Nestle.pdf

The Best Writers9 9 1 3 4 0 6R E V : A U G U S T 9 , 2 0 1 3________________________________________________________________________________________________________________Professor Ray A. Goldberg and Lorin A. Fries (HKS 2012) prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2012, 2013 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.R A Y A . G O L D B E R GL O R I N A . F R I E SNestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)As we look ahead to the next ten years, it seems wrong to talk about “the future of sustainable agriculture.” Simply put, there is no future without sustainable agriculture.— Peter Brabeck-Letmathe, Chairman, Nestlé1Now after more than ten years of focusing on sustainable agriculture, many food processors and farmers are collectively working to redesign the whole food value chain to make it sustainable.— Hans Jöhr, Head of Corporate Agriculture, Nestlé2Hans Jöhr stood from his chair and walked to the window to think. It was a quiet morning at Nestlé, but his mind raced in anticipation of the executive board meeting that afternoon. As the company’s Corporate Head of Agriculture, Jöhr recognized the meeting as a key opportunity to strategize far into the future, reexamining how his team’s efforts in sustainable agricultural sourcing supported Nestlé’s position as the world’s leading nutrition, health and wellness company. The company had undertaken to impact three of the world’s most urgent challenges—nutrition, water, and rural development—and Jöhr’s team was fundamental to each of these pillars. Yet the forces changing the global food system were formidable: unprecedented levels of hunger, obesity, and chronic disease; land degradation, frequent natural disasters, and critical threats to water supply; population growth by the billions in the coming decades, along with increased urbanization; and a volatile and tentative world economy. In the face of such threats and complexity, how could Hans Jöhr ensure that Nestlé’s agricultural raw materials were safe, high quality, of consistent supply, and sustainably and ethically and economically produced? How can the procurement process enable the small scale producer to become a viable partner in the milk production models that Nestlé has developed in the developing world? Further, how could his team excel beyond the company’s day-to-day business and enable Nestlé’s visions for the future?A leading food company in the 21st century faced increasingly complex trends that affected its core business model and strategic approach: Globalization led firms to rely on multiple origins of supply and multiple national governmental programs that impacted each of its major commodity systems. Production and consumption becomes more and more geographically decoupled worldwide, hence open trade is critical for food security.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)2 Operational consolidation was occurring at every level of the supply system, forming long-term relationships focused on removing inefficiencies and preparing for shocks along the value chain. Emerging technologies, especially synthetic genomics, placed increasing emphasis on the nature of each component of the supply chain and its impact on the ultimate consumer. Consumers had increasingly diverse consumption demands, and food companies were becoming more adept at catering to such personal preferences, while remaining attentive to food safety concerns. With scarce available natural renewable resources on one hand and enormous losses and waste of food on the other, the food system players have to innovate to match future needs. There was increased understanding of the role of food and nutrition to human, animal, and plant health, and innovation centers focused on new challenges in these areas. In many markets consumers placed value on sustainable and ethical production practices, which required upstream traceability in the supply chain. World leaders had prioritized food security as among the most crucial and urgent issues for economic development, security and human well-being. Actors in the private, public and not-for-profit sectors were increasingly collaborating in innovative partnerships to tackle development challenges and pursue economic opportunities.For Hans Jöhr, a key piece of this puzzle was sustainability. By organizing agricultural sourcing to support producers and their environment through his team’s Sustainable Agriculture Initiative at Nestlé (SAIN, pronounced “sign”), the company could depend on a more consistent supply and quality of raw materials. Further, Nestlé’s direct relationship with 680,000 farmers called “Farmer Connect” sourcing program with full traceability, safety, and quality control is one big part of the entire puzzle of responsible sourcing differentiating raw materials: Jöhr saw a significant opportunity to link sourcing to nutrition through biofortification—the process of breeding crops in a way that increased their nutritional value. This could not be done with traditional commodities purchased through a long and anonymous supply chain. “Every day there are hundreds of millions of hands that take, or don’t take, a Nestlé product,” Jöhr explained. “How is this linked to agricultural sourcing? That’s the real question.”3 In a tumultuous global food system amid growing momentum to align business, environment, and social objectives and with customers increasingly demanding sustainability and high nutritional value products, the key objective is to understand how consumer trust is linked to sourcing activities and the natural quality of agricultural materials. Jöhr felt the winds changing in the food and beverage industry. Business as usual would no longer suffice for the company, its customers, its broader stakeholders, and the planet. These new realities prompted urgent questions for Jöhr to address at the executive board meeting:1. How does Nestlé develop, with other stakeholders, incentives on water and land management that are fair and equitable, so that current and future needs of the rural and urban populations are met?2. How does Nestlé provide new development models that utilize current and future new technologies that can be accessible to all at every level of the food chain, at every stage of development?For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40633. How does Nestlé develop better feedback mechanisms from every sector of the vertical food chain so that it can encourage the more urgent introduction of its products, with their improved nutritional components, for the improved health of its consumers?4. How does Nestlé find impartial third-party evaluators of its programs who can measure and provide valuable feedback as to their impact on health, nutrition, economic development, and waste management?5. How does Nestlé both compete and partner with entities in a changing, complex food system? In addressing the above issue, how does Nestlé accomplish progress at all levels of the food chain in terms of efficiency and creativity, to enable it to remain a profitable and competitive leader in the global food system?6. How does Nestlé encourage the co-existence of alternative sources of supply from local unique organic crops to global multinational firms and farm cooperatives?7. How does Nestlé encourage the development of genetically modified crops that both improve commodity productivity and improve nutrition in an environmentally sound manner?8. How does Nestlé and its new human nutrition center help the consumer better understand the importance of food and its relationships to his or her health management needs?The world has changed a great deal. Companies such as WalMart are demanding more from their supply chain in every form. Managers now take a systemic view of the global food system (see Figures 1 6). They want total shared value and are doing so with public-private-NGO partnerships that they never dreamed of needing to have. In addition, at every level of the food chain (from input technology to the end consumer), leadership on sustainability, health, nutrition, the environment, land, water, waste management, and economic development is expected as part of the “new normal“ business relationship. The demand for accountability and positive creativity in tackling these manifold expectations is also a new critical factor. A whole new industry of impartial firms that measure the results of these activities is being developed. How to manage these new private public partnerships and how to instill these values throughout the company and how to provide compensation to managers who excel in these areas are again new to most companies. The legal profession has to find new ways of creating these new partnerships while protecting the unique creativity of the firms and their heavy investment in sensitive research. It also has to protect the independence of the public and NGO entities involved. Jöhr said:We do need to capture this new world and the increased expectations that society has from Nestle and the expanded new leadership Nestlé must bring to this arena.Nestlé has set the tone, has created the SAI Platform and has helped to establish a totally new level of awareness and standards on how to source and interact with farmers, traders and primary processors. It’s like we have created a new discipline within the “Olympic games” or global food system, not to say new levels of standards within several agricultural raw materials (commodities). Ten years ago I couldn’t have dreamed about such changes.Obviously, the economic, political, and even social environment (and nature per se) changed a lot during the past years. These changes manifested themselves through different perceptions and media and our sometimes-wrong politics and inflamed crises, etc., which helped us to drive the Sustainable Agriculture Initiative at Nestlé and create the Creating Shared Value concept around the entire Nestlé group—not only on sourcing.