Nestle's key performance indicators provide a focus for measuring and reporting creating shared value, sustainability, and compliance. Creating shared value is Nestle's way of delivering a long-term and positive impact for shareholders and for society. Creating shared value is one of their business strategies, this way they are able to target activities where they can enhance the creation of value.
Nestle's work focuses on caring for water, acting on climate change and safeguarding the environment. They focus on the efforts to reducing water use across their operations, using sustainably managed and renewable resources and Nestle is working towards their goal of zero waste, hoping to become a lean systems company.
In the article "Creating Shared Value" from the Harvard Business Review, authors Michael E. Porter and Mark R. Kramer provide an overview of how businesses can work more responsibly, and by doing so will create value for both the businesses and the communities in which they operate. According to the article, businesses too often are focused on short-term profits. Social responsibility has become a minor point of emphasis but is not something that businesses have adopted as a core value. The article explains how businesses and society will benefit when businesses work harder to put into place practices that are designed to help improve communities where they operate and lessen societal harms which damages the businesses’ customers and employees. These initiatives include creating “shared value” by reconceiving products and markets, redefining productivity in the value chain, and enabling local cluster development. As noted in the article, there are many beneficial ways that companies can redefine productivity in the value chain. The article describes how businesses create shared value by building clusters to improve company productivity. Clusters are defined as “geographic concentrations of firms, related businesses, suppliers, service providers, and logistical infrastructure in a particular field.” Being part of this type of a cluster, like Silicon Valley, can be crucial to the success of the business by drawing on local resources for skilled labor, innovative ideas, and competitiveness.
Sustainability reports provide stakeholders; investors, employees and customers and overall image of the businesses social, ecological, and economic sustainability performance. There are two different types of initiatives; Global Reporting Initiative and Integrated Reporting. Global Reporting Initiative is an international global standards organization that helps businesses, governments, and other organizations understand and communicate their impacts on issues such as climate change and human rights. GRI is the most generally accepted and universally applied sustainability reporting framework and was developed through an international multi-stakeholder consultation process and compromising reporting guidelines. The most current version of GRI is G4 and G4 establishes principles on what to include in the reports and setting standards. Integrated Reporting pretty much asks us why; why are we doing this environmentally, it's an organization's strategy, governance, performance, and prospects lead to the creation of value over the short, medium and long-term. There are benefits of sustainability reporting, however, there are multiple complaints against it as well. Society says that in a sustainability report, businesses are able to hide what they are doing wrong or hide what they are lacking and only show you the positive parts. Our group will be taking a look at Nestle sustainability reports so we can share our opinions and see what they can do to make their company better from what they’re missing.
This article, The Performance Frontier written by Eccles and Serrafein is about examining the tradeoffs and to provide a framework for creating sustainable strategies that will boost financial and environmental, social and governance performance. This requires companies to do two things; to focus strategically on the most material that environmental, social and governance issues, the ones that have the greatest impact on the businesses ability to create shareholder value and to produce innovations in products, processes and business models that prioritize their concerns. Companies know that to withstand a sustainable strategy, the strategy must address the interest of all stakeholders, so those are the investors, employees, customers, and governments. Although all companies know this, some of them go ahead and launch programs anyways hoping they will be financially rewarded because they did “something good”. Some businesses have the same problem as some everyday people, they think because they did something good that they are going to be automatically rewarded. People are selfish, it is a human trait that most people possess and they only do things when something good is going to come their way. When nothing happens, they blame everyone but themselves and this too often happens in a business as well. Businesses have to do four things to be able to create sustainable strategies, they identify which environmental, social and governance issues are the most critical in their particular business, quantify the financial impact that improvements on those issues would have, undertake many innovations in products, processes and business models (which was previously mentioned) and to communicate with stakeholders about these new innovations. The penalties for ignoring ESG (environmental, social and governance) issues are known to be harsh. Some businesses prioritize financial over ESG performance, putting different controls in place to prevent similar disasters only after the fact, so only after something happens, a business wants to do something to fix their mistake. The first step, identifying materials and ESG issues, explains that the list of environmental, social and governance issues could have a big impact on financial performance. These concerns range from emissions into the air, greenhouse gases or pollution from driving your car to water and energy use. The second step is to quantify the relationship between financial and ESG (environmental, social and governance) performance. Once the company understands ESG issues and assess the impacts that each can have to improve financial performance they will know that each performance has many dimensions. Cost dimension, revenue growth, and gross margin defense are all three very important dimensions. In the third step, the companies must innovate products, processes and business models. Through developing a sustainable strategy, the process is never easy. There are short-term incentives, shortage of expertise, and capital budgeting limitations. Just because a business has this great] idea it does not mean they are always able to follow through with it. This could also be why some businesses decide they want to bypass the strategy and just go towards what is going to make them money. Or what they think is going to make them money because they're doing “something good" what was mentioned previously. Many employees are not rewarded how they should be so they do not have a lot of motivation to put in all their hard work and complete focus. Creating a strategy takes a long time and management realized that so employees are actually given short-term incentives to get tasks done. New strategies that disclose environmental and social challenges require new skills sometimes. Since new skills are required, the business needs to either pay money to train their employees or they need to hire more employees who possess the skills that are needed. So this training process or hiring process cost the business money. The long-term investments that sustainability improvements require does not make them attractive to businesses. Companies need to consider the value of investing in the long run, but some do not which is also a reason some choose not to partake in it.
