Sharing Our Vision · PROJECT Sustainability Report 2009 FILE NES013_09Sustainability_FA2.indd SIZE / STAGE 210mm x 297mm / DR1 STAFF / DATE bs: ... • Nestlé Fiji Ltd sold its

About Us.Products and Consumers.

Our Environmental Footprint. Our People.

Sourcing, Agriculture, and Our Supply Chain.

Our Community.

CEO’s Introduction.

Assurance Statement and GRI Index.

Nestlé Oceania:Creating Shared Value Report 2009

Sharing Our Vision...


COVER: The Milo in2CRICKET kids supported the Jane McGrath Foundation during the 2009 Summer Test Series at the Sydney Cricket Ground.

http://www.nestle.com.au/




Our Community.



We believe our actions must be good for business and good for society. This approach, known as Creating Shared Value, keeps us focused on the areas which create long-standing value for our shareholders and contribute, uniquely, to a prosperous, healthy and sustainable society.

02 The CEO’s Introduction 04 About Us 18 Products and Consumers 32 Our Environmental Footprint 42 Our People 54 Sourcing, Agriculture and Our Supply Chain 66 Our Community 75 Assurance Statement 77 GRI Index

Brought to you by the people who work at Nestlé in Oceania.


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Nestlé Oceania Creating Shared Value Report 2009


The CEO’s Introduction.


02 The CEO’s Introduction





Our Community.



This approach keeps us focused on the priority areas which we share with society; those issues which are strategic to our business and, importantly, critical to creating a prosperous, healthy and sustainable society. By focusing on these shared priorities, we are able to truly embed this strategy into our core business and create sustained and long-standing value for our shareholders and the community.

Reinforcing this approach, our global efforts come together around three priority areas:

• Water: because the ongoing quality and availability of it is critical to life, the production of food and to our operations

• Rural development: because the overall wellbeing of farmers, rural communities, workers, small entrepreneurs and suppliers is intrinsic to our ability to continue to do business in the future

• Nutrition: because food and nutrition are the basis of good health and of our business

Building on these global priorities – and taking into account the unique social, environmental and economic fabric of the regions where we operate – we also know that we have regionally-specific priorities.

To draw out these Oceania-specific issues, and to begin to build these stakeholder priorities into our regional business, we have recently formed an Oceania Creating Shared Value Advisory Board. Joining Nestlé Australia Chairman Elizabeth Proust and I, the Advisory Board brings together our key regional stakeholders, including those with an intimate understanding of the challenges facing our region.

The group met for the first time in December 2009 and as well as reinforcing our global priorities of water, nutrition and rural development, a number of specific issues emerged such as sustainable agriculture and production, climate change, responsible sourcing, and Nestlé’s role in the development of public policy. We are planning to work with the Advisory Board throughout 2010 to sharpen our focus on these key issues, including water.

This 2009 Nestlé Oceania Creating Shared Value Report sees various improvements in our reporting platform. We have more closely aligned our report with the Global Reporting Initiative, bolstered our stakeholder engagement processes for determining ‘material’ issues to be addressed in the report and have expanded the role of our audit provider.

With two strategic imperatives in mind, we have further improvements planned for future reports. First, we want to continue to use our reporting efforts to drive improved performance against key sustainability areas. Second, we want to continue to respond to and report against the areas of importance to our stakeholders.

As our reporting journey evolves, we welcome your feedbackand comments.

Graham CampbellCEO Nestlé Oceania

Welcome to our second Creating Shared Value Report for Nestlé Oceania

Building on our fi rst report in 2008 and also our global reporting, we continue to demonstrate how we are embedding the concept of Creating Shared Value into our regional business; creating value for both our shareholders and society and tackling the emerging societal and environmental issues that face the Oceania region.

Nestlé Oceania Creating Shared Value Report 2009 03



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Nestlé is the world’s leading Nutrition, Health and Wellness company.

NestléWorldwide.


04 About Us





Our Community.



CREATING SHARED VALUE AT NESTLÉAs a basis for responsible operations and business success over the long term, Nestlé believes it must manage its operations in a manner to comply with the highest standards of business practice and environmental sustainability.

This involves compliance with national laws and relevant conventions, as well as our own regulations, which often go beyond our legal obligations. These are laid out in our Nestlé Corporate Business Principles and related policy documents, and their application is verified through our CARE program and our internal Corporate Group Auditors.

Beyond that, how we do business is based on sustainability – ensuring that our activities preserve the environment for future generations. In line with the Brundtland Commission’s definition, sustainable development to Nestlé means ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’.

However, we believe that to build a profitable business for our shareholders, we must go beyond compliance and sustainability to a third level: creating long-term value both for society and for our shareholders.

Given the nature of our business, we have identified nutrition, water and rural development as key global issues of concern to society. These three areas are core to our business strategy and competitive advantage, to driving growth in shareholder value and to meeting the needs of society.

OUR GLOBAL CREATING SHARED VALUE REPORTINGIn 2007, Nestlé released its first global Creating Shared Value Report, and committed to issuing a similar report every two years. In alternate years, we have reported in more depth on one of our three focus areas: nutrition, water and rural development. These in-depth reviews included the Nestlé Water Management Report in 2006 and Nutritional Needs and Quality Diets in 2008.

The global reports are available at: www.nestle.com/csv

In Oceania, we are committed to releasing an annual Oceania Creating Shared Value Report, supporting the global report and providing our regional stakeholders with a more detailed overview of our regional performance and key activities.

Nestlé was founded in 1866 and is headquartered in Vevey, Switzerland. The company operates some 449 factories and employs 278,000 employees around the world. Our objective is to be recognised as the leader in Nutrition, Health and Wellness and as the reference for sustainable fi nancial performance, and trusted by all stakeholders.

ComplianceLaws, business principles, codes of conduct

SustainabilityProtect the future

CreatingShared

ValueNutrition, water,

rural development

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Australia

Fiji

Solomon Islands

Samoa

Nauru

Papua New Guinea

Wallis andFutuna

TongaVanuatu

New Caledonia

New Zealand

Cook Islands

Niue

Tokelau

Pitcairn

Tuvalu

Kiribati

French Polynesia

NestléOceania.


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Our Community.



Introducing Nestlé Oceania

Nestlé Oceania group is wholly owned by the Swiss-based global food and beverage company Nestlé S.A. Across the Oceania region – taking in Australia, New Zealand and the Pacifi c Islands – Nestlé employs around 5,295 people and, along with distribution centres and business and sales offi ces, operates 15 factories. Our regional head offi ce is at Rhodes in Sydney, Australia.

As a food and beverage business, our footprint extends right across the region’s economy, from an agricultural and primary production supply base through to manufacturing operations scattered across the region and into the homes of millions of consumers who enjoy our products every day.

This vast footprint brings with it a serious responsibility, varied sustainability challenges, and, on the fl ipside, a unique opportunity to create shared value right across the community.

SNAPSHOT OF OUR 2009 OCEANIA FOOTPRINT

3.130Oceania sales (AUD billion)

5,295Total number of Full Time Equivalent employees

15Number of factories

2,523Approximate number of product lines




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OUR STRUCTURENestlé Oceania forms part of a broader regional business which also includes Asia, Africa and the Middle East. Within Oceania, our businesses and brands sit under a number of key divisions, including Pacific Islands, New Zealand, Beverages, Foods, Confectionery and Snacks, and Ice Cream, and incorporate our Uncle Tobys business, which includes nutritious snacks and a breakfast cereal business operated by Cereal Partners Worldwide (CPW), Nestlé’s joint venture with US-based General Mills.

Nestlé Waters, Nestlé Nutrition, Nestlé Purina Pet Food, Nespresso and Nestlé Professional are managed on a global basis out of Switzerland.

In Australia, we are governed by a board of directors which is chaired by an independent chairman. The Board has oversight of strategy, company accounts and compliance with various company reporting and statutory requirements. In 2009, a number of director changes were announced, including the appointment of a new independent chairman, Elizabeth Proust.

What’s new in 2009 – business changes, transactions and announcementsA number of business changes and transactions were announced throughout 2009. Further information on these transactions – and particularly how they affected our employees – is discussed in greater detail in the section Our People.

Sale of Fiji factory to local business partner, CJ Patel.24 June 2009

• Nestlé Fiji Ltd sold its Ba factory, which produces Maggi Noodles and Jason’s Snacks for the South Pacific Islands, as well as its snacks business, to long-term partner, local firm CJ Patel.

• Nestlé Fiji and CJ Patel entered into a co-manufacturing agreement whereby Maggi noodles will continue to be produced for Nestlé by CJ Patel at the Ba Factory, with Nestlé providing ongoing manufacturing expertise to the factory.

• CJ Patel has taken over full responsibility for the manufacture and marketing of Jason’s Snacks in the Fijian market and Jason’s is expected to continue to be a leading growth brand in the local snacks category. CJ Patel will also begin production of sugar confectionery again.

Nestlé and Simplot enter into a combined licence and acquisition arrangement.27 October 2009

• Under the deal, Nestlé licensed its leading frozen meals brand Lean Cuisine and Maggi frozen brand to Simplot Australia. Simplot Australia also acquired the Papa Giuseppi frozen pizza brand and the manufacturing facility at Pakenham, near Melbourne.

• The Pakenham site now trades under the name of Gippsland Food Company.

• Employees at the Pakenham factory work for Gippsland Food Company and will continue to manufacture Lean Cuisine and Maggi frozen food products.

Nestlé Oceania: our business and the emerging CSV agenda

08 About Us





Our Community.



• Under the licensing agreement for Lean Cuisine and Maggi frozen foods, Simplot Australia acquired the right to manufacture, market and sell the products throughout Australia and New Zealand.

Nestlé Peters acquires several ice cream brands from Fonterra in Western Australia. 29 April 2009

• Nestlé Peters entered an agreement to acquire several ice cream brands, including Peters, previously owned by Fonterra in Western Australia.

• In addition to gaining the right to the Peters brand in WA, Nestlé acquired other local ice cream brands found in the Peters impulse freezers in WA such as Giant Sandwich, and the Connoisseur brand.

• Securing the Peters brand in Western Australia (which was previously owned by Fonterra) means that the Nestlé Peters brand has become a national ice cream brand.

Multi million dollar upgrade for Uncle Tobys’ Wahgunyah factory.13 January 2009

• Nestlé Australia Ltd and its joint venture partner in cereals, Cereal Partners Worldwide (CPW), announced a $28 million upgrade to operations.

• The upgrade involved automating the packing lines in Nestlé’s Snacks operation and upgrading the packaging area in CPW’s Cereals unit.

OUR CREATING SHARED VALUE STRATEGY, PRIORITIES AND GOVERNANCE We are focused on maximising value for our shareholders and value for society at the same time.

This fundamental strategy – known as Creating Shared Value – keeps us focused on the areas where we can have the greatest impact, from a business and societal perspective. This includes those unique areas and issues which, given our position as a food and beverage business, we can uniquely tackle.

That’s why we have set water, nutrition and rural development as key global priorities for our business. Looking closely at these issues, they all have a common thread. They are priority areas which are shared between our business and society more broadly.

• Water: because the ongoing quality and availability of it is critical to life, the production of food and to our operations.

• Rural development: because the overall wellbeing of the farmers, rural communities, workers, small entrepreneurs and suppliers is intrinsic to our ability to continue to do business in the future.

• Nutrition: because food and nutrition are the basis of good health and of our business.

OUR KEY BRANDSSome of our key brands are set out below.

%97FATFREE*




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Membership – Creating Shared Value Advisory Board

• Claire HewatChief Executive Officer, Dietitians Association of Australia

• Prof Ian CatersonBoden Professor of Human Nutrition, University of NSW

• Dr James HorneDeputy Secretary, Water Group, Department of Environment, Water, Heritage and the Arts

• Paul ToniProgram Leader Development and Sustainability, WWF Australia

• Heather CampbellChief Executive Officer, Landcare Australia

• Dr Selwyn HeilbronSecretary, Sustainable Agriculture Initiative Australia

• Dr Simon LongstaffExecutive Director, St James Ethics Centre

• Ed CordnerChief Executive Officer, National Packaging Covenant

• Mia FreedmanColumnist, author, blogger and media consultant

Members of the Oceania Sustainability Council (left to right): Peter Kelly, Director Corporate and External Relations; Christine Geary, Director of Human Resources; Ian Alwill, Executive Director of Group Marketing and Communications; and Juerg Stocker, Executive Director, Operations.

10 About Us





Our Community.



Regional priority areasBuilding on our global priorities – and taking into account the social, environmental and economic fabric of this region – here in Oceania we have regional-specific priorities. Drawing on the insight and advice of our newly-formed Nestlé Oceania Creating Shared Value Advisory Board, we want to better identify and articulate these regionally-specific ‘shared’ priorities and more fully integrate these into our business strategy. Some of these emerging issues are set out below:

• Sustainable agriculture and production • Climate change • Water • Health and nutrition • Responsible sourcing • Responsible marketing and communications • Environment • Communities and agricultural development • Public policy development • Waste and food waste

We aim to further refine these issues throughout 2010 and, with the help of our Creating Shared Value Advisory Board, focus on key priority areas.

GovernanceOur Creating Shared Value governance structure continues to evolve. We have put in place an executive-led Oceania Sustainability Council which provides oversight of our CSV approach including strategy, stakeholder engagement and our key initiatives. The Council also provides oversight of our Creating Shared Value reporting, performance and future commitments. The Council members (including Operations, Marketing, Human Resources and Corporate and External Relations) also sit on the Creating Shared Value Advisory Board, ensuring stakeholder priorities and internal strategy are aligned.

We also have a long-standing Nutrition Council which provides oversight of our Nutrition, Health and Wellness activities.

ENGAGING OUR STAKEHOLDERSThe very premise of ‘Creating Shared Value’ requires an intimate understanding of stakeholder and societal issues. It’s about identifying the areas of intersection between our business and society and focusing on those issues which simultaneously affect our long-term business prospects and the health and prosperity of our society.

As such, engaging our stakeholders – particularly around our Creating Shared Value agenda – has been a major strategic focus for Nestlé Oceania over the past 12 months. Drawing on the widely-used stakeholder engagement standard AA1000SES, we’ve put in place a new Creating Shared Value Stakeholder Engagement Framework. As a starting point, we’ve set out to more fully understand the key stakeholder groups – right across our value chain – who affect our business and/or are affected by us and our business activities.

The new framework, consisting of both formal and informal mechanisms, assists Nestlé Oceania to build stakeholder insight and issues into company decision making and strategy, develop our regional Creating Shared Value strategy and key priorities, strengthen our relationships and trust and ultimately build broader community support.

At the heart of the new framework is a newly-formed and externally-led Creating Shared Value Advisory Board. The Board, which met for the first time in December 2009, establishes greater dialogue and co-operation in tackling the emerging social, environmental and stakeholder issues facing our business. The group will hopefully also challenge our thinking and approach and help us innovate and focus on material issues.

Joined by the Nestlé Oceania CEO and Chairman, the Advisory Board brings together our key stakeholders, including those with expertise and knowledge of corporate responsibility and sustainability strategy, nutrition, water, rural and agricultural development and other regional social and environmental issues.

Members of the Oceania Sustainability Secretariat (left to right): Fran Hernon, Corporate Affairs Manager; Jacky Nordsvan, Packaging Specialist; Justine Dixon, Executive Assistant; David McDowell, Safety Health and Environment Manager; Katrina Koutoulas, Corporate Marketing Manager; and Steven Ellwood, HR Business Partner, Operations. Absent: Karen Duncan, Environment Manager.




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THE FUNDAMENTALS: RESPONSIBLE AND SUSTAINABLE BUSINESS PRACTICESOur commitment to responsible and sustainable business practices is set out in the Nestlé Corporate Business Principles. These reflect the 10 UN Global Compact Principles on Human Rights, Labour, the Environment and Corruption, and other relevant international norms, including the UN Millennium Development Goals and the OECD Guidelines for Multinational Enterprises.

Our adherence to these Principles is tested each year through our independently-audited CARE program, which looks at how our commitments are being put into operation across four key pillars: Labour, Health and Safety, Environment and Business Integrity.

The Nestlé Corporate Business Principles are supported by a wide range of specific policies on nutrition, environmental sustainability, marketing, occupational health and safety, quality and safety and human resources.

Our manufacturing sites are also certified against ISO 14001 (environment) and OHSAS 18001 (occupational health and safety) standards.

Over 2009, Nestlé Oceania joined with the St James Ethics Centre in the establishment of an Australian network of the Global Compact.

ABOUT THIS REPORTThis is our second Creating Shared Value Report. This report builds on our global report and provides our regional stakeholders with a detailed assessment of our key initiatives, challenges and 2009 performance.

This year, we have more closely aligned our report with the Global Reporting Initiative (GRI) and, right across our various reporting areas, have incorporated many new GRI indicators. We have also greatly improved our ‘materiality’ processes for determining what goes into this report and what doesn’t and have bolstered the role of external stakeholders in this process, through the establishment of the Creating Shared Value Advisory Board and also direct – one-on-one – interviews with other key stakeholder groups. We are confident we are reporting against the performance areas which are most material to our business and to our stakeholders. In addition to shaping our report content, this engagement has provided us with rich insight into our stakeholders’ priorities and what issues we should be focusing on.

Global Reporting InitiativeThe Global Reporting Initiative (GRI) provides a generally accepted framework for reporting on an organisation’s economic, environmental and social performance. As with our first report, the Global Reporting Initiative is used as the basis of our Reporting. In 2009, we’ve more closely aligned our report with the GRI’s Sustainability Reporting Guidelines, including a broader number of indicators and further drawing on GRI’s Reporting Principles in putting together the report. This has ensured we are more closely considering key issues such as engaging with stakeholders, selecting material indicators, and adhering to a high standard of report quality. Our report currently represents a B+ reporting level and a GRI Content Index is set out on page 77.

Globally, we are also participating closely – through involvement in a joint industry and stakeholder Working Group – in the development of a ‘Food Processing Sector Supplement’. The Working Group released a Draft Final Food Processing Sector Supplement in August 2009. Locally, Nestlé Oceania has completed a review of the Draft Guidelines and looks forward to drawing upon these sector-specific indicators in future reports.

What’s in and what’s out – selecting report contentOur Materiality Process for determining key issues facing our business and what should be included in this report has been bolstered this year through the establishment of the Creating Shared Value Advisory Board. Assisting in ‘identifying content and stakeholder issues and priorities for inclusion in this Report’ is a key role of the Advisory Board.

More broadly, our Materiality Process, consisting of a four-step process, draws on a range of internal and external factors to identify the issues, risks and areas of our performance which should be covered within this report.

It is a stakeholder-led process. Bolstering the Creating Shared Value Advisory Board, this year we also undertook a range of one-on-one stakeholder interviews. Stakeholders interviewed – which were drawn from a comprehensive stakeholder mapping exercise undertaken throughout 2009 – included customers, environmental and social groups, public health groups, consumer groups and academics.

Our process also drew upon a Global Materiality Assessment undertaken by SustainAbility on behalf of Nestlé Global. This assessment involved a review of material sustainability issues – facing Nestlé’s business globally – drawn from three key areas: Non-Government Organisations; Media; Investors.

Four-step Materiality Process

Identify social, environmental and stakeholder issues.

Assess ability to respond and influence.

Assess business impact.

Prioritise material issues for inclusion in report.

What are the issues? Impact on business and ability to influence Prioritise material issues

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Our Community.



Structure of this reportDrawing on our Materiality Process, this report is structured around the key, material issues facing our business in Oceania in the areas of:

• Products and consumers • Our environmental footprint • Our people • Sourcing, agriculture and our supply chain • Our community

As with our 2008 report, we also feature a number of case studies which bring to life our CSV approach and key initiatives. In 2009, we are also featuring Opinion Pieces from two members of our Creating Shared Value Advisory Board.

Dr Selwyn Heilbron, Secretary, Sustainable Agriculture Initiative Australia – Looking forward – our changing agricultural landscape and the implications for the food and beverage sector (page 58).

Mia Freedman, columnist, author, blogger and media consultant – What really matters to consumers – social observations from a mum, consumer, author and blogger (page 22).

Scope of report and verifi cationThis report covers Nestlé’s operations in Oceania, including Australia, New Zealand and the Pacific Islands for the year ending 2009 (unless otherwise stated). This report also includes businesses such as Nestlé Nutrition, Nestlé Professional, Nestlé Purina, and Uncle Tobys cereals. Whilst these businesses are managed globally, we feel they are important to include in this report given they form part of our geographic footprint in Oceania.

In a positive development this year, we have broadened the scope and role of our audit provider, SGS Australia, within this report. Please see SGS’s Assurance Statement on page 75 for further information on the verification scope and process.

As we more closely line up our report with the GRI, SGS Australia has also verified the reports’ broader alignment with the GRI’s Sustainability Reporting Guidelines, including issues such as materiality, stakeholder inclusiveness, completeness and balance. SGS has also undertaken a formal review and gap analysis of our disclosures against the requirements of the G3 GRI application level B+.

Our economic footprintNestlé has a large economic footprint in Oceania region, directly through our employment and supply chain activities and, indirectly, through our manufacturing operations scattered across communities in the region.

In 2009, we performed well in a challenging economic environment, achieving global organic growth of 4.1 per cent and growing substantially faster than our industry. In Oceania, we reported a strong improvement in profitability and positive growth right across our business. We also improved productivity, reduced waste and reduced our operating expenses by some 8 per cent. This meant we could also increase investment in our brands by 22 per cent.

“ Nutrition, Rural Development and Water are priority issues for society where Nestlé is committed to making a difference and is uniquely positioned to do so through our approach to Creating Shared Value.”

Martin Brown, Business Executive Manager, Beverages.




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Economic

GRI reference 2008 2009

Operational footprint

Number of factories ‡ 18 15

Number of product lines ‡ 3,500† 2,523

Value generation

Oceania total sales (Billion AUD) EC1 3.059† 3.130

Value distribution (AUD – 000s) EC1

Net proceeds of sales 3,125,318 3,194,669

Operating costs 2,936,100 2,885,812

Taxes 77,160 96,653

Net profit (AUD – 000s) 112,059 212,204

† Restated to include Nestlé in the Market business units such as Nestlé Professional and Nestlé Purina Petcare.‡ Nestlé specific indicator.

Oceania sales breakdown*

* Breakdown of sales amended to better reflect business areas.

2008 2009

Soluble coffee Chilled dairy

Powdered beverages Milk

Culinary Nestlé Nutrition

Frozen Petcare

Ice cream Breakfast cereals

Confectionery and snacks Other products

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Our Community.



Creating Shared Value – performance summary In line with the Global Reporting Initiative, we have included a wider set of economic indicators in this year’s CSV Report.

