“We have a very comprehensive roadmap that we are implementing consistently, with positive and visible results," says Aranols
INTEGRATING environmental, social and governance (ESG) into business strategy and operations is challenging for an average-sized company.
This is also challenging when you are a large, multinational company with a value chain that reaches nearly every corner of the globe.
There are few companies with more experience to share on this than Nestlé, the world’s largest food and beverage company.
“As a multinational company with a well-established presence in Malaysia, Nestlé is honoured to have grown with the nation for more than 110 years.
“In line with our purpose of enhancing the quality of life and contributing to a healthier future for all Malaysians, we constantly strive to make a positive difference in all that we do, including through our approach to ESG-related programmes,” says Nestlé (M) Bhd chief executive officer Juan Aranols.
“We have a very comprehensive roadmap that we are implementing consistently, with positive and visible results.”
So how can such a large company manage its footprint?
“We have a responsibility to lead by example. The work required is extensive and rigorous. We need to examine not only our operations but also each of our products to see how we can make them better for people and the planet,” says Aranols.
In line with this, Nestlé has established clear sustainability targets under specific focus areas:
> Climate change – Reduce its carbon emissions by 20% by 2025, halve its emissions by 2030 and achieve net zero by 2050. In Malaysia, Nestlé has successfully transitioned to 100% renewable energy across its operations nationwide since 2020.
The company is also undertaking a solar roof initiative with its long-term distribution partners.
In tandem with its efforts to transition to renewable energy, the company continues to advance in its ambitious reforestation programme, Project RELeaf, with a target to plant three million trees across selected locations in Malaysia by 2024.
> Sustainable packaging and circularity – Reduce the use of virgin plastics by at least one-third and make 100% of its packaging recyclable and reusable by 2025.
Since 2020, Nestlé Malaysia has made significant progress in tackling plastic waste with 7,000 tonnes of post-consumer packaging waste collected and separated for recycling in 2022 through various plastic neutrality initiatives.
Today, over 90% of Nestlé Malaysia’s packaging materials are also designed for recycling.
> Sustainable sourcing – Achieve 100% responsibly sourced palm oil by 2023, cocoa and coffee by 2025. Nestlé is also committed to advancing regenerative agriculture among local farmers.
Locally, Nestlé Malaysia works closely with farmers to empower them towards more sustainable farming practices, including regenerative agriculture, through the Farmer Connect programmes, comprising Nestlé Paddy Club, Nestlé Chilli Club and NESCAFÉ Grown Respectfully.
> Water – Maintain good water resource management throughout its operations and continue to support communities in need of clean water.
Working towards this goal, all Nestlé industrial sites in Malaysia have wastewater treatment plants to treat the wastewater that it discharges.
Nestlé also aims to raise awareness on water conservation and improve access to water and sanitation among underserved orang asli communities through its Safe Water Safe Communities project, reaching almost 700 families to provide water sanitation equipment.
“While we are progressively working towards achieving our targets, most of our emissions and environmental footprint come from outside of our own four walls, particularly from our raw materials and ingredients sourced from suppliers all over the world.
“While implementing good ESG practices within our own operations is a good starting point, it is essential to partner with our suppliers and engage with all players throughout the value chain and reduce total emissions,” he emphasises.
“At Nestlé, we closely engage with our supply chain and talk to our vendors on the ground. Explaining the rationale of our ESG expectations and showing them how they can take action is key, so that they understand our approach and can walk the talk. There are clear non-negotiables such as human rights, child labour and other key ESG aspects in this context.
“The Covid-19 pandemic put our value chains to test, but with a clear strategy in place, we were able to quickly adapt and protect our workforce and distribution partners while ensuring continuity in the supply of essential products,” Aranols adds.
Engagements should also extend beyond suppliers and vendors all the way to the end consumers and including distributors and retailers in the process.
Generally, it is accepted that a producer or brand owner is responsible for ensuring that products are safely delivered to retailers, and once it is in the hands of consumers, they are the ones who hold responsibility. But this is not enough.
Managing waste in a sustainable manner should be the collective responsibility of producers, consumers and relevant authorities, thus contributing to a circular economy, says Aranols.
“This is why Nestlé Malaysia is a strong advocate for Extended Producer Responsibility, which we drive as an active founding member of the Malaysian Recycling Alliance, together with other leading fast-moving consumer goods organisations.
“We also put extensive efforts in educating consumers on the importance of recycling.”
Based on experience, Nestlé believes that people want to do good. They just need the right resources, support and awareness.
“For example, when we first started on our Door-to-Door Collection and Recycling Programme, there were some sceptics who felt that people would not have the right attitude to separate their waste for recycling,” he shares.
“However, once we provided them with the understanding and the tools to do it conveniently and reliably, we have seen a very high participation rate of 80% to 85% in some areas. This demonstrates that Malaysians are indeed conscious about the environment, and we just need to provide the necessary support.”
Nestlé firmly believes that people are at the heart of climate action and that driving positive change must be a collaboration between all stakeholders.
“We cannot achieve our goals alone; companies need to shape their advocacy and communications around a roadmap and engage with others.
“As part of this journey, they need to communicate their advocacy positions and interact with governments, local communities and their consumers. Businesses should take a whole life cycle approach to determining the footprint of their products and services.
“It is a process that involves working with many others such as farmers, logistics providers, manufacturing, retailers and consumers, covering end to end, from downstream to upstream,” Aranols adds.
“Ultimately, Nestlé’s approach to sustainability and ESG is intrinsically tied to our purpose: to unlock the power of food to enhance quality of life for everyone, today and for generations to come.
“It is this belief that fuels our commitment to leverage our global scale, resources and expertise to contribute to a healthier future for people and the planet.
“We sought to build our business approach on decisions that are not just good for us and our shareholders, but for society and the planet as well, and we do this with a high sense of urgency and commitment,” he says.
This article is contributed by members of the CEO Action Network.
