GLOBAL: Nestle puts faith in co-operation with suppliers on CSR

By Dean Best | 4 December 2012

Nestle pointed to work with suppliers including Sinar Mas

Nestle pointed to work with suppliers including Sinar Mas

Working with suppliers, rather than withdrawing contracts, is more effective in making food supply chains more sustainable, Nestle has claimed.

The world's largest food company, like many of its peers, is trying to reduce the environmental impact of the way it procures raw materials and introduce more ethical methods of sourcing commodities.

Food manufacturers and retailers are trying to encourage suppliers to do business more sustainably but some industry watchers contend putting economic pressure on farmers or ingredients producers would be more effective in getting change.

Nestle is investing millions in areas such as cocoa cultivation and palm oil sourcing to make its supply base more sustainable but the company told just-food it was more interested in co-operating with its suppliers than ending business links.

"Negative pressure doesn't work," Wouter van Tol, head of sustainability communications at Nestle's UK and Irish businesses, said today (4 December). "Most suppliers want to change but need help on how to implement that."

Van Tol cited the way Nestle had worked with Golden-Agri Resources, the palm oil arm of agribusiness giant Sinar Mas, on palm oil after the Kit Kat maker was criticised by Greenpeace for the way it sourced the commodity.

"We engaged with them after Greenpeace gave us a little bit of a wake-up call," Van Tol said. "Sinar Mas has adapted to our policy, which goes beyond RSPO requirements. That wasn't negative pressure on a supplier."

Van Tol could not comment on whether Nestle had put withdrawn contracts from food suppliers after failing to encourage them to make the way they sourced and farmed commodities more sustainable. However, Nestle said it had ended its business with another Sinar Mas subsidiary, Asia Pulp and Paper, after disagreements on sourcing.

Van Tol was talking at the launch of a sustainable sourcing guide drawn up by The UK's Food and Drink Federation. The industry association had put together advice on how its members can try to source ingredients and other commodities more sustainably.

Perhaps Nestle's most notable recent work in the area has been on cocoa sourcing. In June, an investigation set up by Nestle alongside the Fair Labor Association found "numerous violations" of the company's "labour code" and publicly confirmed child labour was being used by its cocoa suppliers.

Campaigners had hoped Nestle's work would encourage others in the cocoa supply chain to follow suit, including brand manufacturers and processors. Suppliers of cocoa like Cargill and Archer Daniels Midland, processing thousands of tonnes of cocoa are key to improving ethics in the supply chain.

Last month, Cargill launched what it called the "cocoa promise" to train cocoa farmers, give them better access to education and healthcare and protect children.

In October, another cocoa supplier, Olam International, joined the FLA. Van Tol said Olam's decision to join the FLA "shows there is momentum" behind the issue of sustainable cocoa.

Mars Inc has warned creating a sustainable cocoa sector that will meet the demands of the chocolate industry and improve the livelihoods of farmers will require "billions of dollars" of investment and more co-operation across the industry.

Van Tol welcomed the recent investment by the likes of Mars and Mondelez International. "It's good for the industry," he said.

Sectors: Commodities & ingredients, Confectionery, Sustainability & the environment

Companies: Nestle, Kit Kat, Cargill, Food and Drink Federation, Archer Daniels Midland, Mars Inc, Mondelez International

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