GRI reference 2008 2009

Economic

Oceania total sales (Billion AUD) EC1 3.059> 3.130

Net profit (AUD – 000s) EC1 112,059 212,204

Nutrition

Nestlé Nutrition Oceania sales (AUD) n/a 129,568,000 144,590,000

Products meeting or exceeding Nutritional Foundation profiling criteria (as % of total sales) n/a — 63%

Renovated products for nutrition or health considerations (number of renovated products)† PR1 62 73

Increase in nutritious ingredients or essential nutrients (number of renovated products)† PR1 17 1

Reduction of sodium, sugars, TFAs, total fat or artificial colourings (number of products)† PR1 74 173

Products covered by Nestlé Nutritional Compass (% of sales)† PR3 97% 97%

Products with %DI labelling (% of sales) PR3 59% 94%

Our environmental footprint

Total energy consumption (GJ) EN3/EN4 1,895,501 1,892,051

Total energy consumption (GJ per tonne of manufactured product) n/a 6.1 5.7

Total energy greenhouse emissions (tonnes CO2e) * EN16 207,788o 204,930

Water usage (kL) EN8 1,168,893 1,205,645

Water usage (kL per tonne of manufactured product) n/a 3.8 3.7

Non-hazardous waste disposed of to landfill (t) EN22 6,267 5,989

Materials recycled (t) EN22 19,513 38,779

Our people

Workforce size LA1 5,615 5,295

Lost Time Injury Frequency Rate LA7 3.00# 2.00

Leadership positions held by women (%)^v LA13 32% 31%

Employee turnover§ LA2 11.6% 9.8%

Hewitt Employee Engagement Score n/a 58%

† Excludes Nestlé In the Market (such as Purina, Nestlé Professional and Nestlé Nutrition).* This currently covers our material emission sources – electricity, gas and other sources of scope 1 energy emissions – from our factories.o Australian National Greenhouse Energy Reporting (NGER) C0

2 emission factors used from 2008 onwards. Previously, International Energy Agency emission factors were used.

^ Excludes Nestlé Pacific Islands and taken as at December.v Percentage of management which are women. Incorporates senior executives, senior management and management.§ From 2009, employee turnover represents all people who left the organisation voluntarily or due to dismissal, retrenchment or retirement and only applies to Nestlé

Oceania monthly paid employees. Previously, employee turnover represented voluntary resignations only. Australian and New Zealand employees only. Given Nestlé participated in a global employee survey, the Hewitt survey was not completed in 2008.# From 2008 onwards, this is now an overall Nestlé Oceania figure. Previously, it excluded additional Nestlé businesses such as our Nutrition and petcare businesses.> Restated to include Nestlé in the Market business units such as Nestlé Professional and Nestlé Purina Petcare.




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Progress snapshot – how we are tracking against our to do list

Focus area Current targets Status / ProgressNew targets: 2010 and beyond

FUTURE CSV REPORTING AND STRATEGY

Improved alignment with Global Reporting Initiative (GRI) ‘G3’ guidelines.

Have included a broader set of GRI Indicators and have achieved a B+ application level.

Further develop our CSV reporting processes and procedures where identified by our audit provider.

Report against material indicators from the new GRI Food Processing Sector Supplement.

Hold bi-annual meetings with the CSV Advisory Board.

Engage key stakeholder groups on CSV reporting and priorities.

Have developed comprehensive stakeholder engagement framework and established Oceania Creating Shared Value Advisory Board.

PRODUCTS AND CONSUMERS

Reduce the level of sugar in selected products by at least 5% by 2012.

On track. A number of products have been reformulated to reduce sugar levels.

Engage consumers in a way that drives increased nutrition and creates demand for a healthy food supply.

Undertake research on consumer understanding of nutrition issues.

Reduce the level of sugar in selected products by at least 5% by 2012.

Reduce salt levels in our salty products, against a 2005 baseline, by 25% by the end of 2010.

Continue our annual review of entire product portfolio against Nestlé Nutritional Profiling System to support continuous improvement.

Ensure 100% of our retail products contain %DI labelling.

Ensure 100% of Nestlé Oceania employees complete nutrition-based training by 2011.

Ensure 100% of Nestlé’s product range comply with our Trans Fatty Acids (TFA) requirements.

Ensure 100% of Nestlé’s product range comply with our Trans Fatty Acids (TFA) requirements by end of 2009.

Three products do not currently meet our Trans Fatty Acid policy. One product is currently being reformulated to meet the policy and the other two will be discontinued.

Reduce salt levels in our salty products, against a 2005 baseline, by 25% by the end of 2010.

In line with our salt policy, we continue to reformulate and renovate our products to reduce salt levels.

Continue our annual review of entire product portfolio against Nestlé Nutritional Profiling System to support continuous improvement.

In 2009, 100% of our Oceania products were audited against the Nestlé Nutritional Profiling System.

Educate our consumers to better understand nutritional labelling, in particular Percentage Daily Intake (%DI) labelling.

Detailed information on Nestlé websites and also dedicated page in new cookbook with Australian Institute of Sport which will be on shelf March 2010.

Ensure 100% of our retail products contain %DI labelling.

As at December 2009, 94% of our products contained %DI labelling, up from 59% from 2008.

Ensure 100% of Nestlé Oceania employees complete nutrition-based training by 2011.

In 2009, some 646 employees received nutrition-based training, up from 292 employees in 2008. We have now trained over 1,600 employees since 2006.

Launch comprehensive system to help track and report on our nutrition performance, including on a product-by-product basis.

System has been developed and is being rolled out across the business.

Develop nutrition-based stakeholder engagement strategy targeting key health professionals in Australia.

Nutrition experts now part of CSV Advisory Board. Have also partnered with additional groups, including Go Grains, Coeliac Society, Anaphylaxis Australia.

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Our Community.



Focus area Current targets Status / ProgressNew targets: 2010 and beyond

OUR ENVIRONMENTAL FOOTPRINT

Reduce energy consumption (per tonne of product) by 2% in 2009.

In 2009, we achieved a 6.6% reduction in our energy use per tonne of manufactured product, moving from 6.1 gigajoules of energy use per tonne of manufactured product to 5.7.

Reduce energy consumption (per tonne of product) by 2% in 2010.

Reduce water consumption (per tonne of product) by 4% in 2010.

Reduce greenhouse gas emissions by 2.5% in 2010.

Develop mitigation strategy to manage key sustainability risks (including water and carbon).

Develop Key Performance Indicators for our packaging performance.

Reduce water consumption (per tonne of product) by 4% in 2009.

Our performance was impacted by changes to product mix and an increase in shorter production runs to meet retail customer requirements.

Build climate change strategy encompassing whole of value chain approach.

Further analysis completed in 2009. Key risks were prioritised and a mitigation strategy is being developed.

Develop Key Performance Indicators for our packaging performance.

Progress has been made, including a PIQET (Packaging Impact Quick Evaluation Tool) audit which looked at the key drivers which lead to negative/positive impacts. This audit will guide our KPIs going forward.

Develop comprehensive greenhouse inventory in line with the Australian Government’s NGER requirements.

Submitted NGER report in October 2009.

OUR PEOPLE Reduce Lost Time Injury Frequency Rate to less than three injuries per million hours in 2009.

In 2009 we saw a further 30% drop in our LTIFR, going from 3.00 (in 2008) to 2.00 injuries per million work hours.

Reduce Lost Time Injury Frequency Rate to less than two injuries per million hours in 2010.

Maintain employee turnover† below 14%.

Achieve Hewitt Best Employer employee engagement status.

Maintain employee turnover† below 12%.

Achieved an employee turnover† result of 9.1%.

Maintain employee engagement above 60% (within Hewitt Best Employer range).

In 2009, our overall employee engagement was 58%, marginally down from 60% the previous year.

SOURCING, AGRICULTURE AND OUR SUPPLY CHAIN

Ensure 100% of suppliers are in adherence to Nestlé Supplier Code and other key sustainability policies and practices.

The Nestlé Supplier Code forms part of all supplier agreements in Australia and New Zealand. In 2010, we will be reviewing Nestlé Pacific Islands (NPI) to ensure the Nestlé Supplier Code is integrated into our supplier procedures throughout the Pacific Islands.

Ensure Supplier Code referenced in supply agreements for Nestlé Pacific Islands.

Ensure all ‘high risk’ suppliers are audited as part of our Responsible Sourcing program.Ensure sustainability and environment

considerations form part of tenders and decisions relating to award of suppliers.

Environment and sustainability remains a key consideration in selection of suppliers. Our tender processes require suppliers to submit a proposal detailing their environmental policies, systems and considerations for the material or service being sourced. This forms a key criteria in the assessment of suppliers.

OUR COMMUNITY Maintain strong community support through Nestlé Good Life programs and initiatives in lifestyle activity and education.

In 2009, our Nestlé Good Life Program contributed some AUD 5 million to community programs and broader sponsorship initiatives.

Maintain strong community support through Nestlé Good Life programs and initiatives in lifestyle activity and education.

Respond to recommendations from the independent review of the NCEP program.

Continue to support community environmental projects, through the Nestlé Community Environment Program (NCEP).

Some 14 individual projects were implemented in 2009 across a diverse range of environmental issues, including revegetation, education and energy efficiency projects.

† Employee turnover target is for voluntary resignations only.




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Products andConsumers.


We believe that the very future of our company lies in helping people to eat a healthier diet.

18 Products and Consumers





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We believe that the very future of our company lies in helping people to eat a healthier diet.

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“ We wanted to really understand what it’s like for people with arthritis.”






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It was these alarming predictions that prompted Nestlé Oceania’s packaging experts to take a long, hard look at how challenging it was for the ageing population and people living with arthritis to open our products.

In a first for our region, our packaging team formed a partnership with Arthritis Australia and embarked on an independent study to benchmark five of Nestlé Oceania’s popular products against its competitors.

Nestlé Oceania believes that, alongside the environmental impacts of our packaging, we also need to consider the social impacts, and how accessible our products are for all consumers. This is a view shared with the Australian National Packaging Covenant.

Using a pair of special gloves that simulated arthritis, our packaging team got a chance to experience what it felt like to open products with limited hand movement.

“We wanted to really understand what it’s like for people with arthritis and the elderly to open our products, such as packs of lollies, coffee jars or tubs of ice cream,” said Jacky Nordsvan, Packaging Specialist.

“It really gave us a great insight into how we can move our packaging forward so that everyone can open our products easily.”

The products were independently assessed by Arthritis Australia in collaboration with the Georgia Tech Research Institute in the US, one of the world’s leading research universities dedicated to improving human life.

The research results will now be used to assist our Product Development and Packaging teams to adopt a more cognitive approach to package design.

CASE STUDY

Tackling the social impacts of our packaging

Arthritis, a debilitating condition with signifi cant social and economic impacts, is expected to affect seven million people in Australia alone by 2050†. Australia’s population is also ageing, with projections that some 7.3 million Australians will be over 50 by 2011, growing to 14.6 million or 44 per cent of the population by 2050*.

Products assessed included:

• Nescafé Blend 43

• Allen’s Snakes – family pack

• Maggi recipe mixes

• Peters Entice ice cream

• Nestlé Club chocolate

† Access Economics, Painful Realties Report 2007.* Australian Bureau of Statistics, Population Projections 2004-2101.

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The modern consumer has never been smarter, more connected or more demanding. And it’s not just price and quality they’re focused on.

No longer do advertising campaigns or purchasing history form the basis of brand choices. Consumers also want to know more about the operational activities of the brands they support.

Make no mistake, quality and familiarity stand alongside value as key purchasing influencers but corporate values are becoming an increasing factor in this equation.

Consumers want to know more about the behind-the-scenes policies and activities of big corporations. They want to know about their ethics and principles. They want to know what big businesses are doing to help the environment and how they plan to further causes around social justice, not just their own balance sheets.

To win the trust and confidence of customers and to secure brand loyalty, companies must be as transparent as possible about any philanthropic work they are doing behind-the-scenes, any steps they’re taking to be more green, more responsible, more socially aware.

For companies who respond to this new dimension of customer service, the rewards can be manifold. Social media and the internet can be used to elevate or decimate brands with astonishing speed.

For brands and corporations who get it wrong, there is a new willingness and even eagerness among consumers to call them out for perceived inconsistency or hypocrisy.

Similarly, there is an inherent expectation that in exchange for their loyalty, consumers want their chosen brands to be a good corporate and global citizen.

When pertinent questions arise about particular aspects of a company’s business, it is imperative that they be addressed accurately, honestly and transparently. Getting it wrong is acceptable, being opaque or deliberately misleading is not.

There is a distinct preference for truth and plain speaking above glossy perfection and spin. Consumers are highly attuned to the smell of spin and enormously cynical about its implementation.

Instead, they favour brands that reflect a more real version of themselves back to them in ways they recognise. They are embracing reality and authenticity like never before. Smart, progressive companies have recognised this and are tailoring their messages and the way they do business accordingly, and for this they will reap the rewards over those who don’t understand how the psyche and expectations of their customers have changed.

By Mia FreedmanAuthor, columnist, CEO of Mamamia.com and member of Nestlé Oceania Creating Shared Value Advisory Board.

OPINION

The game is changing and it’s changing faster and more profoundly than ever before






Our Community.



Our challenges not only include how to best take our consumers on the journey with us but also how to make healthy options affordable and accessible, particularly for low-income consumers.

Our health and nutrition agenda builds on business fundamentals of ensuring safe and high quality products; communicating responsibly and ethically and continuously responding to our consumers’ changing needs and priorities.

HEALTH AND NUTRITION AT NESTLÉNutrition is one of our three global Creating Shared Value priorities. It’s such an important issue for us because food and nutrition are the basis of good health and of our business.

We invest heavily in research and development and the Nestlé Research Center (NRC) based in Lausanne, Switzerland is one of the world’s largest private facilities for food, nutrition, health, quality and safety research. In 2009, we invested some AUD 2 billion in Nestlé research globally.

In Oceania, we are focused on a number of key areas, including:

• Continuously improving the nutritional profile of our product range.

• Creating an internal culture of health and nutrition across our workforce.

• Driving consumer demand for nutritious products.

We are also focused on increasing the nutrition ‘voice’ across the business and building our capacity to improve the nutritional value of our products. To achieve this, we employ some 29 dietitians throughout the major divisions of our business.

POLICYOur Nutrition, Health and Wellness principles shape our approach to:

• Encourage a balanced healthy diet, including by monitoring existing products for their content of total fat, saturated fat, sugar and other sensitive nutrients.

• Ensure our products are formulated to help our consumers meet their nutritional needs, including developing broader community education programs.

• Take care of our own people, including ensuring they are well trained when it comes to nutrition matters.

These operating policies are supported by a range of mandatory policies for the reduction of all public-health sensitive nutrients: trans fatty acids, salt, sugar and, released in 2009, saturated fats. The new saturated fat policy requires the monitoring of saturated fat in all of our food products. The policy also requires that new products have a saturated fat level less than that of its equivalent in the Nestlé portfolio, or, if no such equivalent exists, the leading competitive product in the appropriate food category.

MAKING NUTRITION THE PREFERRED OPTIONNestlé’s proprietary ‘60/40+’ program ensures our nutritious products are the preferred choice, not only from a nutrition perspective, but also, importantly, from a taste perspective. The program aims to gain the approval of 60 per cent of consumers in a taste test while bringing an additional ‘plus’ in terms of nutritional outcomes such as calories, fat, saturated fat, sodium, added sugars and trans fatty acids.

We believe you can’t have one without the other; our nutrition initiatives would not have their desired impact, on a large scale, if our products are not attractive to our consumers. Our marketing and advertising efforts focus on those products which have successfully ‘won’ in terms of taste and nutrition.

Globally, we believe that the very future of our company lies in helping people to eat a healthier diet. We do this through what we do best: by making our products more nutritious and better for our consumers; and by using our unique position in the marketplace to respond to some of the broader health challenges facing our community, from micronutrient malnutrition, to issues such as obesity and cardiovascular disease.

Helping people to eat a healthier diet




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MEASURING AND BENCHMARKING THE NUTRITIONAL PERFORMANCE OF OUR PRODUCT RANGEThe Nestlé Nutritional Profiling System assesses the nutritional value of products. This annual assessment is based on our own internal standards and various external standards such as those published by the World Health Organisation and country specific nutrient targets and recommendations in Australia and New Zealand.

Products meeting or exceeding all criteria are said to achieve the Nestlé Nutritional Foundation (NF), and are considered appropriate choices in the context of a balanced diet for the majority of people, even when consumed regularly.

In 2009, 100 per cent of our Oceania products were audited against the Nestlé Nutritional Profiling System. From this, 63 per cent met or exceeded the required standards and received the Nestlé Nutritional Foundation status.

In the Oceania region, we are also active participants in the Heart Foundation Tick, Glycemic Index Program and the NSW School Canteen Association Healthy Kids Program which set additional, regionally-specific nutrition targets.

In 2009, a range of innovative product improvements and initiatives were undertaken, all aimed at making our products more nutritious. Initiatives from our confectionery and snacks business are discussed in greater detail in the case study on page 28.

• Reformulation of our Lean Cuisine range to meet our ‘Nutrition Foundation’ standards.

• Reduction of artificial colours across the ice cream range – starting with those aimed at children – as well as Smarties.

• Fortification of Nesquik Plus Chocolate with Vitamin D and calcium.

• Launch of 25 per cent reduced sugar range in Allen’s confectionery.

• Launch of Skinny Cow ice cream range, 97 per cent fat free and no sugar added.

• Launch of new Uncle Tobys Fruit Fix snack, made of 99 per cent fruit ingredients – including puree, juice and fibre – with no artificial colours or flavours.

REFORMULATING AND RENOVATING OUR PRODUCTSWe are constantly reformulating our products, looking to reduce those components which have a negative effect on health and increasing those nutrients required to maintain good health. Reformulations are based on our specific health and nutrition policies and also regionally-based endorsement programs which we prescribe to, including those discussed previously. Our products are also constantly reformulated to achieve the Nestlé Nutritional Foundation status.

A major initiative in 2009 was integrating the Nutritional Foundation into our new innovation program known as B3 (Bigger opportunities, Better execution and Bolder initiatives). This ensures nutritional opportunities are captured in the innovation and product development process, the stage where we know we can have the greatest impact.

In 2009, 73 products were renovated for nutrition or health considerations; 173 products were renovated to reduce sodium, sugars, trans fatty acids, total fat or artificial colourings; and an additional product was renovated to increase nutritious ingredients or essential nutrients.

NUTRITION GOVERNANCE The internal Nutrition Council provides improved governance of our activities and drives better health and nutrition outcomes across our business. The key roles of the Council are to:

• Ensure claims on products and associated communications are accurate, clear and not misleading in any way.

• Oversee compliance with our Nutrition Policies and the Nestlé Corporate Business Principles.

• Approve programs that promote Nutrition, Health and Wellness.

The Nutrition, Health and Wellness agenda continues to become much more operational and better integrated into the culture of our business. This is leading to fewer issues to do with product claims and more about driving new programs, partnerships and innovation through new product development.

Members of the Nutrition Council (left to right): Juerg Stocker, Executive Director, Operations; Ian Alwill, Executive Director of Group Marketing and Communications; and Peter Kelly, Director Corporate and External Relations.






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RESPONSIBLE MARKETING AND COMMUNICATIONSWe are committed to marketing and communicating our products responsibly, clearly and ethically. Our Nestlé Consumer Communication Principles form the basis of our responsible marketing commitments and ensure that:

• Communication is not misleading and accurately represents the product.

• Health benefit claims are backed by sound scientific evidence. • Food advertising depicts moderation in consumption. • Advertising encourages an active lifestyle. • The true purpose of the product is clear, and not misleading –

for example, products that form only part of a meal should clearly be depicted as such.

We also have additional policies and initiatives, which set out how we market to vulnerable groups, including children. Our Nestlé Responsible Marketing to Children Action Plan ensures, above all:

• Nestlé does not advertise food and beverage products to children under 5 years of age

• Advertising to children between the ages of 5 and 12 is restricted to products with a nutritional profile which help children achieve a healthy balanced diet, including clear limits to product size and ingredients such as sugar, salt and fat

The Action Plan, which took full effect on 1 January 2009, sets our commitment to the Responsible Marketing to Children Initiative, which was jointly developed by the Australian Food and Grocery Council (AFGC) and the Australian Association of National Advertisers (AANA). Our commitments and practices are also in alignment with the New Zealand Code for Advertising to Children.

In 2009, through our progress report to the Responsible Marketing to Children Initiative, we reported full compliance against our stated commitments and policies and also provided an update on our broader initiatives relating to children, such as product renovations and nutritional educational initiatives. As such, the Australian Advertising Standards Board, which provides a public complaints resolution service, did not report any breaches from Nestlé against the various advertising to children standards.

Communicating Creating Shared Value and eliminating ‘greenwash’With an increasing awareness and interest in environmental issues, there has been a rise in ‘greenwashing’, or false and misleading claims being made by companies and manufacturers. Like nutrition claims, this is an issue we take very seriously and we ensure we are not engaging in any form of misleading communications or overstating claims when it comes to environmental issues or our performance.

We have released an internal standard for our marketers and advertisers on communicating our Creating Shared Value approach and any social and environmental claims. Aligned to country-specific guidelines such as the Australian Competition & Consumer Commission – ‘Green Marketing & Carbon Claims’ and New Zealand’s ‘Guidelines for Green Marketing’ – the standard sets out our commitments to clear, scientifically substantiated messaging, which does not mislead our consumers in any way. No ‘green’ claims were made in 2009 and, as such, no breaches in our practices were reported by the ACCC.

In Oceania, we have also established a Sustainability Council which has oversight and approves any environmental claims.

Responsible food labellingOur global-first nutritional labelling system, the Nestlé Nutritional Compass, helps our consumers make informed decisions about our products through four elements: a standardised nutrient table; explanations of the ingredients and nutrients the product contains; Nutrition, Health and Wellness messages; and contact details and links to more information. As at December 2009, 97 per cent of our products carried the Nutritional Compass.

We are also progressively including Percentage Daily Intake (%DI) on our packaging. As at December 2009, 94 per cent of our products contained %DI labelling, up from 59 per cent from 2008. %DI is a guide to how much energy and key nutrients an average adult should eat to have a balanced diet and what percentage of this our product constitutes.

We are also closely monitoring developments relating to broader sustainability labelling such as carbon and water labelling. We see anything that empowers consumers to take action as a good thing. We prefer a full Life Cycle Analysis (LCA) approach, taking into account broad environmental sustainability indicators, and have concerns around the potential for perverse outcomes caused by overly simplistic communication – for example, a sole focus on carbon. That said, we will continue to monitor specific developments such as the Carbon Reduction Label in Australia.

