1. The Nestl CorporateBusiness PrinciplesPrinciplesMandatoryJune 2010

2. Author / issuing departmentChairman and Chief Executive OfficerTarget audienceAll employeesRelated Group Principles / Policies, Standards or GuidelinesCode of Business Conduct,The Nestl Management and Leadership PrinciplesRepositoryAll Nestl Principles and Policies, Standards and Guidelinescan be found in the Centre online repository athttp://intranet.nestle.com/nestledocs.Date of publicationJune 2010Copyright and confidentialityThe content of this document may not be reproducedwithout proper authorisation.All rights belong to Nestec Ltd., 1800 Vevey, Switzerland. 2010, Nestec Ltd.In case of doubt or differences of interpretation,the English version shall prevail.DesignNestec Ltd., Corporate Identity & Design,Vevey, SwitzerlandProductionAltavia SwissPaperThis report is printed on BVS, a paper producedfrom well-managed forests and other controlled sourcescertified by the Forest Stewardship Council (FSC).PrinciplesMandatoryJune 2010 3. Table of contents3 Commitment of the Chairman and the Chief Executive Officer5 The foundation for sustainability and Creating Shared Value6 The ten principles of business operationsConsumers1 Nutrition, Health and Wellness2 Quality assurance and product safety3 Consumer communicationHuman rights and labour practices4 Human rights in our business activitiesOur people5 Leadership and personal responsibility6 Safety and health at workSuppliers and customers7 Supplier and customer relations8 Agriculture and rural developmentThe environment9 Environmental sustainability10 Water8 Detailed descriptions and links to corporate policies8 Consumers9 Human rights and labour practices10 Our people11 Suppliers and customers12 The environment13 AuditingThe Nestl Corporate Business Principles 1 4. Nestl principles and policies mapThe ten principles of business operationsConsumers Our people1 Nutrition,Health andWellness2 Quality assuranceand productsafety3Consumercommunication5Leadershipand personalresponsibilityNestl ConsumerCommunicationPrinciplesNestl Policyon Nutrition andHealth ClaimsNestl NutritionalProfiling SystemNestl NutritionalCompassWHO InternationalCode of Marketing ofBreast-milk Substitutes*Nestl Privacy PolicyNestl Managementand LeadershipPrinciplesNestl Codeof Business ConductNestl HumanResources PolicyNestl Quality PolicyNestl NutritionQuality PolicyNestl Principleson Nutrition, Healthand WellnessHuman rights and labourpractices4Human rightsin our businessactivitiesUN Global Compact*ILO Conventions 87,138, 182*UN Conventionof the Rights ofthe Child: Article 32*OECD Guidelinesfor MultinationalEnterprises 2000*ILO Declarationon MultinationalEnterprises 2006* 5. 6Safety andhealth at workNestl Policyon Safety andHealth at WorkSuppliers and customers7 Supplierand customerrelations9 Environmentalsustainability8 Agricultureand ruraldevelopment10WaterNestl Supplier Code Nestl Policyon EnvironmentalSustainabilityNestl Policyon EnvironmentalSustainabilityNestl Policyon EnvironmentalSustainabilityNestl Commitmentson Water* ExternalreferencesThe environment 6. Commitment of the Chairmanand the Chief Executive OfficerWe believe in the importance of a strongcompliance culture that is fully embedded inour business.The Corporate Business Principlesand the supporting documents reflect thiscommitment and thus protect the trust of ourconsumers and other stakeholders in the Nestlbrand. Our internal rules not only require strictcompliance with the law, they guide our actionseven if the law is more lenient or where there isno applicable law at all. For Nestl, upholdingcompliance goes beyond keeping checklists.It requires steadfast principles that apply acrossthe whole Company, providing clear guidanceto our people.As the Chairman and the Chief ExecutiveOfficer of Nestl, we are committed to makingsure that our entire Company is managedaccording to these principles and requireadherence to them from all our employeesaround the world. We are also committedto continuous improvement and are open toexternal engagement regarding any areaof our Corporate Business Principles.Paul BulckeChief Executive OfficerThe Nestl Corporate Business Principles areat the basis of our companys culture, whichhas developed over the span of 140 years. SinceHenri Nestl first developed his successfulinfant cereal Farine Lacte, we have built ourbusiness on the fundamental principle that tohave long-term success for our shareholders,we not only have to comply with all applicablelegal requirements and ensure that all ouractivities are sustainable, but additionally we haveto create significant value for society. At Nestlwe call this Creating Shared Value.Principles were first published as an integrateddocument in 1998, most had already beenestablished in individual form many yearsbefore. While the Business Principles are firmlyestablished, they also continue to evolve andadapt to a changing world. For instance, Nestlincorporated all ten principles of the UnitedNations Global Compact soon after their creationand continues to implement them today.This latest revision differs from the previoustwo versions in that the ten principles of businessoperations