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Such a process looks inwards as much as it does outward, encompassing employees, suppliers, business partners, consumers and government alike, and in such scenarios the provision of equal standards and quality is utmost he points out and is non-negotiable in building a global brand and trust. This penchant of excellence extends to products and processes in the one billion Nestlé foods consumed globally daily. Trust and belongingness is also built by embedding organisations into local society as achieved by Nestlé in the markets it operates in Nandkishore remarks, “as Nestlé is viewed as a local company everywhere we operate” creating value across the chain and building trust.
"To further its commitment to society and its ethos of Creating Shared Value, last week Nestlé introduced a global White Paper becoming the first multinational in the world to report publicly on its human rights impact across seven countries."
Capitalism under fire
“We find capitalism increasingly coming under fire, it begun especially after the Lehman Brothers crisis and the excesses of the Wall Street. Then people started talking of Corporate Social Responsibility and spending so much on society. But what real change do these processes drive and how sustainable are they? Our view is that the only way to build sustainability over a long period of time is to build belongingness to society. The only way you can do that is by simultaneously creating value to society at the same time to shareholders. Then what you do becomes sustainable, defendable and is not corporate greed. Creating Shared Value is broader than CSR, and it’s better because you don’t get caught into the trap of philanthropy and ad-hocism. We look at Creating Shared Value through three pillars; Rural Development, Nutrition and Water Resource Management. This is fundamental to how Nestlé does business globally and we work hand-in-hand with governments, societal bodies and thousands of farmers globally in producing and marketing our products and which is why we are seen as a local company,” Nandkishore explains.
In 2012, Nestlé Lanka did Rs. 28 billion in sales in the country, contributed Rs. 4 billion in taxes and paid out close to another Rs. 4 billion to farmers. The company’s profit after tax was Rs. 3 billion and this is how we can be sharing value with our stakeholders and become sustainable, he says.
"In 2012, Nestlé Lanka did Rs. 28 billion in sales in the country, contributed Rs. 4 billion in taxes and paid out close to another Rs. 4 billion to farmers. The company’s profit after tax was Rs. 3 billion."
Sustainable source of living
Globally, Nestlé is actively engaged in transforming itself to a sustainable source of living to consumers and customers alike. With over a billion Swiss francs spent, Nestlé boasts the highest investment globally behind research and development on nutrition and are measuring the levels of micro-nutrient deficiency in the markets it operates employing publicly available data and intervention studies. The company says it is uniquely placed in its understanding of nutrition to help governments and civil society address issues of malnutrition, and how to transform these into product based solutions.
Micro-nutrients embedded into deeply consumed food has moved the needle on iodine, vitamin A and zinc deficiencies and as more and more governments move to make this law this will help bridge the gap on nutrition deficiencies. Many countries along the tropical belt have the ‘double burden’ of disease – of physical and mental stunting, and the fastest growing numbers of obesity, diabetes and cardiovascular disease. However, there still remains much to be achieved and this entails a process of education.
“There is evidence, not conclusive, that one of the root causes of these epidemics that society faces today appear to lie in malnutrition in the first 1000 days of life starting from pregnancy. There are genetic mechanisms at work, which mean that during pregnancy if the mother is malnourished then the foetus is switching off and on some genes because it is preparing for a world of starvation. When the baby is born it is underweight, under height and it reaches sexual maturity faster because it is geared to ensure survival – that’s nature’s way. Now having being born, if this undernourished foetus encounters a world where there is calorie excess even 30 40 years later the impact is diabetes and obesity. So one thing we can do is address malnutrition during pregnancy. Why is this more prevalent amongst pregnant women particularly in the eastern context? This is probably to do with their status in society. It’s the children who eat first, then the in-laws, then the husband and finally her. So you are compromising future generations. What we need to trigger is where the pregnant woman eats first and has the right amount of micro nutrients, this is an impact stemming over generations. So we need to educate them and there is a need for sociological change and the nutritional status of women. This will also transform public health,” Nandkishore remarks.
