Embeddedness in the context of corporate sustainability at Nestlé
Hans Jöhr
Head of Corporate Agriculture
University of Zurich
January 19th, 2017
7 February, 2017 Corporate Agriculture
Planetary boundaries 9 control variables
Estimates of how the different control variables for seven planetary boundaries
have changed from 1950 to present.
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Source: Steffen et al. 2015, Science
• Stratospheric ozone depletion
• Loss of biosphere integrity (biodiversity loss and
extinctions)
• Chemical pollution and the release of novel entities
• Climate Change
• Ocean acidification
• Freshwater consumption and the global
hydrological cycle
• Land system change
• Nitrogen and phosphorus flows to the biosphere
and oceans
• Atmospheric aerosol loading
The green shaded polygon represents the
safe operating space.
Feeding 9+ bio people by 2050 Threats or opportunities
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Policy Interventions
Water in Agriculture
Training & Assistance
Soils & Soil Health
Energy Pricing
Biodiversity & Genetics
Nestlé In the context of Consumer Package Goods (CPG) companies
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… but only 1.7% of the
global market
1.7% - Nestlé 9% - 20 largest companies
Our outreach has limits Despite our size
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Partner Project
Sphere of
Control
Sphere of
Influence
Sphere of
Interest
Beneficiaries
Activity vs outcome monitoring & evaluation
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Impact:
Changes in
the state
Outcomes:
Changes of
behavior
Inputs,
activities,
outputs
Sphere of
control
Sphere of
Influence
Sphere of
Interest
Activity, outcome and impact relationships
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Participatory
research on
drip irrigation
techology at
demo farms
Farmers
participate in
field trials
Farmers learn how
to use technology
Extension workers
visit demonstration
farms
Training of
extension workers
Publication of
performance of
different setups
Increased
knowldedge of
techniqeuws
Farmers adopting
technology
Extension workers
promote drip
irrigation
Reduced numbers
of new wells
Greater quantities
of groundwater
available
Ambition: Shifting from activities to outcomes
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Inputs Activities Outcomes Impacts Outputs
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Our task: Responsible Sourcing
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Corporate Agriculture / Nestlé Nutrition
FARMER CONNECT
TRACEABILITY
FARM ASSESSMENTS
AUDITING
Ensuring a minumum level of good sourcing practices for 12 raw material categories
in the upstream value chain.
Farmer Connect Definition & Justification
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Ensured long-term supply of safe, quality assured, regulatory compliant and price
competitive agricultural materials to serve our brands to delight consumers
How do we operate?
With lean upstream supply chains from farm gate to factory gate, called “Farmer Connect”
What is “Farmer Connect”?
Traceability up to farmer level by buying either directly from farmers, cooperatives or
selective traders applying Nestlé good agricultural standards, principles and practices with
engagement in capacity building and training
Why and where?
46% of Nestlé factories are located in emerging countries (the fast developing world) and
74% of those Nestlé factories are located in rural areas
Sustainable Agriculture Initiative Nestlé SAIN
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PEOPLE
LAND
WATER
ENERGY
CLIMATE
To ensure supply we have to smarter use natural
resources by
• Not wasting
• Not polluting
• Not destroying
and a good start is eradicating
the worst and promoting better
Sustainable Agricultural Practices.
Producing more food from the same area of land
while reducing the environmental impacts requires
what we call “Sustainable intensification of
Agriculture”.
Since 2001 – 278 SAIN
Cases across 53
countries published
SAIN Support instruments in Farmer Connect
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Financial Support
Schemes
• Pre-financing
• Investment credits
• Bank guarantees
Technologies
• Fodder/feed production & conservation, planting material
• Animal health and welfare
• Biodigesters, irrigation
Economy of Scale
• Bargaining power
• Price reductions through scale effects in procurement of agricultural inputs
Market Access and Price Stability • Organisation of Supply Chain,
Logistics
• Transparent pricing schemes and improve price stability
Education, Training & Extension
• Good agricultural practices
• Standards (e.g. 4C, UTZ, Rainforest Alliance, Organic)
• Vocational schooling, further education, agripreneurship
Policy Dialogue & Advocacy • Government agencies
• Civil society organization
• Industry
• Conferences e.g. World Economic Forum
Farmer Connect Outreach
30 milk markets
11 coffee markets
7 cocoa markets
1’ 200
11’400
686’000
300’000
2013
1’290
12’100
695’000
375’000
2014
1’200
9’700
760’000
400’000
2015
Source: CSV Reports 2013, 2014, 2015; SAIN: Sustainable Agriculture Initiative Nestlé
Direct sourcing staff:
Supply chain support staff:
Farmers supplying directly to Nestlé:
Farmers received training:
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Nescafé Plan Overview
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Nescafé Plan builds on tangible facts
in the upstream (results 2015):
• 10 Farmer Connect Markets
• Green coffee sourced: 225’600 t
• Farmers delivering: 211,400
• Farmers trained: 88,771
• Plantlets distributed: 26.8 million
Nescafé Plan Theory of Change I
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Activity vs outcome
monitoring & evaluation
= Theory of Change
Sampling size
Baseline Data Design of surveys Data collection
Frequency of
Data collection Data cleaning
Analysis
Reporting
= Monitoring &
Evaluation Target setting
Inputs ST Outcomes Impacts LT Outcomes
# Plantlets distributed
# Trainings Survival rates
Adoption rates of practices Farm economics
= KPI framework
Productivity increase
Level of changes
(e.g. production costs)
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Nescafé Plan Theory of change II
Nescafé Plan Colombia 2010–2015 • FNC (Colombian Coffee Federation)
has been the Project Executor
• Good and reliable supplier of class 1.1
coffee for many years.
