Monday, October 11, 2010

How Nestlé creates Shared Value with society through its business

How Nestlé creates Shared Value with society through its business 
The Philippine Star
October 11, 2010

Manila, Philippines - With serious threats to the environment like global warming, as well as social problems like poverty, illiteracy and hunger across the world, experts are calling for a paradigm shift in the way major corporations including the wealthiest multi-national companies do business. That paradigm shift involves doing business in a way that ensure profits, while at the same time contributing a solution to problems faced by society.

Such a paradigm shift was discussed at the Creating Shared Value (CSV) Forum held at the New World Hotel. The Forum was well attended, drawing members of the business community, government, aid agencies, non-governmental organizations and other sectors of society. Leading the forum was Harvard professor and social responsibility expert Mark Kramer. Kramer says the traditional view that pits society and big business against each other is detrimental to both.

Under the traditional view, corporations would look at social programs as a cost of doing business. They would do social programs as a moral obligation, to enhance their reputation, or as a way of appeasing critics and preventing protests, so they are left alone to do business. In reality, business and society are interdependent and both should work together. This interdependence is the foundation of CSV.

“Creating Shared Value means policies and practices that enhance the competitiveness of a company while simultaneously advancing economic and social conditions in the communities in which it operates,” says Kramer.

Founding philosophy

The CSV Forum was organized by Nestlé Philippines, the Asian Development Bank, the Philippine Business for Social Progress and the Asian Institute of Management RVR Center for Social Responsibility. “Nestlé wants to promote CSV in order to share its own business philosophy, which remains unchanged since it was founded 140 years ago. In fact, Nestlé was already practicing CSV even before the term itself had been invented,” says Edith de Leon, SVP and head of Nestlé Philippines’ Corporate Affairs office.

De Leon says that Henri Nestlé—a trained pharmacist—began with the simple, yet noble, desire to help a neighbor’s baby and ended up founding what would become one of the world’s top food companies.

“At the time, quite a number of infants suffered from malnutrition—and some even died—because for one reason or another, they could not take their mother’s milk. Henri Nestlé was among several people working on powdered milk as a way to help such infants. His first success on his powdered milk formula was when he saved the life of his neighbor’s baby, who nearly died because it could not digest mother’s milk,” explains de Leon.

De Leon revealed added that CSV lies at the core of the business philosophy, practices and corporate values of Nestlé as a company. She said that wherever in the world Nestlé does business, it always seeks opportunities to integrate the welfare of the communities and societies where it operates.

CSV the Nestlé way

Kramer cites Nestlé for integrating CSV in its business through its “60/40 Program”. “Since its core business is food products, Nestlé is gaining competitive advantage by its 60/40 program. Under that program, Nestlé is increasing nutrition while reducing fat, salt and sugar in thousands of food products a year—aiming for 40 percent reduction in fat, salt and sugar while retaining 60 percent customer preference over its competitors,” says Kramer.

Coffee farmers are given training free-of-charge at the Nestlé Experimental and Demonstration Farm (NEDF) in Tagum City in Davao. There, they learn to plant other cash crops alongside their coffee trees—this gives them an added source of income while waiting for the harvest season.

Coffee farmers training at the NEDF learn to use the Sustainable Agricultural Initiative (SAI) and the Coffee-Based Sustainable Farming System (CBSFS). These programs teach coffee-growing methods that improve the quantity and quality of their coffee beans—all in the most environment friendly and sustainable way.

De Leon also mentions the “Laki sa Gatas” program that provides milk and basic nutrition seminars to public school children, teachers and parents. There’s also the BOW (Business on Wheels) program that provides livelihood to its members, who earn income as micro-distributors of Nestlé products. Nestlé Philippines is also a partner of Gawad Kalinga in supporting one GK community in Malarayat.

“Through CSV Forum, Nestlé hopes to share the benefits of putting CSV into a company’s business philosophy,” De Leon says, adding that she is heartened by the positive feedback she receives from Forum participants. It gives her hope that more and more companies, government agencies and NGOs will also become catalysts for social progress through CSV.