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)4Jöhr had a small magnet on his desk lamp that read, “Go—See—Think—Do.” This was his mantra, he explained—a cyclical pattern that fueled informed, reflective, proactive work. Eleven years after creating SAIN and its Farmer Connect program, it was time again to think. “We have a big tanker,” Jöhr reflected. “We need to know where the winds are blowing to set the sails: what are the issues for our stakeholders, especially our consumers? What is changing in our operating environment?”4 Nestlé leaders’ ability to predict and navigate these trends had far-reaching implications for the company’s continued success; the well-being of upstream producers, workers and communities; and greater sustainability throughout the global food system.Nestlé’s VisionNestlé had an ambitious vision. It was a company that looked decades into the future to frame its strategic decisions. Far beyond food supply and even food security, the company saw that it could make a critical contribution to disease prevention and health science (see Exhibit 1). Most recently the company invested in Accera, an innovative medical food company. This was an unusual notion for a leading food company: not only could Nestlé sell high-quality and dependable products to its consumers, it could provide nutritional and health solutions. In orienting toward the future, Nestlé was also acutely aware of the trends that were shaping the food system. It built its strategy around the three core topics within the “creating shared value” (CSV) concept [www.nestle.com/CSV] most critical to their business: nutrition, water, and rural development. The company’s corporate business principles reflected these priorities and included particular commitments on agriculture and rural development, environmental sustainability, and water (see Exhibit 2).Nutrition The first core topic, nutrition, was of paramount importance in a world plagued by both malnutrition and obesity (see Exhibits 3 and 4). In 2010, those suffering from hunger numbered 925,000,5 while chronic diseases were the world’s leading cause of death (see Exhibit 5).6 Recognizing the increased demand for available and convenient packaged foods, the company built nutritional solutions into its products. Given the critical role of diet in preventive health and disease management, Nestlé saw that its products and services could help foster healthful lifestyles among its consumers. This was a natural role for a company that had begun, in 1866, by selling infant formula to mothers unable to breastfeed their babies. Now more than a decade into the 21st century, Nestlé sought to “expand the boundaries of nutrition”:7 its most recent investments included the creation of Nestlé Health Science S.A. and Nestlé Institute of Health Sciences to target new opportunities at the intersection of the food and pharma industries. Accordingly, their creations were often called “nutraceuticals.” These organizations focused on what the company called “personalized health science nutrition,” developing nutritional products for health conditions such as diabetes, obesity, cardiovascular disease, and Alzheimer’s disease.8 In addition, Nestlé’s Clinical Development Unit, established in 2012, allowed the company to expand its clinical trials to assess the impact of its products on human health.9 In 2012 Nestlé also acquired a company that would allow it to research and develop “brain food,” medical food designed to improve mental functions such as memory and cognition. Nestlé Chairman Peter Brabeck emphasized that the company sought not only to extend consumers’ lives, but also to sustain the quality of those lives.10 Thus, from infant formula to personalized products for the aging, Nestlé sought to provide “nutritional solutions” to its customers throughout their life cycle.Water Nestlé’s second core topic was the natural resource most vital to its operations. Yet water was being used at unsustainable rates—a growing crisis that Brabeck had taken on as his top policy priority. By 2005 the world was already using more water than could be naturally regenerated (see Exhibit 6), and Nestlé calculated that by 2030, water withdrawals would exceed natural renewals by 60%.11 Critically for the food and beverage industry, agriculture accounted for 70% of global waterFor the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-4065usage.12 As Brabeck summarized, “You need [to invest] 1 liter of water for any calorie you eat that comes from a plant, and 10 liters for a calorie that comes from meat. [In New England] each day we consume about 4,500 liters of water.”13 Heretofore a free resource for much of the world, water scarcity was often a tragedy of the commons: without incentives or collective action mechanisms for water stewardship, few users sought to limit their extraction. “Water is the most valuable thing in the world, and yet we don’t give it a value,” Brabeck observed.14 Though improved irrigation and other technologies could help producers reduce water usage dramatically, weak systems for transferring and incentivizing these practices prevented their wide-scale adoption.Rural development Nestlé’s third core topic was rural development. The company was invested in this area because it recognized that many of the farmers upstream in its supply chain, as well as an emerging segment of its consumers, were constrained by the daily burdens of poverty and underdevelopment. Further, the poor often suffered the most in the face of the increasingly volatile food prices (see Exhibit 7) as well as natural disasters, which had increased in number and severity in recent years (see Exhibit 8). Investing for development made sense both for the company and for rural communities: highly productive and more resilient agriculture benefitted the company’s supply chain and increased farmers’ incomes; improved infrastructure enabled more efficient supply chain logistics and connected the rural poor to resources like markets, health facilities, and schools; and better health and nutrition among rural populations helped maintain Nestlé’s supplier and consumer base while improving life and economic productivity within such communities.BackgroundNestlé S.A. In 2012, Nestlé was the world’s largest food and beverage company. It ranked 40th on the Forbes Global 2000, with net profits of over CHF 9.5 billion in 2011 (see Exhibit 9).15 In the same year, it had 461 factories in 83 countries, with 328,000 employees worldwide.16 With brands including Kit Kat, Nescafé, Maggi, Lean Cuisine, and DiGiorno, the company’s agricultural raw materials sourcing totaled approximately CHF 21.7 billion each year (see Exhibit 10). With such wide scope came significant vulnerability. The company recognized that a risk to its producers had potentially severe implications for the company: “5,500 cups of Nescafe are drunk every second,” said Stefan Canz, a sourcing specialist in Corporate Agriculture at Nestlé. “This puts sustainability into a different perspective. If something goes wrong with the producers, we suffer.”17 Therefore Nestlé needed to manage risk and volatility, anticipating shocks to producers and the market; the well-being of its farmers was intertwined with its own. But, even while Nestlé pursued 5% 6% annual organic growth, it recognized the environmental implications of such expansion. Hitting this target would mean about 120,000 additional hectares of land in a given year, Jöhr calculated. “That’s like a new state in Switzerland. It means 100,000 more cows in Europe, or 500,000 buffalo cows in less productive regions like Pakistan.” Therefore, central to the company’s future was the question of protecting natural capital: “How do we use natural resources in a way that sustains growth and increasing our part of the world food system without jeopardizing natural capital?”18The concept of Creating Shared Value (CSV) A dialogue had emerged over the last decades about companies’ interaction with society and the environment. Various approaches had emerged, including the “triple bottom line” and “corporate social responsibility.” While these concepts varied between actors, they were predicated on the notion that companies had responsibilities beyond their financial returns, and that they should divert a portion of their profits to invest in social and environmental programs. The Nestlé team saw it differently. Peter Brabeck, believed there was no place for philanthropy by businesses. “I have nothing to give back to society,” he explained, “because I have not been stealing anything from society.”19 The company recognized that its health and growth depended on having investment from its shareholders and a social licenseFor the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)6to operate; thus, it had to create both financial and social value.20 This approach was rooted in long-term strategic thinking: as the world’s largest food company, Nestlé was highly dependent on the communities and ecosystems that supplied its raw materials. Therefore, there was a business case for investing in environmental sustainability and social well-being. To capture this concept, Nestlé partnered around 2005 with thought leaders at the Harvard Business School and the social impact consulting firm FSG to introduce “creating shared value” (CSV) into the academic discourse. The company also adopted CSV as its guiding principle, as illustrated in its Nestlé Creating Shared Value Pyramid (see Exhibit 11).Though CSV was new terminology, Nestlé explained that the same principles had driven the company’s strategy for decades. It pointed especially to its milk district models, a decentralized system of rurally-based delivery points that helped low-income dairy farmers access markets, reducing waste and increasing rural incomes. More recently, the company took the bold move of distancing itself from the obligation to report on short-term financial results. With near-unanimous shareholder approval, it changed the company’s articles of constitution, permitting it to withdraw from all stock markets that demanded quarterly profit reporting.21 This was part of the company’s efforts to take a holistic view of “success.” Hans Jöhr explained, “We’re not into charity; we have to measure the financials—but not exclusively. Financials are necessary like the oxygen in life. But imagine if life were only about oxygen.”22The premise of CSV was at once revolutionary, logical, and aspirational, evolving out of the old corporate social responsibility. “We focus on creating shared value now, not on sharing created value anymore,” Jöhr noted. Its win-win premise had captured the imaginations of students, scholars, and practitioners. Perhaps there was a true opportunity to bridge the often stark divide between multinational businesses and the public sector, channeling private sector resources towards sustainable development for people, the environment, and business alike. This would represent a paradigm shift: forward-looking companies would recognize non-financial goals