• Strong presence at the field (150+
Agronomists / Field Technicians )
• Good project execution capacity
• Severe Leaf Rust Outbreak in
Colombia 2009/2010
• Continuous downtrend in
national production
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• Number of Plantlets Distributed (Mio) 28.9
• Number of hectares (Ha) renovated 4,804
• 4C Verified Coffee Delivered (Tons) 93,000
• 4C Verified Farmers 2,864
• Farmers Trained 7,222
• Fertilizer Distributed (Tons) 1,160
• Personal Protective Equipment Distributed 1,321
• Signs Distr. 2,156
• Soil Analysis 1,657
• Training Booklets 2,700
• Municipalities impacted: Tulua, Andalucia, Bugalagrande, Sevilla, Caicedonia, Bolivar, Roldanillo, Pradera & Trujillo 10
Total Investment (Nestlé) Mio CHF 2011-15 3.06
Main Project Indicators
Better Farming Practices Farmers’ adoption I
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0
10
20
30
40
50
60
70
80
90
100
Adoption Level 2010 vs 2015
Better Farming Practices Farmers’ adoption II
Soil Conservation
• Doubled adoption of soil analysis 11.3 %
(82/699) still extremely low though higher
than 5% average country wide.
Solid Waste Management
• Increased adoption level in all six
indicators
• Collected 4.4 Tons of empty plastic
containers
Water Resources Management
• Knowledge/practices led to limited impact,
technological improvements needed that
require capital investment
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Agrochemical Management
• Use of PPE almost doubled (from 22% to
41%)
• All six indicators had signifficant increase
in adoption
Economic Dimension
• 94% of farmers adopted leaf rust tolerant
varieties
• Record keeping on sales, purchases and
harvesting showed signifficant
improvement
• Not very keen on acivities chronogram or
farm map
Plan impact
• 1.87 Million kg additional Green Coffee
produced per year (>USD 5 Million
income)
• 35% Increase in Productivity
• 41% increase in net farmer income
• Production Cost increase: only 5%!
• Increase of leaf rust tolerant trees from
36 to 67% (2010-2015)
• Supply of fully traceable and lower cost
leaf rust tolerant plantlets
• Coffee farmers are more likely to stay
in business (next generation secured?)
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Main Impact Indicators
2010 2015
Productivity 125 Kg Parch/Ha 10.8 14.6
Trees average age (years) 9.69 7.02
Trees Density (Ha) 4827 4997
Leaf rust resist trees NP (%) 36 67
Tech. Young trees NP (%) 57 75
% Decrease in Coffee Growing area 5.4 3.1
% of abandoned farms 2.4 1.4
Nestlé Cocoa Plan Overview
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Results 2015:
• Cocoa sourced: 121,400 t
• Farmers delivering: 66,320
• Farmers trained: 66,320
• Plantlets distributed: 1.7 million
Improving cocoa quality and yield, and
thus the lives of cocoa farming
communities.
Based on three main action pillars:
• Enabling farmers to run profitable
farms;
• Improving social conditions;
• Sourcing responsible, good quality
cocoa.
Supplier Development Winning with consumers, Venezuela
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“A seasoning that we have used from generation to
generation, that has delighted the palates of all
Venezuelans.”
More Info: Maggi on Facebook Venezuela
A testimonial that provides great insight in the making of
Maggi cubes and soups.
Supplier Development Culinary raw materials, Venezuela
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Human resource Youth employment & next generation farmers
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Nestlé has recognised that youth employment
and training of next generation farmers is key to
ensure long-term supply of agricultural raw
materials.
Worldwide, the average farmer age is 60 years!
In 2015:
• Nestlé trained more that
400 000 farmer
• Nestlé initated the
agripreneurship program to
accelerates development of
capable and willing farmers
• Farming by choice
Sustainable Development Goals
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We all can contribute to make the Sustainable Development Goals happen!
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