Members of the Nutrition Secretariat (left to right): Dr Penny Small, Manager Corporate Nutrition; Kirsten Grinter, Regulatory & Scientific Affairs Manager; Fran Hernon, Corporate Affairs Manager; and Katrina Koutoulas, Corporate Marketing Manager.




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Infant food marketingNestlé sells and markets infant formula products responsibly, and we voluntarily and unilaterally apply the World Health Organisation’s Code of Marketing Breast-milk Substitutes. To ensure compliance with the WHO Code, Nestlé has developed a unique global management system.

In Australia, Nestlé is a signatory to the Marketing in Australia of Infant Formula (MAIF) Agreement, which is administered by the Federal Government’s Department of Health and Ageing. The MAIF Agreement is Australia’s response to becoming a signatory to the WHO Code and sets out the obligations of manufacturers and importers of infant formulas. In New Zealand, the code – Implementing and Monitoring the International Code of Marketing of Breast-milk Substitutes in New Zealand – applies to our practices. More information on our approach can be found at: www.babymilk.nestle.com

QUALITY AND FOOD SAFETY Ensuring the food safety and quality of our products is of critical importance to us. This is a fundamental issue; the safety of our products is paramount and we can only win the trust of our consumers by having unassailable safety and quality standards.

Our global Food Safety Management System is aligned to external quality standards, including ISO 22000:2005 Food Safety Management Systems, which includes Hazard Analysis Critical Control Point (HACCP), a food safety risk assessment process focused on control of biological, chemical and physical hazards within the food chain.

A revised global Food Safety Management system was released in March 2009. The revised system now incorporates new food safety and security standards such as PAS 220:2008 Prerequisite programmes on food safety for food manufacturing and PAS 96:2008 – Defending food and drink.

Our Nestlé Food Safety Management System is integrated into the broader Nestlé Quality Management System (NQMS), which is aligned to ISO 9001 (Quality management Systems – Requirements). NQMS covers each and every Nestlé product and, importantly, it sits across our entire value chain, starting with our Consumer requirements, through Suppliers, Manufacturing, Distribution, Sales and to consumption by our Consumers.

All Oceania factories have now been audited by an independent auditor and certified against NQMS and ISO 22000. The ISO 2200 certifications are accredited by JAS-ANZ (Joint Accreditation System of Australia & New Zealand, which is the government-appointed accreditation body for Australia and New Zealand responsible for providing accreditation of conformity of assessment bodies).

Our factories in Blayney (NSW), Marton (New Zealand), Lae (Papua New Guinea) and Notting Hill (Victoria) completed certification throughout the year. Surveillance audits by independent auditors are now undertaken on an ongoing basis to ensure all sites are meeting safety and quality requirements. To meet customer requirements, selected sites have also been certified to British Retail Consortium’s Global Standard for Food Safety, HACCP or other customer specific standards.

In addition to completing NQMS and ISO 22000 certification, throughout 2009 our factories were also focused on hygiene and pathogen monitoring, allergen management, and HACCP verification.

Our supply chain is a critical component of our overall food safety system and we expect the same high standards from our suppliers as we apply to ourselves and our own operations. Based on the ISO 22000 standard we have established an active and ongoing supplier audit process on a range of food safety areas. High risk suppliers, particularly those that supply raw materials and product contact packaging, are audited every two years by Nestlé. Throughout 2009, 105 suppliers, representing some 16.5 per cent of our supply base, were audited against our standards.

Consumer complaints represents the best measurement of how we are tracking on our quality and safety commitments. This has been a focus area for us and we’ve seen another 23 per cent reduction in complaints regarding quality and food safety issues. We are targeting further cuts in consumer complaints for 2010.

GETTING CLOSER TO OUR CONSUMERSOur Consumer Services team is the point of contact for our consumers. The team received 118,647 contacts in 2009, up slightly from 2008. We want to continue to be more and more accessible to our consumers. Contact details for our Consumer Services team are included on all products and, as part of the Nestlé Compass (included on our products), consumers are actively encouraged, under the ‘Good to Talk’ banner, to contact Nestlé for any enquiries.

Being at the coalface and having greater dialogue also provides Nestlé with important insight into what’s important to our consumers and how we can be more responsive. In 2009, we also strengthened how we can more fully utilise this consumer insight, particularly in the development of new products. The Consumer Services team now plays a more active role in the innovation and new product development process, providing a consumer ‘voice’ at the concept stage and also providing extensive feedback following the first weeks of a product’s launch. Overall we also want to continue to become more open and more transparent in relation to changes or decisions we make in regard to our products.

Our consumers also keep us focused on key social, environmental and ethical issues as part of our broader Creating Shared Value strategy and approach. Throughout 2009 consumers commented on a number of CSV-related issues including ethical sourcing and labour standards in our supply chain, genetic engineering, animal welfare, sugar and additives, fair trade and packaging. In addition to helping shape our CSV strategy, through this dialogue, we are also able demonstrate how Nestlé currently manages and is responding to these issues.

We also measure consumer satisfaction through an annual survey. In 2009, 68 per cent† of respondents said that, overall, our complaint handling service exceeded their expectations.

Brand performance We closely track the overall performance of our brand, and also the awareness and understanding, amongst our consumers, of our Nutrition, Health and Wellness activities and product range. This is tracked – and benchmarked against our competitors – through an independently-run consumer survey. In this year’s CSV Report, we have introduced new indicators* representing our brand performance across three key areas:

• Percentage of respondents who believe that Nestlé is a company that they can trust

• Percentage of respondents who believe that Nestlé produces quality products

• Percentage of respondents who believe that Nestlé makes Healthy and Nutritional Products






Our Community.



Fixing our mistakes and responding to feedbackOur consumers also tell us when we have got something wrong. For example, we received a number of complaints regarding a Kit Kat promotional Christmas pack. The four Kit Kats were packaged within a large promotional tin. Consumers said they felt deceived and misled by the amount of packaging, and disappointed from an environmental perspective.

Due to this feedback, we have made improvements in our processes involved in the development of new products and packaging to prevent this in the future.

PARTNERSHIPS, ENGAGEMENT AND LEVERAGING OUR REACHWe know that no single organisation – public or private – can meet the challenges facing our region. For this reason, we want to continue to develop strong ties with our industry, government and non-government partners to tackle a range of emerging nutrition, food safety and broader public health issues. And we want to leverage our unique reach in the market, through the millions of people that purchase our products every day, to bring about improved health and nutrition outcomes.

Going forward, we are keen to establish closer partnerships with government and non-government partners to tackle a range of specific issues, including how to truly engage consumers and create greater demand for a healthy food supply.

Creating Shared Value Advisory BoardThe recently constituted Nestlé Oceania Creating Shared Value Advisory Board seeks to establish greater dialogue and co-operation in tackling, amongst other things, the emerging health and nutrition issues facing the food and beverage sector in our region. It also provides us with rich insight from key stakeholder groups and helps us focus on those priority areas which we share with our stakeholders. Joined by experts in water, agriculture, corporate responsibility and sustainability, the Advisory Board brings

together a number of health and nutrition experts including the Dietitians Association of Australia and Prof Ian Caterson, Boden Professor of Human Nutrition at the University of New South Wales.

A number of health and nutrition issues emerged from our first meeting held in December 2009, including: balancing nutrition and shareholder needs; communicating nutrition and engaging consumers; and contributing to public policy.

Scientifi c Advisory Network Group In 2009, we established the Scientific Advisory Network Group, an independent body of leading Australian scientific experts. Drawing on its members’ own research and subject matter expertise and the latest scientific literature, the group’s primary function is to provide advice to Nestlé Oceania on our business agenda, innovation and renovation activities and emerging issues facing our business. In 2009, the Group provided expert guidance into the development of the independently commissioned Nestlé dietary fibre study.

Regulatory and Scientifi c AffairsNestlé Oceania works closely alongside our external regulators, government and industry bodies on key food regulations, policies and broader industry developments. Our regulatory and scientific expertise contributes to a sound regulatory environment and enables us to help deliver safe, compliant and exciting products to the market.

Our Regulatory and Scientific Affairs function supports Nestlé’s Nutrition, Health and Wellness agenda by identifying and leveraging regulatory and scientific opportunities. The function is also responsible for the substantiation of our product claims based on a rigorous scientific evaluation model. In 2009, we developed Nutribank, a standardised product information system. Nutribank underpins a consistent consumer communication through the product label and website product information.

† 2009 is the first year in which customer satisfaction is reported in the CSV Report. Customer satisfaction represents Australian-only consumers which ‘agreed’ or ‘strongly agreed’ with the survey question: “overall, the complaint-handling service provided by the company exceeded my expectations”.

* These indicators currently cover our Australian business only.

“ We receive valuable feedback from our consumers and share this with the business to ensure consumers are at the forefront of our thinking.”

Karen Andrews, Consumer Services Manager.




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CASE STUDY

Helping our consumers get the balance right

Our products are constantly under the nutritional spotlight, making sure they measure up to the company’s nutrition, health and wellness vision and our consumers’ expectations.

In fact, our aim is to work towards making products that are superior in both taste and nutritional value.

Nestlé Oceania Nutritionist Caitlin Hughes, (right) who works alongside our Confectionery and Snacks team, said “consumers expect value from all the products they buy – and I don’t just mean value for money, but also something that is better for them”.

“A lot of consumers tell us they want to enjoy confectionery but they don’t want the guilt of enjoying it,” she said.

“Confectionery plays such an important social and wellbeing role in our society and it’s our job to help consumers understand what an appropriate amount is.”

The division has an ongoing multi-pronged health and wellness strategy that includes providing transparent nutrition information, setting appropriate serving sizes, improving labelling, removing artificial colours and flavours and reducing sugar in certain products.

Caitlin said part of the education process has been the move to start to replace king size packs with twin packs, allowing consumers to share, making it easier to manage portion control.

“We’ve also made it easier for consumers to understand what a serving size is by actually spelling out how many pieces is an appropriate serving size, whether it is a pack of Smarties or a chocolate block,” she said.

But the division’s big success was the launch of Uncle Tobys Fruit Fix which provided more than nine million serves of fruit to Australians in 2009.

“In some age groups up to 99 per cent of children aren’t getting their recommended daily serves of fruit.

“We will always say a fresh piece of fruit is best but Fruit Fix can add variety and enjoyment to your day and can boost you fruit intake as well.”

Some of our product enhancements across our Confectionery and Snacks business:

• Reduced sugar in Uncle Tobys Roll Ups by 40 per cent.• Removed artificial colours and flavours from Milky Bar.• Removed artificial colours and flavours from Smarties.• Phasing out of king size portions and replacement with

twin packs.• Launched Bodywise Digestive Balance bars.• Launch of 25% Reduced Sugar range in Allen’s confectionery.• Launch of new Uncle Tobys Fruit Fix snack, made of 99% fruit

ingredients – including puree, juice and fibre – with no artificial colours or flavours.

We believe confectionery is a treat to be enjoyed as part of a well balanced diet. We also believe it’s our responsibility to help consumers get this balance right and enjoy certain foods in moderation.






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Working with our peopleOur own employees are front and centre in getting the nutrition message out to the community. Plus, each and every employee plays a role in our health and nutrition agenda and is responsible for the innovative advances across our business.

In working with our employees, we commenced nutrition training – known as Nutrition Quotient – in 2005 and have committed to providing nutrition-based training to 100 per cent of our people by 2011. Employees undertake a general Foundation Module, while those with product development or product communication responsibilities attend further advanced and specialised workshops.

In 2009, some 646 employees received nutrition-based training, up from 292 employees in 2008. We have now trained over 1,600 employees since 2006.

Industry engagementNestlé continues to be an active member of the Australian Food and Grocery Council (AFGC) and the New Zealand Food & Grocery Council (NZFGC). Our CEO sits on the AFGC and we are active on a number of committees and working groups of the AFGC and NZFGC including Health, Nutrition and Scientific Affairs, Supply Chain, Sustainable Practices and Public Affairs.

Awareness and educationWe undertake a number of awareness raising and education initiatives on health nutrition and on specific issues such as exercise and fitness. A snapshot of our 2009 activities is below.

• A balanced lunch box – Nestlé Uncle Tobys has produced a comprehensive guide for parents on ‘how to pack a balanced lunch’. It includes tips and advice on packing a nutritious lunch, and also tips on making your child’s lunchbox safe through effective hygiene practices.

• AIS into your Classroom – Nestlé and the Australian Institute of Sport have developed a free health and physical education resource for teachers of upper primary school students. Likewise in New Zealand, Nestlé and the Millennium Institute of Sport and Health provide Health & Activity teaching resource for teachers of year 7 and 8 children.

• Research and thought leadership – including an Aussie Mums Survey which looked at the struggles facing contemporary Australian mothers. We also commissioned an independent study into dietary fibre, which showed that one in two Australian adults are consuming less than 30g of fibre each day. The outcomes highlight the importance of continuing to communicate the role of dietary fibre in the diet and developing convenient, tasty solutions to increase daily fibre intake in the adult population.

• Physical activity outreach programs and initiatives, including with the Australian Institute of Sport, Millennium Institute of Sport & Health, Milo in2CRICKET and Milo Kiwi Cricket. Nestlé in New Zealand has launched Sports Nutrition advice sheets tailored to individual sports and plans to cover 20 sports by the end of 2010.

• Nestlé websites – we continue to develop and enhance our Australian and New Zealand websites to bring together the latest health, nutrition and product resources for our consumers and other stakeholders. The websites contain detailed nutrition information and resources, food allergen information, and expert advice from our corporate nutritionist, Dr Penny Small. In addition to the food allergen information (Nestlé Allergen Centre) we launched a new feature called the

Allergen Centre Registration Service where consumers are able to register and receive relevant news and information about allergens.

Allergen BureauThe Allergen Bureau was established as an initiative of the Australian Food and Grocery Council and seeks to address food allergen risks in food ingredients and manufactured foods in Australia and New Zealand. Nestlé continues to support the Allergen Bureau by being a member of the Management Committee which drives the agenda to support key industry allergen management projects.

The Allergen Bureau informs and educates the food industry and consumers in a number of ways. The Allergen Bureau website and electronic newsletters provide the industry with up-to-date information on allergen issues. The Allergen Bureau also maintains a 1800 (0800 for NZ) number and email address for industry and consumer enquiries and employs a team of technical experts who respond to relevant enquiries. The Allergen Bureau actively promotes and supports a number of industry tools such as Voluntary Incidental Trace Allergen Labelling (VITAL), which is designed to improve allergen management within the industry. The Allergen Bureau also works closely with Anaphylaxis Australia and the Coeliac Society to improve allergen awareness within the Australian community.

Dietitians Association of Australia (DAA)Nestlé has worked closely with the DAA, a leading nutrition body in Australia which represents over 4,000 members, over the past 10 years.

In 2009, amongst other activities, we held a joint information session with the DAA to raise awareness of the emerging vitamin D deficiency across the community. We believe vitamin D deficiency is a major public health issue and in addition to advocating and raising awareness through forums such as this, we are also looking at fortifying some of our products with vitamin D.

DAA’s CEO, Claire Hewat, has also joined our Creating Shared Value Advisory Board to provide insight into the emerging health and nutrition issues facing the food and beverage sector.

Confectionery Manufacturers of Australasia (CMA)Nestlé remains involved with the Confectionery Manufacturers of Australasia (CMA), a trans-Tasman industry group which addresses key industry issues such as corporate responsibility and environmental management and provides technical advice to members and plays a role in advocating the industry’s position on issues such as packaging and labelling.

Cocoa supply chain issues, including human rights and labour conditions, remains a key issue of the CMA. ‘Be treatwise’, a consumer information program aimed at helping consumers better understand the healthy daily intake of treats such as chocolate and lollies, is also a major focus.

Australian Institute of SportNestlé is celebrating a 10 year partnership with the Australian Institute of Sport. This long-term partnership allows Nestlé to learn from, and leverage through its products and outreach activities, AIS’s 27 years of nutrition and fitness expertise. Further information on our partnership, including a new joint educational initiative – Get the AIS into your Classroom – can be found in the ‘Our Community’ section of this report.




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Centre of Health Innovation and Partnership (CHIP)Nestlé is participating in the Centre of Health Innovation and Partnership (CHIP), an initiative of the Sydney West Area Health Service (SWAHS) to improve the wellbeing and health of people living in Western Sydney. CHIP has defined its work in three areas: Prevention Programs, Health Innovation and Global Programs and also has a particular focus on enabling a healthier food supply chain.

Ian Alwill, Executive Director of Group Marketing and Communications, represents Nestlé Oceania on CHIP’s Leaders Forum.

Food and Health Dialogue Nestlé Uncle Tobys is participating in ‘Food and Health the Dialogue’, a joint industry, government and academic initiative aiming to improve Australian diets through food reformulation and consumer awareness.

The Dialogue, chaired by the Australian Government’s Parliamentary Secretary for Health, is initially focusing on salt reduction for bread and ready-to-eat breakfast cereals. For those products that exceed 400 milligrams of sodium per 100 grams, Nestlé Uncle Tobys, along with other participants, has agreed to reduce the sodium content by 15 per cent over four years.

The Dialogue is part of a broader Government strategy to increase consumption of fruits, vegetables and whole grain foods; reduce the consumption of risk-associated nutrients, such as salt and saturated fat; and improve consumer awareness about healthy diet choices.

AFFORDABILITY AND ACCESSIBILITYOur Popularly Positioned Products (PPP) initiative ensures our products are accessible and affordable for everyone, including those people at or near the bottom of the income pyramid.

As part of the initiative we are deploying new food and nutrition technology to deliver products that provide nutritional value at a reduced cost and appropriate serving size. We also employ a range of locally adapted distribution methods, including street markets, mobile street vendors and door-to-door distributors to ensure our products are accessible to the community. This innovative distribution approach creates local jobs and also improves our market penetration. In 2009, worldwide sales of PPPs reached AUD 9,201 million.

The PPP model forms the basis of our approach in the Pacific Islands, and we deploy a broad range of specific PPP products.

Health and Nutrition in Papua New GuineaIn 2009, Nestlé Oceania commenced a major health and nutrition initiative targeting Papua New Guinea, a major market for Nestlé Oceania. As part of the initiative we researched the major health and nutrition needs of the Papua New Guinea community. Micronutrient deficiency – in particular Iodine, Zinc, Vitamin A and Iron – remains a major challenge for the people of Papua New Guinea. Iodine represents a particular public health issue; in some areas, especially in the highland areas, up to 36 per cent† of women have low levels of urinary Iodine. Other public health challenges also emerged as part of our research.

Based on these findings, our approach is fourfold: product improvements and fortification; nutrition education programs within communities; on pack communications; and nutrition training for our own people.

Fortifi cationIodine deficiency was an initial focus for us. In 2009 we added iodised salt to the Maggi ‘taste maker’ sachet, a cooking supplement that is used broadly throughout Papua New Guinea communities. This built upon the iodised salt that has already been added to the noodle cake itself.

On pack communicationsWe also undertook some consumer research to better understand cooking and eating behaviours within villages. The study found that our Maggi Noodles are widely used as a meal base, accompanied with locally available vegetables. We also know that many rural diets are low in protein. From this we established an on pack communication program to educate people on how to best use our Maggi Noodles as part of a balanced diet and to encourage people to add protein-rich foods such as meat, chicken and eggs to their meals. This included on pack messaging, consisting of easy to understand visuals, and the dissemination of recipes.

We have also adapted a food pyramid for the Papua New Guinea context, which is also being included on our packaging to encourage the use of local fresh foods and common staples recognised by the public.

Community roadshowWe have also developed a community road show program, which is seeking to reach 150 villages in 2010. The three-hour, locally delivered program consists of cooking demonstrations and product sampling and encourages the use of local fresh ingredients, and balancing meals with the right foods and adequate portions. It also aims to educate people on the importance of adding protein-rich foods to their meals.

† 2005 PNG National Micronutrient Survey And Food For Health (Pacific Island Food Meeting Sydney, 5 November 2008), Wila Saweri, Technical Adviser Nutrition, NDOH, Papua New Guinea.






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Products and Consumers – our performance

GRI reference 2006 2007 2008 2009

Consumer Services – enquirieso

Nestlé Australia Consumer Services enquiries PR5 — 87,862 88,253 87,076

Purina Australia enquiries PR5 — 9,625 8,348 10,833

Nestlé New Zealand Consumer Services enquiries PR5 — 15,942 18,098 17,494

Purina New Zealand enquiries PR5 — 2,326 2,629 3,244

Total enquiries PR5 — 115,755 117,328 118,647

Brand health and consumer satisfaction

Percentage of respondents who believe that Nestlé is a company that they can trust* PR5 — — — 44%

Percentage of respondents who believe that Nestlé produces quality products* PR5 — — — 43%

Percentage of respondents who believe that Nestlé makes healthy and nutritional products* PR5 — — — 23%

Consumer services satisfaction (Australia only)^ PR5 — — — 68%

Quality and food safety

Oceania quality and food safety complaints PR5 — 33,355 30,427 23,568

Percentage of manufacturing sites accredited against Nestlé Quality Management System / ISO 22000# — — — 100%

Health, Nutrition and Wellness (2008)

Products covered by Nestlé Nutritional Compass (% of sales)† PR3 50% 87% 97% 97%

Products with GDA (%GI) labelling (% of sales)† PR3 — — 59% 94%

Nutritional profiling completed (% of products analysed for nutritional value)† PR1 — — 100% 100%

Nestlé Nutrition Oceania sales (AUD) 58,174,000 104,227,000 129,568,000 144,590,000

Total employees receiving nutrition training† 242 488 292 646

Products meeting or exceeding Nutritional Foundation profiling criteria (as % of total sales) n/a — — — 63%

Renovated products for nutrition or health considerations (number of renovated products)† PR1 — — 62 73

Increase in nutritious ingredients or essential nutrients (number of renovated products)† PR1 — — 17 1

Reduction of sodium, sugars, TFAs, total fat or artificial colourings (number of products)† PR1 — — 74 173

* Australia only and as at July (Sweeney Research).^ Customer satisfaction represents Australian-only consumers who believe that our overall complaint handling service exceeded their expectations. Nestlé specific indicator.# NQMS incorporates ISO 22000 (2005 Food Safety Management Systems) and the Hazard Analysis Critical Control Point (where required).† Excludes Nestlé In the Market (such as Purina, Nestlé Professional and Nestlé Nutrition).o Includes product-related enquiries, plus general company enquiries.

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OurEnvironmentalFootprint.


Our business depends on a sustainable environment, including the availability of clean water, and we are determined to play our part in tackling the environmental challenges facing our planet.

32 Our Environmental Footprint





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The new boiler is allowing us to move forward and look at many more greener initiatives within the factory.






