KUALA LUMPUR: Global multinational food and drink processing conglomerate Nestlé S.A plans to allocate 3.2 billion francs (RM14.58 billion) in investments over the next five years to combat climate change as part of its aspiration to accelerate net zero emissions by 2050.
This includes 1.2 billion Swiss francs (RM5.47 billion) to spark regenerative agriculture across its global supply chain involving 150,000 raw materials (direct suppliers) and 500,000 (indirect suppliers).
Chief executive officer Mark Schneider said affordability continues to be the main theme for Nestlé as it is one of the company's key principles, despite the substantial investment for net zero initiative.
He strongly believes that affordable nutrition, especially for those who needed the most, should stay affordable.
"Affordable products is one of our key work streams that we have been patiently pursuing over many years. This will not change.
"We do see premiumisation and price increase opportunities but what is affordable will stay affordable," Schneider said when responding to a question by the New Straits Times at the Nestlé Net Zero Roadmap global live event and virtual conference recently.
The roadmap was the result of a complete review of Nestlé's businesses and operations to understand the depth of the challenge and determine the actions needed to address it.
Schneider said Nestlé strongly believes that nutrition products should stay affordable, citing that nothing can be gained by making the perfect products unaffordable.
He said tackling climate would be imperative to the long-term success of Nestlé business and the initiative cannot be deferred.
"Nestlé has a unique opportunity to address climate change, as we operate in nearly every country in the world and have the size, scale, and reach to make a difference.
"We will work together with farmers, industry partners, governments, non-governmental organisations and our consumers to reduce our environmental footprint," he said.
Executive vice president and head of operations Magdi Batato said investments will be financed primarily through operational and structural efficiencies to keep its initiative earnings neutral.
He said regenerative agriculture and reforestation would be the focal points of the company's path to net zero emission as nearly two-thirds of its emissions derived from agriculture.
"These efforts will reduce emissions and improve biodiversity at scale. We will also continue to eliminate emissions from our operations and make improvements in our product portfolio," he said.
Batato said Nestlé would accelerate and expand the climate change initiative to achieve a 20 per cent absolute reduction in emission by 2025 from its baseline of 92 million tonnes of greenhouse gas emissions in 2018.
During the year, the emissions included ingredients sourcing (65.6 tonnes), product manufacturing (7.0 tonnes), product packaging (11 tonnes), logistics (7.5 tonnes), and employees commuting (0.8 tonne).
"As from 2025, we will transform our operation by investing in technology and making fundamental changes to our portfolio and businesses.
"This work should complete by 2030 and deliver 50 per cent absolute reduction of the emission. Lastly, between 2030 and 2050, we will continue to eliminate emission through high quality and major base solutions," he said.
Batato said these solutions will benefit communities and ecosystems at large, while offsetting any remaining emission that will impossible to eliminate.
He said the initiative would cover three areas namely agriculture supply chain, in-house operation and product portfolio. Two third of Nestle greenhouse gas emissions occur in the agriculture supply chain.
"This is why we will prioritise regenerative agriculture as the primary way to reach net zero. Such practices include restoring soil health, protecting and maintaining the diverse ecosystem and reducing synthetic fertilisers and other chemicals."
Batato said regenerative agriculture not only reduces emissions but also helps to improve biodiversity and community resilience to climate change.
"By 2025, 20 per cent of key agriculture ingredients will be sourced using the regenerative practices, followed by 50 per cent of these key agriculture ingredients by 2030, which is equivalent to 14 million tonnes of ingredients," he said.
Batato said regenerative agriculture will boost demand for these goods and enhance farmers' livelihoods as Nestlé would create the market for this segment.
"We want to create the market – of course it comes with the premium at the beginning but technologies evolve with our size and scale as more partners to come.
"We expect the premium (price) to go down – it is a demand and supply, that's how procurement works.
"I'm very positive about that – we will be establishing the footprint to track our progress of the procurement in the organisation," he said.
Batato said Nestlé ensures its key the commodities supply chain will be 100 per cent deforestation-free in the next two years.
"We will scale up our existing re-forestation programme. We will plant 200 million trees over the next decade, 20 million trees per year in the areas where we source our ingredients.
"This will also boost carbon removal from the atmosphere, improve agriculture's yields, biodiversity and soil health at farm level," he said.
Batato said Nestlé would switch its global a fleet of vehicles to lower emission options where possible such as electric vehicles and offset any remaining emissions by 2022.
"We will work with our logistics suppliers to help start a broad transition in the freight industry towards lower carbon options.
"We will also offset all of our business travels by 2022. All our 800 Nestle sites include factories, warehouses, logistics centrss and offices will also use 100 per cent Renewable Electricity in five years' time," he added.
Chairman Paul Bulcke said the board recognises the strategic importance of taking decisive measures to address climate change.
"It supports accelerating and scaling up our work to ensure the long-term success of the company and to contribute to a sustainable future for generations to come," he said.