Nestle Paper

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Nestle has responded to consumers changing preferences by encouraging good agricultural practices among its upstream producers. Their biggest challenge in positioning itself in the future global food system is communicating these practices and standards to consumers. Mr. Johr stated his key goal is “to link responsible sourcing to Nestle’s business and its brand.” Initiatives such as the Nestle Cocoa Plan and the Nescafe Plan (which will be explained in more detail later in the paper) are a good start towards positioning itself as the market leader in sustainability and proper agricultural practices.

One of the ways Nestle is taking a systematic approach to this sustainability strategy is by incentivizing sustainability. As with many long term initiatives, a short term decision could not necessarily be made, with the producers initial profits and market share being taken into consideration. In order for these producers to follow the long-term sustainability focus, they need to be incentivized in the short term. Nestle was having conflict within its own organization surrounding how to incentivize both employees and outside relationships. They came to the conclusion that they needed to reformulate their expectations to pursue non-financial goals

Nestle relates its leadership to the sustainability and health priorities of the company by their individual initiatives and their culture. The Nescafe Plan was derived by the company’s goal of doubling the amount of coffee they bought directly from producers. However, they were not going to just accept any producer to achieve this goal. In order to qualify to be a producer for Nestle, the producer must meet the 4C code of conduct, which is a basic set of sustainability standards. Nestle is leveraging their prominence to both help producers sell more coffee, but making them follow their sustainability initiatives and culture.

Nestle’s Cocoa Plan took the sustainability initiative to the chocolate industry. This plan had three main goals: eliminating child labor in their value chain, sustaining cocoa supply in the future, and ensuring farmers had a sustainable income. Nestle tackled the first goal by adopting a zero-tolerance policy for child labor in partnering with Fair Labor Association. Nestle attacked the final two goals by “investing CHF 110 million in Plan activities over the decade starting in 2010, training 30,000 farmers, investing in plant research, and distributing one million high-yield, disease-resistant cocoa plantlets each year.”

Nestle’s objective of creating shared value is starting to show the fruits of the efforts the company has put forth. Sustainability is something that needs to be achieved throw various platforms, both environmentally and financially. Consumer preferences have brought about a much needed change in the way companies, including Nestle, prove their sustainability efforts and best agricultural practices. Nestle has begun this process through various initiatives, both internally and throughout their supply chain.