Nestls Creating Shared Value: Myth or Reality?

Christopher Greenwald Director of Data Content ASSET4

Key Factors for Investors

Consistent Reporting on Variables Global in Scope Timely Material variables across various segments Coherence between policies and outcomes Concrete examples of implementation Targets and progress over time Coherence between CSR strategy and corporate strategy Does the CSR strategy fit with the larger corporate strategy Is the company adapting to longer-term social trends?

HEC MBA Event 7 9, May 6, 2009

Nestls CSR Reporting

Nestls reporting has seen significant improvement in the past 3 years 2007 first global sustainability report 2008 report is integrated into the annual report Environmental and social variables reported consistently across all operations Policies matched by implementation Overall implementation strong Detailed information on programs and initiatives

Coherence between overall strategy and CSR strategy Focus on those areas where there is an overlap between creation of value for society and value for shareholders

HEC MBA Event 7 9, May 6, 2009

Nestls Creating Shared Value 3 Key Themes

Rural Development Sustainability Issue 2/3 of raw material purchases are in developing markets Fastest growing markets are in developing countries Nestls Response: Collaborations with agricultural suppliers Popularly Positioned Products Water Sustainability Issue Growing water crisis represents significant threat to supply chain Nestls Response: Significant increase in water efficiency Nutrition Sustainability Issue Growing Importance of Nutrition as a consumer trend Nestls Response Greater information on packaging Investments in Nutrition-oriented product lines

HEC MBA Event 7 9, May 6, 2009

Positive Take-Aways from Nestls CSR Strategy

CSR Policies should be focused on several key themes

CSR Policies should relate to aspects where the company can create value for both society and shareholders

CSR Policies should relate to the core strategy of the company

HEC MBA Event 7 9, May 6, 2009

Creating Shared Value - Challenges

Need to continue to develop integrated reporting

Consideration of sustainability risks Sustainability Issues that could threaten the strategy: Nestl Waters experienced a sales decline in 2008

More open discussion of some of the challenges Nutrition not only an opportunity, but also a challenge for Nestl

HEC MBA Event 7 9, May 6, 2009

Creating Shared Value On-Line Forum

Day-Long Webcast conference with thought-leaders considering Nestls strategy

A very detailed, clear, open and honest discussion of the sustainability issues that Nestl faces
A positive and innovative example for others to follow

HEC MBA Event 7 9, May 6, 2009