footprint.”

Society and governance are often overlooked in ESG

Society and governance aspects are often ignored or go unseen in the race to meet environmental targets but Nestlé’s goal of advancing sustainable regenerative food systems at scale is unachievable without every part of ESG, Keller says. “It’s not just about tackling climate change, it also includes improving water use and quality, increasing biodiversity and reducing the impact of our packaging, aiding people in communities, supporting youth, sustainable sourcing and efforts to improve diversity and inclusion. Every part of ESG is important.”

The company last year launched the Nestlé Income Accelerator which aims to help cocoa farmers and families build sustainable economic stability while encouraging actions to deliver financial benefits that increase over time as productivity increases.

“There are four key elements: education, agricultural practices, agroforestry and additional incomes each underpinned by support and financial incentives offering households the potential to earn 500 Euro in total,” Keller explains. “We are continuing our education work, building schools, providing school kits and other activities. For agricultural practices we provide training, equipment and subsidised pruning groups and offer a payment to farmers for pruning fields, the key to increased productivity as it encourages cocoa trees to fruit and helps control diseases.”

The Nestlé First Milk partnership supports more than 80 farmers in England and Scotland to regenerate the land they farm while helping to develop the next generation of leaders. “We reach beyond just the farmers we work with directly. Whether that’s helping school children understand where their food comes from, helping young farmers become the dairy leaders of tomorrow or planting thousands of trees and miles of hedgerows, our long-term partnership aims to have a positive impact for generations to come.

“We work with local communities on a range of initiatives including apprenticeship schemes for young people; promoting healthy hydration and healthy lifestyle; encouraging recycling; developing employee skills and knowledge and sponsoring education projects.”

In its efforts to reduce food waste Nestlé has long-standing partnerships with Fareshare and Community Shop in the UK and FoodCloud in Ireland to redistribute surplus food to communities. “We are the only food supplier to provide all surplus food to FoodCloud while also making a per-pallet financial contribution to assist the organisation to be self-sustaining,” says Keller whose company encourages staff to undertake voluntary work in the community. “Each Nestlé employee can take two days a year away from work to do volunteer work, in UK and Ireland that’s up to 15,000 days of volunteering every year by employees.”

The global scale of Nestlé’s business presents many and varied practical, operational and management challenges that must be addressed and overcome in its journey to net zero and of all the critical elements involved  in ESG the ‘G’ is the most fundamental, Keller believes. “Delivering on all of our commitments requires good governance to ensure that sustainability is embedded in our DNA and is seen to apply at every level of the business.”