to be in their true long-term business interest. The idea worked because it was deeply logical. A company like Nestlé relied on the quantity, quality, and consistency of the materials it sourced. “We purchase 10% of the world’s coffee and cocoa production,” Stefan Canz of Corporate Agriculture explained, “therefore we depend on functioning ecosystems and a healthy environment.”23 Thus, safeguarding the natural resource base for production and investing in human health, capacity, and resiliency made business sense. Yet, elements of CSV were still aspirational. While business, social, and environmental well-being were mutually reinforcing in many areas, in some cases there was a negative net financial value for the company, challenging its ability to be competitive in current markets.The Role of Agricultural Sourcing within NestléHans Jöhr could summarize his job in a single hefty objective: “to ensure the delivery of safe, quality assured, regulatory compliant, and competitively priced agricultural materials supplied through Farmer Connect to serve Nestlé’s brands and consumers.”24 But this summary masked enormous complexity. Hans Jöhr’s job was far more than a logistics supply chain: it was an integral foundation of Nestlé’s vision to be the world’s leading nutrition, health and wellness company. Sourcing had to be an enabler for this vision.25For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-4067Creating the Sustainable Agricultural Initiative at NestléCreation of SAIN and the SAI PlatformNestlé’s concern for sustainable production was already embedded in the company’s agricultural portfolio. More than a decade prior, in 2000, Hans Jöhr and his team had created SAIN, the Sustainable Agriculture Initiative at Nestlé. SAIN encouraged good agricultural practices among its suppliers, providing technical assistance through a team of extension workers. These activities sustained and were fully aligned with the company’s later created CSV approach: productive farmers who were stewards of natural resources represented a more reliable and sustainable source of quality raw materials for the company. Though Nestlé in many countries does not legally contract with farmers, it described significant producer loyalty in the majority of its markets.SAIN was designed as a bottom-up approach. Several barriers to sustainable agriculture were systemic, however, and necessitated broader changes in the industry and in policy. Therefore Nestlé joined with Unilever and Danone to create the Sustainable Agriculture Initiative (SAI) Platform in 2002. By 2012 the Platform, www.saiplatform.org, had 43 active members including Coca-Cola, PepsiCo, General Mills, Kraft, and McDonalds. These partners worked in pre-competitive and collaborative forums on sustainable agriculture, which they defined as a “productive, competitive, and efficient way to produce agricultural products, while at the same time protecting and improving the natural environment and social/economic conditions of local communities.”26A Decade of Progress in Sustainable AgricultureCalls for Sustainability in the Global Food SystemNatural resource scarcity and climate change Nestlé’s sustainable agriculture activities were situated amid increasing international attention to natural resource scarcity and climate change. There was a growing body of evidence about such threats, accompanied by tools to measure the environmental “footprint” of a wide range of human activities. Shocks like the food price crisis of 2007 08 and the financial recession shook the world, prompting urgent calls for more sustainable practices in individual lifestyles and business operations. Many of the threats had already reached critical levels; among the most prominent issues overlapping with agriculture were climate change and deforestation.In the first decade of the 21st century, climate scientists provided irrefutable proof of climate change and its links to anthropogenic, or human, activities. The problem was divided into two main issues: mitigation and adaptation. Mitigation focused on slowing or reversing the pace of global warming and associated climatic changes, while adaptation sought to address those threats that had already manifested. There were several key overlapping issues between climate change and agriculture. Production activities—especially where land was cleared of forest or cattle were reared—could generate high levels of carbon and methane, the two primary greenhouse gases. Indeed, agriculture and forestry activities together represented up to 30% of global emissions.27 Yet farmers also suffered many of the effects of climate change: natural disasters had spiked in number and increased in severity,28 and the majority of these had direct implications for agricultural production. Less dramatic changes, such as increasingly erratic rainfall, also had devastating effects. While U.S. farmers faced the worst drought since the 1950s in 2012, a highly-publicized hardship, countless smallholder farmers lost their entire harvest due to miscalculating when the rains would come.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)8Forests also attracted significant attention as society began to appreciate their role in global climate change. Not only could forests absorb greenhouse gases—a critical counterbalance to emissions—but the activity of clearing land for agricultural production resulted in substantial emissions itself. Yet at the turn of the century there were few immediate incentives for preserving forested land when production on the same land would be profitable. During this period, governments such as Brazil’s made significant strides to reduce deforestation through legislation, international bodies like the United Nations designed financial incentives for preserving forest, and advocacy groups like Greenpeace pressured companies to prove that their products did not contribute to deforestation.Trends in consumer demand The first decade of the 21st century also saw significant changes to consumer trends. The first concerned demographics: the global population hit 7 billion in 2011 and was projected to be 9.1 billion by mid-century. In 2008 the world became more urban than rural, a trend that was projected to accelerate especially in Asia and Africa (see Exhibits 12 and 13).29 And poor consumers in emerging economies were increasingly participating in markets as many emerged from poverty and businesses became more adept at reaching those at the base of the socioeconomic pyramid. And as the global population skyrocketed, farmers represented an ever smaller and older demographic. In 2012 the average age of U.S. farmers was 58 years, and over one-third of European farmers were older than 65.30In the same period, consumer preferences had shifted towards more responsible and sustainable production. As companies like Nestlé knew, consumers were no longer solely focused on price, taste, and nutritional content. Consumers were asking two additional questions about food products: Where did it come from? and How was it produced? In the digital age, everyone had a voice and everyone was heard. Nestlé was increasingly held accountable for its products upstream, even to the farm or feedstock origin. Thus, the value proposition of Nestlé’s products needed to change for certain markets, especially in the United States and Europe. The company collected information on consumers’ priorities and found that, in some cases, consumers were willing to pay more for more responsibly produced products. This allowed Nestlé to invest in increased transparency and accountability upstream in its supply chain.31Economic volatility A final critical trend of the early 21st century was increasing volatility in world markets. The financial recession had triggered uncertainty throughout the global economy. The food price crisis of 2007 08 plunged millions into poverty and hunger; many producers in the developing world—ironically, a demographic that had to buy more food than they produced—suffered acutely from the crisis. This had implications for companies like Nestlé at several stages of the value chain. For agricultural sourcing in particular, the crises illuminated critical upstream risks to the sustained supply of quality raw materials. The relationship between rural economic development and the company’s own success became ever more apparent: failed harvests and hardship among the world’s poor had real implications for a multinational company like Nestlé.Nestlé’s recognized these realities explicitly in its CSV approach, and sought to improve the productivity and resiliency of upstream livelihoods through its rural development activities. Importantly, it also recognized that truly sustainable production needed to have an economic dimension: not only must practices use particular agricultural approaches, but they must also be economically viable for producers over the long term.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-4069Nestlé’s Leadership in Agricultural Raw Materials SourcingNestlé purchased agricultural materials in two ways, and this division was reflected in the company’s organizational structure. When Hans Jöhr’s team initiated the Sustainable Agriculture Initiative at Nestlé (SAIN) in 2000, Nestlé was already partnering with farmers. Unlike many of its competitors, Nestlé started in Switzerland to purchase raw materials directly from farmers in 1870. In 2011 farmer suppliers numbered 680,000 and represented a wide set of developing economies. These producers were supported by the company’s decentralized presence: about half of Nestlé’s factories were located in the developing world and almost three-quarters of these were based in rural areas.32 In 2011 Farmer Connect producers provided Nestlé 13 million tons of fresh milk from more than 30 countries through its milk district models, 6% of the company’s total cocoa sourcing, and almost 90,000 tons of green coffee.33 Nestlé bought all other agricultural materials from about 165,000 intermediaries, or “suppliers,” through the company’s procurement team (see Exhibits 14 and 15 for these two distinct exercises, Farmer Connect and procurement from suppliers).SAIN Farmer Connect program Hans Jöhr’s Farmer Connect activities were structured around Nestlé’s highest-volume agricultural materials: coffee, cocoa, and milk but also vegetables and grain. The team had constructed plans, targets, and tools for more sustainable sourcing in each of these value chains. These activities fell under several