are specifically linked to on-line copiesof more detailed principles, policies, standardsand guidelines. This has allowed the statementof each principle to be more succinct, whileproviding more detailed implementing measuresrelated to each one on the World Wide Web. Also,for the first time, a map of the principles and anoverview of related company measures is includedat the start of the document.Peter Brabeck-LetmatheChairman of the BoardAlthough our Nestl Corporate BusinessThe Nestl Corporate Business Principles 3 7. The foundation for sustainabilityand Creating Shared ValueAt Nestl, we have analysed our value chainand determined that the areas of greatest potentialfor joint value optimisation with society areNutrition, Water and Rural Development. Theseactivities are core to our business strategy andvital to the welfare of the people in the countrieswhere we operate.We actively seek engagement and partnershipswith outside stakeholders that optimise positiveimpact in these areas of focus. However, CreatingShared Value is not about philanthrophy. It isabout leveraging core activities and partnershipsfor the joint benefit of the people in the countrieswhere we operate.In doing so, Nestl maintains a verylongterm perspective on business developmentand welcomes dialogue with externalstakeholders who are committed to principledbehaviour and constructive engagement.This includes government and regulatoryauthorities, intergovernmental organisations,non-governmental organisations, academic andprofessional bodies, and local communities.As Nestl is a principle-based company, theNestl Corporate Business Principles formthe foundation of all we do. Compliance withNestl Corporate Business Principles, andwith specific policies related to each principle,is nonnegotiable for all employees and theirapplication is monitored and regularly audited.As shown in the diagram below, compliancewith Nestl Corporate Business Principles isthe foundation for the Companys commitmentto be environmentally sustainable and to createshared value.Creating Shared Value is the basic way wedo business, which states that in order to createlongterm value for shareholders, we have tocreate value for society. But we cannot be eitherenvironmentally sustainable or create shared valuefor shareholders and society if we fail to complywith our Business Principles.At the same time, Creating Shared Valuegoes beyond compliance and sustainability. Anybusiness that thinks long-term and follows soundbusiness principles creates value for shareholdersand for society through its activities, e.g. interms of jobs for workers, taxes to support publicservices, and economic activity in general.But Creating Shared Value goes one stepfurther. A company consciously identifies areas offocus, where: a) shareholders interest andsocietys strongly intersect, and b) where valuecreation can be optimised for both. As a result,the company invests resources, both in terms oftalent and capital, in those areas where thepotential for joint value creation is the greatest,and seeks collaborative action with relevantstakeholders in society.CreatingShared ValueNutrition, Water,Rural DevelopmentSustainabilityProtect the FutureCompliancewithNestl Corporate Business Principles,Laws, Codes of ConductThe Nestl Corporate Business Principles 5 8. The ten principles of business operationsConsumers1Nutrition, Healthand WellnessOur core aim is to enhancethe quality of consumers livesevery day, everywhere byoffering tastier and healthierfood and beverage choicesand encouraging a healthylifestyle. We express this viaour corporate propositionGood Food, Good Life.2Quality assuranceand product safetyEverywhere in the world,the Nestl name representsa promise to the consumerthat the product is safe andof high standard.3Consumer communicationWe are committed toresponsible, reliable consumercommunication that empowersconsumers to exercise theirright to informed choice andpromotes healthier diets.We respect consumer privacy.Human rights andlabour practices4Human rights in ourbusiness activitiesWe fully support the UnitedNations Global Compacts(UNGC) guiding principleson human rights and labourand aim to provide an exampleof good human rights andlabour practices throughoutour business activities.Our people5Leadership andpersonal responsibilityOur success is based on ourpeople. We treat each otherwith respect and dignityand expect everyone topromote a sense of personalresponsibility. We recruitcompetent and motivatedpeople who respect our values,provide equal opportunitiesfor their development andadvancement, protect theirprivacy and do not tolerateany form of harassmentor discrimination.6Safety and health at workWe are committed topreventing accidents, injuriesand illness related to work,and to protect employees,contractors and othersinvolved along the value chain.6 The Nestl Corporate Business Principles 9. Suppliersand customers7Supplier andcustomer relationsWe require our suppliers,agents, subcontractorsand their employees todemonstrate honesty, integrityand fairness, and to adhereto our non-negotiablestandards. In the same way,we are committed to ourown customers.8Agriculture andrural developmentWe