Sustainable development

The latter part of the twentieth century saw an increasing concern for the environment.

The concept of “sustainable development” (asdefined by the World Commission on

Environment and Development in 1987) is:

“development that meets the needs of thepresent generation without compromising

the ability of future generations tomeet their own needs.”

There are many views aboutthe nature of sustainability. Inits simplest form it is aboutensuring a better quality oflife for everyone, now andfor future generations. Toachieve this, sustainabledevelopment is concernedwith achieving economicgrowth alongside the pro-tection of the environmentand also at the same timemaking sure that theseeconomic and environmen-

tal benefits are available toeveryone. These three aspects

- economic, environmentaland social form the basis of

the sustainabledevelopment

concept.

Rio and after

By the early 1990s there was consider-able pressure for governments to createagreements concerning the environ-ment and its protection.

In 1992 the United Nations Conferenceon Environmental and Development(UNCED) was held in Rio de Janeiro.The main outcome of the conferencewas Agenda 21, which marked animportant landmark in the sustainabledevelopment fight, and inter countryco-operation.

Agenda 21 was the main documentsigned at the conference. It was over 800pages long, and represented a newglobal commitment to sustainable devel-opment. It was not a legally binding document, but was devised as a workingplan which countries would follow.

The conference marked the start ofglobal co-operation, which was neededto deal with the many issues, includingconcern for the environment.

The sustainable business

The concept and support for, sustainabledevelopment is growing. Many businesseshave integrated a strategy of sustainability(taking into account its 3 main aspects -economic, environment, social). It makesgood business sense for companies to beenvironmentally friendly as improved

efficiency in manufacturing in turn leadsto a more efficient use of naturalresources. Operating efficiently translatesto competitive advantage for business andsupports the economic pillar of sustain-ability as well. Therefore, all aspects ofsustainability are seen as complementary,and mutually interdependent.

Agenda 21 states that responsible businesses should play a major role inimproving the efficiency of resourceuse. This can result in minimisingwaste and protecting human health andenvironmental quality.

For a business to be environmentallysustainable, the company must start bybecoming environmentally aware fromthe inside. The whole ethics and cul-ture of the organisation must reflectthose of sustainable development. Thisincludes what the company does, howit treats its workers, how it deals withother organisations, how the managersact and what messages these actionssend out. Sustainable Development isan integrated approach including eco-nomic, environmental and socialaspects. Therefore all three are to beput at complementary levels of priorityeach considering effects of the othercomponents.

Agenda 21 lays out a seven point plan forbusinesses to start changing values andperceptions. It states that they should:

develop policies that support operations and products that havelower environmental impacts

ensure responsible and ethicalmanagement of products andprocesses from the point of view ofhealth, safety and the environment

make environmentally sound technologies available to affiliatesin developing countries withoutprohibitive charges

encourage overseas affiliates tomodify procedures in order to reflectlocal ecological conditions and shareinformation with Governments

create partnerships to help people in smaller companies learn business skills

establish national councils for sustainable development, both inthe formal business communityand in the informal sector, whichincludes small scale businesses

increase research and development of environmentally sound technologies and environmentalmanagement systems.

Nestlé as a sustainable business

As the world’s largest food company,Nestlé S.A. is dedicated to providingconsumers with the best food through-out their lives. The primary role of theCompany is the transformation of nat-ural resources into finished productsthat meet consumers’ expectations forsafety, quality, convenience and value.

Naturally, Nestlé is committed to sus-tainable development and environmentallysound business practices. The key driversfor Nestlé’s worldwide environmentalapproach are:

total compliance with all laws and regulations in all countrieswhere it operates

that Nestlé seeks to provide aleadership role - to establish thebenchmark for good business practice

by committing resources, bothhuman and financial, to secureenvironmental targets, including:

employing new technologies andprocesses

measuring the costs and benefits to the business of its activities

ensuring employees are aware ofbest practice.

To be effective a programme of environmental improvement must besupported by practical managementsystems.

Nestlé’s worldwide approach, therefore,has been to:

set targets for environmentalimprovements

monitor progress

audit results

review targets.

Doing Better by the Environment

www.nestle.co.ukwww.nestle.com

INTRODUCTIONThe environment is a key subject that affects us all.

Protection of the environment and the move towardssustainable development remains a responsibility

that must be shared between the public, govern-ments and the private sector.

This case study examines the background tosustainable development, the environment

and its protection. It also looks at howNestlé S.A., the world’s leading food

company, developed a policy and currentbusiness practices that reduce thecompany’s effect on the environment.

Following years of work on environmentalissues dating back to the 30’s, in 1996 theNestlé Environmental ManagementSystem (NEMS) was introduced whichconsolidates all environmentalmeasures taken by the NestléGroup. NEMS is now used to

ensure continuous improvementin Nestlé’s environmental

performance coveringall its business

activities.

Progress to date - Anexample from Nestlé UK

In the UK a series of surveys at allNestlé UK locations formed the basisfor a programme of continuousimprovement. Action plans weredeveloped for each Nestlé UK site,including capital expenditure plans forenvironmental protection.

Nestlé’s EnvironmentalManagement System

(NEMS)

NEMS is an organisational tool at theheart of Nestle's programme for theenvironment, and sets the frameworkfor all measures applied.

The NEMS objectives include:

To provide a systematic approachthat ensures compliance with Nestlé’senvironmental policy, relevant lawsand Nestlé’s operational standards.