additional corporate initiatives e.g., the Nescafé Plan, the Cocoa Plan, and the RISE tool for dairy production.The Nescafé PlanNestlé sought to double the amount of Nescafé coffee the company bought directly from producers, seeking to reach 170,000 farmers by 2015. Eighty percent of these would be smallholders. The direct relationship with producers allowed Nestlé to require more responsible production methods: the company had committed that by 2015 all coffee sourced through Farmer Direct would meet the 4C code of conduct, a basic set of sustainability standards.34 By 2020 the company sought to have procured 90,000 tons of Nescafé coffee produced in accordance with Rainforest Alliance and SAN principles—a more stringent certification.35 To complement this sourcing, Nestlé provided agricultural training, plus it distributed high-yield, disease-resistant coffee plantlets. These Plan activities were designed to increase the viability and sustainability of farmers’ production: improved agronomic practices would increase productivity while protecting the local ecosystem, and the plantlets replaced old, less productive trees. The company estimated that its investments in such coffee projects would total CHF 500 million by 2020.The Nestlé Cocoa PlanThe Nestlé Cocoa Plan was also designed to support farmers’ sustainable production practices. The Plan had three pillars: eliminating child labor in Nestlé’s cocoa value chain, sustaining cocoa supply into the future, and ensuring farmers had a sustainable income. Nestlé had partnered with the Fair Labor Association to adopt a zero-tolerance policy for child labor in its cocoa supply chain. The company was investing CHF 110 million in Plan activities over the decade starting in 2010, training approximately 30,000 farmers, investing in plant research, and distributing one million high-yield, disease-resistant cocoa plantlets each year. The Nestlé Cocoa Plan also aimed to increase the percentage of cocoa sourced directly from farmers.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)10DairyNestlé had set an example for rural development over more than a century of sourcing through its milk district model. As Jöhr and Manfred Noll, a milk specialist on Nestlé’s Corporate Agriculture team, noted in a previous case study:Once you start to operate a factory in a region, the farmers see this is not a development project like those that a government might finance, where you come in for one, two or three years, and then leave when the project is over. If we are setting up a factory, we’re there to stay for tens of years—you have to justify the investments to your shareholders. It is a very strong message to send to the local communities, and it says that we are really going to buy local raw materials. . . . The most powerful tool we have to convince new farmers to improve their output, or to even try dairy, is building a factory. When they see the factory going up, they know this is for the long term. 36While Nestlé’s dairy activities did not have a consumer-facing plan, they were designed to protect producers and the environment with the help of a tool called the Response-Inducing Sustainability Evaluation (RISE). RISE was a diagnostic tool, developed and owned by the Swiss College of Agriculture, to identify economic, social, and environmental areas for improvement on dairy farms. Nestlé was on track to have assessed 90% of its milk supply with RISE by the close of 2012.37 Like Nestlé’s other sustainability strategies, the tool was designed to enable long-term milk supply; however, it was less important that a particular source of milk be communicated to consumers than it was to help farmers eliminate unsustainable practices. Milk had not attracted many consumer concerns for sustainability, though its compliance with safety regulations and quality assurance was well monitored. Despite the lack of such consumer attention, Nestlé invested to bring RISE to its producers. “We believe in the spirit of continuous improvement also for our farmers,” Stefan Canz said simply.38Procurement Nestlé’s procurement team oversaw the company’s second stream of agricultural materials. While these activities looked more like traditional operations within a food and beverage company, the procurement team had taken significant strides toward more responsible sourcing. These had come in three distinct waves: adopting a supplier code of conduct, initiating a responsible sourcing audit program, and pursuing value chain traceability for key agricultural products.Supplier Code of ConductUntil the late 2000s, aside from the Farmer Connect program, Nestlé’s procurement relationships were predominantly with Tier 1 suppliers—large companies like Cargill and ADM. Like the majority of its competitors, the company had scarce knowledge about activities further upstream in its agricultural supply chains. Yet in recent years, consumer preferences, media attention, and supply chain vulnerabilities demanded Nestlé’s attention to additional tiers of suppliers. In 2009 the company published the Nestlé Supplier Code that established standards such as minimum age limits and safety requirements. While establishing such a code was an important step, the company soon realized that it had few systems in place to ensure compliance. Thus, Nestlé committed to a more robust effort in responsible sourcing.39Responsible SourcingIn 2010, Nestlé augmented its Supplier Code of Conduct with the Responsible Sourcing Audit Programme. The company rolled the program out in phases. First, with key competitors like Kraft, Food Master, PepsiCo, Coca-Cola, and Unilever, Nestlé agreed to a common, industry-wide ethicalFor the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40611audit protocol for suppliers. These standards were valid for 35 major companies. “This is the biggest success we could have had,” noted Benjamin Ware, a global supplier and development manager at Nestlé.40The second step was to conduct responsible sourcing audits. This was a significant challenge: Nestlé procured from 160,000 suppliers, many of whom had multiple geographic sites. In the program’s first year Nestlé conducted 4,000 such audits, partnering with organizations like Sedex, Maplecroft, AIM-PROGRESS, the World Wildlife Federation, and Greenpeace. Identifying whom to audit first was an extensive exercise. Nestlé used Maplecroft indices of countries with high risk for unethical practices and asked its team in those markets to identify problematic suppliers for the first round of audits. The company also conducted a few audits in less risky countries. In 2011, Nestlé reported that 75.2% of its procured volume was compliant with the Nestlé Supplier Code.41 Suppliers found to be non-compliant were given a window to redress the problem, depending on the severity of the breaches. An important finding from the initial audits was that problems in risky economies were more numerous, but generally lower risk, while breaches in developed nations were less probable but relatively more severe. 42 This prompted Nestlé to extend its responsible sourcing audits in 2012 and beyond to all locations and spend categories.TraceabilityComplementary to the Responsible Sourcing Audit Programme, Nestlé sought greater transparency in its upstream supply chains. There had been growing pressure on industry players to demonstrate the origins of their materials. The company initiated a new Traceability Program in June 2010, five weeks before Greenpeace protesters in orangutan costumes made media headlines at a Nestlé annual meeting.43 As Benjamin Ware reflected, “Greenpeace said, ‘We don’t care if the problem in your palm oil supply chain is with the first or the 25th tier supplier.’ This was exactly the crisis we needed internally to kick off this second phase of our responsible sourcing activities.”44 Nestlé identified 12 categories it could strongly influence through traceability (shown in Exhibit 14) and launched into traceability exercises. By 2011 the company had completed those for milk, cocoa, coffee, and select other major commodities, and it would complete the remainder in 2012. Nestlé had not made commitments around sustainable production of these materials: this exercise was designed only to reveal the upstream relationships. However, such knowledge positioned the company for tangible actions on ethical and environmental production concerns. For palm oil, for instance, the company had worked with the Forest Trust to conduct mapping of exporters, traders, and farmers, blacklisting those with unfavorable practices.Water management SAIN and responsible procurement were also key to Nestlé’s water commitments. Along with major industry players, Nestlé had made commitments to reducing water use in its own operations: between 2001 and 2011 it had achieved a 28% reduction.45 Beyond this important achievement, however, Nestlé recognized that the production of its raw materials represented the most significant proportion of its water footprint. Greater efficiency along its supply chain was critical to water accessibility and replenishment in watersheds throughout Nestlé’s source markets. As such, water stewardship was a natural goal within the company’s CSV philosophy.While many praised Nestlé’s water management efforts, the company’s activities in water-stressed regions also attracted significant protest. In multiple countries around the world, local groups charged the company with unsustainable and exploitative use of public water resources, especially for its bottled water products. The company pointed out that its bottled water represented 0.0009% (less than one millionth) of total fresh water consumed worldwide, and the company as a whole used only 0.005%.46 The company posited that its exit from emerging economies with water-For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)12stress issues would be a detriment for local communities because its presence had positive impacts for smallholders’ livelihoods. It explained that, even if it were to exit, a competitor might replace it immediately. Thus, Nestlé’s role in water-stressed regions was to remain present, act as good stewards of the resource, and contribute towards collective improvement of water resource management within individual watersheds, according to Carlo Galli, a technical and strategic adviser in Nestlé’s Water Resources unit.47Key Issues on the HorizonReflecting on these several years of progress, Hans Jöhr considered the primary risks and opportunities along the agricultural value chain that warranted strategic thinking for the coming period. These fell into four main categories: production systems and methods, measurement of impact, people development, and maintaining competitiveness.Sustainable and Ethical Agricultural ProductionGood agricultural practices In response to consumers’ changing preferences, pressured by environmental advocates, and in keeping with its own CSV principles, Nestlé encouraged good agricultural practices among its upstream producers. For Nestlé, such practices were defined jointly with the SAI Platform on a pre-competitive level, with NGOs’ and other technical experts’ input.48 However, a major challenge across the industry was to communicate these standards to consumers. Companies, consumer advocacy groups, and environmental organizations had different standards and metrics, and many had ways to signal their commitments to the market. What had emerged was a cacophony of sourcing standards that had captured and confused consumers’ attention. In 2011 the Ecolabel Index listed 426 certifications and labels across 25 industry sectors.49 To Hans Jöhr, there were two aspects of this challenge: myths and branding.