Nutritional intervention
"We find capitalism increasingly coming under fire, it begun especially after the Lehman Brothers crisis and the excesses of the Wall Street. Then people started talking of Corporate Social Responsibility and spending so much on society. But what real change do these processes drive and how sustainable are they? Our view is that the only way to build sustainability over a long period of time is to build belongingness to society. The only way you can do that is by simultaneously creating value to society at the same time to shareholders. Then what you do becomes sustainable, defendable and is not corporate greed. Creating Shared Value is broader than CSR, and it’s better because you don’t get caught into the trap of philanthropy and ad-hocism. We look at Creating Shared Value through three pillars; Rural Development, Nutrition and Water Resource Management. This is fundamental to how Nestlé does business globally and we work hand-in-hand with governments, societal bodies and thousands of farmers globally in producing and marketing our products and which is why we are seen as a local company – Nandu Nandkishore, Executive Vice President Nestlé S.A., Zone Director for Asia, Oceania, Africa and Middle East"
Nestlé is targeting nutritional intervention for people with diseases through its products, by studying genomics and mapping genetic solutions “so people can live better.” Eastern cultures obtain good bacteria to their system through the consumption of curds. The trouble is they don’t have shelf life, so companies need to find innovative ways to deliver micro nutrients and pro-biotics to consumers even after one year on the shelf. A number of companies have acquired the technology to deliver a product that has enough pro-biotics even after a long shelf life, and this is how science can be applied to food to address issues of malnutrition, he explains.
Pro-biotics embedded in food are likely to become a key component in the future as the world braces itself for a food crisis with the population expected to exceed 9 billion by 2050. Nandkishore remarks that Nestlé’s sustainability ethos is also focused on addressing this future issue. He points out that in today’s context from harvest to home over 30% of the global food produce is wasted. If we could eliminate that waste, there itself is “low hanging fruit” which would help address the issue. In theory this could be done Nandkishore says, but there needs to be a mass scale coordinated effort in order to achieve this.
Human rights impact
To further its commitment to society and its ethos of Creating Shared Value, last week Nestlé introduced a global White Paper becoming the first multinational in the world to report publicly on its human rights impact across seven countries. “We have a responsibility towards civil society and to industry to become a beacon of standards and behaviour, because people expect that of is. We are confident that this will become a reference point for others and a behaviours benchmark. There has been criticism from various points on use of child labour for cocoa farming and so on. So we have to work with our farmers and suppliers and use audit methods and guarantee we are in full compliance of the regulations,” Nandkishore avers.
Speaking to the Daily FT, he remarks that on the question of ‘family labour’ it is important to establish justifiable causes in its implementation. Family labour is widely prevalent in African and Asian communities, and it is a stepping stone for the next generation to acquire the skills and continue the family trade. Thus it becomes a case of ensuring that the fundamental rights of the child in terms of education and sanitation are met in this process, Nandkishore says.
Commitment to rural development
Elaborating further on the strategic pillars of Nestlé’s CSV agenda, Nandkishore summed up its commitment to rural development given its position as an agro-business company. The company deals with farmers on a daily basis and it helps them have a sustainable source of life. With the exponential growth in the world’s population and with growing wealth people, tend to consume more animal protein requiring a doubling of output of agriculture and dairy. This poses serious challenges to Nestlé’s pillar of Nutrition.
The demand for dairy is increasing and current prices are at an all time high. The amount of tradable dairy is going down with a severe supply-demand imbalance for dairy protein globally. A related problem therein is Water Resource Management. At present 70% of the fresh water in the world is used for agriculture, with a mere 1% used for human consumption. With the doubling of agriculture, it is estimated that the world will run out of fresh water in 30 years, Nandkishore explains. Accordingly, Nestlé is working closely with governments and civil society in all its markets to manage water as a scare resource.
Sri Lankan operations
Commenting briefly on its Sri Lankan operations, consistent to its global operations the collection of milk is at an all time high with over 62 million litres estimated to be collected this year. However, the yield per cow in the country in significantly low at less than five litres a day sourced from over 18,000 farmers islandwide. Nestlé Lanka has 130 chilling centres around the island with the latest one declared open in Mullaitivu just last week.
The company having conducted a desktop research on nutrition needs in Sri Lanka recently commissioned a Nutrition Landscape Study in Sri Lanka and its findings are due out soon. “The more we understand the needs, the better and more we can do to address them and serve the community” Nandkishore avers, adding that Nestlé globally shares all its findings with governments and civil society groups to arrive at concerted efforts to address health issues.
In Sri Lanka Nestlé has already launched the Healthy Kids program together with the Ministry of Education targeting 1,500 secondary schools in Sri Lanka. Together with the Ministry the company has designed a nutrition and activity module for each school, which is being implemented together with teachers from these schools. Nestlé does not promote any of its products or brand during this activity.
“Globally, we work directly with over 550,000 farmers on a daily basis in various spheres. Our relationship is not one based merely on the concept of buyer and seller; it is the fruition of a long and converse process where we also serve to add value to their operation by imparting our learning and experience from across the world, from our research and science on how they can improve their yields, fodder and efficiencies. Creating Shared Value is imperative and pervades all elements of our business and Sri Lanka is no exception. We see great value in our emerging markets, which includes Sri Lanka, and we will continue to invest towards its growth, our people and operations and deliver upon our promise of value at every juncture,” Nandkishore stated.
