{"id":26908,"date":"2017-11-15T22:59:38","date_gmt":"2017-11-16T03:59:38","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/nestle-greening-the-supply-chain\/"},"modified":"2017-11-15T22:59:38","modified_gmt":"2017-11-16T03:59:38","slug":"nestle-greening-the-supply-chain","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/nestle-greening-the-supply-chain\/","title":{"rendered":"Nestle: Greening the Supply Chain"},"content":{"rendered":"

Nestle, the world\u2019s largest supplier of food and beverages, is a global leader in addressing sustainability not just within their company but across their entire supply chain.\u00a0 In January 2019, Nestle was one of only 29 companies recognized for addressing climate change with their suppliers in a report by the nonprofit group Carbon Disclosure Project (CDP).[i]<\/a>\u00a0 According to CDP, \u201cthe vast majority of emissions of the average company are in the supply chain,\u201d but \u201ctoo few companies have engaged with their suppliers.\u201d[ii]<\/a><\/p>\n

Food producers are already seeing impacts of climate change on crop yield as weather becomes more volatile.\u00a0 According to a 2014 report by the UN\u2019s climate science panel, crop yields are seeing a decline in rate of growth, and changes in temperature and rainfall could cause food prices to rise between 3% and 84% by 2050.[iii]<\/a>\u00a0 Nestle and other large food and beverage companies are well aware of these risks. In the lead up to the 2015 Paris Climate Accord, Nestle USA CEO Paul Grimwood joined 9 other CEOs of leading food companies including Mars, General Mills, and Kellogg in releasing a joint letter urging world leaders to take action on climate change.\u00a0 In the letter, Grimwood stated, \u201cthese changes\u00a0impact the business we do every day as well as the work of farmers, suppliers and distributors across our vast network of partners.”[iv]<\/a><\/p>\n

While on the surface Nestle talks about business and corporate responsibility as the main reasons for its sustainability efforts, reputational risk is also a major concern. \u00a0Customers are increasingly sensitive to where their food comes from, yet they do not often differentiate between the brand name on their package and the suppliers further up the chain.[v]<\/a>\u00a0 Therefore a company which has its own sustainability programs but does not look to its entire supply chain may still suffer reputational damage if one of its suppliers is a major polluter.\u00a0 To this end Nestle has participated in European Commission efforts to standardize how environmental standards and claims of sustainability are communicated to consumers, including standard definitions of \u201csustainability\u201d and how to measure environmental impact.[vi]<\/a><\/p>\n

Nestle\u2019s actions to date <\/strong><\/p>\n

Nestle has taken steps on several fronts to \u201cgreen\u201d their entire supply chain.\u00a0 They have taken a \u201clife cycle approach\u201d (LCA) to looking at their products, an assessment approach that identifies the environmental impact of a product at every stage in its life cycle.\u00a0 LCA is becoming more and more common in agriculture and industrial food, and it has proven effective in assessing environmental impacts of products in a more systematic way.[vii]<\/a>\u00a0 For example, for their Nespresso coffee products, Nestle started with coffee farmers at the very top of their supply chain, evaluating sustainability practices at the farms and coaching farmers through a continuous improvement process.[viii]<\/a>\u00a0 In their manufacturing processes, Nestle has set a goal of being emissions-free by 2030. To date they have achieved reductions in emissions by improving manufacturing efficiency and switching to renewable energy and clean fuels.[ix]<\/a> \u00a0\u00a0Nestle also encourages factory sites to adopt best practices in sustainability from other sites through their Do It Yourself website.[x]<\/a><\/p>\n

Taking it further<\/strong><\/p>\n

While Nestle has done a lot of work to promote sustainability in their supply chain and has been a strong advocate for responsible climate policy, some of their branding efforts seem to cross the line into \u201cgreenwashing,\u201d or using labels and packaging that imply that a product is environmentally friendly.\u00a0 For example, some of Nestle\u2019s breakfast cereals sport a green banner at the top and proclaim themselves to be \u201cwhole grain.\u201d\u00a0 Nestle\u2019s branding implies that these products are healthier and more environmentally friendly, yet many still contain large amounts of added sugar.\u00a0 With these products Nestle risks alienating environmentally-friendly consumers who may resent this \u201cgreenwashing.\u201d\u00a0 They also risk misinforming consumers trying to make healthier choices, which goes against some of their customer-focused positioning, or diluting their environmental work by associating \u2018green,\u2019 more natural-looking labels with physical health instead of environmental health.\u00a0 In addition, to drive real sustainability, Nestle should look to innovation in their packaging to develop more compostable or renewable packaging for currently disposable goods like plastic water bottles and cereal bags.<\/p>\n

Open questions<\/strong><\/p>\n

Do consumers take sustainability into account when making purchasing decisions?\u00a0 What is the best way to convey this message?\u00a0 How can more large companies convince their shareholders to take sustainability seriously at all stages in the supply chain? (884 words)<\/p>\n

\u00a0<\/strong><\/p>\n

Sources:<\/strong><\/p>\n

[i]<\/a> https:\/\/www.reuters.com\/article\/us-climatechange-companies\/more-businesses-must-work-with-suppliers-to-curb-climate-change-study-idUSKBN1580D0<\/p>\n

[ii]<\/a> ibid.<\/p>\n

[iii]<\/a> https:\/\/www.theguardian.com\/environment\/2014\/mar\/31\/climate-change-food-supply-un<\/p>\n

[iv]<\/a> GLOBAL FOOD COMPANIES UNITE ON CLIMATE ACTION; in joint letter released today, chief executive officers of 10 leading food companies call on U.S. and world leaders to act swiftly and decisively. (2015, Oct 02).\u00a0M2 Presswire <\/em>Retrieved from http:\/\/search.proquest.com.ezp-prod1.hul.harvard.edu\/docview\/1718381026?accountid=11311<\/a><\/p>\n

[v]<\/a> P. Rao and D. Holt, Do green supply chains lead to competitiveness and economic performance? International Journal of Operations & Production Management, 25(9), (2005), 898-916<\/p>\n

[vi]<\/a> http:\/\/www.food-scp.eu\/node\/26<\/p>\n

[vii]<\/a> A\u00a0review\u00a0of\u00a0life\u00a0cycle\u00a0assessment\u00a0(LCA)\u00a0on\u00a0some\u00a0food\u00a0products<\/a>. Roy, Poritosh; Nei, Daisuke; Orikasa, Takahiro; Xu, Qingyi; Okadome, Hiroshi; et al.\u00a0Journal of food engineering\u00a0Vol.\u00a090,\u00a0Iss.\u00a01,\u00a0 (Jan 2009): 1-10.<\/p>\n

[viii]<\/a> Alvarez, G., Pilbeam, C., & Wilding, R. (2010). Nestl\u00e9 nespresso AAA sustainable quality program: An investigation into the governance dynamics in a multi-stakeholder supply chain network.\u00a0Supply Chain Management,\u00a015<\/em>(2), 165-182. doi:http:\/\/dx.doi.org.ezp-prod1.hul.harvard.edu\/10.1108\/13598541011028769<\/p>\n

[ix]<\/a> http:\/\/www.nestle.com\/csv\/planet\/product-life-cycle\/manufacturing<\/p>\n

[x]<\/a> ibid.<\/p>\n","protected":false},"excerpt":{"rendered":"

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