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CASE STUDY

Turning waste into energy

The opportunity to reduce the company’s reliance on fossil fuels and turn our Nescafé factory in Queensland, Australia into a facility that operated largely on renewable energy posed an exciting challenge for Nestlé Oceania engineers.

Modelled on energy-efficient boilers that have pioneered the use of renewable energy sources at our coffee producing factories in Brazil, Philippines, Thailand and Russia, a new multi-million dollar state-of-the-art boiler was commissioned at our Nescafé factory in May 2009.

Daryl Lawrence, one of our Senior Engineers who led the project, said the new boiler has so far exceeded expectations. It’s predicted the new boiler will save 4,000 tonnes of greenhouse emissions a year and reduce waste to landfill by 5,400 tonnes.

One of the many benefits of the boiler is that it uses 100 per cent of the discarded coffee grounds produced by the factory as a clean, renewable fuel source.

Previously, part of these spent coffee grounds were destined to landfill but now those grounds are supplemented with low cost sawdust sourced from the wastes of regional sawmills and used as fuel.

“The new boiler can now supply all our steam needs on sawdust and coffee grounds whereas before we were using gas as well,” Daryl said.

“We have slashed the amount of coffee grounds solids going to landfill and gained valuable energy from this waste.

“The heat from the new boiler has also generated 20 per cent more steam which is used as a fuel source throughout the

factory, reducing reliance on electricity and butane gas. In fact, the success of the new boiler has allowed the factory to completely decommission the existing old boiler that used gas as its fuel source.

“The benefits we are seeing from the new boiler will help us reduce our greenhouse footprint, and that’s exciting,” Daryl said.

“It is allowing us to move forward and look at many more greener initiatives within the factory using green energy from this boiler.”

• Twenty per cent more steam is being produced at the factory each day

• 5,400 tonnes less factory waste to landfi ll each year

• Cleaner operation – lower air emissions in local community

• Boiler can run exclusively on coffee grounds

• Minimal gas consumption (start-up only)

• 100 per cent of coffee ground waste used as fuel

• The heat produced from the boiler is used to produce the steam requirements of the factory

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The production of food – the business we are in – fundamentally relies on the ongoing quality and availability of water, soil quality, biodiversity and a climate system which allows us to continue to grow sufficient food and produce around the world.

We believe that we are facing a serious water crisis. We are seeing this all around the world and we are all experiencing it, first hand, in our everyday lives in dry continents such as Australia.

The availability and accessibility of fresh water is affecting our business today, and we also expect to see the consequences of climate change, which further exacerbates the water issue, impact our operations into the future.

Against a backdrop of population growth and increasing affluence and lifestyle patterns, this presents not only challenges for our business but fundamentally for feeding the world’s population and for global food security.

WATER: OUR GREATEST PRIORITY We have made the issue of water management our top priority globally because water availability and quality affects our business in a number of significant ways.

First, and most importantly, is the impact on food production. Agriculture is responsible for most of the world’s water consumption – some 65 per cent in Australia for example – so the future of agriculture and food security is fundamentally put at risk if we are not able to solve the world’s water crisis.

Secondly, we rely on the availability of clean water for our manufacturing activities all around the world.

Our response to this challenge is threefold:

• Water efficiency across our worldwide operations: We have set ourselves the target of becoming the most efficient water user among food manufacturers. In Oceania we have reduced our water consumption, per tonne of product manufactured, by 34 per cent since 2004.

• Working with our supply chain and farmers: Given agriculture accounts for some two thirds of water usage globally, we work across our supply chain and support our farmers to adopt good water management practices.

• Advocacy: We advocate for better management, governance and pricing of water.

Advocacy and policyIn November 2009, globally we led a joint global project, Charting Our Water Future: A new economic framework to decision making, along with the International Finance Corporation of the World Bank Group and McKinsey. The project focuses on how, by 2030, competing demands for scarce water resources can be met and sustained.

This cross-sector analysis measured actual water withdrawal for human use against existing accessible, reliable and sustainable water supply, leading to a comprehensive understanding of water overuse at national and global levels. Alarmingly, the report found that competing demands for water resources may lead to an estimated 40 per cent supply shortage by 2030.

The effectiveness and cost of various ways to reduce that overuse were then compared, so that decisions on water management can be integrated into wider policy and economic decisions. The cost analysis for various water management measures, including for example, no-till farming, desalination, rainwater harvesting and establishment of municipal dams, provides valuable insight for policy makers here in Oceania.

Nestlé is also a founding signatory to the UN Global Compact CEO Water Mandate and has committed to improving and reporting on our water management efforts through this forum.

Water footprintingNestlé Oceania has joined with the CSIRO and the Australian chapter of Sustainable Agriculture Initiative in a ‘water footprinting’ study into the water used to grow three grain crops in Australia – wheat, oats and barley. The study, which focused on the major grain producing regions of NSW, went beyond a simple analysis of the volume of water used and looked at broader environmental sustainability factors, including the type of water used and the local water scarcity.

For NSW, the production of 1 kg of wheat, barley and oats was found to have an environmental impact comparable to 86.5, 80.7 and 65.4 litres of direct water consumption.

The study provides the basis – and a valuable first step – in better understanding the lifecycle impact of producing our products and to address agricultural sustainability issues within our supply chain.

The water footprint case study will contribute to a wider international effort to develop a global water footprint standard by the International Organization for Standardization (ISO), of which Nestlé is contributing to globally. This CSIRO water footprinting project is discussed in greater detail on page 57.

Engagement and strategyIn Oceania, we have also formed a Creating Shared Value Advisory Board which brings together external stakeholders and experts on a range of areas, including water and sustainable agriculture. The Advisory Board is intended to help identify Oceania-specific social, environmental and stakeholder priorities and shape our Oceania CSV Strategy. As you would expect, the issue of water is a major focus of this group and we expect to further develop our response and key initiatives throughout 2010.

Nestlé and the environmentOur business depends on a sustainable environment and, perhaps more than any other sector, is most impacted by some of the environmental challenges facing our planet.






Our Community.



CLIMATE CHANGEClimate change also presents significant challenges to our business. First and foremost, it is likely to exacerbate the global issue of water and present further challenges in terms of water scarcity and quality.

It also presents challenges to our agricultural supply chain. Agriculture, especially in dry continents such as Australia, is highly vulnerable to climate impacts. Many regions throughout Australia have suffered through prolonged drought and dry periods.

Current climate projections, including through the latest assessment by the Intergovernmental Panel on Climate Change (IPCC), point to this drying trend continuing across Australia and New Zealand, bringing further water security problems, and impacting the reliability of production across the agricultural sector. We are also likely to see reduced precipitation and a growing risk of bushfire incidences.

Climate change also presents broader regulatory (such as new regulatory and reporting requirements which add additional cost to our business), market and reputational risks to our business.

For our part, we are committed to being a leader in reducing greenhouse gas emissions from own operations, contributing to the public policy debate on climate change and mitigation measures and working closely with our consumers on reducing emissions.

We will also continue to work closely with our agricultural supply chain. Climate change, and the implications for agriculture and food production, is also a key area of the Australian Chapter of the Sustainable Agriculture Initiative. Working closely with the South Australian Research and Development Institute we are researching and testing new varieties of oats which, amongst other things, have greater resistance to drought and dry conditions.

Advocating for action on climate changeAhead of the Copenhagen climate change discussions held in December 2009, The Prince of Wales Corporate Leaders Group on Climate Change published a statement calling for an ambitious, robust and equitable global deal on climate change that responds credibly to the scale and urgency problem.

The Communiqué, which was signed by Nestlé’s Chief Executive Officer Paul Bulcke, called for a global greenhouse gas emissions cap and countries to develop long-term reduction plans for 2013–2050 with interim targets and national or regional ‘cap-and-trade’ markets.

REDUCING OUR FOOTPRINTOne of the foundations of Creating Shared Value, our way of doing business, is sustainability: ensuring that our activities preserve the environment for future generations, while at the same time meeting the needs of the present generations.

We understand that we have a ‘direct’ and ‘indirect’ footprint and are focused on both.

For our direct footprint, we are focused on reducing the energy, greenhouse gas emissions and water used by our factories, distribution centres and offices, reducing waste across our business and minimising the impacts of our packaging.

Our indirect footprint extends beyond our own manufacturing activities and includes the farmers which supply to us and our consumers who buy our products every single day. This is an increasingly important area of focus for us and one that presents environmental risks; for example, through our supply chain. However, more broadly, it also provides us with an opportunity to influence good environmental practices right across our value chain, from ‘farm to fork’. Initiatives targeting our ‘indirect’ footprint and across our supply chain are discussed further in the section ‘Sourcing, agriculture and our supply chain’.

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Nestlé Oceania Water Usage

In Oceania we have reduced our water consumption, per tonne of product manufactured, by 34 per cent since 2004.

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TACKLING OUR DIRECT, OPERATIONAL, FOOTPRINTWe have had a long belief that our operations should be environmentally sustainable and efficient. We are committed to being a leader in this field, particularly around our key environmental impacts such as water, energy and waste.

Given that our broader environmental sustainability efforts start with our own operations, we have set ourselves targets to drive improved performance across our operations.

We have a number of initiatives to ensure we are measuring our performance, identifying efficiency opportunities and implementing projects which reduce our energy, water and waste consumption.

Key to our approach is our Eco Reduction Program which requires all Oceania sites to develop eco reduction plans to reduce energy, water and waste. These plans are reviewed monthly to ensure we are on track and our targets are being achieved. The program also encourages knowledge sharing between sites of innovative approaches to sustainability and technical projects.

Through this program, over 380 resource efficiency actions were identified in 2009 and, as at December 2009, over 170 projects had been implemented.

Policy, management systems and reportingOur environmental sustainability strategy and approach is based on the Nestlé Oceania Environment Policy. The policy was first released in 2003 and was reviewed in 2009.

Our ISO 14001-compliant Nestlé Safety, Health and Environment System puts our policy into action and ensures we are managing our environmental impacts and key risks and are compliant with legislation. Building on the corporate management system, each site is required to maintain its own specific management system and, in a new initiative, obtain certification against ISO 14001.

All factories, Distribution Centres and our regional head office have now been certified to ISO 14001† with a number of sites completing certification in 2009 (including Altona, and Notting Hill (Musashi) Victoria; Arndell Park, Blayney (Purina) and Rhodes, NSW; Lae, Papua New Guinea; Marton, New Zealand; and Carole Park (Chalet Patisserie), Queensland. Our sales and administration offices also participate in a third-party audit, which covers a range of environmental areas, as part of our CARE Program.

Nestlé Australia triggered the reporting threshold under the Federal Government’s National Greenhouse and Energy Reporting Scheme and submitted its Australian greenhouse inventory in October 2009.

Nestlé Australia also participates in the Energy Efficiency Opportunity program and also has various state-based regulatory reporting requirements.

Starting in 2009, through this report, we are also reporting against a number of new performance indicators, including total water discharged from our factories, a better break-down of our energy consumption (between scope 1 and scope 2 sources), our road transport footprint, and resource efficiency projects.

WaterGlobally, we have set ourselves the target of becoming the most efficient water user amongst food manufacturers.

In Oceania, we have achieved a 34 per cent reduction in our water usage (per tonne of manufactured product) since 2004 through a focus on water efficiency and reuse initiatives across our factories.

While we continued to reduce our water consumption in 2009 we unfortunately did not meet our target of a 4 per cent reduction on 2008 levels. Our water usage per tonne of manufactured product moved from 3.8 kilolitres of water usage per tonne of manufactured product to 3.7, representing a 2.7 per cent reduction.

A range of factors impacted our water consumption and performance. This included changes to product mix and an increase in shorter production runs of products to meet retail customer requirements. This requires more product change-overs, which results in increased resource consumption, as well as increases in cleaning during line changeovers.

Despite this, our factories implemented some 41 specific water reduction actions throughout 2009 as part of the Eco Reduction Program. This included a range of innovative projects such as optimising chilled water plants and eliminating water completely in the cleaning process through ‘dry cleaning’.

Nestlé globally has also pioneered water treatment and water reuse technology, including through the implementation of several projects in Oceania. Where possible, we look to reuse and recycle water directly within the factory itself. For example, the Nescafé factory in Gympie, Queensland has introduced a new system to recycle used water for secondary uses, including within a cooling tower and an industrial boiler.

Nestlé Purina Petfood at Blayney NSW is also recycling wastewater for cleaning purposes throughout the factory.

In 2009, we discharged 836,454 m3 of water from our factories and sites, with an average level of organic load to water of 159* mg COD/l (Chemical Oxygen Demand per litre). All discharged water is treated in either municipal wastewater treatment plants or our own on-site facilities. This cleaned water is returned to the environment in a number of ways*: some 60 per cent is utilised as irrigation wastewater following either on site or offsite treatment; and some 40 per cent is returned to rivers, waterways or lakes either as treated water or as clear water.

† ISO 14001 is accredited by JAS-ANZ (Joint Accreditation System of Australia & New Zealand, which is the government-appointed accreditation body for Australia and New Zealand responsible for providing accreditation of conformity of assessment bodies).

* Excludes now divested sites of Ba, Noumea and Pakenham.

Our Eco Reduction Plans led to over 70 specifi c energy effi ciency actions being implemented across our factories in 2009.






Our Community.



Energy and greenhouse gas emissionsEnergy and greenhouse gas emissions represent a significant focus for us. Like our approach to water, our strategy starts with our own operations and we are committed to being a leader in reducing greenhouse gas emissions. Our emission reduction strategy comes together around two main areas:

• Improve energy efficiency throughout our operations; • Expand our use of renewable energy.

Our energy greenhouse gas emissions (scope 1 and 2)‡ were 204,930 tonnes of CO

2 in 2009, representing a 1.4 per cent

reduction on 2008 levels.

In 2009, we achieved a 5.9 per cent reduction in our energy use per tonne of manufactured product, moving from 6.1 gigajoules of energy use per tonne of manufactured product to 5.7. This exceeded our 2 per cent reduction target for 2009.

Our Eco Reduction Plans led to over 70 specific energy efficiency actions being implemented across our factories in 2009, from a total of 184 actions which were identified. This has resulted in a range of projects, including but not limited to:

• Lighting energy efficiency upgrades • Optimisation of air compressor plants • Air conditioning and ventilation upgrades • Identification and maintenance of air compression leaks

Energy savings from actions implemented and in progress equate to some 20,000 GJ.

Historically, through the establishment of performance targets, our focus has been on energy efficiency improvements and energy reduction. Whilst this obviously leads to greenhouse reductions it does not capture the broader greenhouse reductions which have been achieved by a number of our factories switching to cleaner fossil fuels such as natural gas, and also renewable sources of energy (such as a major project at our Nescafé site – featured on page 35).

We plan to further decouple energy consumption and greenhouse gas emissions in the future, and in 2010, alongside an energy efficiency target, we have committed to a specific emission reduction target of 2.5 per cent on 2009 levels (based on per tonne product basis). This reflects our broader focus on emission reductions and our dual strategy of improving energy efficiency and switching to renewable energy sources.

WasteIn 2009, we continued to operate our factories on a more efficient basis and we reduced the amount of our waste which goes to landfill by an absolute 4 per cent, or 10 per cent on a per tonne of manufactured product basis.

As with energy and water, our Eco Reduction Program identified some 105 waste reduction opportunities across our operations. As at December 2009, we had implemented 57 of these opportunities. This has included a range of often simple changes to our manufacturing process, such as:

• Waste reduction at Campbellfield (where we make Kit Kats) – Following a comprehensive review of how waste was being generated across the factory and how it could be reduced, a range of initiatives have been put in place. These have included working with a recycling partner to recycle plastic film and one way plastic pallets, which in the past were sent to landfill.

• Smithtown (where we make Milo and Nesquik) – Nestlé Smithtown has changed the way it sources its carmine powder, which is used to make Nesquik Strawberry. Previously, the carmine powder was supplied in poly propylene buckets, containing 1x1kg bags of product. Working with its supplier, Nestlé Smithtown now sources the carmine powder in corrugated boxes containing 10x1kg bags of product. Previously, around 22 buckets were used per shift, compared to just 2.2 boxes now.

• Nestlé Broadford (where we make the Allen’s range of confectionery) – Nestlé Broadford is tackling the large amounts of plastic film used at the factory. Previously, the plastic film was categorised as ‘secure dumping’ and, along with organics and hazardous waste, was being sent to landfill. Working with a recycling company, Nestlé Broadford has found a solution and, through the correct bailing and collection procedures, the film is now collected monthly and sent for recycling.

Our ‘War on Waste’, a continued focus on reducing waste before it can occur, contributed to reductions in waste throughout 2009. ‘War on Waste’ focuses on a range of elements which lead to wastage, including things such as obsolete raw and packaging materials, recall costs and bad goods (warehouse expired stock, transport damage and customer returns).

Nestlé Continuous Excellence (NCE), the core of our strategy to drive operational efficiency throughout our business, also has had a demonstrable impact on removing wastage from our business. Nestlé Continuous Excellence aims to engage and empower all employees in a ‘zero defect, zero waste’ mentality

‡ Please note: this currently covers our material emission source – scope 1 direct energy emissions and scope 2 sources such as electricity and gas – from our manufacturing operations only.

Tony Silvia, Line Manager, Smithtown Factory.

“We’ve identifi ed areas in each value chain where waste is occurring and once we’ve identifi ed what does not add value to the process, we can target those areas to eliminate waste.”

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across our value chain. Through the program we have been able to reduce accidents, waste, unplanned stoppages, quality defects and consumer complaints, and improve productivity. As part of NCE, we have also introduced the LEAN initiative to focus our efforts on eliminating waste from our business. This initiative is discussed further in the Sourcing, Agriculture and Supply Chain section.

PACKAGINGThrough our packaging policy, we are focused on reducing the environmental impact of our packaging, whilst not compromising on safety, quality and consumer acceptance.

Our strategy remains to:

1. Work with our employees to develop the right procedures, the right behaviours and the right skills.

2. Work with our consumers to encourage greater recycling and waste minimisation.

3. Work with our partners to ensure our suppliers are choosing the right materials.

Our approach is aligned with the Australian National Packaging Covenant and the New Zealand Packaging Accord, and their respective principles of product stewardship and shared responsibility. Nestlé Oceania participated in industry discussions regarding the proposed New Zealand Packaging Stewardship Scheme, and called for greater Trans Tasman harmony between the Australian New Zealand schemes.

Our challengesLike many other businesses, we face a number of packaging challenges.

One of our challenges stems from a growing trend – reflecting smaller households in Australia and New Zealand in particular – toward smaller pack sizes and multi-packs. This in turn contributes to the use of more packaging per product.

Another challenge is the issue of Key Performance Indicators and the establishment of appropriate targets across our business. Consistent with our energy, water and waste targets, which we have had in place for a number of years, we would like to set specific quantitative targets to drive performance improvements in our packaging. The issue which we are grappling with is what these targets should look like, what issues they should cover, and where, in the packaging chain, they should target. Whilst we hoped to have these targets in place by the end of 2009, we did make some solid progress throughout the year.

Key to this was a PIQET (Packaging Impact Quick Evaluation Tool) audit. The audit explicitly aimed to identify the key drivers which lead to negative/positive impacts. The results will be used to guide our efforts, and the establishment of targets, to ensure we are focusing on the material areas where we can make the greatest impact. Initial findings show that the most common driver of negative PIQET outcomes is New Product Development. This area will be a major focus when we finalise our performance targets.

PIQET – Packaging Impact Quick Evaluation ToolNestlé Australia was a founding sponsor of the lifecycle assessment tool known as PIQET. The tool allows us to assess the full environmental impact – from ‘cradle to grave’ – of our packaging across a number of indicators including climate change, energy, water and waste.

PIQET is being used across our business to drive operational improvements in our packaging practices, in particular around New Product Development. Any new or modified packaging must now undergo a PIQET review. Any negative results require a business justification to be developed and escalated to the Sustainability Secretariat.

In 2009, we completed a comprehensive PIQET audit across some 65 Nestlé products. The PIQET audit helped us identify the key drivers which lead to negative/positive impacts. Initial findings of the audit identified four key drivers which, most often, negatively impact PIQET outcomes. The most common drivers of negative outcomes include New Product Development (and changes in packaging) and supply chain factors.

Based on user experience at both Nestlé Oceania and globally, we continued to work with the Sustainable Packaging Alliance (SPA) to progress a range of modifications and improvements to PIQET.

Sample of some of our sustainable packaging initiatives:

• Reduced cardboard thickness for Nescafé trayboards. • Reduced corrugated board across ice cream shippers at

Nestlé Mulgrave • Removed a top flap from display trays across the Quick-Eze

Multi Pack Range. The new open-top display tray uses 25 per cent less cardboard while carrying the same amount of products as the former design

• Reduced cardboard weight across multi-pack ice cream range, resulting in an annual reduction of around 18 tonnes

• Achieved significant reductions in carton board usage across our Friskies Dry Cat Food Range. The reductions were achieved through a redesign of the cartons’ pour spout. This replaced the previous spout, which extruded from the carton, with a perforated opening, built into the carton itself

• Moving from a two piece lid to a one piece lid across our Nescafé jars, leading to a reduction in plastic and better recycling outcomes

Performance Our packaging data currently only covers our Australian operations, as reported through the Australian National Packaging Covenant. We will look to incorporate additional packaging data in the future, particularly as the New Zealand Packaging Stewardship Scheme develops.

We were pleased to see a moderate improvement in our product to packaging ratio. We were also pleased to see recycled content by weight improve from last year. The overall amount of packaging used also dropped by some 14 per cent.

SUSTAINABILITY RISK MANAGEMENTBuilding on work undertaken in 2008, this year we progressed a major sustainability risk mapping and management exercise. Senior managers from across the business were brought together to identify sustainability risks, identify business impacts and prioritise risks for further action. Sustainability risks, with a focus on water and climate change, were classified according to their business impact: financial, brand / reputation, operational, and environmental.

Risks identified through this exercise will be mapped against the insight and feedback of our Creating Shared Value Advisory Board to enure our strategy is aligned with stakeholder expectations. Throughout 2010, a mitigation strategy will be formulated for high risk areas.