contribute to improvementsin agricultural production, thesocial and economic status offarmers, rural communities andin production systems to makethem more environmentallysustainable.The environment9EnvironmentalsustainabilityWe commit ourselves toenvironmentally sustainablebusiness practices. At allstages of the product lifecycle we strive to use naturalresources efficiently, favour theuse of sustainably-managedrenewable resources,and target zero waste.10WaterWe are committed to thesustainable use of water andcontinuous improvementin water management. Werecognise that the world facesa growing water challengeand that responsiblemanagement of the worldsresources by all water usersis an absolute necessity.The Nestl Corporate Business Principles 7 10. Detailed descriptionsand links to corporate policies3Consumer communicationWe are committed to responsible, reliableconsumer communication that empowersconsumers to exercise their right to informedchoice and promotes healthier diets.We respect consumer privacy.Our core business strategy is built aroundhelping consumers to have a balanced, healthierdiet. The Nestl Consumer CommunicationPrinciples contain mandatory rules on marketingcommunication to all consumers, includingaccurate representation and portrayalof foods in a way that does not encourageoverconsumption. In addition, specific principlesguide our communication to children includingno advertising or marketing activity to childrenunder 6 years of age. Advertising to childrenfrom 6 to 12 years is restricted to productsthat meet predetermined nutritional profilingcriteria, including clear limits on energy andhealth-sensitive ingredients such as sugars, salt,saturated fat and trans fatty acids. Our childrenscommunication principles are specificallyaimed at protecting children by ensuring thatthe advertising is not misleading, does notundermine parental authority or generateunrealistic expectations of success, create asense of urgency or allude to a sense of low price.The Nestl Policy on Nutrition and HealthClaims steers our actions related to scientificallysupportable health claims. Please see TheNestl Consumer Communication Principles,The Nestl Policy on Nutrition and Health Claimsand The Nestl Nutritional Profiling Systemat www.nestle.com/policies.Marketing of Infant FoodsWe are committed to supporting whatever ismost suited for achieving the best start in life forbabies. This means that we recommend breastfeeding over all other feeding alternatives. Forthose who need alternatives to breast feeding,our objective is to offer formula products thatmeet international standards for infant healthin place of dangerous and inappropriate breastmilk substitutes, such as whole milk. Ourobjective is also to offer cereals, baby foodsand milks that contribute to optimal growth anddevelopment in place of complementary foodsof low nutritional value often fed to infants.Consumers1Nutrition, Health and WellnessOur core aim is to enhance the quality ofconsumers lives every day, everywhereby offering tastier and healthier food andbeverage choices and encouraging a healthylifestyle. We express this via our corporateproposition Good Food, Good Life.Guided by our commitment to Nutrition, Healthand Wellness, we work to increase the nutritionalvalue of our products while also improvingtaste and enjoyment. We also develop brandcommunication and information that encouragesand empowers consumers to make informedchoices about their diet.Please see The Nestl Principles on Nutrition,Health and Wellness at www.nestle.com/policies.2Quality assurance and product safetyEverywhere in the world, the Nestl namerepresents a promise to the consumerthat the product is safe and of high standard.Our commitment is never to compromiseon the safety of any product. Our Quality Policysummarises the essentials of our passionfor excellence: to build trust by offering products andservices that match consumer expectationand preference; to comply with all internal and external foodsafety, regulatory and quality requirements.Quality is everybodys commitment. Wecontinuously challenge ourselves in order toconstantly improve and achieve the highest levelsof quality. We maintain the same high food safetystandards in all countries in which we operate.We ensure the delivery of high quality productsthrough our Quality Management System.Please see The Nestl Quality Policyat www.nestle.com/policies.8 The Nestl Corporate Business Principles 11. Our infant food marketing is conducted inaccordance with the World Health Organization(WHO) International Code of Marketing ofBreast-milk Substitutes, as implemented byeach member state of the WHO. Additionally, indeveloping countries, we voluntarily implementthe WHO Code, whether or not the governmenthas done so. We monitor our own practicesto ensure compliance with those standardsirrespective of whether or not a governmentmonitoring system is in place. Independentauditing of Nestl compliance with the WHO Codeis conducted on an ongoing basis by recognisedsocial auditing companies and reports are publiclyavailable. Please see www.babymilk.nestle.com.Human rights and labour practices4Human rights in our business