Responsible sourcing

responsible sourcing

Responsible sourcing

What is the issue?

Climate change, growing populations, rapid urbanisation and other factors have made our world increasingly unpredictable. As demand for commodities continues to increase, we need to make sure our supply chains, and the people who work within them, are protected and sustainable in order to safeguard the supply of quality raw materials on which our business depends.

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Why is it important?

As the largest food manufacturer in the world, we depend on the timely sourcing of the ingredients we need to make our products. For Nestlé, it makes business sense to look after these supply chains, in order to ensure security of supply in the future. On top of this, as a major sourcing company, we have a duty to ensure that our business and the organisations in our supply chain uphold responsible sourcing practices.

 

  • Achieved
  • By 2015 – 100% of our palm oil bought and used in UK & Ireland is independently verified as responsibly sourced and coming from a fully segregated supply chain.
Society

Increased supply chain transparency, and support for the farmers who work with us, including training on improved farming practices.

Business

A trusted reputation and more resilient supply chains.

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What are we doing about it?

Responsible sourcing is a way of doing business that enables us to say with confidence the we know where our ingredients and packing materials come from and how they were made.

We work with our suppliers to ensure that our supply chains are transparent, from the source to the finished product. It also means identifying and addressing key issues along the way, including human rights, environmental protection, animal welfare, safety and health, and business integrity.

Globally, our approach to responsible sourcing is based on our Corporate Business Principles and our Supplier Code, which set out the non-negotiable, minimum requirements to which we ask our suppliers to comply.

Working with third-party experts such as The Forest Trust and the Fair Labour Association, we have also developed a set of Responsible Sourcing Guidelines. These set out more detailed supply chain requirements for 12 key commodities, with specific aims and objectives for each. Our long-term goal is to have guidelines that cover all the ingredients we use.

In the UK, our responsible sourcing programme focuses on four commodities: cocoa, coffee, palm oil and fresh milk. It also includes a number of initiatives, such as the Nestlé Cocoa Plan, the Nescafé Plan and our partnership with First Milk farmers.

We measure our progress in responsible sourcing against three key metrics:

1. The number of suppliers that are compliant to the Nestlé Supplier Code,
2. The percentage of our priority ingredients that are traceable to Origin
3. The percentage of our priority ingredients that are responsibly sourced in accordance to Nestlé Responsible Sourcing Guidelines

Driving shared value for farmers, workers and their communities is critical to the long-term sustainability of Nestlé’s supply chains. Nowhere is this clearer than in rural communities in Côte d’Ivoire who, as a result of Nestlé KitKat commitment to Fairtrade since 2010, are more able to improve their farming practices and cocoa quality, professionalise their own cooperatives, as well as address endemic issues such as child labour and lack of decent schools. We hope such collaborations increase and deepen, as Nestlé moves to embed fair and sustainable sourcing into core business practices.
Euan Venters, Commercial Director – Fairtrade Foundation

Supplier audit programme

All of Nestlé’s suppliers must comply with our Supplier Code. To ensure compliance, we carry out a rolling series of independent audits across their sites in the UK, delivered by Bureau Veritas, Intertek and SGS.

Since 2012, 187 independent audits of our supplier sites have been carried out across Europe, including the UK & Ireland. More than half of these are now compliant to our supplier code and the rest have corrective action plans in place.

Along with our independent compliance audits, we have asked some of our service providers to audit themselves using the Ecovadis ethical self-assessment tool.

100%

of our palm oil bought and used in UK&I is verified as responsibly sourced and coming from a fully segregated supply chain

Traceability and assessment

To understand our dependencies and potential impacts across our value chain, it’s vital to know where our ingredients and materials come from. To achieve this, we work with our direct suppliers to map the supply chain right down to farm level.

When we have built a clear understanding of the farms and other suppliers that contribute at every stage, we assess them against our Responsible Sourcing Guideline, addressing any issues where necessary. These assessments are carried out by partner organisations such as The Forest Trust (TRT).

Ethical audit of Nestlé’s own operations

Our commitment to responsible business covers our own operations as well as those of our suppliers. Since 2005, Bureau Veritas has audited all of our head offices, factories, distribution centres and sales outlets (such as Nespresso boutiques) once every three years. The audits are based on five criteria: human rights, business integrity, environment, safety and health, and security.

Bureau Veritas has carried more than 2,000 audits of Nestlé sites globally. To date, the audits have not identified any critical issues.

The CARE audit programme

We assess compliance around human rights and labour practices, business integrity, safety and health, environmental sustainability and security through the CARE programme, which relies on an independent external audit network.

The audits take place every three years (every five years for the CARE program in the United States), and are performed by three leading independent audit companies: SGS, Bureau Veritas and Intertek. Where necessary, we introduce detailed action plans that are thoroughly and systematically monitored.

The findings are classified in three categories:
• Minor – an isolated and non-repetitive finding or minor issue;
• Major – a systematic finding or major issue or infringement against local legislation; and
• Critical – an exceptional issue, which requires immediate notification to the Nestlé Group Compliance Committee.

In 2015, we carried out 250 CARE audits across Nestlé, taking our cumulative total to 2,207 audits since 2005.

 

By the end of 2015, we had identified 184 CARE gaps. We have introduced corrective action plans to cover these gaps, 36 of which are now closed. The remaining corrective action plans are in process of being implemented.

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Palm oil sourcing

The production of palm oil has been associated with social and environmental issues such as forced labour and deforestation. As palm oil is an essential cooking ingredient for Nestlé, we set a target in the UK to source 100% of our palm oil from sustainable sources by 2015.

We made palm oil a priority ingredient of our traceability and assessment programmes, working with suppliers and NGOs to implement our Responsible Sourcing Guideline (pdf, 2Mb) throughout our palm oil supply chain. As a result, we were able to verify that all our palm oil is fully segregated and responsibly sourced by 2012, three years ahead of target.

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What’s next?

Over the next five years we plan to expand our responsible sourcing efforts in the UK to include commodities such as hazelnuts, vanilla and sugar. This will be in addition to our current focus on cocoa, palm oil, milk and coffee.

In 2016, we will work with our customers as well as our suppliers to ensure that responsible sourcing is ingrained across our entire value chain, from farm to fork.

This will involve collaborating closely with some of our major customers to identify responsible sourcing opportunities in more product areas, as well as developing education campaigns to raise the profile of responsible sourcing practices across our value chain.