Ethical Performance
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Nestle bows to pressure on rainforest products

June 2010

Nestle is to stop using products from sources that contribute to rainforest destruction, after a campaign against its use of palm oil linked to deforestation.

The food giant will identify and exclude companies owning or managing high-risk farms linked to deforestation in a system beginning with palm oil and to be applied later to other supply chain products such as paper.

The decision follows a high-profile internet campaign by Greenpeace against Nestle’s use of environmentally damaging palm oil. Last month Greenpeace broadcast a report on rainforest destruction by Nestle’s Indonesian supplier Sinar Mas, causing public outcry and forcing the manufacturer to cease direct business with the company immediately.

Nestle has gone a step further now, establishing procurement guidelines that it says will help it to reach its goal of using 100 per cent sustainable palm oil by 2015, and committing itself to ‘provide regular and transparent feedback on its findings and its performance’ on responsible sourcing. At present the company sources only 18 per cent of its palm oil sustainably.

Demand for palm oil is increasing rapidly. The product already causes widespread deforestation in Indonesia – where it is said to threaten the orang-utan with extinction – and elsewhere.

Pat Venditti, Greenpeace’s forest campaign leader, said: ‘We are delighted that Nestle plans to give orang-utans a break and we call on other international retailers, such as Carrefour and Wal-Mart, to do the same. Since the beginning of our campaign, hundreds of thousands of people have contacted Nestle to say they will not buy products linked to rainforest destruction.’

Aside from NGO pressure on companies like Nestle, investors have also been asking more questions about the issue. Last month a toolkit for investors in industries involving forests was unveiled by the World Business Council for Sustainable Development (WBCSD) and PricewaterhouseCoopers.

The Sustainable Forest Finance Toolkit, which is available to all financial institutions, advises on portfolio management, policy development and procurement, and includes a model client assessment procedure for all new potential financing.

The ‘new application’ section gives guidance on issues that investors should consider when dealing with new business, including site risk, track record and certification. Another feature is a model ‘management interview’ for financiers to use.

There is further advice on legal issues, due diligence, local communities and country briefings for high-risk areas such as Russia and Brazil. All guidance is aligned to best practices in the financial, forestry, paper and packaging industries.

Land use changes to agriculture and forestry activity produce about 17 per cent of global emissions, making it the world’s third largest source of greenhouse gas.

Nestlé | Global | Supply Chain Management

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