activitiesWe fully support the United Nations GlobalCompacts (UNGC) guiding principles on humanrights and labour and aim to provide an exampleof good human rights and labour practicesthroughout our business activities.We support and respect the protection ofinternational human rights within our sphereof influence (UNGC Principle 1); make sure that we are not complicit in humanrights abuses (UNGC Principle 2); are against all forms of exploitation of children; recognise privacy as a human right; expect each of our companies to respectand follow the local laws and regulationsconcerning human rights practices. Where ourown principles and regulations are stricter thanlocal legislation, the higher standard applies; recognise the responsibility of companiesto respect human rights irrespective of the factthat governments are ultimately responsiblefor the establishment of a legal frameworkfor protecting human rights within theirjurisdictions.We uphold the freedom of association and the effectiverecognition of the right to collective bargaining(UNGC Principle 3); the elimination of all forms of forced andcompulsory labour (UNGC Principle 4); the effective abolition of child labour(UNGC Principle 5); the elimination of discrimination in respect ofemployment occupation (UNGC Principle 6).We adhere to the eight fundamental Conventionsof the International Labour Organisation (ILO), inparticular Convention 87, Freedom of Associationand Protection of the Right to Organise (1948),as well as Convention 138, Minimum Age forEmployment, and Convention 182, Worst Formsof Child Labour, which are based on the UnitedNations Convention of the Rights of the Child(Article 32). Furthermore, we adhere to theTripartite Declaration of Principles concerningMultinational Enterprises and Social Policy (ILO)of March 2006 and the OECD Guidelines forMultinational Enterprises of June 2000.The Nestl Corporate Business Principles 9 12. Our people5Leadership and personal responsibilityOur success is based on our people. We treateach other with respect and dignity andexpect everyone to promote a sense ofpersonal responsibility. We recruit competentand motivated people who respect ourvalues, provide equal opportunities for theirdevelopment and advancement, protecttheir privacy and do not tolerate any formof harassment or discrimination.Nestl Managementand Leadership PrinciplesOur Management and Leadership Principlesdescribe the culture and basic values weexpect our employees to uphold, as wellas the attributes needed to be successful inmanagement and leadership. Please seeThe Nestl Management and Leadership Principlesat www.nestle.com/policies.Nestl Code of Business ConductOur Code of Business Conduct specifies certainnon-negotiable minimum standards in key areasof employee behaviour, including compliancewith laws, conflicts of interests, anti-trust and fairdealing, bribery, corruption (UNGC Principle 10),discrimination and harassment, and integrity.We believe in the importance of free competitionand are committed to acting with integrityin all situations. Please see The Nestl Codeof Business Conduct at www.nestle.com/policies.Our Human Resources Policy specifies attitudessuch as mutual respect, trust and transparencyin relating to one another and encourages opencommunication and cooperation. We also believethat our long-term success depends on ourcapacity to attract, develop, protect and retainthe right and best employees.We respect international conventionsconcerning employees rights, do not toleratediscrimination for reasons such as origin,nationality, religion, race, gender, age or sexualorientation or engage in any kind of verbal orphysical harassment based on any of the aboveor any other reason. We uphold the freedomof association of our employees and the effectiverecognition of the right to collective bargainingthrough unions or other types of associations(UNGC Principle 3). We respect our employeesright to privacy.6Safety and health at workWe are committed to preventing accidents,injuries and illness related to work, andto protect employees, contractors and othersinvolved along the value chain.Our Policy on Safety and Health at Workestablishes safety as a non-negotiable priorityof our culture. We recognise and require thateveryone play an active role in providing asafe and healthy environment, and promoteawareness and knowledge of safety and healthto employees, contractors and other peoplerelated to or impacted by our business activitiesby setting high standards.We monitor our performance throughthe Nestl Occupational Safety and HealthManagement System to assure a safe and healthyworkplace. Please see The Nestl Policy on Safetyand Health at Work at www.nestle.com/policies.10 The Nestl Corporate Business Principles 13. Suppliers and customers7Supplier and customer relationsWe require our suppliers, agents, subcontractorsand their employees to demonstrate honesty,integrity and fairness, and to adhere to ournon-negotiable standards. In the same way, weare committed to our own customers.The Nestl Supplier Code specifies minimumstandards that we ask our suppliers, agents,subcontractors and their employees to respectand adhere to. The Supplier