Sustainable Development in a Changing Climate - International Development Committee Contents


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  Agriculture places the greatest demand on water resources, accounting for 70% of fresh water withdrawn, with the remaining 30% used by industry and households.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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