Nestlé General Responsible Sourcing Guidelines for Materials of Agriculture, Forestry, Fishery and Aquaculture Origin A Framework for Continuous Improvement Version 1.0 February 2013 Table of contents I. Introduction 2 II. Scope 3 III. General Principles 4 IV. General Guidelines 5 V. Annexes: Material-specific Guidelines 6 1
I. Introduction This document presents Nestlé s General Responsible Sourcing Guidelines (RSGs) for materials of agriculture, forestry, fisheries and aquaculture origin (the so-called soft commodities ). The General RSGs establish a framework for Nestlé s engagement with suppliers with the long-term ambition that all materials of agriculture, forestry, fishery and aquaculture origin the company purchases will come from legally compliant and responsible sources that are committed to a process of continuous improvement towards environmental, economic and social sustainability, based on supply chain transparency and credible verification. 1 Nestlé s worldwide raw and packaging material supply chains are characterised by a high degree of diversity in terms of locally prevailing production systems, scales of production (ranging from smallholders to large-scale producers), cultures, consumer preferences, climates and ecological variables. Nestlé purchases a range of raw materials directly from more than 600 000 farmers globally. At the same time, many other Nestlé supply chains are long and complex and involve a wide range of different actors, including agricultural input providers, farmers, primary and secondary processors, carriers, traders and middlemen. Nestlé acknowledges the importance of applying a long-term approach to driving transparency and continuous improvement against our RSGs in our upstream value chains back to the origin. To this end, RSG Action Plans are being put in place for major raw and packaging material supply chains, comprising short-, mid- and long-term activities in line with the overall concept: remove the worst, promote the best, improve the rest. The RSGs and Action Plans form an integral part of Nestlé s supplier selection, evaluation and development process. Nestlé will report publically on annual basis on the progress achieved in implementing the RSGs. The RSGs complement the Nestlé Supplier Code and are applicable to all stages of the upstream value chain back to the primary production level. They are intended to be complemented with specific guidelines and practical tools adapted to local or regional conditions in compliance with national laws and regulations. The RSGs will be regularly revised, as appropriate, based on an evaluation of their practical workability and effectiveness in meeting sustainability objectives. The RSGs have been produced to guide Nestlé Businesses in the design and implementation of Responsible Sourcing Action Plans for specific raw and packaging materials and to support Nestlé Procurement and Agricultural Services in the assessment and continuous development of Nestlé suppliers against our corporate commitments and responsible sourcing requirements, as follows: Nestlé Corporate Business Principles Nestlé Supplier Code Nestlé Policy on Environmental Sustainability Nestlé Commitment on Climate Change Nestlé Commitment on Deforestation and Forest Stewardship Nestlé Responsible Sourcing Guidelines: Framework for Forest-based Materials Nestlé Responsible Sourcing Guidelines: Specific Requirements for Water Use in Agriculture Nestlé Commitment on Child Labour in Agricultural Supply Chains Nestlé Commitment on Rural Development Nestlé Commitment on Farm Animal Welfare United Nations Universal Declaration on Human Rights ILO Declaration on Fundamental Principles and Rights at Work (1988) United Nations Global Compact Principles 1 Throughout these RSG the term sustainable encompasses all three dimensions: environmental, social and economic. 2
The General RSGs comprise three sections: 1. General Principles driving the overall concept remove the worst, promote the best, improve the rest 2. General Guidelines applicable horizontally to all materials of agricultural, forestry, fishery and aquaculture origin 3. Annexes: Material-specific Guidelines that complement the General Principles and Guidelines by defining priority areas for continuous improvement for the material in question II. Scope The General Principles and Guidelines apply globally to all Nestlé purchases of raw and packaging materials of agriculture, forestry, fisheries and aquaculture origin. The commodity-specific Guidelines apply globally to the material in question. All Guidelines are applicable to all stages of the upstream value chain back to the primary production level. 3
III. General Principles In engaging with its suppliers, Nestlé will apply the following principles that are driving the overall concept remove the worst, promote the best, improve the rest. a) Continuous improvement Nestlé is committed to continuously and sustainably increasing the share of raw and packaging material sourced in compliance with the RSGs. All Nestlé suppliers are expected to engage in a process of continuous improvement and to verify their processes and practices against the RSGs. The RSGs form an integral part of Nestlé s supplier assessment, selection and development process. b) Transparency along the value chain Nestlé expects its suppliers to conduct their business with Nestlé in an open and transparent way, which includes providing transparency of material flows throughout the entire upstream value chain and the provision of accurate information on all aspects covered by the RSGs. c) Supplier accountability and supplier support Nestlé expects its suppliers to take ownership and leadership in developing and implementing continuous improvement measures against all aspects of the RSGs. As appropriate, Nestlé will provide support to suppliers that are not yet able to comply with all aspects of the RSGs, but are committed to becoming compliant over time and demonstrate continuous and tangible progress. d) Credible verification Nestlé s direct (tier 1) suppliers are audited by independent third parties against the minimum requirements of the Nestlé Supplier Code. These audits form part of Nestlé s Vendor Approval Process. In its extended value chains, Nestlé is committed to applying a consistent process of monitoring and verification of suppliers performance and continuous improvement against the RSGs. In the case of high sustainability risks, this process may be complemented by independent on-site audits or certification against effective and credible standards for sustainable agriculture, forestry, fisheries and aquaculture. e) Shared value for rural communities Nestlé recognizes the important socio-economic contribution of the agriculture, forestry, fishery