“The food system is plenty full of myth,” Jöhr said, pacing his office with a burst of energy. He gave the example that “everyone wants shade-grown coffee.” Indeed, this is important to the coffee’s quality in some regions, but in places like Brazil, no one could distinguish a coffee bean grown in shade or sun. Nonetheless, some of Nestlé’s strongest competitors captured significant market share with such guarantees, Jöhr explained:It isn’t right. You’re selling a concept to consumers that doesn’t correlate with the realities of production. We need to work with facts and figures instead of fooling around with emotions. But these certifications become like a religion. Nestlé believes that many schemes are not tackling the most important issues to the crop: there’s a disconnect between the public interest and the real issue.”50Even well-designed global indicators could divert attention from important sustainability issues, explained Benjamin Ware. For instance, greenhouse gas emissions were among the most prominent environmental indicators, thus Nestlé measured the carbon footprint of its dairy farms. While greenhouse gases received attention and resources, however, the animals’ effluents could be a much more significant issue for the local environment: they could pollute the water, kill biodiversity, and lead to significant health dangers.51Given such noise in the market, how could Nestlé communicate its own sustainability strategy to consumers and other stakeholders? This question underscored Hans Jöhr’s key goal: to link responsible sourcing to Nestlé’s business and its brand. The Nestlé Cocoa Plan had developed a logo and was branding the small percentage of its confectionary products that used cocoa sourced throughFor the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40613the initiative. The confectionary team was hopeful that this would be an important signal in particularly source-conscious markets, like the U.K. But other branding was less successful. “We developed this Fair Trade Nescafé product and it didn’t sell,” Jöhr said, picking up one of the many products that decorated his shelves. He believed this was because the concept of fair trade and that of big business didn’t fit together in consumers’ minds. “No one worries about the fact that there are only two suppliers of the microchips for these,” Jöhr said, holding up an iPhone, “But, like I said, food is emotional.”52Economic SustainabilityFor Nestlé, one of the key elements of sustainability was that production needed to be environmentally sound, but also economically viable for the producer over the long term. This nuance was relatively new in the broader global dialogue: the term sustainability had traditionally been used in a purely environmental or social sense, and several platforms and certification schemes had been built around this focus. But, as Nestlé team member Stefan Canz explained, “You can’t claim sustainability purely on a certification scheme when you don’t know whether the farmer sees better business in producing other crops such as rubber, or if he will go completely out of business the next year.”53 Both the economic security of its producers and the competitiveness of farmers’ products were important to Nestlé: among its primary challenges was the availability of alternative, more lucrative production activities in areas like West Africa. Simon Billington, head of Nestlé’s Confectionery Strategic Business Unit, explained that rubber and palm oil were easier to produce, and the potential that farmers would switch products presented enormous risk to Nestlé’s cocoa supply.54 Thus, the economic viability of producing Nestlé’s materials was among the company’s sourcing concerns.Ethical ProductionCommitments Regarding Child LaborEthical production practices in agriculture were focused primarily on fair and safe labor conditions for agricultural workers. In this period the issue that captured most attention was children’s involvement in agricultural production, particularly for cocoa and sugarcane. Global attention to this problem had intensified in the early 21st century, and companies like Nestlé had been both criticized for complicity and encouraged to be part of the solution through stringent sourcing requirements. Not only was such labor dangerous for children, who used tools like machetes and often worked long hours in harsh conditions, but it prevented their attendance at school. Nestlé and others announced zero tolerance policies for child labor in their supply chains. “Some things are simply ethical obligations and non-negotiable,” Simon Billington said. But there was also a critical business case for devoting resources towards this problem. “Chocolate is all about pleasure,” observed Darrell High, cocoa manager in the Confectionery Strategic Business Unit. “If the media stories grind away at customers’ enjoyment, and if potato crisps don’t bring up the same issues, then we’re in trouble.”55Nestlé devoted priority attention to the child labor issue: it describes itself as the first company to acknowledge the problem,56 and in 2011 it partnered with the reputable Fair Labor Association (FLA) to determine strategies for eliminating the practice in its supply chains. The FLA produced 11 recommendations, which Nestlé accepted in full.57 Central to this analysis, and to the larger Cocoa Plan, was the recognition that child labor was deeply rooted in local livelihood practices: in many communities, children had assisted with agricultural production for generations, and in some casesFor the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)14families saw little opportunity cost because schooling options were scarce and of poor quality. Thus, a true solution needed to combine behavior change, household economic empowerment to free children of work obligations, and better opportunities for schooling. Under the Cocoa Plan, Nestlé and the FLA pursued all these goals. One of the plan’s most prominent features was the construction or refurbishment of 40 schools. As to the company’s zero tolerance policy, Nestlé’s senior leadership observed that it was impossible to guarantee that purchased cocoa had not been produced with child labor, as this would require ubiquitous monitoring that was infeasible.58 Like others in the industry, Nestlé was struggling to be ethical and realistic at once vis-à-vis child labor.Commitments on Deforestation: Sustainable Palm OilAnother dimension of ethical production concerned deforestation for agricultural production. Global concern had surged in recent years as large swaths of forest were cleared to grow lucrative raw materials such as palm oil. Far more pervasive than most consumers were aware, palm oil was an ingredient in thousands of packaged products. As global demand for such products rose, the multi-stakeholder Roundtable on Sustainable Palm Oil (RSPO) emerged. The RSPO eventually secured near-universal commitment from multinational food companies to source the product exclusively from areas cleared before 2005, among other stipulations.59 Nestlé was among its members, and held up this commitment proudly. While the choice increased the price of palm oil, this premium was only $6 $8 per ton.60 Sourcing other products with such stringent requirements, such as cocoa, would represent a far more burdensome cost—and one that consumers might not be willing to absorb. Industry leaders’ commitments to sustainable palm oil were key to changing incentives for deforestation. And although Nestlé used only 0.7% of the world’s palm oil supply, the action had positive reverberations for the company and the industry.61 Kevin Petrie, Nestlé senior vice president and head of procurement, gave a smile for his own hero and quoted, “With great power comes great responsibility.”62Measuring Social and Environmental ImpactJöhr recognized the growing demand for companies to measure the social and environmental implications of their operations. Indeed, international organizations like the United Nations had recently resolved that businesses’ obligations extended beyond their immediate sphere of influence and encompassed their wider impact.63 Especially amid the growing buzz about CSV, there was greater need to define what companies really meant by the term. Prominent new reporting standards, such as the Global Reporting Initiative (GRI) and indices such as FTSE4Good, required extensive and detailed global data.64 Gathering such data was an investment, and companies were adjusting to higher expectations. But good measurement had its challenges: paraphrasing Einstein, Hans Jöhr reflected, “There are a lot of things that you can measure that don’t matter; the things that do matter are often very difficult to measure.”65New demands for data The GRI had emerged as one of the gold standards for disclosure among big businesses. Nestlé was proud to have achieved the top rating of A+ in 2011, the highest to date for a global report in the food and beverage industry. The effort to gather and distill such data was substantial, but it represented an opportunity for Nestlé to monitor its own progress, to demonstrate progress to stakeholders in tangible terms, and to be competitive with other food and beverage companies that were targeting sustainable practices.The Nestlé team recognized two prominent shifts