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Our Environmental Footprint – our performance

GRI reference 2004 2005 2006 2007 2008 2009

Production

Production volume (tonnes) 438,309 390,594 341,912 352,550 311,522 330,282

Energy consumption and greenhouse gas emissions#

Direct energy consumption – scope 1 (GJ) EN3 — — — — — 1,332,325

Indirect energy – scope 2 (GJ) EN4 — — — — — 559,726

Total energy consumption (GJ) 2,967,904 2,303,788 1,927,779 1,995,860 1,895,501 1,892,051

Total energy consumption (GJ per tonne of manufactured product) 6.8 5.9 5.6 5.7 6.1 5.7

Scope 1 – Direct energy emissions (tonnes CO2e) EN16 — — ‡ 52,184 47,386 44,852

Scope 2 – Energy indirect emissions (tonnes CO2e) EN16 — — ‡ 131,867 160,401 160,078

Total energy greenhouse emissions (tonnes CO2e) * EN16 206,729 123,146 113,713 184,051 207,788 o 204,930

Scope 1 energy greenhouse emissions (tonnes CO2e

per tonne of manufactured product) — — — 0.15 0.15 0.14

Water#

Water usage (kL) EN8 2,430,724 1,909,162 1,571,639 1,476,277 1,168,893 1,205,645

Water usage (kL per tonne of manufactured product) 5.6 4.9 4.6 4.2 3.8 3.7

Total water discharge (m3) EN21 2,233,214 1,574,547 1,250,009 911,720 780,682 836,454

Total water discharge (m3 per tonne of manufactured product) 5.1 4.0 3.6 2.6 2.5 2.5

Transport – tool of trade vehicles

Kilometres travelled EN29 — — — — — 18,337,667

Fuel consumption (litres) EN29 — — — — — 2,666,497

Waste#

Non-hazardous waste disposed of to landfill (t) EN22 8,055 8,221 8,063 8,209 6,267 5,989

Materials recycled (t) EN22 35,448 33,609 36,878 34,678 19,513 38,779

Non-hazardous waste disposed of to landfill (kgs per tonne of manufactured product) 18.4 21.0 23.6 23.3 20.1 18.1

Resource effi ciency#

Number of eco reduction actions identified EN5 / EN18 — — — — — 381

Number of eco reduction actions implemented EN5 / EN18 — — — — — 171

Packaging†

Net tonnes of product sold EN27 — — 297,788 323,511 272,697 244,738

Net tonnes of packaging used EN27 — — 46,382 48,492 53,585 46,152

Product to packaging ratio EN27 — — 6.42:1 6.67:1 5.09:1 5.30:1

Total ‘recyclable’ packaging sold (tonnes) EN27 — — 37,201 39,150 45,242 39,945

“Non-recyclable’ packaging sold (tonnes) EN27 — — 9,181 9,342 8,343 6,050

Packaging content which is recycled (by weight %) EN2 — — 68.6 68.8 65.7 75

† Australia only – and as at June 30 (as per National Packaging Covenant (NPC) requirements.* This currently covers our material emission sources – electricity, gas and other sources of scope 1 energy emissions – from our factories.‡ Scope 1 and scope 2 emission sources were not reported separately from 2004 and 2007. Incorporates Tool of Trade vehicles owned and operated by Nestlé Oceania, including TOT motor vehicles, Ice Cream Route vehicles, CDS vehicles and factory vehicles. Nestlé specific indicator.# Oceania factories only.o Australian National Greenhouse Energy Reporting (NGER) C0

2 emission factors used from 2008 onwards. Previously, International Energy Agency emission factors were used.

Includes biomass energy sources.

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Our People.


We want to create a great place to work for our employees.

42 Our People





Our Community.



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“ People at Nestlé really love coming to work – and that’s the best weapon in retaining employees.”

44 Our People





Our Community.



CASE STUDY

Attracting and retaining the right people for our business

While many companies were forced to dramatically restructure their workforces during the challenging economic times felt around the globe, Nestlé Oceania had already embarked on an internal program to review its business model, to reduce complexity and improve the way we operate. This meant that across the period of the downturn we remained more active in the employment market compared with other organisations.

The company employs 5,295 people in Oceania and prides itself on being a proactive player in the employment market. It’s also a company that enjoys one of the lowest staff turnovers in the FMCG industry.

Against this backdrop, Nestlé has put in place an innovative recruitment strategy, including sourcing people through non-traditional methods, and an increasing focus on dealing directly with potential candidates.

This strategy aims to target both “active” candidates – those actively seeking work currently – and “passive” candidates – or specialised and high calibre talent who are engaged in other organisations and not actively seeking new employment

James Howison, Talent and Resourcing Manager, says the days of solely relying on newspapers to fill positions are long gone. He says Nestlé Oceania embarked on a unique strategy a number of years ago to draw on modern technology to help source the best talent.

“Social Media has added a whole new element to the job market as it allows us to connect to people a lot more quickly,” he said.

“We are now able to get out into the marketplace in a virtual sense much quicker than we could in the past to source potential employees. Before we had to find them in a much more traditional way through newspapers and that often took a lot more time.”

Believing in the power of networking and personal recommendations, Nestlé Oceania launched an employee referral program in 2007. Called CONNECT, the program gives a financial reward to employees who successfully refer a friend or contact into a position within Nestlé.

According to James, the program has proved so successful that nearly $350,000 has been distributed to employees and 130 people placed into positions.

“We believe good people know good people,” he said.

“Our own employees are very tight on the screening process and they will only refer people they know and respect.”

Our own people often consider things such as whether the candidate is well suited from a culture and values perspective and whether, at the end of the day, they think the candidate would enjoy working at Nestlé.

While recruiting the best talent is a key focus for us, we are just as serious about retaining our existing work force. We use a wide range of tools and processes that support retention and personal development, such as our professional and leadership courses, the GreatNes recognition and reward program and recently the introduction of a mentoring program.

“There’s really no silver bullet when it comes to keeping people,” James said. “It’s not just about all the programs and benefits we offer – people at Nestlé really love coming to work – and that’s the best weapon in retaining employees.”

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Our broader HR strategy comes together around three key areas:

• People – attracting and retaining the right people for current and future business needs.

• Performance – achieving the full potential of our organisation and our people.

• Culture – creating an ethical, responsible and high performance culture.

A RESPONSIBLE CULTUREWe are committed to a highly responsible and ethical culture across our worldwide operations. This starts with how we treat our own people and the standard we set as a company and extends to how our employees behave in their day-to-day roles.

Based on the United Nations Global Compact’s four guiding principles on labour, our employee commitments are set out in our Nestlé Corporate Business Principles, Nestlé Leadership and Management Principles, Nestlé Human Resources Policies and Nestlé Code of Conduct.

Through our global employee survey, Nestlé and I, we actively test how we are tracking in terms of creating a responsible culture and embedding the Nestlé Corporate Business Principles into our business.

Results released in 2009, the first time we participated in the Nestlé and I survey, showed that some 65 per cent of employees were aware of the Nestlé Corporate Business Principles and around half of our employees felt that the Principles are actively applied in working units. This shows that whilst we have made some good progress, we still have some further work to do in embedding the Principles into our culture. We will again measure the level of integration and awareness in 2010.

Our employees undertake various training on our human rights and labour standards and commitments. All new employees are also taken through Nestlé’s Creating Shared Value approach and our commitment to responsible and ethical practices and labour standards. In 2009, a total of 189 Australian corporate employees attended our Corporate Induction Program and were trained in our practices, including our Corporate Business Principles. Factory-based employees and corporate employees in the Pacific Islands and New Zealand also attend a similar induction and undertake similar training.

UNDERSTANDING OUR EMPLOYEES’ CONCERNS, THOUGHTS AND PRIORITIES Nestlé Oceania undertakes a range of surveys, both internal and external, to better understand what our employees’ concerns, thoughts and priorities are and how we can continue to improve our HR performance.

Creating a great place to work for all employees

Against the backdrop of a fi ercely competitive employment marketplace, our number one priority is attracting and retaining the right people for our business. Right in terms of culture and values, right in terms of innovation and leading change, and right in terms of capability and performance.

OUR WORKFORCE

Australian-based employees ...............................................4,153

New Zealand-based employees .............................................617

Pacific Island employees ......................................................... 525

Total number of Oceania employees .................................5,295

Percentage of full time employees ...................................... 77%

Percentage of part time employees ...................................... 4%

Percentage of casual employees ...........................................19%

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Our Community.



While there’s nothing better than direct dialogue with our employees, these surveys help us to identify areas which need to be addressed and benchmark our performance against our peers and best practice. The two main surveys which we undertake are the internal ‘Nestlé and I’ (which replaces our previous regional ‘Climate Survey’) global survey and the external benchmarking survey, Hewitt Best Employer Survey. To avoid ‘survey fatigue’ amongst our employees, these surveys are completed in alternating years.

In 2009, we participated in the Hewitt Best Employer Survey.† The Hewitt survey measures employee commitment, and is based on ‘say’, ‘stay’, ‘strive’ principles: whether employees say positive things; have a strong desire to stay; and are motivated to go above and beyond.

In 2009, our overall employee engagement was 58 per cent, marginally down from 60 per cent the previous year. While this represented only a minor drop, this result has meant we have dropped out of the Hewitt ‘Best Employer Range’ and did not meet our own target to maintain employee engagement above 60 per cent.

The survey results have identified a number of areas which need further focus. This includes:

• Recognition • Managing (good and bad) performance • Career opportunities – visibility of opportunities and

developing our people • People practices

These areas were underpinned by the issue of integration, and specifically how line managers are utilising already-developed HR tools around recognition, performance management and career development, and embedding these tools within their teams.

Another issue is the actual engagement of our people managers and the impact this may have on their broader teams.

We are looking to address these issues ahead of again participating in the Hewitt survey in 2011 and are targeting employee commitment within the ‘best employer’, representing a major performance improvement target.

Employee turnoverEmployee turnover represents an important indicator of our overall HR performance. To more closely align our reporting with the Global Reporting Initiative, in 2009 we have broadened our definition of employee turnover to include all people who left the organisation voluntarily or due to dismissal, retrenchment or retirement. Previously, we only reported voluntary resignations.

However, from a company perspective we remain focused on voluntary resignations and continue to set targets and implement initiatives to retain talented people across our business.

Concern and grievance reportingThe Nestlé Business Conduct Line provides Australian and New Zealand employees with access to an independently-run ethics and grievance reporting service. The service allows employees to report fraudulent and unethical behaviour in our workplace, covering anything from fraud, theft, misconduct, bullying, harassment, to discrimination and any breaches of our various policies, including the Nestlé Corporate Business Principles.

As the service was only launched in late 2008, throughout 2009, we were focused on ensuring our people are aware of the service and refining the governance of the system, including how we can quickly and effectively deal with any issues raised.

† The Hewitt Best Practice Survey involves employees in Australia and New Zealand and excludes Nestlé Purina employees. .

“ Since Nestlé Continuous Excellence (NCE) was introduced, we now have a voice. You get more pride in what you have done and know that you can use NCE principles to do other projects.”

Pam Quinn, Production Operator, Blacktown Factory.

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ENSURING OUR HIGH LABOUR STANDARDS ARE EMBEDDEDNestlé’s CARE Program (Compliance Assessment of Human Resources, Occupational Safety, Health, Environment and Business Integrity) ensures our factories, sales offices and other corporate offices are adhering to the high labour standards we have set ourselves globally. CARE tests, through an independently-assured process, that our sites are compliant with our own internal policies and principles (such as the Nestlé Business Principles, HR Policies and Code of Business Conduct) and also external norms and regulations (such as the UN Global Compact).

It’s one thing to write policies and standards; however, it’s another thing to ensure they are implemented. This initiative assures that our global corporate responsibilities are being followed and supported by procedures and systems at a practical and local level.

Building on the existing pillars – Labour, Health and Safety, and Environment – a new Business Integrity pillar has been added to the CARE Program. This new pillar incorporates Nestlé’s Code of Conduct and covers issues such as conflicts of interest, insider trading, fraud, bribery and corruption.

In 2009, a number of factories – and for the first time, corporate offices – were audited as part of the CARE Program, including our Ice Cream facility at Mulgrave, Victoria, our Cambria Park factory in New Zealand, our Gympie factory and a number of corporate offices including our regional head office in Rhodes. No non-compliance issues were found as part of the audits.

MANAGING CHANGE – PUTTING OUR PEOPLE FIRSTChange is inevitable for a business such as ours. 2009 was no exception to this and our regional business experienced a number of significant changes over the year. This included the sale of our Fiji factory and the licence and divestment arrangement at our Pakenham site.

These business changes can often present changes, and sometimes uncertainty for our employees. Managing this impact on our people is something we take seriously and is a priority in any new change or business transaction.

Fiji factory saleSituation: The sale of our Fiji factory to local business partner CJ Patel took effect on 1 October 2009. This had a direct and indirect impact on employees and resulted in approximately 70 redundancies.

Nestlé’s HR response: A specific program was designed to assist our people who were affected by this new arrangement. In addition to direct redundancy payments, the program consisted of a number of initiatives:

• Retraining opportunities – working with a local TAFE college in Latoka, training courses were provided to employees on a range of topics including cooking, sheetmetal, IT and computers and starting your own business.

• Job seeking support – a local employment agency was engaged to provide employees with advice on writing a resume, interview techniques and developing application letters. The employment agency also conducted a search of potential employment opportunities which were communicated to employees. These optional workshops were attended by some 95 per cent of employees.

• Financial planning advice – employees were also provided with one-on-one financial planning advice, particularly on how to best manage the redundancy payments which were provided to them.

• Ongoing support was provided to employees. Our employment agency partner contacted each employee on a weekly basis to assist with the redeployment process. This will continue throughout 2010 and additional support will be provided to those employees who are still yet to secure alternative employment.

Pakenham factory – licence and divestment arrangement with SimplotSituation: Nestlé licensed its leading frozen meals brand Lean Cuisine and Maggi frozen brand to Simplot Australia and Simplot Australia acquired the Papa Giuseppi frozen pizza brand and the manufacturing facility at Pakenham, near Melbourne.

Nestlé’s HR response: Under the arrangement secured with Simplot Australia, all employees at Pakenham remained at the factory, under the newly-formed Gippsland Food Company. Employment conditions and benefits were retained under the new arrangement. Given the greater synergies with Simplot Australia’s business model, production is likely to be enhanced into the future.

LOOKING AFTER OUR PEOPLE – WELLNES 4 LIFEAs the world’s leading Nutrition, Health and Wellness business, our efforts should and do start with our own people. Our key employee initiative has been significantly enhanced and relaunched in 2009 as the ‘WellNes 4 Life’ program. This initiative promotes employee wellbeing and helps our people become healthier, both at work and at home. Unashamedly, we also want to create the right culture within the business and encourage our employees to fly the Nutrition, Health and Wellness flag in the community.

As the world’s leading Nutrition, Health and Wellness business, our efforts should and do start with our own people. Our key employee initiative has been signifi cantly enhanced and relaunched in 2009 as the ‘WellNes 4 Life’ program.

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Our Community.



Launched with some 800 of our employees from around Australia, the new and improved program consists of three key areas:

MIND – ‘PEACE OF MIND’

• Financial wellness • Strategies for life • Exploring new ways of thinking

BODY – ‘FEEL GOOD’

• Fitness to live • Nutrition 4 life • Educating for physical wellbeing

SOUL – ‘CONNECTIONS’

• Support networks • Volunteering in the community • Self-care strategies

A key initiative of the newly launched program is the Fitness2Live website, an employee resource bringing together a range of services such as health assessments, weight loss and lifestyle plans, recipes and expert training programs.

A WellNes 4 Life champion is now located at each of our sites to better co-ordinate our activities and ensure they provide value for our employees.

Community connectedness and helping our employees get active in the community is also an important part of WellNes 4 Life. In 2009, 162 days of volunteer work was undertaken across our business, up from 112 the previous year. This is discussed further in the Our Community section of the report. Our Volunteer Program will be a key focus of the WellNes 4 Life program in 2010.

PROTECTING OUR PEOPLE – HEALTH AND SAFETY We continue to make further improvements in our health and safety performance. In 2009, we saw a further 30 per cent drop in our Lost Time Injury Frequency Rate (LTIFR), our key OHS performance measure, going from 3.00 (in 2008) to 2.00 injuries per million work hours. This exceeded our target, which was to reduce the LTIFR to less than three injuries per million hours.

A focus on manual handling injuries and ‘near miss’ reporting contributed to this overall improved performance in 2009. Our manual handling focus alone reduced sprain and strain injuries by over 20 per cent.

While we continue to make solid improvements in our performance, our ultimate goal remains the same: to develop a zero injury culture right across our business. This goal is underpinned by a number of strategies and initiatives.

Management systemsThroughout the year, we continued to make improvements in our OHS Management System, ensuring the appropriate processes and procedures are in place, risks are being reduced and specific gaps in our performance are addressed. A number of remaining

factories, distribution centres and our head office were certified against the international standard, OHSAS 18001, in 2009. They included Altona (Vic); Arndell Park (NSW); Blayney (NSW); Lae (PNG); Marton (NZ); Chalet Patisserie (QLD); Musashi (VIC); and Rhodes Head Office (NSW). All Nestlé Oceania sites are now certified and, in addition, our corporate SHE System was also certified to OHSAS 18001.†

For our sales and administration offices we have started to introduce OHS risk registers and these offices are also third-party audited against OHS requirements as part of our CARE Program.

Tackling sprains and strainsFifty-nine per cent of our reported injuries are sprain and strain conditions. These injuries are a major focus for us. While we continue to innovate in terms of reducing manual handling across our sites we also know that a reduction in sprain and strain type injuries requires a focus on physical wellbeing initiatives such as nutrition as well as strength and flexibility programs. To address this – and tackle sprain and strain injuries – we’re rolling out a new program across our factories and offices. Posture@work, a behaviour-based system, uses posture, core strength and a balance of muscle length and muscle strength to achieve postural correction whether packing, driving machinery, or working at a computer. Participants are first taken through a self assessment in which they identify elements of learned, poor posture such as slumping. The program then builds on this and takes participants through a range of exercises to fix the way they sit, stand and move about.

† OHSAS 18001 is accredited by JAS-ANZ (Joint Accreditation System of Australia & New Zealand, which is the government-appointed accreditation body for Australia and New Zealand responsible for providing accreditation of conformity of assessment bodies).

Jane Glasscock, Step Change Project Leader.

“I’ve been working with some really passionate people who are taking the time to look at their areas, refl ect, collect feedback and then move forward. The idea is to work through change, develop a best practice and embed it.”

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Safety in action – leadership across our business

Broadford, Victoria Nestlé’s confectionery facility at Broadford, Victoria, has put in place a new project aimed at reducing the incidence of manual handling injuries. As a result of a new ‘direct feed’ system, there has been close to 6 million less arm and shoulder movements which has led to a 82 per cent reduction in reported neck and shoulder injuries.

Blayney, NSW Nestlé Purina located at Blayney, NSW is also tackling manual handling within its operations. Previously, specialised ingredients were added by hand to our recipes. This involved operators manually lifting 20kg bags of raw materials, and emptying them into a product mixer. As a result of the new safety project, the required ingredient is placed onto a height adjustable pallet lifter and a vacuum lifter is then used to lift the bags onto a conveyor which leads to a bag splitter. The bags are then split open and the ingredients dropped into the mixer.

Lae, Papua New Guinea Ladders and scaffolding have been replaced at Lae with an elevated, mobile, work platform. The new work platform eliminates the injury risk of working at heights using a ladder or scaffolding. The new elevated work platform is also a much more efficient solution and has reduced the time taken to build scaffolding each time it is required.

Wahgunyah, Victoria A new ‘safety train’ has improved maintenance and cleaning of guide rollers at Nestlé Uncle Tobys factory in Wahgunyah, Victoria. Previously, operators bent over, and held sustained awkward postures whilst hosing, removing and cleaning guide rollers. To control the risk posed by this task, the Safety Train was developed. The Safety Train consists of a stool on wheels that the operator sits on whilst cleaning the 20 metre length of the cooling tunnel. The Safety Train enables the cleaning operator to clean the length of the belt whilst seated, allowing them ease of movement.

LeadershipRecognising the role of leadership, we have introduced a new Safety Health and Environment Leadership Assessment Program. As part of the program we’ve defined the leadership behaviours which are critical in addressing safety issues at a site level, including communication, risk management and team involvement. Against these ‘ideal’ behaviours teams review their leaders – and their own – current behaviours and identify any gaps and leadership issues which are to be addressed over a period of time. An Action Plan is developed to address any gaps and is reviewed on a monthly basis.

‘Near-miss’ reportingNear-miss incidents are those that, whilst having the potential to do so, did not cause injury or ill health. These incidents are much more frequent and present us with the greatest opportunity to learn and improve and stop injuries happening from the outset.

In 2009, a new near-miss reporting and investigation program was established to take safety to a new level. Sites are now required to report near-misses and investigate any potential risks. By having a clearer picture of near-misses we are able to determine potential problems and their causes and find and implement solutions.

“ Our people really are our most important asset, I am fortunate to have a great team who are passionate about making pets’ lives better. It’s that commitment and dedication by all employees that make Blayney a great place to work.”

Joe Meintjes, Factory Manager, Nestlé Purina Petcare Factory, Blayney.

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Our Community.



AbsenteeismWe also measure absenteeism across our manufacturing operations. Absenteeism for Nestlé Oceania’s factories in 2009 was 3.6 per cent. Going forward we are looking to broaden the scope of our absenteeism reporting to incorporate our corporate offices and distribution centres.

WORKING WITH OUR PEOPLE

Performance management and facilitating the right behavioursBuilding on a pilot project, we continued to enhance our performance management framework throughout 2009. In addition to measuring ‘what’ was achieved by our employees, the new framework looks at ‘how’ it was achieved and seeks to encourage and reward a series of behaviours across our business. These behaviours have been identified as the foundation of improved business performance and a responsible culture, in line our Corporate Business Principles and Management and Leadership Principles.

These key behaviours – which include elements such as integrity, collaboration, initiative and results focus – will be measured alongside more conventional ‘quantitative’ measures. This will form part of a total performance management framework and achievement against these behaviours will be linked to remuneration and rewards.

These four behaviours were rolled out across the business in August 2009 and training was held for all employees on what these behaviours mean in a day-to-day setting. All employees were evaluated against them in late 2009.

Developing our peopleWe work closely with our employees to help them succeed in their current roles and, importantly, develop and prepare for future roles. The Progress Development Guide is our key tool and addresses key issues such as developing leadership competencies, career aspirations and mobility. The development plan seeks to align career goals with company goals, leverage our employees’ individual strengths and help them continually grow by identifying development needs.

Labour relationsOur Corporate Business Principles ensure our labour management principles and policies are appropriate, responsible and in line with international norms such as the UN Global Compact. While the Corporate Business Principles establishes the overarching framework, employee and labour relations are often delivered and handled at a local site level. We feel this is the best approach and ensures we are focused on practical outcomes that are best suited to employees and their needs.

Throughout 2009 we renegotiated and resolved a total of seven workplace agreements. Going forward, we will continue to resolve workplace agreements swiftly and efficiently, where possible, in the same year they expire.