Abraham and Mohan article, "Sustainability Innovation Systems” mentions how businesses follow a series of stages to reach “sustainable maturity” where companies undergo different focuses on sustainability. There are five different stages that help us to identify the status of a company from their sustainable performance.
Why Sustainability is the New Key Driver of Innovation, written by Ram Nidumolu, C.K. Prahalad, and M.R. Rangaswami studied companies that are involved with sustainability initiatives and what the results of that were. Sustainability objective drives innovation though and it is the mother lode of organizational and technological innovations that yield both bottom line and top line returns. Only companies that make sustainability a goal will achieve competitive advantage. Sustainability will always be a vital part of the development and those companies that go along with this new process will reduce the inputs they use and processes generated will add additional revenue from better products. The key to progress in times of economic crisis is innovation, becoming more sustainable will have businesses competitors hard pressed to follow in their direction. There is a five-stage process identified in the organizational path to be sustainable, each stage has its own challenges, competencies needed, and innovation opportunities. Stage 1 is View Compliance as an Opportunity, Stage 2 is Making Value Chains Sustainable, Stage 3 is Designing Sustainable Products and Services, Stage 4, Developing New Business Models and, Stage 5 is Creating Next Practice Platforms. Becoming a more sustainable company will make that company money, there are so many ways to become environmentally friendly and the benefits of doing so and all businesses should follow. They will make money and there will be an increase financially. It is so rewarding and customers will appreciate them doing it.
In our text, Molthan-Hill’s The Business Students Guide to Sustainable Management has concepts of the life-cycle assessment, sustainable product design, and green manufacturing. LCA is a standard for International Organization for Standardization. There are four stages of LCA: The goal/score phase, life cycle inventory phase, life cycle impact assessment phase and interpretation phase. Regarding Nestle, they have a life cycle assessment for their coffee products, this assessment takes an overall look overall that begins with raw materials, goes into manufacturing, packaging, transport, and distribution, information and dialogue and waste and recovery. The results were the following, starting with the first step which is getting the supplies, the problems were the GHG (greenhouse gas) emissions and water for green coffee cultivation. Nestle decided to train farmers in agricultural techniques, one of them being irrigation which is "the artificial application of water to land to assist in the production of crops", and they also distributed plantlets explaining how to produce large amounts of coffee while also being drought resistance. Next, it's the manufacturing this consisted of solving the use of energy, water, and waste. Solution to this was to have zero waste to dispose of, to reduce the amount of water used along with GHG emissions, and with the idea of zero waste, coffee grounds were put into used for factory fuel. For packaging, energy was also a concern, but Nestle dealt with it by developing materials made from sources that were "responsibly managed" and "improved environmental performance." After packaging, we have distribution and storage for this GHG emissions and energy were affected when Nestle took alternatives ways of transport and reduced the travel time to decrease the GHG emission. For consumption, it was a bit trickier as the customers were the ones responsible for this section, but still Nestle had a goal to reduce the use of water and energy when consuming their coffee products so they used LCA communication tools to give the customers a comparison of the energy use and water waste with "different machines, cups, and types of coffee," Nestle also offered online courses developed by the company's professionals on waste management, this included food loss and waste. Lastly, in the end of life which is where waste is the main concerned, Nestle created a tool to guide the providers on the environmental impact of serving coffee to both employees and customers and suggest practical suggestion for waste disposal. Looking at the results, we wondered when Nestle would be doing this for all their products and we found that they have a goal to “identify, update and address the sustainability hotspots for 20 product categories” by 2020, but for now we think this is the right step into knowing the life cycle of their products.
Nestle also uses sustainable product design principles, one being life cycle design like we mentioned before they had made sure to track the life cycle of their coffee products from the raw materials to the end of life. Another principle they use is design for ease repair/disposal, the company has focused on having a packaging that both protect their products but has the least amount of impact on the environment. So, they have used materials from "sustainably managed renewable resources" for almost all packaging, like bottles, cartons, they have also made a goal to recover their packaging and use it again for new packaging. Along with the sustainable packaging, Nestle has focused on labeling as they believe labeling a water bottle as with only one indicator such as "water footprint" would lead customers to believe the product has no effect of CO2 emissions and has impacted non-renewable energy resources. Though Nestle is on the right track for sustainability, we believe they need to be innovative and create an environmentally friendly product design from scratch, something that would change the game in sustainable companies.
From Green IT To Sustainable Innovation, another article we read written by Osch and Avital it focuses on discussing the concepts of Green IT and ‘Green IS’ to demonstrate the importance and bringing attention too sustainable innovation.’ There are three perspectives on sustainable information technology. Sustainability when referring it to information technology is frequently addressed through talking about green information technology or green information systems and not through sustainable innovation. These three perspectives speak about all three. Green information technology is the first; a good number of studies to date have been concerned with Green IT, with modifying and trying to control the negative impacts of information technology, energy consumption, and carbon dioxide emissions. The most noticeable driver of green information technology is regulation, which is a concept of management of complex systems according to a set of rules. The impact of information technology and energy spending is also another main concern, [G1] therefore eliminating waste and increasing efficiency are aimed for best practices. The business needs to be able to remove waste that is disrupting their business so they can be more productive. Green information system stresses the greater potential of information systems as opposed to information technology for dealing with environmental management. The most prominent driver of green information systems is the desire to reduce costs of energy and carbon emissions as well as regulatory reporting. As a result, green information systems are partially responsive. Sustainable innovation is the last perspective, sustainability can be seen as a business approach to creating long-term shareholder and stakeholder value by welcoming opportunities and risks that come from economic, environmental and social developments
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