To ensure the continuous improve-ment of Nestlé’s environmentalperformance, e.g. through the conservation of natural resourcesand the minimisation of waste.

To achieve compatibility with inter-national voluntary standards onenvironmental management systems.

To build mutual trust with consumers, governmental authorities and business partners.

NEMS is being implemented through-out Nestlé S.A.’s entire operation.

Ways in which Nestlé is doing betterby the environment

Nestlé UK’s commitment to sustain-able business practice is illustrated by

two business examples of areas whereimprovements are being made:

Packaging

Packaging is essential to maintain thehigh quality of the products. Nestlécontinuously reviews packaging and,where possible, reduces the amountused. This results in saving on materi-als such as glass and plastics. Nestlé isalso playing its part in meeting nation-al targets for the recovery and recyclingof packaging waste.

Nestlé has established a set of criteriafor evaluating packaging. These are:

Is the packaging appropriate for the product?

Is the size of pack justified?

Are there any unnecessary components within the pack?

Could any of the components be reduced in weight or thickness?

Could the manufacture and construction of the outer packaging be made simpler?

Is the material re-usable or recyclable?

Between 1991 and 2000 Nestlé UK hasbeen able to reduce its consumption ofmaterials by up to 10%.

Major achievements in this area included:

Removal of the inner plastic sleevefrom Kit Kat Bumper packs saving160 tonnes of plastic per year.

A reduction in the thickness of200g Nescafé jars saving 1041tonnes of glass per year.

A reduction in thickness of basematerial for chilled dessert pots

saving 150 tonnes of plastic over a two year period.

Energy management

As an integrated part of its environ-

mental policy, Nestlé UK is committed

to responsible energy management and

seeks to use energy as efficiently as

possible. This is done to:

improve cost-effectiveness, produc-tivity and working conditions

prolong the useful life of fossil fuels

avoid unnecessary expenditure

prevent related emissions to theenvironment.

This involves seeking to buy fuels attheir most economic cost and then touse them as efficiently as possible. Italso means a reduction in pollution,and less dependence on non-renewableresources. In the short-term thisinvolves gaining better control overenergy consumption. Different opera-tions are measured to determine energyusage. Nestlé is investing in energysaving measures as well as staff that areproperly informed.

Carbon dioxide is the most significantof the greenhouse gases believed to beresponsible for the effects of GlobalWarming. The Kyoto Conference onClimate Change (1999) has meant thatthe UK and many other Governmentshave entered into a legally bindingagreement to reduce greenhouse gases.In addition, the Government has set aunilateral target of 20% reduction ofcarbon dioxide by 2010 from 1990levels.

This is a summary of the steps taken byNestlé UK since 1994 to reduce green-house gas emissions:

the replacement of a coal-firedsteam raising plant with a gas-firedcombined heat and power plant at York, saving 45,000 tonnes ofCO2 per year

similar changes at Dalston - saving 24,000 tonnes

Ashbourne - saving 9,000 tonnes

Fawdon - saving 12,500 tonnes.

All figures shown relate to savingsmade per year.

As a company which produces

frozen, chilled and other

perishable foods, refrig-

eration is essential to

many parts of

Nestlé’s production

and distribution sys-

tems. Nestlé is pro-

gressively cutting

refrigerants tha t

a re potentially

harmful to the envi-

ronment. In the late

1980’s a survey indi-

cated that up to 10%

of refrigerants used by

the company in the UK

were CFCs. The decision

was made to phase out CFCs

in all but small, hermetically

sealed systems and today this pro-

gramme is complete.

Nestlé Policy and the EnvironmentProtection Act all forbid the deliberate

discharge of refrigerants into the

atmosphere. Where refrigerant has to

be removed from a system and cannot

be immediately reused, it is recovered

and sent for recycling or disposal by

suitably qualified companies.

Audit: Listing and measuring results,in order to check on performance.

Continuous improvement: Based on the Japanese notion of Kaizen ofcontinually seeking small incrementalsteps to improve products, processesand ways of working.

Culture: The typical pattern or wayof doing things in an organisation.

Drivers: The underlying forces thatprompt and lead change.

Environment Protection Act: UKlegislation creating series of require-ments on business to operate in sustainable ways.

Ethics: Sets of moral principles/beliefs.

Practical management systems:Systems which are designed to putmanagement decisions into action.

Strategic commitment: Organisationwide commitment involving all theparts of organisational policy andpractice.

Sustainable development:Development in living standards and improvements in the quality of life of people as a whole (ratherthan just for specific individuals) over a period of time.

© Business Case Studies LLP. www.businesscasestudies.co.uk

3 Give one other example of

how Nestlé has developed

business practice in line

with Agenda 21’s seven

point plan for business.

4 Why is it important for

organisations like Nestlé

to show leadership in

developing sustainable

business practice?

5 What further steps

could Nestlé take

in contributing to

sustainability?

2 Why are International

Treaties like Rio and

Kyoto important in

encouraging sustainable

business practice?

1 How can the removal of

the inner plastic sleeve

from Kit Kat Bumper

packs be seen as a move

towards sustainability?

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QUESTIONS

GLOSSARY OF KEYWORDS

ConclusionWorld governments are increasinglyrealising their responsibility to developand implement shared solutions toglobal environmental issues. At thesame time responsible businesses likeNestlé S.A. are taking on a leadershiprole. This should drive forward changesin policy and practice which will helpus all to enjoy a sustainable future.

Removal of inner plastic sleeves from Kit-Katbumper packs saves 160 tonnes of plastic per annum.