Blog 5 - Nestle's Commitment to Creating Shared Value

Creating shared value is a forward-thinking management strategy that enables corporations around the world to ensure their longevity, productivity, and impact by directly connecting business functions and profitability with the well-being of local communities, the environment, and individuals.

A company at the forefront of creating shared value is Nestle, the global food giant which encompasses brands such as Perrier water, Nescafe, Gerber, and Stouffer’s, just to name a few.

Nestle is one of the few corporations to have embraced the creating shared value management strategy and has a stated commitment to creating shared value for the “farmers who grow [their] ingredients, [their] consumers, and the communities where [they] live and work”.

Nestle lays out several “ambitions” as part of their creating shared value strategy to accomplish by 2030:

• Help 50 million children lead healthier lives by improving ingredients quality, offering healthier food options, and removing artificial coloring.

• Improve 30 million livelihoods in communities directly connected to business activities by equipping young people in Nestle’s operations footprint with the skills and education necessary to achieve gainful employment after graduation.

• Achieve zero environmental impact in operations by focusing on how the corporation uses natural resources, reducing plastic waste, and providing access to clean drinking water in local communities.

So how is this new strategy and commitment impacting Nestle’s operations, and more importantly, their profitability?

So far, 2019 has been a great year for Nestle. In April, first quarter reports showed that Nestle had outpaced analysts estimates for growth, with a 3.4% reported growth. This is on the tale end of across the board growth in 2018. Adding to this momentum was the acquisition of Starbucks’ license to market branded products under the Starbucks brand name, as well as gains in the pet food market under the Purina brand name.

Based on these outcomes, it’s clear that Nestle’s focus on creating shared value has not hurt the business so far, even after analysts expressed skepticism over Nestle being able to eliminate plastic waste in a heavily packaged food industry. Despite these critics, Nestle remains committed to identifying ways to reduce its global plastics footprint and stay on track for total waste elimination by 2030.

Nestle’s bold and outspoken venture into creating shared value without losing profitability sets a precedent for other companies to feel confident doing the same. Unlike corporate social responsibility, which has a reputation and brand management focus, creating shared value means ensuring a company’s operations are in alignment with the goals and aspirations of the local communities that are directly impacted by the company’s work. By ensuring these things are in alignment, companies are more likely to be integral to the success of a community rather than counter or in the way of it.

One thing is clear from Nestle’s venture, and that is their intentionality. Like all strategy decisions, companies cannot dabble in creating shared value. Rather, a full host of resources and efforts must be put behind the creating shared value strategy to make it work. It must be embodied by employees and embedded throughout company culture and business practices. At first glance, this may seem like a lot of work. But as Nestle has proven, sometimes hard work pays off in a big way.

Sources:
Caplinger, D. (2019, April 22). Nestle Gets a Sweet Start to 2019. Retrieved May 1, 2019, from https://www.fool.com/investing/2019/04/22/nestle-gets-a-sweet-start-to-2019.aspx

Felsted, A. (2019, April 18). Nestle Discipline Cements Its Lead Over Unilever. Retrieved May 1, 2019, from https://www.washingtonpost.com/business/nestle-discipline-cements-its-lead-over-unilever/2019/04/18/faf65f6c-61d7-11e9-bf24-db4b9fb62aa2_story.html?utm_term=.81d15520eb2b

Our Impact. (n.d.). Retrieved May 1, 2019, from https://www.nestle.com/csv/global-initiatives

Tyler, J. (2019, April 11). Nestlé reports across-the-board growth in 2018. Retrieved May 1, 2019, from https://www.petfoodprocessing.net/articles/13036-nestlé-reports-across-the-board-growth-in-2018