occurring in the data they were asked to gather. First, indicators were expanding from an environmental focus to encompass social and economic aspects of sustainable development. Benjamin Ware reflected, “Few companies can truly work on theFor the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40615social and economic aspects, beyond the environmental concerns. This is what real sustainable development is. This is the step between environmental compliance and towards Nestlé’s three pillars—nutrition, water, and rural development.”66The second major shift was that companies like Nestlé were increasingly asked to provide “context reporting” to allow stakeholders to understand a particular measurement against broader sustainability trends. Claus Conzelmann, head of the Safety, Health, and Environmental Sustainability group, explained, “Nestlé uses about 3 kilos of water per kilo of product. Agriculture uses about 3,000 liters of water per kilo of raw materials. That’s why context reporting is important.”67 Herbert Oberhänsli reflected this logic when discussing the critics of Nestlé’s bottled water products. “You’re actually selling the service,” he explained, “and the alternative is beer or sugary drinks. Yet no one thinks about the enormous water footprint of hops or sugar production when they make noise about Nestlé’s water extraction.”68The Rural Development Framework and indicators With growing demands for new and more nuanced data, Nestlé had several monitoring and evaluation efforts in motion. Nestlé was developing a complex, promising monitoring tool called the Rural Development Framework. “This is how CSV manifests itself,” explained Duncan Pollard.a,69 While Nestlé had put its formal CSV team within Public Affairs, Pollard and many prominent colleagues recognized that as a mistake: CSV was about operations,70 and the Rural Development Framework was being designed to quantify the impacts of such activities (see Exhibit 16 for an illustrative section of the Framework).The Framework had been designed through a rigorous process. The team had identified which 20 countries would be most important to Nestlé in 2020, based on both business and social criteria, and had designed indicators for three audiences: farmers, workers and communities.71 Some of the indicators addressed key concerns that echoed throughout the development community: for instance, there was a target for crop diversity at the farm level,72 a signal that the company recognized concerns about monocropping. Yet, the company had not decided exactly how data collected on Framework indicators would be shared and utilized. And, importantly, Nestlé was not trying to measure causal impact. The team explained that it was sufficient to point out where Nestlé is working and the overall social and environmental progress in that area.73Water key performance indicators In 2006 Nestlé set out its WATER commitments (see Exhibit 17). Of these, one was particularly focused on their raw materials sourcing: the company committed to “engage with suppliers, especially those in agriculture, helping to improve their water management with focus on impacts at watershed level.”74 Nestlé’s resolution to improve water stewardship in its value chains was a significant move, reinforcing the notion that companies should take responsibility for the indirect impacts of their sourcing activities.However, the devil was in the details to achieve strides for water management. The Nestlé team was working to influence the incentives around water use and to develop robust indicators and monitoring tools to measure progress. Despite the severity of the issue on a global and watershed level, it could be difficult to integrate water management into day-to-day concerns on the ground—especially when producers and extension workers were extremely focused on price and quality issues. “Can you ask farmers, especially smallholders, to start carefully monitoring their water use on top of all their problems?” asked Carlo Galli.b In the case where producers paid for water and energy for pumping it, you could make an economic argument: more efficient water use would lower aa Duncan Pollard is Sustainability Advisor, Nestlé.b Carlo Galli is Technical and Strategic Adviser, Water Resources, Nestlé.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)16farmer’s costs. But this argument did not apply where water was free. Further, with some exceptions, free but scarce water was subject to a typical “tragedy of the commons” dilemma, where producers sought to maximize their own benefit in the absence of collective action. The team was also invested in developing water-related Key Performance Indicators (KPIs) for its WATER commitments. This was still a key challenge in 2012: the team had a high-level strategy but was struggling to identify the appropriate and feasible indicators to measure its progress.75Forward-Facing People DevelopmentExpert networks and skills building “A great company is made out of people who are great,”76 Hans Jöhr stated. Indeed, Jöhr saw Nestlé’s people as its most valuable asset to the company’s success, growth, and progress towards sustainability.77 The SAIN team had begun to roll out a people development strategy for its agriculture-focused colleagues throughout the world. This system combined an internet-based information platform with courses and networks designed to share agricultural expertise within the company, facilitate professional development, and set expectations for team members’ performance. The training courses were about to come online, with curricula targeted at multiple stages of development in general skills, supplier development, nutrition, and the company’s primary raw materials. The team sought to institutionalize the courses and link them to Success Profiles, such that promotion was contingent upon successful training on key topics. Importantly, the SAIN cases are also devoted to training Nestlé employees inside and outside of the agriculture team in core curricula related to business principles 8 and 10—Agriculture and Rural Development and Water, respectively. Given increased external and company attention to the Farmer Connect program, Jöhr’s team saw an opportunity for increased understanding and competency through such training opportunities.Incentivizing sustainability One of the key challenges to implementing CSV among all companies was that the broader alignment of company, social and environmental interests over the long term is not always apparent in discrete decisions. In many cases, an individual decision could still appear more logical if long-term sustainability was deprioritized for other goals like profitability and high market share. To change this necessitated a close look at Nestlé’s systems for setting and reviewing employee performance.Nestlé team members disagreed about the extent to which the company incentivized sustainability through compensation and advancement. A member of the team familiar with such issues could not identify performance metrics linked to sustainability in Nestlé’s Job Success Profile or standard Performance Evaluation, and said the company was far from having such indicators.78 Another member, who led SAIN’s people development effort, reflected on the same question of incentives:We take sustainability seriously and we are embedding this topic in our job descriptions and success profiles at all levels. For example, of eight key outputs for the head of agriculture in each market, four concern sustainability. Other companies may construct incentives differently, but in the end I don’t think it really matters. What matters is that our people in the field are best equipped to do their jobs.79Nestlé was facing a fundamental tension between traditional methods of incentivizing behavior to maximize profits, and the need to reformulate expectations to pursue non-financial goals. The company was not alone: across the industry, companies struggled to define and monitor performance for sustainability.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40617Embedding “Creating Shared Value” In collaborating to coin “Creating Shared Value”, Nestlé had become a thought leader in the sustainability dialogue it had opened. But the company did not confine their contributions to the conceptual level: “We aspire to CSV implementation leadership,” explained Janet Voûte.c The question was how best to embed such knowledge and goals throughout the company. Duncan Pollard said this was his job, emphasizing, “I’m here to make sure Nestlé doesn’t have a Chief Sustainability Officer.” Rather, Pollard was charged to catalyze sustainability within the company, and the Rural Development Framework was his primary tool.80Maintaining CompetitivenessStrategic collaboration A fundamental quality of Nestlé’s CSV approach is that it pursued sustainability at multiple levels: among communities through its Farmer Connect program, in its own operations through Responsible Sourcing and other commitments, in its industry through pre-competitive agreements, and in policy via public sector collaboration. The SAI Platform was an important space for industry collaboration: with the leading companies in the room the group could make commitments, like the improved packaging standards, that had dramatic effects throughout the industry. This avoided the prisoners’ dilemmas that hindered unilateral commitments. Another of the company’s significant engagements was the 2030 Water Resources Group, which Peter Brabeck chaired in tandem with his equivalent role within Nestlé. This prominent forum, an initiative of the World Economic Forum, brought together partners from the private, public and non-profit sectors to engage on systemic solutions for water scarcity. Indeed, Nestlé’s cross-sectoral collaboration reflected a growing willingness to engage in innovative partnerships and multistakeholder platforms to pursue systems-level change. Experts were calling on a diverse set of private, public and civil society stakeholders to gather around the major challenges on the horizon and devise systems-level solutions. Issues like water scarcity, drought risk management, and chronic disease were not problems that could be solved with a piecemeal approach.There was considerable controversy over many of Nestlé’s actions. Among other issues, there was lingering concern about perceived inappropriate marketing of infant formula, prompting some mothers to buy from Nestlé in lieu of nursing; there were accusations of hypocrisy