Written evidence submitted by Nestlé
UK
1. As you will be aware, Nestlé has
a strong legacy of investment and trade in the developing world
having built our first factory in Latin America in 1921. Today,
45% of our factories and 48% of our employees are based in developing
countries.
2. Our principle is to manufacture, when possible,
in countries from which we source commodities, rather than to
export the raw materials. Regional manufacture for regional markets
means our products have fewer miles to travel, and also allows
us to become fully integrated into the social, cultural, and economic
life of the countries in which we operate.
3. Equally important to our core business
is our commitment to sustainability and corporate social responsibility
which is reflected through our concept of Creating Shared Value—a
belief that in order for a company to create value for its shareholders
over the long term, it must bring value to society as a whole.
This is reflected across our supply chain and in the many programmes
and projects that Nestlé supports, including those that
work toward attainment of the UN Millennium Development Goals
(MDGs).
4. Nestlé fully supports all eight
MDGs and considers them important objectives for improving the
state of the world and in addressing the most pressing needs of
people, particularly in developing countries.
5. Nestlé believes that, especially
in a "changing climate", the issue of water scarcity
is no longer just an environmental issue, but is fast becoming
a national and international security issue.
6. The globe is facing a severe near-term
crisis of increased demand on limited resources. The UNDP predicts
that by 2025, if present trends continue, two-thirds of the world's
population will suffer from water stress and one quarter from
severe water shortage.
7. Agriculture places the greatest demand
on water resources, accounting for 70% of fresh water withdrawn,
with the remaining 30% used by industry and households.
8. The problem has been exacerbated by the
recent surge in biofuels production—itself the result of
policy decisions made in response to climate change and the use
of fossil fuels. Not only has this placed increased pressure on
food supplies, by diverting arable land away from food production,
but has also put further stress on already strained water resources.
9. For example, the US Department of Energy
calculates that as much as 10,000 litres of water are needed to
produce five litres of bio-ethanol. Biofuel production has been
heavily subsidised, and the resulting incentive to divert food
crops away from use as human food is underpinning already high
crop prices. These effects are felt most keenly in the developing
world, and often in countries less able to adapt to a changing
climate.
10. Rising demand for biofuels has also
contributed to growth in the palm oil industry. Nestlé
is committed to supporting and participating in the search for
a practical and sustainable solutions to the palm oil/deforestation
problem.
11. Nestlé has consistently opposed
the mandatory 10% target for use of biofuels in transport fuel,
as outlined by the Renewable Energy Directive. We were therefore
encouraged by the decision taken by the European Parliament's
Industry, Research and Energy Committee on 11 September 2008 to
support the Turmes report which had called for the reduction or
outright rejection of this mandatory 10% target for biofuels by
2020.
12. We welcomed the Committee's decision
to move away from the use of agro-fuels, highlighted by the amended
text specifications that at least 20% of the 2015 target and 40%
of the 2020 goal must be met from "non-food and feed-competing"
second-generation biofuels or from cars running on green electricity
and hydrogen.
13. Nestlé has long supported sustainable
energy use: over the last five years, Nestlé has reduced
its energy consumption per tonne of product by 28% and its greenhouse
gas emissions by 32%. However, we believe that any decision on
the use of energy sources must be based on a systematic cost benefit
and life cycle analysis, taking into consideration the social
and environmental impact, including the effects on food prices
and water.
14. There is no question that we have to
reduce our consumption of fossil fuels. But biofuels derived from
food crops planted exclusively for that use are clearly the wrong
solution. While there are substitutes for oil, there are not any
for water.
15. Sustainable development in a changing
climate means encouraging the responsible use of water. Water
is still treated as a limitless resource in too many communities,
and one reason is a lack of an appropriate pricing structure.
One example of a market-led mechanism is tradeable water rights,
where farmers can decide among themselves what is the correct
price. We need a system that provides incentives to invest in
best practice and new technology in agriculture. Reasonable pricing
policies would help by encouraging the use and development of
water efficient crops and smart irrigation systems.
16. At the World Economic Forum in Davos
in January 2008, Nestlé chairman Peter Brabeck-Letmathe
spoke about how more companies should sign up to the CEO Water
Mandate, run in partnership with the UN Global Compact, which
outlines a framework for businesses to address water sustainability
in their operations and supply chain.
17. Nestlé itself has made significant
reductions in water use. Whilst Nestlé production has nearly
doubled in the past 10 years, its water consumption has been reduced
by 29% in absolute terms. Waste water has also been reduced by
37%.
18. At the same time, in the Developing
World, Nestlé helps educate farmers, children and the public
about what can be done to alleviate water stress. 675 Nestlé
agronomists and more than 5,500 contractual agricultural extension
workers are working with over 530,000 farmers to introduce water
management techniques which can lead to significant water savings.
19. A current project that will specifically
address the issue of sustainable development in a direct way is
Nestlé's submission to The Prime Minister's Business Call
to Action, whereby Nestlé, working through its agronomists
on-the-ground will train farmers in Central Africa in improved
storage and agricultural practices to reduce mycotoxin spoilage
of Légumes- increasing yields, reducing the need for imports
and directly increasing farmer incomes by $900 per annum. A very
direct and practical project to build sustainable farming incomes
in Developing Countries.
20. In summary, we strongly believe that
businesses, alongside other stakeholders, have a key role to play
in bringing about positive, sustainable changes in developing
countries. This is increasingly important when facing the challenges
posed by climate change.
November 2008
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