Véronique Cremades-Mathis, Global Head of Sustainable Packaging at Nestlé, discusses the business case for sustainability and the new relationships firms need to make with all stakeholders.
What does sustainability mean for Nestlé?
We transform ingredients from the agricultural world in order to create products for the consumer, so sustainability has always been embedded in the way we design food and beverage product, in the way we do business – it’s part of our DNA.
Of course, with the acceleration of the environmental challenge, sustainability comes even more sharply into focus for us. We need to be more visible, and more articulate in how we talk about our beliefs and how we deliver on our commitments. Nestlé embraces the principle of creating shared value; we work with and serve the community – that's how we see our role.
What does that approach to sustainability look like in practice?
It’s about linking our work to our company purpose. When it comes to the individual and the family, we promote nutrition and a healthier lifestyle with programmes on the ground that empower consumers through knowledge.
When it comes to sourcing materials, we are committed to transparency and traceability in the upstream supply chain. We’re conscious of the need to steward resources for the next generation – by using water in our factories sustainably, for example.
Then there is packaging, where we are on a transformation journey to ensure all of our packaging is 100% recyclable or reusable by 2025. That means adjusting 5,000 production lines in more than 400 factories across all our brands.
We’re also aware of our responsibility to help consumers to make better decisions and choices – to think differently about their consumption patterns. Whether it’s educating consumers on how to buy food items dispensed into their own containers rather than with packaging, or how to dispose of packaging properly in their communities. There are so many ways to help the consumer to realise they have a role to play.
How do you justify that kind of work internally? Does there always have to be a business case?
There are really two ways to answer that question. The first is to recognise that it’s not optional for sustainability to be part of your marketing mix in the 21st century; if you don’t demonstrate your commitment to sustainability, whether it’s the container or the content, you will not be chosen. It is our licence to operate.
The second perspective is the notion of return on invested capital. The reality is that we are highly dependent on the cost of raw materials, but we are very accustomed to mitigating increased costs in our business. Packaging transformation, for example, is another exercise in mitigation.
While mitigating negative impacts, we are simultaneously creating value for consumers. That doesn’t mean charging higher prices; it means recognising new value to the consumer in creating a bridge from the way we source materials, to fulfilling the customer’s need, to disposing and recycling responsibly.
How do you begin to measure those returns and sustainability more generally?
We say that what gets measured gets done. So, for everything we commit to, we have key performance indicators in place alongside a roadmap for delivering on the commitment. We have a tracking system to ensure we really do walk the talk.
Our reporting focuses on that idea of shared value. We generate lots of data about what we say, what we do and where we’re at, and we apply those same criteria to each new transformation journey – our current focus on packaging, for example. So if we say we’ll be ready by 2025, we put the work into understanding what it will require to achieve that – to understand the resources we need to put behind such a promise.
How do shareholders feel about your focus on sustainability?
If the discussion about sustainability were somehow a fork in the path that could derail your business, there would no doubt be pressures. But we don’t see the contradiction between doing the right thing on sustainability and delivering to our shareholders.
In fact, that has always been the Nestlé way. We established much of our sustainability program before the discussion about sustainability became hot. Investors are increasingly knowledgeable and focused on sustainability as part of the conversation about the bottom line. We’re able to say, “We’ve been doing this for years,” and it feels good to talk about it. Hopefully that will translate into returns for our shareholders.
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