about a company that sold candy and pizzas claiming to be a leader in nutrition; there was concern that the company’s raw materials included genetically modified organisms (GMOs); there was aggravation that the company trumpeted “nutritional solutions” when many saw natural fruits and vegetables as having the highest nutritional value; and there were outcries about many of Nestlé’s water extraction exercises. The company engaged such concerns through stakeholder dialogues in person and online.81Nestlé emphasized that, despite its size, its capacities were far from unlimited. While some argued that the company had the critical power of market pull, Nestlé pointed out that policies could have more complete coverage than its own activities.82 Thus, Nestlé engaged in strategic collaboration through multiple mechanisms. José Lopez, one of the most senior Nestlé officials, emphasized this need at the Rio +20 conference in saying, “Sustainable agriculture is not just about farming activities. Collaboration will need to be strengthened across businesses, governments, NGOs and financial institutions. . . . We probably have enough existing knowledge, existing science and technology. The work is about alignment, it’s about breaking down the silos. It’s about getting started.” Janet Voûte reflected that true CSV also depended on team members who had exposure and competencies across the private, public and non-profit sectors. “Emerging leaders need to understand the multi-stakeholder environment. They need to speak corporate strategy, and they need to speak NGO. In thec Janet Voûte is Vice President, Corporate Head of Public Affairs, Nestlé.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)18past, joining one sector meant you defined yourself against the other. This is changing.”83 This was an important role for universities and training institutions in preparing their graduates, and it underscored Nestlé’s significant engagement in multistakeholder platforms for dialogue and joint commitments.But along with such efforts in strategic collaboration and its long-term strategies for sustainability, Nestlé needed to remain competitive within the industry. This was a careful balance of costs versus benefits, market-specific versus corporate-wide decisions, and future commitments versus tested strategies.Financial implications of sustainable choices Nestlé had to be realistic about the cost of sustainable choices and how those could be met. Sustainable palm oil came with such a manageable premium, and represented such small amounts (0.5% in a product like Kit Kat, for instance), that Nestlé could afford to make a company-wide commitment.84 But members of the team argued that the same was not true for sustainable cocoa: “There’s a danger in moving too far ahead of the curve,” Simon Billington said. Nestlé procures about 10% of the world’s cocoa, and a sustainable product would come with about a US$ 200 premium per metric ton.85 “The key is to move in pace to match supply to demand,” Billington explained, pointing out that consumers in many markets would not accept a higher price point for sustainable products.86 While this tension was inconvenient, it was a real example: the company needed to balance responsibility to its shareholders with creating value for all stakeholders. (See Exhibit 18 for growth rates.)Context-based sourcing Jöhr was acutely aware that sourcing approaches needed to be tailored to the realities of production on the ground. For instance, the dispersed rural nature of dairy farmers had prompted one of Nestlé’s early innovations in sourcing: far before the term “creating shared value”, the company collected milk via its lauded milk district model. But, even while he focused on sourcing, Jöhr needed to understand consumer markets as well. “It’s important to ask consumers and clients what they want,” he explained. “It’s critical to recognize that no single recipe fits all: there are completely different worlds in different markets.”87. The UK wanted Kit Kats that were Fair Trade or Utz certified, so Nestlé sourced through these schemes for the British. The Chinese were less concerned about externally certified products, but they cared strongly about supporting their local farmers. As Peter Brabeck summarized: “Although we are a global company, we do not believe that there is a global consumer.”dCommunicating sustainable practices externally It was important that Nestlé communicate its progress and goals for sustainable agriculture and responsible procurement. Yet this exercise illuminated a key difference between the company’s communication style and that of leading competitors. Many within Nestlé emphasized that the company’s culture was to report on progress achieved, rather than to announce dramatic future commitments. As Darrell High explained, “Nestlé is trying to be more sincere and solid.”88 Yet the company understood that its communication style also endangered its market share in the face of competitors’ announcements. For example, Mars and Ferrero had pledged to have 100% of their cocoa sustainably certified by 2020.Securing and retaining trust “Do you want to know what my job is?” Hans Jöhr asked. He pointed to a slide of two women discussing Nestlé’s products, with the caption, I trust Nestlé to always offer the tastiest and healthiest choice, helping me care for myself and my family.89 “My job is about keeping their trust.”90 This goal reverberated throughout Nestlé’s sustainability efforts, from the Farmer Connect program and responsible procurement to stakeholder engagement and communicating with consumers.d Interview with Peter Brabeck-Letmathe, January 7, 2002.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40619Unlike many competitors, Nestlé did not have written contracts with many Farmer Connect producers. While some criticized the company for shifting risk to the producer, Nestlé saw it differently. “We need to work to develop farmer loyalty over time,” Emilio Díaz explained.e He described Nestlé’s decision to continue collecting milk from dairy farmers in Chile in the days following the 2009 earthquake. The company did this to retain trust, though the team knew it would incur costs for spoilage when damaged infrastructure prolonged transportation times. “Visit Chile,” Díaz suggested, “and you’ll hear that the farmers still talk about it.”91Nestlé had experienced a significant setback in the 1970’s when it was accused of marketing infant formula inappropriately. Several decades later, this issue still tarnished the company’s reputation along with concerns about water exploitation, child labor, and obesity and non-communicable diseases. While these issues were hotly disputed, Nestlé recognized that the most productive approach was to organize several platforms for stakeholders’ interaction with the company in person and in the virtual environment. As Janet Voûte explained, these platforms represented a long-term behavior shift within the company—away from the internally-focused style of the most difficult years of the infant formula issue. It was an opportunity to be transparent and to build trust with the stakeholder community. “This is a logical extension of CSV—you can’t do CSV alone, after all.”92When it came to the consumer, it came down to Jöhr’s ultimate job responsibility: to ensure a continued supply of quality agricultural raw materials. He expanded:We have to deal with the agricultural production potential losses—post-harvest losses and food waste—within the context of land-use and sustainability. We strongly support the concept of sustainable intensification of production systems and methods and believe, combined with “ZERO WASTE,” we can not only feed 10 billion people, but set aside huge acreages for conservation again and put the value of food back to consumers.Colleague Andreas Berger (senior vice president of co-manufacturing & operational excellence at Nestlé) explained, “We don’t believe in greenwashing or ethic-washing—so you won’t see Nestlé making grand future commitments. That is irresponsible. Nestlé has clear principles, but it doesn’t brag.”f,93 In keeping with Nestlé’s corporate culture, Jöhr believed that consumer trust was not built with promises, but with results.e Emilio Díaz is Risk Manager in Sourcing, CO-Agriculture, Nestlé.f Andreas Berger is Senior Vice President, CO-Manufacturing & Operational Excellence, Nestlé.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)20ConclusionHans Jöhr decided to have an afternoon Nespresso to calm his mind, reflect on this progress towards sustainable agriculture, and to prepare his presentation to the Executive Board. The weather felt as impatient as he was: Lake Geneva’s waters were choppy against the Alps. He wrote down his most urgent questions:1. What are the prominent topics to address for the next 10 years to have ensured supply within an ever-changing food system?2. How can Nestlé build future activities on its SAIN initiative and CSV concept to continue its leadership on responsible sourcing culture?3. Can emerging technologies, adapted practices, and geopolitics change have the desired positive transformation to overall nutritional and food security in the future for everybody?4. With whom should Nestlé partner to sustain its leadership in the global food system?Jöhr described competition in the food and beverage industry like a boat regatta: “We’re racing, and we see the other guy catching up, and the question is how to change and get faster again to adapt in time to keep winning. We need sometimes to rebuild our boat while we’re racing.”94 In a couple of hours Nestlé’s most senior leaders would look to him for answers to a delicate, competitive food system full of risk and opportunity. What would he recommend?For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40621Exhibit 1 Nestlé’s Strategic PositioningSource: Company documents, “Nestlé: a Unique Capability to Win”, March 30, 2011, http://www.nestle.com/asset-library/Documents/Library/Presentations/Investors_Events/2011-CAGE-Conference-PBulcke.pdf, accessed December 2012.Exhibit 2 Nestlé Corporate Business PrinciplesSource: Nestlé Corporate Business Principles (Nestec Ltd., June 2010), http://www.nestle.com/INVESTORS/ CORPORATEGOVERNANCE/BUSINESSPRINCIPLES/Pages/BusinessPrinciplesHome.aspx.