Nestlé Oceania’s Employee Relations Steering Committee establishes the overall policy direction across the Oceania Region with respect to employment related policies and procedures, enterprise bargaining, management of complex industrial situations and legislative and regulatory compliance. The Steering Committee also plays a role in ensuring Nestlé Oceania offers competitive salaries and benefits.

As set out through our Corporate Business Principles and HR Policies, union participation is a matter of individual choice and we respect our employees’ right to collective bargaining. Some 46 per cent of our employees are covered by collective bargaining agreements.

RecognitionA new reward and recognition program, ‘GreatNes’, was launched in September 2009. While the new program consists of monetary reward opportunities, importantly, it also includes a range of non-monetary elements and seeks to create a culture of ongoing recognition across the business. Non-monetary elements to the program include things such as mentoring opportunities, involvement in new projects and opportunities to present to senior management and develop new skills and capabilities.

It sounds straightforward; however, we also want basic recognition – thank you’s, acknowledgement in team meetings, sharing positive feedback – to become part of every day at Nestlé Oceania. To facilitate this we’ve created a manager toolkit and other resources for people managers.

As part of this initiative we also want employees to be recognised for ‘how’ they’ve done things: how their actions are aligned to the four key behaviours we are embedding into our business.

DIVERSITYNestlé is committed to developing a diverse workforce. To us this means harnessing the unique experience, perspectives and skills that each individual brings.

This starts by creating an inclusive environment and by ensuring equal opportunities for all employees. We are also focused on a number of diversity areas including accelerating gender balance, a critical area for the future success of our business.

Women in management While experiencing a moderate increase since 2006, the percentage of women in senior positions is still relatively low. Through a new program and an active focus, Nestlé has committed to closing this gap and providing greater opportunities for women to develop into senior management positions.

To begin to unpick some of perceptions and barriers which may exist for women in our workplace, we undertook some targeted research throughout 2009. Research participants – consisting of both men and women – were selected from across the business, including members of the Senior Leadership Team.

These Gender Balance Focus Groups highlighted a range of potential issues facing women in our workplace. Some of these issues include:

• Flexible Work Practices/Job Design • Networking/Culture • Mobility • Career Management

A comprehensive Gender Balance initiative is being developed in 2010 to address these areas and assist women in succeeding in senior management positions. The initiative – which is being led by the head of our confectionery and snacks business – will look at a range of issues including recruitment, succession planning, cultural issues and will also establish Key Performance Indicators

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to measure our performance over time. The Gender Balance initiatives will also focus on improving work life balance across our business, for both men and women.

HUMAN RIGHTSWhile human rights issues extend right across our business – from our supply chain and right through to our consumer and marketing activities – our practices and commitments are especially relevant when it comes to our workplace and labour standards. Our Corporate Business Principles detail our human rights practices and relate to how we treat our employees. Our Principles, which are supported by local HR policies and procedures, cover key issues such as freedom of association, collective bargaining, forced and compulsory labour, child labour and discrimination. Most importantly, we constantly assure our compliance to our own Corporate Business Principles, as well as key external norms such as UN Global Compact, through our CARE Program (Compliance Assessment of Human Resources, Occupational Safety, Health, Environment and Business Integrity).

TRAININGOur training and development strategy, and the specific programs it offers, is built around a 70/20/10 approach – ideally our people gain 70 per cent of their development through career experiences and on the job opportunities, 20 per cent through feedback and coaching and 10 per cent through formal training. Based on this model – and around these three pillars of ‘experiences’, ‘relationships’ and ‘education’ – we have designed a range of tools, initiatives and specific training programs. We structure our focus in this way as we believe this approach provides for the greatest development opportunities for our employees.

Our formal training offers programs such as professional skills-based, leadership , orientation and safety and compliance training as well as functional-specific training for sales and marketing, finance, operations, supply and HR.

Throughout 2009, we have also been focused on ensuring our training programs are closely linked with and contribute to the delivery of our business strategy. Our CEO presented Nestlé

Oceania’s current business strategy to our training providers, ensuring they understand the broader strategic context and are tailoring programs appropriately.

Overall we spent some AUD 5 million on training across Oceania in 2009.

Creating Shared Value trainingTo ensure our employees fully understand our approach to Creating Shared Value, our key initiatives and what this means at a practical everyday work level, we launched a new Creating Shared Value e-learning module. Through an interactive platform, this module is available to all of our employees.

Launch of online learning portal In October 2009, we launched a new online training portal to some 550 pilot users. This provides a new and innovative way to encourage our people to progress their individual learning and development, at a time which suits them and in an environment in which they are comfortable. The online portal is linked to our employees’ development plans and allows them to address the skills and competencies for both current and future roles.

Mentoring Mentoring forms a crucial component of our training and development strategy. In July 2009, we launched a new mentoring program, Mentoring at Nestlé. The program involves matching suitable employees with experienced, senior managers from across the business. Mentors share their experiences, provide new insights and support and assist the mentee develop at Nestlé and explore growth opportunities.

For Nestlé, the program helps to facilitate internal knowledge exchange and help develop the leaders of tomorrow.

A total of 28 employees participated in the program in 2009.

“ Personal goals are important. You need to help your mentee think critically and deeply about the long term.”

Peter Millar, Mulgrave Factory Manager and participant in the Mentoring program at Nestlé.

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Our Community.



Our People – our performance

GRI reference 2006 2007 2008 2009

Workforce – Full Time Equivalent employeeso

Australian-based employees LA1 4,671 4,655 4,245 4,153

New Zealand-based employees LA1 664 651 636 617

Pacific Island employees LA1 692 741 735 525

Total number of employees LA1 6,027 6,047 5,615 5,295

Full time employees (%) LA1 — — 79% 77%

Part time employees (%) LA1 — — 4% 4%

Casual employees (%) LA1 — — 17% 19%

Employee engagement

Hewitt Employee Engagement Score 61% 60% † 58%

Occupational Health and Safety

Lost Time Injury Frequency Rate LA7 4.30 3.31 3.00# 2.00

Employee turnover

Employee turnover‡ LA2 10.9% 12.4% 11.6% 9.80%

Diversity

Gender profile (total) – % male LA13 53% 53% 52%

Gender profile (total) – % female LA13 47% 47% 48%

Leadership positions held by women (%) LA13 29% 32% 31%

Female / Male salary ratio (women : men) * LA14

• Senior Executives 46:54 43:57 43:57

• Senior Management 50:50 51:49 49:51

• Management 48:52 49:51 51:49

• Technical/Professional 48:52 48:52 48:52

• Administration/Clerical/Other 49:51 48:52 50:50

• Weekly/Fortnightly Paid 45:55 47:53 47:53

Human rights and labour standards

New employees trained on employee requirements, human rights and labour standards (number of employees) HR3 — — — 189

Number of factories / sites audited by CARE Program (Compliance Assessment of Human Resources, Occupational Safety, Health, Environment and Business Integrity) HR5, HR6, HR7 — — — 9

Training and development

Training provided to employees per year (value of training – AUD) LA10 / LA11 — — 4,977,000 4,829,000

o Taken as at December. Includes permanent and temporary staff and excludes external contractors. Globe (IT) employees not included from 2009 onwards. Excludes Nestlé Pacific Islands and taken as at December.

# From 2008 onwards, this is now an overall Nestlé Oceania figure. Previously, it excluded additional Nestlé businesses such as our Nutrition and petcare businesses.* NZ salaries converted to AUD. Australian and New Zealand employees only.‡ From 2009, employee turnover represents all people who left the organisation voluntarily or due to dismissal, retrenchment or retirement and only applies to Nestlé

Oceania monthly paid employees. Previously, employee turnover represented voluntary resignations only.† Given Nestlé participated in a global employee survey, the Hewitt survey was not completed in 2008. Percentage of management which are women. Incorporates senior executives, senior management and management. Data not available as Nestlé was not required to produce an EOWA report in 2007. Nestlé specific indicator. Included a number of corporate head office functions in 2009. Reported as total number of new Australian corporate employees trained on human rights and labour practices, including the Nestlé Corporate Business Principles.

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Sourcing, Agriculture and Our Supply Chain.


We believe the overall wellbeing of farmers, rural communities and suppliers is core to our ability to do business in the future.

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Our Community.



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If we don’t have sustainable agriculture then we don’t have food products to sell.






Our Community.



CASE STUDY

Understanding the water impacts of our products

Put simply, our business relies on the availability of clean water on two fundamental fronts: for food production and to manufacture our thousands of various products each and every day.

And, given our unique place in the food value chain – positioned between an agricultural supply base and millions of consumers who enjoy our products every day – we are well placed to play a leading role.

Given agriculture is responsible for most of the world’s water consumption – or some 65 per cent in Australia – our supply chain has been a natural focus for us globally.

To put this into perspective, an average of 3,000 litres is needed to produce one kilogram of agricultural raw material, compared to less than 4 litres per kilogram of finished goods for processing those materials into food and beverage products.

As part of our activities here in this region, we co-founded the Australian chapter of the globally-co-ordinated Sustainable Agriculture Initiative in 2007.

The SAI Platform Australia, bringing together agriculture bodies, food and beverage companies and research and government organisations, aims to address the sustainability challenges facing the agricultural sector.

The SAI Platform Australia and its members recently jointly funded a water footprinting study with the CSIRO into the amount of water used to grow Australia’s three major grains – wheat, oats and barley.

The study, which focused on the major grain producing regions of NSW, went beyond a simple analysis of the volume of water used and looked at broader environmental sustainability factors, including the type of water used and the local water scarcity.

For NSW, the production of 1 kg of wheat, barley and oats was found to have an environmental impact comparable to 86.5, 80.7 and 65.4 litres of direct water consumption.

David McDowell, Safety, Health and Environment Manager, Nestlé Oceania, said the new water mapping methodology will be a valuable tool in helping manufacturers such as Nestlé report and measure the full lifecycle water impacts of our products, beyond just the manufacturing component.

“Globally, Nestlé has been vocal about environmental footprinting for a number of years and this research is a great starting point for us here in Oceania,” he said.

“This sort of research is potentially groundbreaking because of the big impact water has on agriculture.

“If we don’t have sustainable agriculture then we don’t have food products to sell.”

David said the next step would assess the impact of water on the entire supply chain within parts of the business.

The water footprint case study will also contribute to a wider international effort to develop a global water footprint standard by the International Organization for Standardization (ISO), which Nestlé is contributing to globally.

Water management is a key global priority for our business. It is an issue which has strategic implications for our business and it is an area where we are uniquely positioned, as a food and beverage company, to have an impact.

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Agriculture, food and beverage production in Oceania faces a series of significant economic, social and environmental challenges.

On the economic front, farmers face a long-term decline in their real terms of trade – the prices they receive for what they sell relative to the prices of what they purchased as inputs. Fundamentally this is because the real prices of farm outputs have been declining gradually on a trend basis for a long time. The only way for farmers to overcome this decline in farmers’ power is by increasing productivity.

But in recent times productivity growth rates in key farming sectors have not grown as fast as in the past. It is not entirely clear why this has happened. Drought has been a factor, but longer-term developments like declining investment in research and development is also suggested as an explanation. This slowing in productivity growth poses a significant challenge which if not met will result in long-term declines in agricultural production. In turn this will mean food and beverage processors facing more difficulties in sourcing traditional volumes of high quality raw materials.

There is no shortage of environmental challenges facing agriculture in Oceania. These include restricted volumes and/or high prices for irrigation water; potential adjustment to climate variability and potentially carbon pricing; and environmental impacts of farm production. These challenges could have significant impacts on farmers’ output. Reduced water availability and/or high prices can mean reduced supply of commodities that rely on irrigation – such as milk, grain and fruit from Northern Victoria/Southern NSW – unless there are dramatic increases in irrigation efficiency (such as through ultra-modern drip irrigation). Climate variability can mean increased volatility in supply and long-term shifts in the location of production as some areas become too hot or cold or wet or dry for certain crops or livestock.

Socially, the challenges include the impact of an ageing farmer demographic; the impact on rural communities of rationalisation in agricultural production and the impact on agricultural production infrastructure of rural-urban migration. Agriculture needs a rural social infrastructure to expand and a vibrant social infrastructure benefits from an expanding agricultural sector.

Recent high volatility in agricultural product prices and falls in the output of some agricultural products; for example, rice and milk have focused the attention of food and beverage producers who have come to assume high volume and quality raw materials availability as a given. Food and beverage corporations

are looking to manage the risks, maintain the value of their brands and ensure they are able to meet consumers’ needs for their products. These needs are essentially for quality food and beverages at prices consumers can afford, but consumers are also increasingly looking for assurance that the products they consume are produced in a sustainable manner. In turn, food and beverage processors are engaging with their supply chains to secure that assurance.

They are exploring the opportunities to achieve these aims by: becoming more aware of the challenges and risks; engaging more directly with their supply chain and other stakeholders in their industries; and developing practical initiatives that improve sustainability outcomes.

Food and beverage companies can work with farmers on sustainable agriculture, water efficiency and other initiatives, such as through the SAI Platform. Farmers, companies and governments can also form partnerships to ensure sustainability initiatives are broad-based, operate through and across supply chains and minimise transaction costs so consumers’ needs are met in the most efficient possible manner. Companies and farmers can also work together in specific initiatives like developing methodologies and systems for water footprinting.

Food and beverage companies can thus transform the sustainability challenges facing agriculture into great opportunities to benefit people, profits and the planet simultaneously.

By Dr Selwyn Heilbron Secretary, SAI (Sustainable Agriculture Initiative) Platform Australia and member of Nestlé Oceania Creating Shared Value Advisory Board

OPINION

Looking forward – our changing agricultural landscape and the implications for the food and beverage sector






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OUR SUPPLY CHAIN PROFILE

ProcurementOur product range is diverse, which means our supply chain and procurement activities are also diverse. While we source raw materials from all around the world it is our preferred approach to manufacture, where possible, in those countries from which we source commodities. Bringing sourcing, manufacture and consumption closer together helps us secure high-quality raw materials, meet local consumer requirements and preferences, reduce distribution costs and produce reasonably priced products that meet Nestlé’s highest quality requirements.

In Oceania, we source a range of commodities and raw materials from both within the region and abroad. All up, 79 per cent of our procurement spend is directed to Oceania-based suppliers.

Distribution Our distribution channels stretch from our manufacturing sites through to our major customers and retail partners throughout the region.

We distribute some 2,200 individual product lines through some 15,600 retail outlets and customers, including major retailers such as Woolworths, Coles and Metcash. Our distribution centres are located across the region, including in Arndell Park, NSW; Altona, Victoria; Waygunyah, Victoria; and Auckland and Christchurch, New Zealand.

THE REGIONAL AGRICULTURAL CONTEXTOur business fundamentally relies on thousands of agricultural producers, located all around the world, for the supply of raw materials. Performance – ours and theirs – is inextricably linked. The issues that affect our farmers and suppliers affect us as well.

It is our preference to purchase locally wherever possible and we purchase a range of commodities from farmers and suppliers based in the Oceania region. This agricultural region, especially Australia, continues to present a range of challenges for farming communities. This context is provided below and also in the Opinion Piece from Dr Selwyn Heilbron, Sustainable Agricultural Initiative (SAI).

We understand that our responsibility extends well beyond the manufacturing and marketing of our products

We are only able to truly respond to key issues such as water, climate change and sustainable and ethical production by working right across our value chain. We also know that the overall wellbeing of farmers, rural communities and suppliers is core to our ability to do business in the future. That’s why we are committed to continually improving our supply chain practices and performance, and that’s why we have made rural development one of our key Creating Shared Value priorities globally.

Cereals and Grains .............................................149,000 tonnes

Sugar .........................................................................52,000 tonnes

Dairy Products .......................................................25,000 tonnes

Coffee ......................................................................22,000 tonnes

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Farming and rural developmentAgriculture represents a vital part of both the Australian and New Zealand economies.

In Australia, the sector generates some AUD 43 billion† in gross value each year. Some 366,000 people are employed in agriculture across some 130,000 commercial farms spread across around 55 per cent of the continent.*

In New Zealand, it is estimated that agriculture, horticulture and forestry, including associated processes and services, contribute a total of approximately 18 per cent to New Zealand’s gross domestic product.‡

Seasonal conditions throughout 2009 were mixed across much of Australia. Overall, total winter crop (including wheat, barley and oats) production for 2009-10 is estimated at 35.2 million tonnes, 4 per cent higher than 2008-09 production. Production in New South Wales and Queensland was affected by a poor spring in 2009. Extreme heat followed by heavy rainfall also affected grain quality and yields of later planted crops in Victoria and South Australia.

Good rain fell across much of the Eastern states in late 2009.

Climate change, water scarcity and agricultureAs one of the hottest and driest continents on earth, Australia’s economy and environment will be one of the hardest hit by climate change. Primary producers and industries relying on agricultural production are among the most vulnerable to climate change impacts.

Projections for Australia’s climate point to a hotter and drier future. Changes in temperature, rainfall, and extreme events will affect water availability, water and soil quality, fire risk, and the incidence of pests, weeds and disease. The frequency and severity of drought is also expected to increase.

Water represents the nearest term impact of climate change and we are likely to see further water scarcity issues across much of Australia. For example, in the Murray Darling Basin, which is responsible for 39 per cent of the national income derived from agricultural production, there is likely to be less water available in the future. By 2030 the median decline in flows for the Basin is projected to be 11 per cent – 9 per cent in the north and 13 per cent in the south.

PRIMARY PRODUCTION AND AGRICULTURE

Working with farmersWe seek to develop close relationships with local suppliers. This approach improves cost-efficiency, eliminates waste in transport, and allows us to work more closely on issues such as quality, safety and other sustainability challenges facing growers.

In the Oceania region, we source a range of local commodities including oats, wheat, barley, rice, sugar and corn for our various products.

OatsNestlé, through its Uncle Tobys business, is one of the largest buyers of oats in our region, with annual requirements of some 35,000 metric tonnes. In 2009, we put in place a new oats strategy, setting out our long-term approach to oat procurement.

Through the strategy we are actively encouraging greater oat production and establishing closer relationships with key growers (particularly in NSW and Victoria). Through this approach – and by offering more attractive pricing and contract terms and promoting our preferred varieties – we have seen a significant increase in the area planted to oats for Uncle Tobys in 2010. In fact, the region within a 100km radius of our Uncle Tobys factory in Victoria will deliver around seven times more volume of oats in 2010, as compared with 2008. Going forward, we expect to establish direct buying relationships with a small number of large oat growers, complimenting our partnership with key traders.

We are continuing our oat breeding work with farmers and the South Australian Research and Development Institute (SARDI) and since 2004 we have developed and commercialised new breeds of oats: Possum and Mitika. A third variety, Yallara, is currently being commercialised and throughout 2009 we undertook further mill trials on our first 100 metric tonne delivery. Initial results are promising.

These new varieties focus on improved crop yields, increased disease resistance, better appearance, and improved nutrient properties such as increased levels of beta glucan, a soluble fibre that is associated with lowering cholesterol reabsorption.

In a new initiative, we are also encouraging our growers to ‘clean’ – or test – their oats themselves, allowing them to only send to us what meets our specifications and utilising, for other purposes, any surplus volume which does not meet our requirements.

† Australian Farming in Brief (Australian Bureau of Statistics, 2009).* Agricultural economies of Australia and New Zealand (ABARE and MAF, 2006).‡ Agricultural economies of Australia and New Zealand (ABARE and MAF, 2006).

Australian crop report (ABARE, 2010). Murray-Darling Basin Sustainable Yields Project (CSIRO, 2008).

Sean Joyce, Procurement Buyer, Ingredients.

“Procurement understands that our responsibility in terms of agriculture extends well beyond the manufacturing and marketing of products. By working right across the value chain we can target sustainable sourcing of grains now and in the future.”






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Understanding the challengesWe participate in a range of agricultural forums and field days to better understand the challenges facing our farmers. For our oats, we also meet directly with farmers three times over the growing season (1st at sowing, 2nd at filling stage, 3rd at harvest). In 2009, we visited three main regions: Riverina, NSW; Western Victoria and the Wangaratta / Wahgunyah region of Victoria. A range of issues are discussed, including crop performance; weather and regional rainfall; yield; disease; and soil condition. We also discuss our broader oat requirements, preferred varieties, quality requirements and commercial arrangements.

Sustainable Agriculture InitiativeThe Australian chapter of the Sustainable Agriculture Initiative – SAI Platform Australia – was co-founded by Nestlé Australia in 2007. From a foundational base of three members in 2007, SAI Platform Australia now boasts 13 member companies which bring together agriculture bodies, food and beverage companies and research and government organisations.

Nestlé, along with a number of other SAI Platform Members, participated in the Chapter’s first joint pilot project undertaken with the research support of the CSIRO. This project, discussed further in a case study on page 57, measured the impact of water use on grain crops using an innovative ‘water footprinting’ methodology. Relevant commodities to Nestlé Oceania, including wheat, oats and barley, were studied as part of the research project.

SAI Platform Australia also conducted a two-day field trip to Wagga Wagga NSW and surrounding areas. The field trip, attended by a delegation of 26 executives and the Federal Minister for Agriculture, discussed agricultural sustainability issues and the future prospects for the food and beverage industry, with a focus on the issue of water. A number of farms were visited as part the field trip to see, first hand, the benefits of innovative technologies and water management practices and sustainable crop production.

Structured around a number of working groups, the SAI Platform Australia continued to focus on a number of key issues across 2009: water, climate change, customer demand, biofuels, livestock and horticulture.

RESPONSIBLE SOURCING – ALIGNING OUR VALUES At the outset, we ensure that all of our suppliers are responsible and ethical. We specifically look for suppliers who share our vision and are prepared, like us, to meet rigorous ethical, environmental and social standards in their operations.

The Nestlé Supplier Code, which seeks to extend our own Nestlé Corporate Business Principles to our supply chain, sets out certain non-negotiable minimum standards and sets out what we expect from our suppliers. The code covers a range of key areas such as:

• Business integrity • Sustainable production • Labour standards, including child labour, discrimination,

and working hours • Safety and health, including the quality and safety of

supplied products • Environmental management

The code also extends to any farmers or primary producers which the particular supplier relies on.

The Code forms part of our purchasing processes and procedures. All new suppliers are required to conform to the Code as part of any contract entered into with Nestlé. In 2009, we also sent the Code to all existing suppliers, reminding them of their responsibilities. Globally, we also amended and re-released the Code in 2009, incorporating a new ‘audit and termination’ section setting out how Nestlé deals with non-compliance.

Building on the Code, we also formally assess suppliers against a range of additional non-financial factors through our supplier selection process. This assessment covers broad requirements such as environmental sustainability, safety, risk management and compliance and specific requirements relevant to the project or the supplier. These requirements are assessed alongside more traditional elements such as price and service delivery.

