Nestlé, the world’s biggest food conglomerate, is boosting its green credentials with a wide-ranging set of initiatives costing 3.2 billion francs ($3.5 billion) over the next five years, including a 1.2 billion franc ($1.3 billion) investment in regenerative agriculture.
At the company’s annual general meeting (AGM) in Switzerland on Thursday, shareholders approved the company’s plans to go net zero by 2050. Unlike the Swiss giant, competitor Unilever hopes to reach net zero by 2039 on a slightly different basis, using carbon credits.
In order to decarbonize, Nestlé will have to rework its entire supply chain which currently produces 95% of its emissions. It plans to address the remaining 5% by making its operations more sustainable by using renewable energy and modifying its product portfolio to include environmentally friendly offerings.
Speaking at the company’s AGM on Thursday, CEO Mark Schneider said Nestlé is hoping to cut down on emissions with “regenerative agriculture” and by “scaling up reforestation” in places where the company sources ingredients for its products.
Dairy and livestock, which produce 34% of Nestlé’s total emissions, will be reworked using “agripreneurship”—initiatives to improve livestock management and provide sustainable feed, whose additives and dietary supplements help reduce methane.
The group also intends to plant more trees. Nestlé has been in hot water recently as it failed to meet its promise to only use deforestation-free raw materials by 2020.
The company has deployed reforestation efforts in a number of countries, with plans to expand across Africa, Asia, and Oceania and redress the historical deforestation caused by Nestlé’s palm oil trade.
This is the first time Nestlé shareholders were given the opportunity to vote on the company’s climate change plan.
Prior to the meeting, a shareholder resolution was jointly submitted by seven of the Swiss pension funds backing Nestlé. They sought a voice in the company’s climate-change–related plans. At the time of the announcement, Ethos director Vincent Kaufmann welcomed the decision to allow a shareholder vote on the issue but added, “It is important that they are actually followed up by concrete and effective measures.”
In the past year, total reported sales at Nestlé fell by 8.9% to 84.3 billion francs ($91.5 billion), while organic sales grew by 3.6%, backed by a surge in pet food revenue as well as strong demand for its coffee and dairy products.
Sales in Nestlé Health Science, which is home to brands such as Vital Proteins and Garden of Life, grew at double-digit rates, as did sales of its vegetarian and plant-based food offerings. Revenue for products that are made for “consumption outside of the home” declined “significantly,” according to Schneider.
Writing in Fortune in February, the Nestlé CEO noted that the company intended to invest in decarbonization, which would in turn serve its shareholders. He acknowledged the “significant transaction costs” the company would have to assume if it didn’t want to “wither” in the face of rising climate taxes and green investing.
Clarification, April 15, 2021: This article has been updated to clarify that Unilever’s net-zero target is based on carbon credits.