and aquaculture sectors to the livelihoods of local communities, including smallholders in developing countries. Nestlé strives to cooperate with supply chain partners and stakeholders to support the long-term economic and social viability of production systems that contribute to sustainable local and rural development. Small producers shall not face disproportionate barriers to becoming a Nestlé supplier as a consequence of the implementation of the RSGs. f) Stakeholder engagement Beyond Nestlé s work in its own supply chains, Nestlé is committed to engaging with business partners, public policy makers, local authorities, international organisations, civil society organisations, and other relevant stakeholders to contribute to a process of continuous sustainability improvement in the agriculture, forestry, fishery and aquaculture sectors. g) Reporting and communication Nestlé is committed to transparently communicating on its progress made in implementing the RSGs to its supply chain partners and other relevant stakeholders. Nestlé will provide regular updates on its corporate website and in the annual Nestlé in Society Report. 4
IV. General Guidelines 1. Compliance a. Suppliers 2 comply with all applicable laws and regulations. b. All materials and products supplied to Nestlé have been produced in compliance with The Nestlé Corporate Business Principles and the Nestlé Supplier Code. 2. Economic sustainability a. All materials and products delivered by suppliers meet the quality and safety standards required by applicable law and by Nestlé safety and quality requirements. b. The long-term financial stability of the production system is pursued in line with market characteristics to enable proper investments and, as applicable, workforce payments. c. There is transparency of material flows throughout the entire upstream value chain to promote market access for safe, high quality products that have been produced in a responsible way. d. Market information is available to producers. 3. Human Rights & Labour Practices a. Suppliers respect all applicable human rights. b. Labour practices: i. There is no use of forced or compulsory labour. 3 ii. There is no use of child labour. Child labour refers to work that is mentally, physically, socially, morally dangerous or harmful to children or that improperly interferes with schooling needs. 4 iii. The rights of workers to freedom of association and collective bargaining are respected, consistent with applicable ILO Conventions. 5 iv. Workers wages and benefits comply with minimum legal requirements or mandatory industry standards, including any applicable binding collective agreements. v. Employees work in compliance with all applicable laws and mandatory industry standards pertaining to the number of hours and days worked. vi. Workers are provided with a safe and healthy workplace, including, as applicable, safe housing conditions. As a minimum, potable drinking water, adequate sanitation, emergency exits, essential safety equipment and access to emergency medical care are provided. vii. Hiring and employment practices do not discriminate on the ground of criteria such as race, colour, religion, sex, age, physical ability, maternity, religion, ethnicity, physical conditions or political views. 2 Throughout the RSGs, the term supplier includes all sub-suppliers back to the primary production stage. 3 ILO Conventions 29 and 105 4 Nestlé Supplier Code, ILO Conventions 138 and 182 5 ILO Convention 87 and 98 5
4. Environmental sustainability: a. There is no sourcing from areas converted from natural forests 6 after 1 February 2013. 7 b. High Conservation Values (HCVs) are identified and effectively maintained and/or enhanced. 8 c. Suppliers identify and reduce their significant environmental impacts in a process of continuous improvement, which includes, as applicable, the following aspects: i. Water withdrawal from the environment is minimized and water pollution is prevented ii. Waste is prevented, reused, recycled, recovered and disposed of in an environmentally sustainable way iii. Soil quality and soil fertility are maintained and/or enhanced iv. Biodiversity is maintained and/or enhanced v. Greenhouse gas emissions are mitigated vi. Air emissions from processing plants are mitigated vii. Energy is used efficiently 5. Local communities and rural development: a. Suppliers can demonstrate legal entitlement to land ownership or other pertinent land use rights. b. Agricultural and forestry development on local peoples land is subject to the free, prior and informed consent of the affected local communities, including indigenous peoples. 9 c. Farming, forestry, fishing and aquaculture activities contribute to rural development. 6. Animal welfare: Animal welfare practices along the upstream value chain are guided by the General Principles for the Welfare of Animals in Livestock Production Systems developed by the World Organisation for Animal Welfare (OIE) 10, to be implemented in a process of continuous improvement. A science-based approach is applied to defining criteria and indicators to evaluating farm animal welfare on the basis of the Five Freedoms 1) freedom from hunger, thirst and malnutrition; 2) freedom from fear and distress; 3) freedom from physical and thermal discomfort; 4) freedom from pain, injury and disease; and 5) freedom to express normal patterns of behaviour of farmed animals. 6 Nestlé Responsible Sourcing Guidelines: Requirements for forest-based materials: http://www.nestle.com/asset-library/documents/media/statements/2012- October/Nestlé%20Responsible%20Sourcing%20Guidelines%20for%20Forest-based%20Materials%20October%202012.pdf 7 Earlier cut-off dates may apply to specific materials. See the Annexes for material-specific requirements. 8 The HCV Resource Network promotes a consistent, global, cross-sectoral and scheme-neutral approach to HCV: www.hcvnetwork.org 9 For guidance see: FSC Guidelines for the implementation of free, prior, informed consent (2012); WWF: Free, prior, informed consent: guidelines and resources (2011): http://assets.worldwildlife.org/publications/363/files/original/14_free Prior Informed_Consent_and_REDD Guidelines_and_Resources.pdf?1345736553 10 Article 7.1.3. of the Terrestrial Animal Health Code, World Organisation of Animal Welfare (OIE) 6
Annexes: Material-specific Guidelines: The annexes lay out material-specific Guidelines for a number of raw and packaging materials, which complement the General Principles and Guidelines. To be annexed: the material-specific RSGs as approved by the SBUs: Palm Oil approved Paper & Board: approved Sugar approved Soya approved Coffee approved Cocoa approved Dairy approved Fish and Seafood approved Meat, Poultry, Eggs approved 7