Responsible Sourcing Program The Responsible Sourcing Program puts the Nestlé Supplier Code into practice and seeks to identify and eliminate any social, ethical and environmental risks across our supply chain. The Program also provides a framework for Nestlé and its suppliers to work together to improve sustainability performance and address any non-compliance issues with our own Code and other social and environmental norms and legislation.

At the outset, we ensure that all of our suppliers are responsible and ethical. We specifi cally look for suppliers who share our vision and are prepared, like us, to meet rigorous ethical, environmental and social standards in their operations.

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In 2009, we were focused on more fully integrating the Responsible Sourcing Program into our procurement processes and procedures. Going forward, all ongoing and major suppliers will be now required to complete a self assessment questionnaire covering environmental, health and safety, ethical and social issues (examples of these issues are set out below). Based on the self assessment, ‘high risk’ suppliers will be required to undertake an external audit with a Nestlé approved auditing body.

In 2009, we also undertook a comprehensive assessment of our existing supplier base and identified ‘high risk’ suppliers which will be required to demonstrate their compliance with the Nestlé Supplier Code through a self assessment and a third party audit. A small number of suppliers were identified as ‘high risk’ and two suppliers completed a self assessment in 2009. In 2010, we are aiming for all high risk suppliers to be audited.

Suppliers which are required to participate in the self assessment exercise can utilise SEDEX (‘Supplier Ethical Data Exchange’), a web-based data management and information sharing platform. SEDEX was developed by a number of manufacturing companies, including Nestlé, to manage ‘survey fatigue’, given our suppliers are increasingly being assessed on similar corporate responsibility grounds by many companies. Using SEDEX, suppliers can share responses, information and data with many of their customers.

Example issues covered in supplier self assessment and third party audit:

Labour standards • Forced labour • Children and young workers • Freedom of association and collective

bargaining • Working hours • Conditions • Discrimination

Health, safety and hygiene

• Health and safety training • Worker health

Business integrity • Corruption • Anti-bribery

Environment • Policy • Waste • Water • Greenhouse emissions • Pollution

Quality and food safety We audit our suppliers regularly to ensure our food safety, quality and also environmental requirements are being adhered to. Based on the ISO 22000 standard we have established an active and ongoing supplier audit process on a range of food safety areas. High risk suppliers, particularly those that supply raw materials and product contact packaging, are audited every two years by Nestlé. Throughout 2009, 105 suppliers, representing some 16.5 per cent of our supply base, were audited in the Oceania region against our standards.

CERTIFICATION AND RESPONSIBLE PRODUCTIONThe issues of certification and responsible production are emerging priorities for our business. Like us, our consumers are increasingly interested in where their food is coming from, how the ingredients are being produced and how this impacts communities and the environment. Terms such as ‘fair trade’ and ‘certified’ are, more and more, becoming part of consumer psyche.

We have long been focused on these issues as a matter of our core business practice. Like others in our industry, we are now looking at how we can continue to improve how we manage these issues throughout our supply chain, and importantly, how we can provide assurance to our consumers on our approach.

Specifically for our business, there are a number of priority areas on which we are focused and working through methodically.

CocoaNestlé purchases 11 per cent of the global cocoa supply. Cocoa is the main ingredient of chocolate and is grown in small, family-run farms often in remote locations. Cocoa farming provides an income to more than 4.5 million farmers, a third of whom live in West Africa. However, cocoa supply is becoming increasingly critical. Low prices have caused a lack of investment in the sector, resulting in declining cocoa quality, worldwide supply deficits and small farms with ageing trees that are vulnerable to disease.

We are building on the work we have been doing ourselves and that we have supported, and rolling it out into our supply chain. We are calling this ‘The Cocoa Plan’ to help to explain this package of measures to consumers.

The Cocoa PlanOur vision is to help professionalise cocoa farming, so that cocoa farmers run profitable farms, respect the environment, and have a good quality of life. The Cocoa Plan is Nestlé’s way of helping to tackle key issues facing cocoa farmers, their families and communities to create a better future for cocoa farming.

The Cocoa Plan – already active in the world’s largest cocoa origin, Côte d’Ivoire, and the world’s largest fine cocoa origins, Ecuador and Venezuela – covers the following aspects:

• Overall investment: Nestlé intends to invest AUD 113 million on cocoa creating shared value initiatives over the next decade, almost twice as much as was spent over the past 15 years.

• Helping farmers: We are training farmers in Ecuador and Côte d’Ivoire to help them to increase yields, reduce disease, respect the environment and produce a better-quality crop which attracts higher prices.

• Plant expertise: As part of a wider remit, our new R&D Centre in Abidjan, Côte d’Ivoire (where more than 40 per cent of the world’s cocoa originates) will provide farmers with 1 million high-potential cocoa trees each year from 2012. The Centre’s programs will focus on improving the quality and quantity of locally sourced raw materials, developing products that meet the nutritional needs and tastes of West African consumers, and helping to increase both agricultural productivity and food safety. We are also training plant scientists in accelerated propagation techniques in other cocoa-producing countries.

• The supply chain: By working closely with farming co-operatives and paying a premium for quality, we aim to reduce the complexity of the supply chain, improve returns to farmers and improve the quality of cocoa for Nestlé.






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• Better social conditions: Cocoa farming is the major employer, the main source of income and the focus of activity for millions of people. But many cocoa communities do not enjoy clean water or access to education, and as a result, labour practices on cocoa farms are not always what they should be. We will work to improve access to education, water and sanitation.

As a founding participant in the International Cocoa Initiative (ICI), set up specifically to eradicate the worst forms of child labour, Nestlé and other industry players are improving access to education and addressing all forms of exploitation of children, forced labour and its underlying causes. We are partnering with the International Federation of The Red Cross/Red Crescent to fund a clean water and sanitation project in schools in the Gagnoa region of Côte d’Ivoire.

• Certification: We believe certification is a critical component to our overall approach. It provides the framework to reward farmers and their organisations for producing cocoa in a sustainable manner, and certification also gives our consumers added assurance that the cocoa was produced under proper conditions.

Nestlé co-founded the UTZ Certified Cocoa program. UTZ is an independent international non-profit organisation which aims to achieve sustainable supply – with farmers implementing good practices and building their business, industry rewarding them for sustainably grown products, and consumers buying products that meet their standard for social and environmental responsibility.

UTZ Certified Cocoa program involves the development of a mainstream certification and traceability system for sustainable cocoa. UTZ Certified is initially focusing on Côte d’Ivoire, but intends to expand to other cocoa producing countries. Nestlé is funding pilot projects in Côte d’Ivoire and is committed to buying UTZ Certified beans in the coming years.

Cocoa and our Oceania business Cocoa, and the social and labour challenges facing the sector, has long been an area of concern to our Australian and New Zealand consumers. In Oceania, we purchase some 6,200 tonnes per annum of cocoa in its various forms across our business.

We are participating closely in The Cocoa Plan, alongside our global colleagues. We expect our first ‘Cocoa Plan’ / UTZ Certified cocoa to arrive at our Australian-based factories in 2010. Starting with the Kit Kat range, we are also commencing some on pack labelling and consumer communications, designed to inform our consumers of our new initiative and the associated certification program with UTZ.

In refining The Cocoa Plan, Nestlé Oceania will meet with a number of local stakeholders in 2010 to gain feedback and insight, including on our regional implementation program. This will be followed by a visit by the head of our Confectionery and Snacks business to cocoa-producing regions – including Côte d’Ivoire – to gain a first-hand understanding of the issues and how our approach will have an impact, on the ground. This visit will also seek to address any of the questions and feedback we received through our regional stakeholder engagement.

We are also working through the issues of certification and, from the multiple cocoa certification schemes operating throughout the world, looking closely at which scheme is most relevant to our Oceania business. A final decision is expected early in 2010.

Andrew McIver, Business Executive Manager, Confectionery and Snacks.

“ The Cocoa Plan is about putting in place a sustainable cocoa tree program supported with education and training and that improves the lives of people in cocoa-farming communities for generations to come.”

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Palm oilWe share the concern about the serious environmental threat to rainforests globally and peat fields in South East Asia caused by the planting of palm oil plantations. While palm oil is not a major raw ingredient for us – Nestlé uses 320,000 metric tonnes, or 0.7 per cent, of the world’s global production of 42 million metric tonnes – we want to work with the industry to find solutions to this complex problem.

We only buy processed palm oil and processed oil mixes, which often come from multiple sources. We do not use crude palm oil and we have no direct link to the plantations. This, however, can make traceability harder. In 2009, we undertook an in-depth review of our supply chain to establish the source of all our palm oil and have committed to using only Certified Sustainable Palm Oil (CSPO) by 2015, when sufficient quantities are expected to be available.

Nestlé has been closely associated with the Round Table on Sustainable Palm Oil (RSPO) through the Sustainable Agriculture Initiative Platform since its inception and now have full corporate membership.

Palm oil is also used as a material from which biofuels are produced, and Nestlé has repeatedly spoken out against the production of such materials for fuel rather than food.

In Oceania, we purchase some 7,000 tonnes of palm oil annually. Nestlé Oceania has committed to purchasing 100 per cent of corresponding ‘GreenPalm’ certificates from 2010 onwards. GreenPalm is an independently certified certificate trading

program whereby RSPO-certified palm oil producers receive GreenPalm certificates when they register an amount of their palm oil output. One GreenPalm certificate represents a metric tonne of palm oil produced in a sustainable manner.

CoffeeNestlé is, as you would expect, a major buyer of coffee worldwide. In 2009, Nestlé purchased some 780,000 tonnes of coffee globally and some 22,000 tonnes for our Oceania operations.

Globally, more than 93,700 tonnes was procured directly from farmers and small-scale intermediaries in Vietnam, Thailand, China, Indonesia, the Philippines, Côte d’Ivoire and Mexico; this represents an increase of 9 per cent from 2008, and makes us the world’s largest direct purchaser.

Not too dissimilar from the cocoa market, the coffee supply chain is extremely complex. Eighty per cent of farmers operate as smallholders and around 25 million smallholders depend directly on coffee farming for their livelihoods.

Our approachOur direct buying system allows tens of thousands of farmers and intermediaries to deliver coffee directly to our buying stations, giving them a higher price and access to free technical assistance. This helps them to improve the quality of their yields and to diversify their activities, giving them higher incomes and helping Nestlé to secure a sustainable supply.

We have committed to purchasing GreenPalm certifi cates to cover all the palm oil we use in our products in Oceania.






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Sourcing, agriculture and our supply chain – our performance

GRI Reference 2008 2009

Procurement

Proportion of spending on locally-based suppliers EC6 — 79%

Number of suppliers screened against Responsible Sourcing Initiative * HR2 — 2

Suppliers audited for safety, quality, environment standards 115 105

* As this is a new initiative we are currently focused on high risk suppliers. Nestlé specific indicator.

Sustainable coffee platformsNestlé is a co-founder of two international sustainable coffee platforms to co-ordinate non-competitive, multi-stakeholder action:

• Through the Coffee Working Group of the Sustainable Agriculture Initiative of the Food Industry (SAI-Platform), Nestlé has been involved in three sustainable coffee pilot projects.

• As one of the founding members of The Common Code for the Coffee Community (4C) Association, we follow a voluntary code of conduct to improve efficiency, profitability, transparency and sustainability in the production, processing and trading of coffee through training and verification.

Genetic engineeringGlobally, our approach regarding the use of Genetically Modified ingredients is based on national regulations, availability of raw materials and consumer attitudes and perceptions. Accordingly, Nestlé Oceania requires suppliers to demonstrate that only non- Genetically Modified ingredients are supplied. This is supported with Identity Preservation systems where appropriate. Nestlé conducts ongoing audits of our suppliers to ensure compliance with our requirements.

SAFETY IN DISTRIBUTIONOur products are transported from our factories – via our distribution centres – to some 21,000 delivery points across the region. Our sales force also travel widely as part of their activities. Like within our own factories, safety is paramount – no matter whether it is a Nestlé employee, contractor or freight provider. We have established an internal Safe Driving Committee to co-ordinate our activities. For our own people and our contractors we have established a Safe Driving Policy which sets out a range of requirements, including measures such as: safe driving behaviour; driver training; safety of vehicles; journey planning; and reporting of accidents and injuries.

For the broader freight and transportation industry, we have worked with major industry groups to establish the Retail Logistics Supply Chain (RLSC) Code of Conduct, a voluntary code which

prescribes minimum levels of operational behaviour to dramatically improve safety across the distribution and supply chain. This covers a range of issues such as scheduling and transit times, safe loading, driver fatigue, speed compliance, and vehicle safety.

Based on the RLSC Code of Conduct we have also recently established a training and audit program. The new program ensures all Nestlé sites and freight suppliers are adhering to the Code of Conduct and are actively managing their obligations under the ‘Chain of Responsibility’ (COR) laws. COR establishes clear road safety responsibilities for all parties in the transport chain – not just the driver.

Under the training and audit program, our factories and distribution centres – along with our freight providers and relevant suppliers – are required to complete a number of online training modules and participate in a self audit and, if required, a site audit.

ELIMINATING WASTE FROM OUR SUPPLY CHAINEliminating waste from our business and from our supply chain has been a long-standing focus for us. As part of Nestlé Continuous Excellence (NCE), a global focus on operational efficiency, we have put in place a new initiative to eliminate waste and improve our customer outcomes. Known as LEAN, the initiative seeks to streamline all the processes from paddock to plate to eliminate wasteful activities, such as excess material movements, waiting time, excess space, travel or other actions that add no value to the consumer. In 2009, LEAN was piloted across our Milo business and identified over 30 business opportunities to eliminate waste, reduce processing times and ensure Milo is produced and distributed in the most efficient way possible.

On top of the obvious cost savings for Nestlé, LEAN brings about improved environmental outcomes and a reduction in waste and food waste.

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Our community initiatives are focused on areas where we can add the most value, namely food, health, nutrition, education and promoting active lifestyles.

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The program teaches children the benefi ts of a healthy diet and exercise.

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CASE STUDY

Kids learn importance of healthy and active lifestyles

When Nestlé Oceania teamed up with the Australian Institute of Sport (AIS) in 2001 to offer nutrition-based lesson plans to primary schools, little did they realise that the program would still be going strong eight years later. Initially, when ‘Get the AIS into your Classroom’ was launched, 15 per cent of Australian primary schools signed up to the program in the fi rst six months.

Since then, more than half of the nation’s primary schools have incorporated the program – which teaches children the benefits of a healthy diet and exercise – into their teaching syllabus.

Katrina Koutoulas, Corporate Marketing Manager, Nestlé Oceania, who originally spearheaded the program and still steers it today, said our goal, together with the AIS, is to address the increasingly complex issue of obesity and to teach kids nutrition basics.

It’s estimated that 17 per cent of Australian children are overweight and 6 per cent are obese*.

“The AIS is synonymous with a healthy lifestyle and expertise in developing the best athletes, while we are one of the world’s leading nutrition, health and wellness companies, so it was obvious that we would team up to try and make a difference in improving nutrition knowledge among students,” she said.

In 2009, the program was reviewed by a panel of teachers from around Australia to update the curriculum which includes state

specific lesson plans, student activity sheets, online forum for teachers, and a nutrition quiz to test students’ knowledge at the beginning and end of the year.

Katrina said a new element to the program allowed children to involve their families in some of the worksheet activities.

“By reaching out to families and helping to increase their nutritional knowledge we can help influence the food choices made by mums and dads at the supermarket and hopefully that will lead to healthier home cooked meals.”

‘Get the AIS into your Classroom’ is a key part of Nestlé’s Healthy Kids Program, a global initiative to improve the nutrition, health and wellness of school age children around the world.

Over the Tasman, Nestlé New Zealand is also making inroads into obesity and active lifestyles through a long-standing partnership with the Millennium Institute of Sport & Health.

* Preventative Health Taskforce. 2009 National Health Preventative Strategy.

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Our efforts are co-ordinated though the Nestlé Good Life Program, which brings together a range of partnerships, specific programs and sponsorship activities. This includes our major nutrition education partnership with the Australian Institute of Sport, our Milo in2CRICKET program, the Nestlé Community Environment Program, the Nestlé Golden Chef’s Hat Award, Meals on Wheels Program and various other initiatives.

In 2009, our Nestlé Good Life Program contributed some AUD 5 million to community programs and broader sponsorship initiatives. This contribution does not include broader in-kind support and staff time.

HEALTHY KIDS GLOBAL PROGRAM Launched at the Creating Shared Value Forum in New York in April 2009, the Nestlé Healthy Kids Global Program aims to improve the nutrition, health, and wellness of school age children around the world. The program is targeted toward children and seeks to improve their health through better eating, greater

physical activity, or other key health measures. In Oceania, our Healthy Kids initiatives bring together healthy eating, education and sports and fitness programs such as the ‘Get the AIS into your Classroom’, ‘Milo in2CRICKET’, ‘Milo Kiwi Cricket’ and the Millennium Institute of Sports Education program. In 2009, these initiatives reached some 1 million children.

AUSTRALIAN INSTITUTE OF SPORT (AIS)Over the past 10 years Nestlé has worked closely with the AIS, particularly in the areas of education and nutrition. Throughout 2009, Nestlé and the AIS continued to improve the healthy lifestyle of Australian children with the continued investment, extensive review and update of the resource ‘Get the AIS into your Classroom’ which will be launched in 2010 to schools and teachers.

The resource is a key part of the ‘Nestlé Healthy Kids Global Program’, and is discussed in greater detail on page 69.

Our community involvement initiatives come together around the areas where we are well placed to make a difference, namely food, health, nutrition, education and promoting active lifestyles. We are also focused on improving the environmental sustainability within the communities where we operate.

Since the Nestlé Community Environment Program started in 2003 we have been part of more than 105 projects throughout Oceania.

Students from Manukau, New Zealand identified fish from nearby waterways during a biodiversity day organised by our Cambria Park factory as part of the factory’s Nestlé Community Environment Project.

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Our Community.



MILLENNIUM INSTITUTE OF SPORT & HEALTHNestlé New Zealand was a foundation sponsor when the Institute opened in 2002 and together over the following eight years Nestlé and the Millennium Institute have continued to promote a healthy lifestyle for Kiwis via initiatives such as ‘Winning Diet’ and ‘Be Healthy Be Active’ Booklets, Health & Activity teaching resource, Sports Nutrition Advice sheets, ‘Fit Food for Winners’ and ‘Fit Food Fast’ recipe books.

MILO COMMUNITY INITIATIVESNestlé is committed to promoting a healthy active lifestyle, especially for kids. Through the Milo brand, Nestlé has partnered with Cricket Australia for over 17 years to support junior cricket development. Through the grassroots introductory program, Milo in2CRICKET, over 600,000 kids participated in cricket activities in 2009.

In addition to the Milo in2CRICKET program, Nestlé granted one child a cricket cadetship including training session with Australian Vice-Captain Michael Clarke, and behind the scenes experiences of international sporting teams and events.

In New Zealand, Nestlé has been supporting junior cricket since 1986. Currently through Milo Kiwi Cricket and Milo Have-a go Cricket over 60,000 kids participated in learning cricketing skills. Nestlé also supports junior rugby in the Auckland Union where 6,500 kids play rugby.

SWIM, SURVIVE, STAY ALIVE PROGRAM Uncle Tobys has partnered with the Royal Life Saving Society Australia (RLSSA) to teach Australian children how to swim and survive in the water. Through a range of education and public awareness activities, the campaign is aimed at preventing the drowning deaths of more than 50 children each year. Uncle Tobys ambassadors and Olympic swimmers Grant Hackett, Eamon Sullivan, Emily Seebohm, Cate Campbell and hurdler Jana Rawlinson are also behind the campaign. The campaign is targeting children aged 5 to 15 to ensure they have got the skills and the knowledge to stay safe in the water.

MEALS ON WHEELSFor the past 10 years, Nestlé has been a proud sponsor of the Australian Meals on Wheels Association, a community-based program that assists people of all ages to remain at home with dignity and independence once they are unable to prepare meals themselves. The sponsorship allows Nestlé to better understand the Nutrition, Health and Wellness needs of the community, in particular the issues facing the elderly, and develop programs accordingly.

FOODBANKNestlé has had a long-standing partnership with Foodbank Australia. Partnering with groups such as Nestlé and other food and grocery donors, Foodbank provides food to a network of welfare agencies which prepare meals and food for the poor and hungry. Foodbank distributes some 17 million kilos of donated food and groceries each year, making around 23 million meals, and helping to feed 60,000 people a day.

Nestlé donates unsaleable or surplus food – which is safe and nutritious – that is distributed through state Foodbanks, as well as donating shop-saleable food to the annual ‘Donate Food Day’.

In 2009, Nestlé donated some 330 tonnes of food products to Foodbank Australia. Since 2004 our total food donations equate to some 3,800 tonnes. In New Zealand, Nestlé donated $2.3 million of product to organisations such as City Mission and Salvation Army.

With our focus on leaner and more efficient operations, Nestlé continues to look at innovative ways it can further contribute to Foodbank’s efforts. In 2009, Nestlé Uncle Tobys donated an entire day’s production as part of a collaborative initiative with Foodbank. This initiative delivered some 1.4 million bowls of porridge to Australians in need and was a true collaborative effort. Uncle Tobys provided the manufacturing – with our employees volunteering their time; farmers in Western Australia provided the cereals; packaging was provided by Amcor; and transportation and distribution was provided by the Toll Group.

Registered Nurse Sally Weatherlake with Wahgunyah employee Steve Bayne.

Our Wellness Program at Wahgunyah makes the employees feel like the company really cares about them. And as far as changing the culture and making a really positive step, it really is helping and tells our employees that we do care about their wellbeing and we are happy to help with work and non-work related issues.

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Since the NCEP’s inception in 2003, the Nestlé Community Environment Program has contributed some AUD 2.4 million to over 105 projects throughout the region.

Site Project details

Altona, Victoria Establishment of an on-site greenhouse and native plant nursery at St Mary’s Primary School, Williamstown. Project aims to teach students about the local wetlands habitat, and their role in its future sustainability. Hobsons Bay City Council, Parks Victoria and Friends of the Wetlands also participated in the project.

Arndell Park and Blacktown, NSW

Establishment of a river recovery nursery with previous NCEP partner, Greening Australia. The nursery will provide environmental education opportunities for local schools, produce and donate plants for local Bushcare/ Landcare groups and provide a resource for interested community members to volunteer and assist in natural resource management activities.

Blayney, NSW Construction of a bird viewing platform at the Heritage Park Wetlands, utilising recycled and sustainable building materials.

Broadford, Victoria Working with Tallarook Primary School, the project established a sustainable outdoor education and recreation space within the school grounds utilising indigenous, native and traditional vegetation. This will provide a long-term interactive educational opportunity to highlight the importance of maintaining a healthy environment in which to learn and play.

