Creating Shared Value in food manufacturing: Nestlé’s experience

As the world’s leading Nutrition, Health and Wellness company (CHF 110 billion sales in 2008), Nestlé recognises that for its business to be successful and sustainable in the long term, it must create value for its shareholders and for society. With this, we need to move beyond more ‘generic’ principles of Corporate Social Responsibility and incorporate the convergence of competitiveness and sustainability into our business models.

Nestlé’s Chairman, Mr Peter Brabeck-Letmathe, recently commented that “the financial crisis which has resulted in the current deep recession revealed once more a basic business axiom: if you fail to work on behalf of the public interest and take shortcuts that place the public at risk, you will also fail your shareholders. We believe that to have long-term business success, you must simultaneously create value for share – holders and for the public. At Nestlé, we call this Creating Shared Value (CSV), and it is the fundamental principle behind the way we conduct business at Nestlé.”

In order to operate as a responsible company, you need a clear definition of your company’s role in society. The long-term economic and social challenges our world is facing – population growth, availability of resources, particularly water and food security – cannot be solved by governments alone. Corporations need to take responsibility and contribute to the solutions. For Nestlé, Creating Shared Value is the most relevant articulation of our relationship with the societies in which we operate.

At the base of our approach is compliance with laws, rules and codes of conduct – for Nestlé, a strictly non-negotiable area. The next ‘given’ for us is sustainability – for which Nestlé follows the interpretation proposed in 1987 by the Brundtland Commission and still relevant today, i.e. “Development which meets the needs of the present without compromising the ability of future generations to meet their own needs.” Beyond this, at Nestlé we believe there is a third level of relationship which goes beyond sustainability, which is to simul taneously generate value for shareholders and for society in a manner that is integrally linked to our core business strategies and operations. We call this Creating Shared Value.

Although it can be argued that such an approach might be applicable to a number of industries, Nestlé has chosen to identify and address the specific social issues that matter most to (our) long-term success through our focus on nutrition, water and rural development, three areas which are core to our business strategy as the world leader in Nutrition, Health and Wellness. Creating value for the public in these areas is key to Nestlé for building a sustainable business and makes a fundamental connection between shareholder and community value.

About the Author

Jose Lopez

Jose Lopez is currently Executive Vice President for Operations & Global Business Excellence at Nestlé S.A. His previous positions include CEO of Nestlé Japan Group and Managing Director of Nestlé Malaysia Bhd & Head of Malaysia/Singapore Region. He has a degree in Mechanical Engineering.