Dive Brief:
- Nestle USA released its second annual Creating Shared Value (CSV) report, which details the company's goals and achievements in 2015 concerning nutrition, health and wellness; environmental sustainability; water management; rural development and responsible sourcing; and social impact.
- In the nutrition and wellness space, Nestle reported reformulating 1,222 food and pet products to meet objectives such as reducing sodium, sugar, trans fat, and artificial colors and flavors and increasing nutrient content.
- Nestle also reported achieving zero waste to landfill in 35 U.S. factories, which is 40% of the company's target of 100% by 2020.
Dive Insight:
The report highlights several initiatives Nestle has taken to improve sustainability programs within the company's U.S. operations. With a No. 2 ranking in Oxfam's recent Behind the Brands sustainability report card and the achievements outlined in this report, Nestle serves as an example manufacturers can follow when determining ways to make their supply chains more sustainable and how to best report initiatives and progress.
However, the CSV and its companion reports also point out struggles leaders face in achieving and maintaining sustainability throughout vast global supply chains. According to Nestle's report, 89% of its audited suppliers were compliant with the Nestle Responsible Sourcing Program in 2015. However, in its companion report, Nestle said the percentage of purchased volume fully compliant with the Nestle Supplier Code fell to 82% in 2015 from 95% in 2014.
The reason for the drop is unclear. But with a portfolio and supply chain as large as Nestle's, the company demonstrates to other global manufacturers the importance of setting clear sustainability goals and outlining concrete plans for achieving them. Without plans and contingencies, massive changes in commodity markets, global economies, and other external factors can derail sustainability efforts.
Nestle has also struggled with bottling issues, particularly in California, where its permit to bottle water pumped from San Bernardino National Forest has been contested. The permit is still in effect but has not been renewed since 1988.
The U.S. Forest Service launched its investigation into the environmental impact of Nestle's pipeline in January after being sued in October by environmental groups for allowing Nestle to continue pumping water despite its questioned permit status. Last month, Nestle Waters North America submitted a 79-page document detailing its concerns about the Forest Service's proposal regarding the NWNA's permit renewal. The company said the proposal would interfere with California state laws and long-established water rights.
The outcome of this permit is critical for Nestle. Bottled water is a major business for the company and was among the fastest-growing beverage segments in 2015, according to the Beverage Marketing Corporation. Achieving a fast resolution here will be significant for Nestle's business, reputation, and sustainability efforts alike.