Code includesrequirements such as business integrity,sustainable operating and agriculturalpractices, labour standards, safety, healthand environmental practices.To ensure that the Supplier Code is putin practice, we reserve the right to verifythe suppliers compliance with the Code ona regular basis.Please see The Nestl Supplier Codeat www.nestle.com/policies.8Agriculture and rural developmentWe contribute to improvements in agriculturalproduction, the social and economic statusof farmers, rural communities and in productionsystems to make them more environmentallysustainable.To ensure that our factories obtain raw materialscompetitively and at required quality and safetyspecifications we engage in developing sustainableagricultural practices and systems thatcontribute to long-term production efficiency,viable incomes for farmers and the transferof agricultural knowledge to suppliers; we support the application of newtechnologies and advances in agriculturalscience, including the opportunities offeredby bioscience when their positive effect onfood safety, environment, agricultural practicesand production efficiency are scientificallyconfirmed and accepted by consumers.The Sustainable Agriculture Initiative Nestl(SAIN) guides our engagement in farmingsystems to support agricultural practices, ruraldevelopment, sourcing processes and practicesthat are sustainable over the long term. Please seeThe Nestl Policy on Environmental Sustainabilityat www.nestle.com/policies.The Nestl Corporate Business Principles 11 14. The environment9Environmental sustainabilityWe commit ourselves to environmentallysustainable business practices. At all stagesof the product life cycle we strive to usenatural resources efficiently, favour the useof sustainably managed renewable resources,and target zero waste.We invest continuously to improve ourenvironmental performance. The Nestl Policyon Environmental Sustainability incorporates theUnited Nations Global Compacts three guidingprinciples on environment (Principles 7, 8 and 9).We apply a product life cycle approachinvolving our partners from farm to consumerin order to minimise the environmental impactof our products and activities. Our four priorityareas are: water, agricultural raw materials,manufacturing and distribution of our products,and packaging. We implement our policy throughthe Nestl Environmental Management System.We believe that environmental performanceis a shared responsibility and requires thecooperation of all parts of society. We aredetermined to continue providing leadershipwithin our sphere of influence. Please seeThe Nestl Policy on Environmental Sustainabilityat www.nestle.com/policies.10WaterWe are committed to the sustainable useof water and continuous improvement in watermanagement. We recognise that the world facesa growing water challenge and that responsiblemanagement of the worlds resources by allwater users is an absolute necessity.Water is a particular area of focus for Nestl.The Nestl Commitments on Water set outour priorities and objectives on responsiblewater usage. These are to continue our effortsto reduce the amount of water used in ouroperations, ensure that activities respect localwater resources, ensure that the water wedischarge into the environment is clean, engagewith suppliers to promote water conservation,especially among farmers, and reach out to otherson water conservation and access. Nestl is afounding signatory of the United Nations GlobalCompact CEO Water Mandate.We monitor and improve water efficiencythrough our water resources managementspecialists and in our factories with ourenvironmental specialists in line with theNestl Environmental Management System.We recognise the right of all peopleto have access to clean water to meet theirbasic needs.Please see Every Drop Countsat www.nestle.com/policies.12 The Nestl Corporate Business Principles 15. AuditingThe Nestl Corporate Business Principles aremandatory statements for all Nestl managersand employees and are integrated in businessplanning, auditing and performance reviews.The Corporate Business Principles areassociated with specific policies and referencecodes, where compliance procedures are outlined.See the Nestl principles and policies map forthe appropriate linkages and reference policies(inside front cover).Nestls compliance regarding its CorporateBusiness Principles is regularly reviewed by itsinternal auditors on the basis of clear auditinginstructions, which are published for all employeesto consult on the Nestl S.A. intranet. Complianceregarding human resources, safety, health,environment and business integrity is assessedthrough our CARE Programme which relies onan independent external audit network. Ourreports on Creating Shared Value are audited byindependent external auditors for accuracy andvalidation. Our external auditors KPMG, whenobtaining an understanding of the internal controlsystem of Nestl, consider how the CorporateBusiness Principles fit into the overall corporategovernance framework of the Group.Findings and recommendations arereported through the Board Audit Committeeto the Nestl S.A. Board of Directors.The Nestl Corporate Business Principles 13