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)22Exhibit 3 Hunger Trends 1969 2010Source: Food and Agriculture Organization of the United Nations, “The State of Food Insecurity in the World,” http://www.fao.org/docrep/013/i1683e/i1683e.pdf, 2010, accessed November 2012.Exhibit 4 Overweight Rates in Selected OECD CountriesSource: OECD Obesity Update, http://www.oecd.org/health/49716427.pdf, accessed December 2012.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40623Exhibit 5 Total Deaths by Broad Cause Group, 2008Source: World Health Organization, Global Status Report on Noncommunicable Diseases, 2010.Exhibit 6 Global Water Use StatisticsSource: Company documents.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)24Exhibit 7 Global Food Price TrendsSource: United Nations Global Compact, The Future We Want, Rio +20 Corporate Sustainability Forum, June 15, 2012), http://www.unglobalcompact.org/docs/news_events/upcoming/RioCSF/partner_deliverables/OxAn_The_ Future_We_Want.pdf, December 2012.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40625Exhibit 8 Disaster Trends, 1900 2011Source: Centre for Research on the Epidemiology of Disasters, “Natural Disasters Trends,” EM-DAT: The OFDA/CRED International Disaster Database—www.emdat.be—Université Catholique de Louvain—Brussels—Belgium, http://www.emdat.be/natural-disasters-trends, accessed December 2012.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)26Exhibit 9 Nestlé Financial Performance, 2011Source: Company documents, “2011 Roadshow,” February 21, 2011, http://www.nestle.com/Investors/Financial Overview/Pages/FinancialOverview.aspx, accessed 2011.Exhibit 10 Nestlé Spend, 2010Source: Company documents.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40627Exhibit 11 Nestlé Creating Shared Value PyramidSource: Company documents.Exhibit 12 Demographic Projections for 2050Source: United Nations Global Compact, The Future We Want, Rio +20 Corporate Sustainability Forum, June 15, 2012), http://www.unglobalcompact.org/docs/news_events/upcoming/RioCSF/partner_deliverables/OxAn_The_ Future_We_Want.pdf, December 2012.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)28Exhibit 13 Demographic Projections for 2050Source: “World Urbanization Prospects—The 2011 Revision,” United Nations Department of Economic and Social Affairs, March 2012, http://esa.un.org/unup/pdf/WUP2011_Highlights.pdf, accessed December 2012.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40629Exhibit 14 Sourcing at NestléSource: Company documents, “Creating Competitive Gaps in Upstream Supply Chains”, http://www.nestle.com/asset-library/Documents/Library/Presentations/Investors_Events/Investor_seminar_2011/NIS2011-02-Supply-Chain-Competitive-Gaps-HJoehr.pdf, June 7, 2011.Exhibit 15 Farmer Connect Presence and ImpactSource: Company documents, “Creating Competitive Gaps in Upstream Supply Chains”, http://www.nestle.com/asset-library/Documents/Library/Presentations/Investors_Events/Investor_seminar_2011/NIS2011-02-Supply-Chain-Competitive-Gaps-HJoehr.pdf, June 7, 2011.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-40630Exhibit16RuralDevelopment Framework—Illustrative Indicatorsfor FarmersSource:Company documents.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40631Exhibit 17 Nestlé W.A.T.E.R. CommitmentsSource: Company documents.Exhibit 18 Delivering the Nestle ModelSource: Company documents.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-40632AppendixFigure1Source:Casewriterresearch,Ray Goldberg, SystemicManagers, forthcoming publication.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-40633Figure2Source:Casewriterresearch,Ray Goldberg, SystemicManagers, forthcoming publication.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-40634Figure3Source:Casewriterresearch,Ray Goldberg, SystemicManagers, forthcoming publication.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-40635Figure4For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-40636Figure4 (continued)Source:Casewriterresearch,Ray Goldberg, SystemicManagers, forthcoming publication.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-40637Figure5Source:Casewriterresearch,Ray Goldberg, SystemicManagers, forthcoming publication.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-40638Figure6Source:Casewriterresearch,Ray Goldberg, SystemicManagers, forthcoming publication.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-40639Endnotes1 José Lopez, “Remarks at the Rio+20 Corporate Sustainability Forum” (presented at the Rio+20 Conference, Rio de Janeiro, June 12, 2012).2 Interview with Hans Jöhr, July 16, 2012.3 Ibid.4 Ibid.5 Food and Agriculture Organization, The State of Food Insecurity in the World, 2010.6 World Health Organization, Global Status Report on Noncommunicable Diseases 2010, 2011.7 Nestlé Institute of Health Sciences, “Expanding the Boundaries of Nutrition,” n.d., http://www.nestle institutehealthsciences.com/vision/Pages/ExpandingtheBoundariesofNutrition.aspx.8 “Nestlé Health Science S.A. and Nestlé Institute of Health Sciences Established to Target New Opportunity Between Food and Pharma,” Nestlé, September 27, 2010.9 “Nestlé Opens New Unit to Centralise Global Clinical Development Work | Nestlé Global,” n.d., http://www.nestle.com/Media/NewsAndFeatures/Pages/nestle-clinical-development.aspx.10 Interview with Peter Brabeck-Letmathe, January 7, 2002.11 “Water Challenge | a Blog by Peter Brabeck-Letmathe,” n.d., http://www.hashtagwater.com/.12 World Economic Forum, Putting the New Vision for Agriculture into Action: A Transformation Is Happening, 2011.13 Seminar—Creating Shared Value—March 4, 2010—P. Brabeck-Letmathe, 2010, http://www.youtube.com/ watch?v=W8NpX5fCm3k&feature=youtube_gdata_player.14 Ibid.15 Nestlé, “2011 Roadshow,” February 21, 2011, http://www.nestle.com/Investors/FinancialOverview/Pages/ FinancialOverview.aspx; Forbes, “The World’s Biggest Public Companies,” n.d., http://www.forbes.com/ global2000/list/.16 Quick Facts for Investors (Nestec Ltd., 2011), http://www.nestle.com/Investors/Pages/Investors.aspx.17 Interview with Stefan Canz, July 20, 2012.18 Interview with Hans Jöhr.19 Seminar—Creating Shared Value—March 4, 2010—P. Brabeck-Letmathe.20 Ibid.21 Ibid.22 Interview with Hans Jöhr.23 Interview with Stefan Canz.24 Interview with Hans Jöhr.25 Ibid.26 SAI Platform, “Who We Are,” n.d., http://www.saiplatform.org/about-us/who-we-are-2.27 World Economic Forum, Realizing a New Vision for Agriculture: A Roadmap for Stakeholders, 2010.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)4028 Centre for Research on the Epidemiology of Disasters, “Natural Disasters Trends | EM-DAT,” The International Disaster Database, n.d., http://www.emdat.be/natural-disasters-trends.29 World Urbanization Prospects—The 2011 Revision (United Nations Department of Economic and Social Affairs, March 2012).30 Hans Jöhr, Where Are the Future Farmers to Grow Our Food?, International Food and Agribusiness Management Review, 2012.31 Interview with Andreas Berger, July 24, 2012.32 Nestlé, Nestlé Creating Shared Value Report, 2011.33 Ibid.34 4C Association, “4C Association: Standards Setting Procedure,” n.d., http://www.4c-coffeeassociation.org/ our-services/4c-code-of-conduct/standards-setting-procedure.html?PHPSESSID=pbe8hn00pic21ork6k8jeeinh0.35 Sustainable Agriculture Network, “SAN Principles,” n.d., http://sanstandards.org/sitio/subsections/ display/7.36 Ray Goldberg and Kerry Herman, “Nestle’s Milk District Model: Economic Development for a Value-Added Food Chain and Improved Nutrition,” HBS No. 906-406 (Watertown, MA: Harvard Business School Publishing, 2005).37 Interview with Hans Jöhr.38 Interview with Stefan Canz.39 Interview with Benjamin Ware, July 17, 2012.40 Ibid.41 Creating Shared Value Annual Report (Nestlé, 2011), www.nestle.com/…/Nestle-CSV-Summary-Report-2011-EN.pdf.42 Interview with Benjamin Ware.43 Ibid.; “Greenpeace Protests at Nestle Shareholder Meeting—YouTube,” n.d., http://www.youtube.com/ watch?v=PRk_m-PJ7_Q.44 Interview with Benjamin Ware.45 Creating Shared Value Annual Report.46 Nestlé, “FAQs |Nestlé Global,” n.d., http://www.nestle.com/common/peripherals/faqs/pages/faqs. aspx#waterselling.47 Interview with Carlo Galli, July 18, 2012.48 Interview with Stefan Canz.49 Interview with Hans Jöhr.50 Ibid.51 Interview with Benjamin Ware.52 Interview with Hans Jöhr.53 Interview with Stefan Canz.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV) 913-4064154 Interview with Simon Billington,” July 20, 2012.55 Interview with Darrell High, July 24, 2012.56 Interview with Janet Voûte, July 19, 2012.57 Fair Labor Association, “Assessment of Nestle Cocoa Supply Chain in Ivory Coast | Fair Labor Association,” n.d., http://www.fairlabor.org/report/assessment-nestle-cocoa-supply-chain-ivory-coast.58 Interview with Simon Billington; Nestlé, “Nestlé Sets Out Actions to Address Child Labour in Response to Fair Labor Association Report on the Company’s Cocoa Supply Chain | Nestlé Global,” June 29, 2012, http:// www.nestle.com/Media/NewsAndFeatures/Pages/fla-report-cocoa.aspx.59 Roundtable on Sustainable Palm Oil, RSPO Principles and Criteria for Sustainable Palm Oil Production, 2007.60 Interview with Simon Billington.61 Interview with Kevin Petrie, July 23, 2012.62 Ibid.63 John Ruggie, Protect, Respect, Remedy Framework (United Nations, March 21, 2011).64 Interview with Duncan Pollard, July 24, 2012.65 Interview with Hans Jöhr.66 Interview with Benjamin Ware.67 Interview with Claus Conzelmann, July 24, 2012.68 Interview with Herbert Oberhänsli, July 17, 2012.69 Interview with Duncan Pollard.70 Ibid.71 Ibid.72 Ibid.73 Ibid.74 “The Future for Nestlé and Water | Nestlé Global,” n.d., http://www.nestle.com/csv/water/thefuture fornestleandwater/Pages/TheFutureForNestleAndWater.aspx.75 Interview with Carlo Galli.76 Interview with Hans Jöhr77 Ibid.78 Interviewee Chose to Remain Anonymous, n.d.79 Interview with Stefan Canz.80 Interview with Duncan Pollard.81 Interview with Janet Voûte.82 Interview with Carlo Galli.83 Interview with Janet Voûte.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.913-406 Nestlé: Agricultural Material Sourcing Within the Concept of Creating Shared Value (CSV)4284 Interview with Simon Billington.85 Ibid.86 Ibid.87 Interview with Hans Jöhr.88 Interview with Darrell High, July 24, 2012.89 Hans Jöhr, “Nestlé Corporate Agriculture,” May 20, 2012.90 Interview with Simon Billington.91 Interview with Emilio Diaz, July 25, 2012.92 Interview with Janet Voûte, July 19, 2012.93 Ibid.94 Interview with Hans Jöhr, July 16, 2012.For the exclusive use of M. Chen, 2022.This document is authorized for use only by Meng Chen in Sustainable Value Creation 2022 taught by ROB RYAN, DePaul University from Jan 2022 to Jul 2022.