Making A Difference Through CSR:Meeting the Challenges

CSR as Business Strategy ~ the NESTLÉ perspective

Presented by:

Stephane AlbyExecutive Director, Finance & Control

Nestlé (Malaysia) Berhad

Making A Difference Through CSR:Meeting the Challenges

An introduction

An Introduction

Nestlé’s Concept of CSR

Conclusion

The NESTLÉ Group

• Founded in 1866 by Henri Nestlé

• Nestlé is present in over 100 countries

• World’s largest food manufacturer, headquartered in Switzerland

• Employs 253,000 people worldwide

• 511 factories in 86 countries

• Sales of 32 billion individual products each year

• World’s largest private nutrition research facility

• 17 R&D Centers worldwide

• RM5 billion investment annually on R&D

NESTLÉ ~ An Introduction

NESTLÉ MALAYSIA

• Started business operations in 1912

• Public listed on Bursa Malaysia

• Malaysia’s leading halal food company

• Employs 4,000 employees

• RM3.1 billion in sales turnover in 2005

• 8 Factories; 6 Sales Offices and 1 National Distribution Centre

• World class products & brands:

Solid CSR Foundation

- Nestlé was established as the result of the humanitarian act of our founder, Henri Nestlé. He developed a cereal milk based product in 1866 to save an infant’s life as the baby could not be breastfed.

-CSR is part of Nestlé’s DNA and is inherent in Nestlé’s Management & Leadership Principles ~ to create long-term value for society

-CSR is built into the Nestlé Corporate Business Principles and is a part of its business strategy.

-Nestlé supports The UN Global Compact’s Principles which are incorporated in the Nestlé Corporate Business Principles ~ as a guide for our business practices.

The Role of Business and CSR

Built into Corporate StrategyReflects mutually dependent relationship: business and society

For Business: • reliable, high quality sourcing• improved government functioning – regulatory• skilled, loyal workforce• superior products which successfully compete

For Society: • improved earnings by suppliers• improved skills and earnings, job stability – employees• higher quality of life – consumers• greater stability, economic and social development - whole society

Mark Kramer, Senior Fellow, Center for Business and Government, John F. Kennedy School of Government, Harvard University and Managing Director, Foundation Strategy Group (FSG)

The Concept of Shared Value Creation

Shared Value Creation

Through Shared Value Creation, a company links its operations to generating long-term value both for its business and for society as a whole, and defines its success in terms of internal financial returns and external social and economic results. Ultimately, creating shared value acknowledges both the work that corporations need to do to reduce negative impacts on society as well as, and more fundamentally, how they can be part of progress on global challenges.

– Create long term value for Business and Society

– Mutually dependent relationship: business and society

– Key part of business strategy

– Value creation through the value chain: Agricultural suppliers, employees and associates, customers and society at large

– Investments must be good for the country and the company

– Following codes of conduct necessary, but not sufficient

– To create Share value, you have to create Shared Value with society

Shared Value Creation

Shared Value is applied across Nestlé's Value Chain

Agriculture and Sourcing

Purchasing Practices

Agricultural and Supplier Development

Raw material access at specified quality and foreseeable price

Higher food output using fewer resources

Value chain impact

Growth context

Nestlé benefit

Society benefit

Manufacturing and Distribution

Environmental, Safety and Labour Practices

Better Food Safety Standards and Workforce Development

Premium food manufacturer

Higher food production standards

Products and consumers

New/renovated products for nutrition health and

wellness

Increase knowledge and awareness for healthy lifestyles

Profitable growth from superior product benefits

Wider access to food, and nutrition and health

Each Nestlé market has its own CSR projects – with the overall umbrella theme of Shared Value Creation which helps ensure that we meet the U.N. MillenniumDevelopment Goals. Throughout the Group, wetry to ensure that one or more of the following goals are met : • Eradicate extreme poverty and hunger• Achieve universal primary education • Promote gender equality and empower

women • Reduce child mortality• Improve maternal health • Combat HIV/AIDS, Malaria and other

diseases • Ensure environmental sustainability • Develop global partnerships

Shared Value Creation

• Extensive range of CSR initiatives in Malaysia which focus on education and improving the quality of lives for less privileged communities.

• Some of our commitments include : – Contract farming for the hard-core poor; – Setting up of kindergartens in rural areas; – Providing learning resources for the physically and mentally

challenged; – Bridging the digital divide and promoting the learning of English in

rural schools via ICT; – Mentoring of SMEs in the food industry; – Helping to provide sustainable livelihoods for single mothers

OUR CSR WORK IN MALAYSIA

Contract Farming of Chillies

– Nestlé works closely with the local farmers association in sourcing for quality agricultural produce and provide technical expertise to ensure better yields

– Nestlé provides transfer of knowledge and assistance to the farmers on Good Agricultural Practices and helps them be self-sufficient and independent.

– Created partnerships for sustainable agriculture. – Access to raw materials from a reliable source and meeting Nestlé quality

standards. – Project has won the Prime Minister’s Award for Socio-Economic Development, – Farmers were accorded the respected and acknowledged SALAM

accreditation for excellence in farming practices in 2005 – which is the official recognition that Good Agricultural Practice (GAP) is implemented and abided by.

Improving Farmers’ Income in Kelantan

The Nestle Food Mentoring Programme for SMEs

- The programme was initiated in 1999 to provide assistance to small-medium companies in the food industry to attain world class standards through the sharing of knowledge and experience with Nestlé

- Range of mentoring topics covered including halal certification; HACCP; marketing; legislation; sourcing; etc

- To date, the programme has successfully trained more than 2000 participants from 700 companies

Investing in the Future of the Food Industry

In an effort to internalise the CSR philosophy of the company, we unveiled acompany-wide initiative in 2005 ~ the Nestlé REACHING OUT to COMMUNITY & KIDS employee volunteer programme (or Nestlé ROCKS for short) to further encourage employee involvement in the communities where the Company operates, which is aimed at reaffirming and strengthening our commitment to CSR.

• Nestlé ROCKs provides an avenue for all our employees to be involved in Nestlé’s CSR programmes while giving them the opportunity to fulfil their own social or community obligations. This is the first initiative that is launched nationally in all work locations involving some 3,500 employees, and allows our employees to dedicate 16 hours of their work time annually towards CSR activities, endorsed by the Company.

• Currently, there are 28 homes, orphanages and charitable organisations that Nestlé has been supporting, where they may volunteer their services.

INTERNALISING OUR CSR WORK

The NESTLÉ Concept of Corporate Social Responsibility

Conclusion:

The CSR Hierarchy

COMPLIANCELaws, Business Principles, codes of conduct

SUSTAINABILITYProtect the future

CREATESHARED VALUEReduce poverty, Improve health

Empower people

Thank You

For further info, please visit:www.nestle.com

www.nestle.com.myOr call Freephone:

1-800-88-3433