How is Nestlé’s Supply Chain Affected by Climate Change?

Nestlé’s Non-Financial Statement 2024 outlines a sharpened focus on integrating sustainability within its corporate governance. 

Governed under the Swiss Code of Obligations, Nestlé has aligned its sustainability disclosures with the European Union’s Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). 

This move anticipates stricter European regulatory frameworks while embedding ESG metrics deeper into business decision-making processes.

The Board of Directors plays a pivotal role in steering sustainability efforts, ensuring that Nestlé’s strategic choices reflect its long-term environmental and social commitments. 

“Nestlé’s strategy is designed to integrate sustainability at its core, ensuring every decision considers the potential impacts on society, the environment and the business,” the report states.

Climate commitments under scrutiny

Nestlé has reiterated its ambition to achieve net zero emissions by 2050, guided by a structured roadmap that sets intermediate goals: a 20% absolute emissions reduction by 2025 and 50% by 2030. 

The company’s climate-risk analysis follows internationally recognised frameworks, including the Task Force on Climate-related Financial Disclosures (TCFD).

Yet, questions remain about how effectively these goals will be met. 

The report highlights transition risks, noting that climate change could impact the availability and cost of raw materials, particularly those like cocoa, coffee and dairy that are sensitive to environmental fluctuations. 

Nestlé acknowledges that “climate-related risks such as heatwaves, drought and water stress may impact raw materials” in both quality and yield.

Responsible sourcing and human rights

Human rights remain a core focus in Nestlé’s strategy, particularly in its supply chains. 

In line with Article 964j of the Swiss Code of Obligations, Nestlé has intensified its due diligence procedures, targeting child labour risks and ensuring fair labour practices. 

The company’s engagement in the Child Labor Cocoa Coordination Group (CLCCG) reflects a growing commitment to eliminating child labour risks in cocoa-growing regions such as Côte d’Ivoire and Ghana.

Further, the company has advanced its partnerships with NGOs and international organisations to bolster transparency and stakeholder engagement. 

“We are committed to fostering positive relations with workers, representative bodies and trade unions,” the report states, citing regular consultations with organisations like the International Union of Food Workers (IUF).

Circular economy and packaging innovation

Packaging sustainability remains another critical area, with Nestlé investing in circular economy practices. 

The company has worked closely with the Ellen MacArthur Foundation and other international partners to promote packaging circularity and reduce virgin plastic use. 

However, while initiatives such as reuse-and-refill systems and collaborations with start-ups show promise, the scalability of these solutions remains to be seen.

Nestlé’s involvement in global partnerships, including the Business Coalition for a Global Plastics Treaty, underscores its recognition of plastic pollution as a systemic issue that requires industry-wide cooperation.

Measuring material impacts

Nestlé has conducted a double materiality assessment (DMA) to identify 39 material sustainability impacts, risks and opportunities across its value chain. 

This assessment informs the company’s resource allocation, risk mitigation strategies and reporting practices. 

“Our materiality assessment helps ensure a comprehensive understanding of each impact’s potential ramifications,” the report says.

This framework has led to improved transparency around pressing issues, from biodiversity loss to gender equality. 

Nestlé’s internal audit processes and ESG-linked incentive schemes aim to keep management accountable, with 15% of executive compensation tied to sustainability metrics.

Balancing ambition with accountability

Despite its ambitious targets, Nestlé faces ongoing scrutiny regarding the practical implementation of its sustainability pledges. 

Industry observers will watch closely to see how these initiatives translate into measurable outcomes.

As the regulatory landscape tightens and consumer expectations rise, Nestlé’s approach could set a benchmark for multinational corporations navigating the complexities of sustainability in the modern business environment.

“Our mission is to advance regenerative food systems at scale,” says Antonia Wanner, CSO at Nestlé.

“Achieving this is not without challenges, and I’m excited to come together with fellow sustainability professionals across public and private partners to share candid challenges and strategies for continuing to improve our impact.”

Explore the latest edition of Sustainability Magazine and be part of the conversation at our global conference series, Sustainability LIVE .

Discover all our upcoming events and secure your tickets today.

Sustainability Magazine is a BizClik brand