Cambria Park, New Zealand

Building on the success of previous NCEP projects with Wai Care Manukau City, this project will raise awareness of the many threats facing wildlife in the local streams and city landscapes. Students from the four surrounding schools will conduct targeted wildlife searches to reveal the state of local biodiversity. Results will be used to put into action plans to improve the local environment.

Campbellfi eld, Victoria Creation of a walking track at Mill Park Heights Primary School that focuses on local vegetation, specifically linking local Aboriginal history and traditions. Track to provide interpretative signage and include a native frog pond.

Gympie, Queensland Installation of new conveyor belt for Red Cross Gympie Business Service. Red Cross Business Services employs over 40 people with intellectual and physical disabilities or mental illness.

Lae, Papua New Guinea Building on a 2008 project, this initiative involves tree planting and rubbish management with Lae City Authority.

Marton, New Zealand Project introduces children at Follet Street Kindergarten to conservation and sustainability concepts by establishing a water play area, a native plant area with outdoor seating, a recycling station and a worm farm.

Mulgrave, Victoria Project creates a butterfly trail circling the perimeter of the school, which will be planted with native plant species to attract the indigenous butterfly population.

Rhodes, NSW Working with Strathfield North Public School to create an Australian native garden including an outdoor learning area. Aims to provide a natural area where the students and local community can develop, maintain and learn the importance of environmental management, water sustainability and the benefits of the unique Australian flora.

Smithtown, NSW Working with Smithtown Public School to develop a community garden. Students will apply sustainable practices to grow, nurture and prepare food. This will include composting and rainwater harvesting to maintain soil quality.

Tongala, Victoria Construction of a permanent, public display module at the park, which will exhibit regional, indigenous and nationally significant invertebrates in landscaped displays. The funding also provides for five mobile display units to be used in the park’s education service. These will allow school students to study lifecycles of invertebrate species in the classroom.

Wahgunyah, Victoria Project funds a curriculum linked energy efficiency program at Rutherglen Primary School in an effort to empower students to reduce energy usage, at home and in the classroom.

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Our Community.



NESTLÉ COMMUNITY ENVIRONMENT PROGRAM The Nestlé Community Environment Program (NCEP) continues to bring Nestlé Oceania sites and their surrounding communities closer together. The program involves key Nestlé Oceania sites partnering with community groups on projects which deliver local environmental sustainability outcomes. A formal review of the program was undertaken in 2009 to understand how the program can remain relevant into the future. Recommendations from the review are currently being considered.

Some 14 individual projects were implemented in 2009 across a diverse range of environmental issues, including revegetation, education and energy efficiency projects. Further details on 2009 projects are provided opposite. Pakenham and Ba sites were sold throughout the year and hence did not participate in NCEP in 2009.

VICTORIAN BUSHFIRE RESPONSEWe were deeply saddened by the tragedy caused by the Victorian bushfires in early 2009. The bushfires devastated Victoria, causing unprecedented loss of life and property. The fires came within one kilometre of our Broadford factory and many of our employees were directly and indirectly impacted by them.

To assist those impacted by the disaster, we announced a series of measures, including:

• $100,000 donation to the Commonwealth Bank’s Series Bushfire Appeal, directed to the Victorian Premier’s Bushfire Fund.

• $400,000 worth of food and beverages donated to those made homeless by the disaster and to the hardworking Emergency Services personnel.

• Matched the Federal Government’s grant of $1,000 per adult and $400 per child for employees who were victims of the crisis.

• Provision of counselling through our Employee Assistance Program.

PROJECT AFRICAProject Africa is a Nestlé employee-led initiative with ‘Habitat for Humanity (HFH) Ghana’, a not-for-profit international housing organisation. HFH aids developing and disaster-struck areas by assisting in building homes for those in need.

In March 2009, a team of six Nestlé Australia and seven Nestlé USA employees visited Ghana to work alongside Habitat for Humanity to build houses and make donations to local schools and orphanages. Working with local tradesmen, three homes were built in the KyeKyewere community, a five hour drive north from the capital Accra.

The Project has continued to grow and now brings together an international network of Nestlé employees who donate their time to participate in the initiative. The Project Leader returned to Ghana in July 2009 to plan for future initiatives, including a 2010 project.

SAVE THE KIWINestlé New Zealand for the last four years has contributed $50,000 to the BNZ Save the Kiwi program. In addition, Nestlé has supported the restoration of Motuhie Island in the Hauraki Gulf back to a pest free, native tree environment whereby in 2009 some of the endangered Little Spotted Kiwi were released.

NESTLÉ VOLUNTEER PROGRAMThe Nestlé Volunteer Program is a key part of our ongoing commitment to the community. By providing an additional day’s paid leave every year, the program helps our people find worthwhile community projects and provide hands-on help to their communities.

Through the program, our people participate in a range of community projects. In 2009, we clocked up 162 days of volunteer work across our Oceania business.

Billy Pawih, SHE Officer, Lae, Papua New Guinea.

“Whenever there is a Nestlé Community Environment Program at Lae it’s all hands on deck. The employees here love getting their hands dirty to help the local community.”

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Our Community – our performance

GRI reference 2006 2007 2008 2009

Community investment

Total community spend (AUD)† SO1 — 4,135,250 4,044,750 5,033,416

Nestlé Community Environment Program

Community Environment Projects (through the Nestlé Community Environment Program) (AUD) * SO1 / EN13 330,000 425,000 425,000 340,416

Nestlé Volunteer Program

Number of volunteering days logged SO1 97 100 112 162^

† Represents financial contributions from Nestlé Australia only. Does not include broader in kind support provided by Nestlé. ^ Includes employee volunteering for Victorian bushfires.* NZ and PNG contributions converted to AUD.

Nestlé Community Environment Program – project focus

Restoration/conservation/revegetation/community (incl. educuation element)

Waste (incl. education element)

Water (incl. education element)

Sustainability (incl. education element)

Energy/climate change (incl. education element)

2006 2007 2008 2009

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ASSURANCE STATEMENT

SGS AUSTRALIA PTY LTD’S STATEMENT ON SUSTAINABILITY ACTIVITIES IN THE NESTLÉ OCEANIA “CREATING SHARED VALUE REPORT 2009”.NATURE AND SCOPE THE ASSURANCESGS Australia was commissioned by Nestlé Oceania to conduct an independent assurance of their “Creating Shared Value Report 2009”. The scope of the assurance, based on the SGS Sustainability Report Assurance methodology, included the text, and 2009 data in accompanying tables, contained in this report.

The information in the “Creating Shared Value Report 2009” of Nestlé Oceania and its presentation are the responsibility of the directors and the management of Nestlé Oceania. SGS Australia has not been involved in the preparation of any of the material included in the “Creating Shared Value Report 2009”. Our responsibility is to express an opinion on the text, data, graphs and statements within the scope of verification set out above with the intention to inform all Nestlé Oceania’s stakeholders.

This report has been assured at a high level of scrutiny using our protocols for:• evaluation of content veracity; and• evaluation of the report against the Global Reporting Initiative Sustainability Reporting Guidelines (2006).

The assurance comprised a combination of pre-assurance research, interviews with relevant employees located at Head Offices in Australia (face-to-face) and New Zealand (by phone). Also, the assurance included on-site visits to factory sites in Australia and New Zealand selected on the basis of their impacts (Campbellfield, Waygunyah, Smithtown, Blayney, Gympie, Marton and Cambria Park); documentation and record review and validation, including a review of stakeholder engagement process undertaken by Nestlé Oceania following their materiality framework and reporting standard procedures. Financial data drawn directly from independently audited financial accounts has not been checked back to source as part of this assurance process.

STATEMENT OF INDEPENDENCE AND COMPETENCEThe SGS Group of companies is the world leader in inspection, testing and verification, operating in more than 140 countries and providing services including management systems and service certification; quality, environmental, social and ethical auditing and training; environmental, social, sustainability report assurance and greenhouse gases verification. SGS Australia affirms our independence from Nestlé Oceania, being free from bias and conflicts of interest with the organisation, its subsidiaries and stakeholders.

The assurance team was assembled based on their knowledge, experience and qualifications for this assignment, and comprised Lead auditors registered at the International Register of Certificated Auditors (IRCA) for environmental, quality and OHS management systems. They are also Lead Greenhouse Gases Verifiers, Lead Social & Business Integrity Auditors and Lead Sustainability Report Assurance practitioners.

ASSURANCE OPINIONOn the basis of the methodology described and the verification work performed, we are satisfied that the information and data contained within the “Creating Shared Value Report 2009” verified is reliable and provides a fair and balanced representation of Nestlé Oceania’s sustainability activities in 2009.

The assurance team is of the opinion that the Report can be used by the Reporting Organisation’s Stakeholders. We believe that the organisation has chosen an appropriate level of assurance for this stage in their reporting.

GLOBAL REPORTING INITIATIVE REPORTING GUIDELINES (2006) CONCLUSIONS, FINDINGS AND RECOMMENDATIONSIn our opinion, the Nestlé Oceania’s “Creating Shared Value Report 2009” meets the content and quality requirements of the Global Reporting Initiative G3 Version 3.0 Application Level B+.

GRI PrinciplesWe are satisfied that the GRI Principles have been adhered to in the development of the report and have summarised below the areas which should be considered for improvement in future reporting cycles.




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Materiality – Material issues that significantly affect the decision making of stakeholders have been included in the report, meeting the requirements of the GRI G3 Materiality Principle. In our opinion future reports could be improved by verifying externally the management disclosure, sustainability targets and information on performance against set targets for the chapter of “sourcing, agriculture, and our supply chain”. Climate Change is one of the material issues identified in the Stakeholder Engagement process, and Nestlé Oceania is reporting on their Scope 1 & Scope 2 performance of Oceania sites. Nevertheless, it should be considered to quantify also the Scope 3 emissions (Air travel, waste generated, final product outsourced transportation, etc) and report them if they are material.

Stakeholder Inclusiveness – Details on key stakeholders and reference to other stakeholders needs are included in the report, meeting the requirements of the GRI G3 Stakeholder Inclusiveness Principle. In our opinion future reports could be improved by including specific New Zealand and Pacific Islands representatives at the “Creating Shared Value Advisory Board” for undertaking the materiality assessment. The current members are all based in Australia. Future reports would be improved if the risks are also quantified (e.g. climate change, water scarcity, brand impact of purchasing controversial materials)

Sustainability Context – The reports reflects the company’s significant economic, environmental and social impacts. However, the report would benefit from being verified externally regarding the communication of the magnitude of its impact and contribution particularly in relation to the supply chain (raw materials, packaging material, greenhouse gases emissions of imported supplies, labour issues for suppliers not based in Oceania).

Completeness – The report is complete for the scope and boundaries defined, and any data not available for New Zealand and the Pacific Islands is appropriately explained within the report. It could be considered to implement further methods to collect full data of New Zealand and Pacific Islands.

Balance – A balanced approach is shown through the report.

Comparability – The report is comparable with previous year’s reports, and also aligned to GRI for enabling data comparison with other companies’ reports. Any indicator that deviates slightly from the GRI guidelines is appropriately explained within the report.

Accuracy – Information and data in the report were evaluated and where necessary to ensure accurate reporting, were amended accordingly, thereby meeting the requirements of the GRI G3 Accuracy Principle. Internal audit of site level data should be implemented to improve the accuracy of data.

Timeliness – Nestlé Oceania is publishing their report in an appropriate time-frame of the year.

Clarity – The report content is clear and has the level of information required by stakeholders. It is in English which is the appropriate language for stakeholders and majority of readers. It is available through internet and hard copies. The auditors verified that previous reports were available at factories and offices in Nestlé Oceania

Reliability – Information and data in the report were reliable and majority of records were kept accordingly. Internal audit of site level data should be implemented to improve the reliability and record keeping of data.

Standard DisclosuresWe are satisfied that the standard disclosures required by GRI have been reported upon.

IndicatorsWe are satisfied that this report includes more than the number of core indicators than the minimum required for GRI Application level B+ and also includes information on several of the additional indicators. More than the required minimum number of core indicators are included in the report, therefore, Nestlé Oceania could consider to report next year a level A+ report.

Signed:For and on behalf of SGS Australia Pty Ltd

Phil HockingGeneral Manager – Auditing DivisionSGS Australia

17 May, 2010WWW.SGS.COM

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GRI Content Index

Indicator Description Page / reference

Standard Disclosures

1.1 Statement from most senior decision maker of organisation Page 2: The CEO’s Introduction

1.2 Description of key impacts, risks, and opportunities Page 9: Our Creating Shared Value Strategy, Priorities and Governance

2.1 Name of the organisation Front cover

2.2 Primary brands, products, and/or services Page 9: Our Key Brands

2.3 Operational structure of the organisation Page 8: Our Structure

2.4 Location of organisation’s headquarters Page 7: Introducing Nestlé Oceania

2.5 Number of countries where the organisation operates Page 6: Introducing Nestlé Oceania

2.6 Nature of ownership and legal form Page 7: Introducing Nestlé Oceania

2.7 Markets served Page 6: Introducing Nestlé Oceania

2.8 Scale of the reporting organisation Page 7: Snapshot of Our 2009 Oceania Footprint

2.9 Significant changes during the reporting period regarding size, structure, or ownership

Page 8: What’s New in 2009 – Business Changes, Transactions and Announcements

2.10 Awards received in the reporting period N/A

3.1 Reporting period for information provided Page 13: Scope of Report and Verification

3.2 Date of most recent previous report (if any) Page 12: About This Report

3.3 Reporting cycle (annual, biennial, etc.) Page 12: About This Report

3.4 Contact point for questions regarding the report Page 81: Contact Us

3.5 Process for defining report content Page 12: What’s In and What’s Out – Selecting Report Content

3.6 Boundary of the report Page 13: Scope of Report and Verification

3.7 Specific limitations on the scope or boundary of the report Page 13: Scope of Report and Verification

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities

Page 13: Scope of Report and Verification

3.9 Data measurement techniques See data and various footnotes

3.10 Restatements 2008 economic indicators were restated to be in line with reporting scope

3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report

Page 12: About This Report; and also various footnotes

3.12 Table identifying the location of the Standard Disclosures in the report Page 77: GRI Content Index

3.13 External assurance Page 75: Assurance Statement

4.1 Governance structure of the organisation, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight

Not listed in Oceania. See Global Annual Report and Corporate Governance Report 2009

4.2 Indicate whether the Chair of the highest governance body is also an executive officer Not listed in Oceania. See Global Annual Report and Corporate Governance Report 2009

4.3 For organisations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members


4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body


4.5 Compensation and performance Not listed in Oceania. See Global Annual Report and Corporate Governance Report 2009

4.6 Avoidance of conflicts of interest Not listed in Oceania. See Global Annual Report and Corporate Governance Report 2009

4.7 Expertise of governance body Not listed in Oceania. See Global Annual Report and Corporate Governance Report 2009

4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation

Page 12: The Fundamentals: Responsible And Sustainable Business Practices; Page 46: A Responsible Culture

4.9 Procedures of the highest governance body for overseeing the organisation’s identification and management of economic, environmental, and social performance





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4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance


4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation

Page 5: Creating Shared Value at Nestlé

4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organisation subscribes or endorses

Page 12: The Fundamentals: Responsible and Sustainable Business Practices

4.13 Memberships in associations Page 12: The Fundamentals: Responsible and Sustainable Business Practices; Page 27: Partnerships, Engagement and Leveraging Our Reach

4.14 List of stakeholder groups engaged by the organisation Page 11: Engaging Our Stakeholders

4.15 Basis for identification and selection of stakeholders with whom to engage Page 11: Engaging Our Stakeholders

4.16 Approaches to stakeholder engagement Page 11: Engaging Our Stakeholders

4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key topics and concerns, including through its reporting

Page 11: Engaging Our Stakeholders

Economic Performance

EC1 Economic value generated and distributed Page 14: Our Economic Footprint

EC2 Risks and opportunities due to climate change Page 37: Climate Change; Page 40: Sustainability Risk Management; Page 60: Climate Change, Water Scarcity and Agriculture

EC3 Organisation’s defined benefit pension plan Not reported

EC4 Financial assistance from government Not reported

EC5 Entry level wage compared to local minimum wage Not reported

EC6 Policy, practices and spending on locally-based suppliers Page 59: Our Supply Chain Profile

EC7 Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation.

Not reported

EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, inkind, or pro bono engagement

Not reported

EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts

Not reported

Environmental

EN1 Material used by weight or volume Partially reported – Page 40: Packaging

EN2 Percentage of materials used that are recycled input materials Page 41: Our Performance (Our Environmental Footprint)

EN3 Direct energy consumption by primary energy source Page 41: Our Performance (Our Environmental Footprint)

EN4 Indirect energy consumption by primary source Page 41: Our Performance (Our Environmental Footprint)

EN5 Energy saved due to conservation and efficiency improvements Page 41: Our Performance (Our Environmental Footprint)

EN6 Initiatives to provide energy-efficient or renewable energy-based products and services Not reported

EN7 Initiatives to reduce indirect energy consumption Not reported

EN8 Total water withdrawal by source Page 41: Our Performance (Our Environmental Footprint)

EN9 Water sources affected Not reported

EN10 Percentage and total volume of water recycled and reused Not reported

EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

Not reported

EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas

Not reported

EN13 Habitats protected or restored Partially reported – Page 73: Nestlé Community Environment Program

EN14 Strategies, current actions, and future plans for managing impacts on biodiversity Not reported

EN15 IUCN Red List species Not reported

EN16 Total direct and indirect greenhouse gas emissions by weight Page 41: Our Performance (Our Environmental Footprint)

EN17 Other indirect greenhouse gas emissions by weight Not reported

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved Page 39: Energy and Greenhouse Gas Emissions

EN19 Ozone-depleting substances Not reported

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EN20 NO, SO and other significant air emissions by type and weight Not reported

EN21 Total water discharge by quality and destination Page 41: Our Performance (Our Environmental Footprint); Page X: Water

EN22 Total weight of waste by type and disposal method Page 38: Our Performance (Our Environmental Footprint)

EN23 Total number and volume of significant spills Not reported

EN24 Weight of transported, imported, exported or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally

Not reported

EN25 Identity, size, protected status and biodiversity value of water bodies and related habitats significantly affected by the reporting organisation’s discharges of water and runoff

Not reported

EN26 Initiatives to mitigate environmental impacts of products and services and extent of impact mitigation

Page 37: Reducing Our Footprint; Page 40: Packaging

EN27 Percentage of products sold and their packaging materials that are reclaimed by category

Page 41: Our Performance (Our Environmental Footprint)

EN28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations

No fines or non-monetary sanctions were received by Nestlé Oceania during 2009

EN29 Significant environmental impacts of transporting products and other goods and materials used for the organisation’s operations, and transporting members of the workforce

Page 41: Our Performance (Our Environmental Footprint)

EN30 Total environmental protection expenditures and investment by type Not reported

Labour Practices

LA1 Total workforce by employment type, employment contract, and by region Page 53: Our Performance (Our People)

LA2 Total number and rate of employee turnover by age group, gender, and region Page 53: Our Performance (Our People)

LA3 Benefits provided to full time employees that are not provided to temporary or part time employees, by major operations

Not reported

LA4 Percentage of employees covered by collective bargaining agreements Page 51: Labour Relations

LA5 Minimum notice period regarding operational changes, including whether it is specified in collective agreements

Not reported

LA6 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs

Not reported

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region

Page 53: Our Performance (Our People); Page 49: Protecting Our People – Health and Safety

LA8 Education, training, counselling, prevention, and risk control programs in place to assist workforce members, their families, or community members regarding serious diseases

Page 48: Looking After Our People – WellNes 4 Life

LA9 Health and safety topics covered in formal agreements with trade unions Not reported

LA10 Average hours of training per year per employee by employee category Page 53: Our Performance (Our People)

LA11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings

Page 52: Training

LA12 Percentage of employees receiving regular performance and career development review

Not reported

LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity

Page 53: Our Performance (Our People)

LA14 Ratio of basic salary of men to women by employee category Page 53: Our Performance (Our People)

Human Rights

HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening

Not reported

HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken

Page 61: Responsible Sourcing Program

HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained

Partially reported – Page 53: Our Performance (Our People); Page 46: A Responsible Culture

HR4 Total number of incidents of discrimination and actions taken Not reported

– Represents those indicators independently verified by SGS Australia.




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HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights

Page 53: Our Performance (Our People); Page 48: Ensuring Our High Labour Standards are Embedded

HR6 Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor


HR7 Operations identified as having significant risk for incidents of forced or compulsory labor and measures to contribute to the elimination of forced or compulsory labor.


HR8 Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations.

Not reported

HR9 Total number of incidents of violations involving Indigenous people and actions taken. Not reported

Society

SO1 Nature, scope, and effectiveness of any programs and practices that assess and manage the impact of operations on communities, including entering, operating, and exiting

Page 74: Our Performance (Our Community)

SO2 Percentage and total number of business units analyzed for risks related to corruption

Page 48: Ensuring Our High Labour Standards are Embedded

SO3 Percentage of employees trained in organization’s anti-corruption policies and procedures

Not reported

SO4 Actions taken in response to incidents of corruption Page 48: Ensuring Our High Labour Standards are Embedded

SO5 Public policy positions and participation in public policy development and lobbying Not reported

SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country

No contributions made to political parties

SO7 Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes

Not reported

SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations

Not reported

Product Responsibility

PR1 Lifecycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures

Page 18: Products and Consumers section; Page 31: Our Performance (Products and Consumers)

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their lifecycle, by type of outcomes

Not reported

PR3 Type of product and service information required by procedures, and percentage or significant products and services subject to such information requirements

Page 31: Our Performance (Products and Consumers)

PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type and outcomes

Not reported

PR5 Practices related to customers’ satisfaction, including results of surveys measuring customers’ satisfaction

Page 26: Getting Closer to Our Consumers

PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship

Page 25: Responsible Marketing and Communications

PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes

Page 25: Responsible Marketing and Communications

PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data

Not reported

PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

Not reported

– Represents those indicators independently verified by SGS Australia.

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Contact us

We want to continually improve our Creating Shared Value reporting and ensure it is valuable for all of our stakeholders. As such we would welcome your comments and feedback.

Please get in touch with us at: [email protected]

For more information, visit our website at: www.nestle.com.auwww.nestle.co.nz

For consumer enquiries, please contact our Consumer Services team at: 1800 025 [email protected]



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www.nestle.com.au

Hard copies of this report are printed on Impact, manufactured from 100% post consumer waste in a chlorine free process under the ISO 14001 environmental management system. The report was printed by Bloxham and Chambers, under strict environmental guidelines, in an operating environment also accredited to ISO 14001.


Documents

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