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Businesses need to find a model that has a net positive impact and creates value for the whole of society, as well as shareholders and investors. Doing this will also have a positive impact on the planet and its inhabitants – a win-win for society as a whole.
Creating shared value
Nestlé was an early advocate of shared value creation as a business model for the future, working with academics, investors, and civil society organisations around the world. Shared value creation is based on the recognition that businesses must create value for shareholders and society while protecting the planet.
Transforming the food system, and reducing the inequalities within it, will require responsible business models. It’s not possible to change the food system without changing the economic and financial system on which it is based. The World Business Council for Sustainable Development (WBCSD) describes this as ‘reinventing capitalism’.
Regenerative businesses should operate for the benefit of society as well as shareholders, and should be built on value creation rather than value extraction.
Vital building blocks for creating regenerative businesses and markets include:
- Protecting people, including their human rights, throughout the value chain.
- Understanding that for a company to serve everyone in its communities, it needs to reflect the diversity of that community at all levels.
- Respect and fair rewards for all participants in the food chain, and a strong commitment to developing skills and opportunities for all.
- Reflecting the interests of all stakeholders in decision making, and operating for the long-term good, rather than for short term gain.
- Increasing transparency and reporting of a company’s societal impacts.
Sometimes the way forward is not always clear cut and the balance of harms and the greater good is not as straightforward as we would wish. Our aim is always to follow our core values and be open and honest about what we are doing. But no one person and no business can get the nuances of every judgment call right all the time. This is why we want to work in collaboration with others about ways forward to creating a regenerative food system.
Key areas for development and new solutions
Here at Nestlé, as one of the UK’s largest food businesses, we know it’s essential that we play our part - we have the size and scale to make a real impact, but we also know we cannot do it alone. So, we are asking ourselves what are the best next steps we can take to create a positive impact on the food system in a way that benefits society as a whole? How can we create a fully integrated regenerative food system? <link to What is a regenerative food system page>
These are some of the questions we are considering in conjunction with experts and like-minded companies and organisations.
How do we develop responsible sourcing throughout the whole food chain?
Responsible sourcing is essential to improve both the environments of local communities and the human rights of people. Much of the modern food system reinforces structural inequalities, both globally and in the UK, in the labour conditions of production. Part of delivering a secure and sustainable food system is in ensuring that the labour market provides rewarding employment for a diverse and skilled workforce that is equipped to meet the needs of the future food system.
So how can industry, working with policy makers and civil society, raise standards and reduce inequality in the food chain?
- Is it through credible certification such as the Fair Labor Association and the Rainforest Alliance Sustainable Agriculture Standard?
- Is it through new contracts and agreements that include a higher-level standard of equitable treatment of workers and producers?
How do we develop a high skill, high productivity economy and food sector?
The UK food chain is suffering from acute labour and skills shortages, creating both immediate and long-term challenges.
Many parts of the food chain operate on wafer-thin margins; investment in new technologies and increased productivity is limited, and skills and wages have been historically low. How do we enhance skills, increase investment, and improve productivity to raise wages and make the sector more attractive?
Is it through:
- increasing the focus on food systems in the curriculum, as well as nutrition and health? We need to encourage more young people to enter the food industry, and it is important for the next generation to be equipped with a greater understanding of where our food comes from and how it is grown.
- community-led training programmes?
- improved and extended apprenticeship schemes?
- improved access to ongoing vocational training? Despite the welcome introduction of the Lifetime Skills Guarantee, providing 400 potential free qualifications, more can be done for the food sector. Government and the food sector could work together to actively forecast future skills gaps and provide access to skills training to ensure the expertise is there when it is needed.
- the national food strategy which, for the first time in 70 years, aims to join up food policy across Government, from environment and health, education and science, through to the economic departments of industry, trade and the treasury?
Nestlé initiatives to support young talent in the food industry
- Nestlé launched a Chartered Manager Degree Apprenticeship in partnership with Sheffield Hallam University Business School in 2015. This saw apprentices taking up full-time roles within Nestlé while spending six weeks a year studying at the Business School.
- The Next Generation Dairy Leaders Programme is a scheme seeking to identify and nurture the next generation of dairy leaders. This is part of a broader partnership with First Milk which also includes measures to improve the sustainability of their farms.
- Nestlé is proud to support The Global Alliance for YOUth to help young people around the globe to thrive. Collectively, we have upskilled millions of young people, but our ambition is to do even more. By 2022 we want to support 15 million young people, to help them build employability skills for the future.
How can we make the food system work fairly for everyone?
How can we ensure that businesses act in a way that benefits all of their stakeholders and not just their shareholders? How can we develop a shared value model for business? At the moment it feels like there are more questions than answers about the best way forward.
- Many businesses are already taking steps to reduce the negative impacts of their activities and support their employees and local communities. But should this be an obligation on business, rather than just a voluntary step? For example through changes to company law and the responsibilities of directors, such as those proposed in the Better Business Act. How can this be raised up the government’s agenda?
- Can investors and the financial community play a greater role in developing shared value creation? Does it require the acceleration of the culture changes taking place in the investment community? Are there changes in, for example, corporate governance, or the way the investment community operates, that could be beneficial?
- Should we create more transparency on ESG (environmental, social and governance) issues to ensure companies are held to account by stakeholders? Are there opportunities for building on the UK Department for Business, Energy, and Industrial Strategy’s proposal for UK reform of corporate governance and audit oversight, published in March 2021. The objectives of these reforms are to restore public trust in corporate governance through greater transparency over company’s finances and extending audits to review the company’s wider non-financial performance. Could this remit therefore be broadened to include community impact too?
How Nestlé is already working to achieve our goals of shared value creation
As a responsible business we are keen to collaborate with organisations working towards the same goals, to embed and refine new ways of creating shared value, both in the UK and globally. We continually look for new ways of doing this.
Tell us what you think
As you can see, we are keen to make progress towards shared value creation in collaboration with others in the sector to achieve our goals. But we know we don’t have all the answers and value others’ ideas and experience.