NESTLÉ COMPANY: A

SUSTAINABILITY REPORT

Ayalin, Kirstein Reign

Castillo, Labyrinth

Genton, Reyland

Go, Deighven

Poblete, Micaella Reilene

 TABLE OF CONTENTS

Relevant Accounting Standards 1

Conceptual Framework Analysis 2

Stakeholder Impact 3

Sustainability Metrics Development 5

Sustainability Report 7

● Introduction and company background

● Governance and sustainability framework

● Stakeholder Engagement

● Performance metrics and analysis

● Future commitments and goals

Recommendation and Future Consideration 11

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RELEVANT ACCOUNTING STANDARDS

Nestlé, as a multinational corporation, typically follows the International Financial Reporting Standards
(IFRS) for its financial reporting. Key relevant standards include:

1. IFRS 15 - Revenue from Contracts with Customers: This standard governs how revenue is
recognized from the sale of goods and services.
2. IFRS 16 - Leases: This addresses the accounting for leases, impacting how Nestlé reports its
lease obligations.
3. IFRS 9 - Financial Instruments: This standard covers the classification and measurement of
financial instruments, including investments and financial liabilities.
4. IAS 2 - Inventories: This standard relates to the accounting for inventory, which is crucial for a
company like Nestlé that has substantial inventory of food products.
5. IAS 1 - Presentation of Financial Statements: This sets out the overall requirements for
financial statement presentation, ensuring transparency and comparability.
6. IAS 12 - Income Taxes: This standard deals with the accounting for income taxes, impacting
how Nestlé reports its tax obligations.

Nestlé Philippines follows the Philippine Accounting Standards (PAS) set by the Financial Reporting
Standards Council (FRSC). The relevant standards include:

1. PAS 1 - Presentation of Financial Statements

○ Establishes the overall framework for the presentation of financial statements, ensuring
they are clear, relevant, and comparable.
2. PAS 2 - Inventories
○ Governs the accounting for inventories, including how to determine their cost and how to
handle write-downs to net realizable value.
3. PAS 16 - Property, Plant, and Equipment
○ Details the recognition, measurement, and depreciation of tangible fixed assets.
4. PAS 36 - Impairment of Assets
○ Provides guidelines for assessing whether an asset is impaired and the procedures for
measuring and recognizing impairment losses.
5. PAS 38 - Intangible Assets
○ Covers the recognition and measurement of intangible assets, including trademarks and
patents.
6. PAS 40 - Investment Property
○ Addresses the accounting for investment properties, providing guidance on recognition
and measurement.

Compliance with International Standards

Nestlé Philippines also aligns its financial reporting with the International Financial Reporting Standards
(IFRS), as these standards have been adopted in the Philippines.

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CONCEPTUAL FRAMEWORK ANALYSIS

Figure 1

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STAKEHOLDERS IMPACT

Stakeholder Analysis:
To identify key stakeholders affected by XYZ Corporation's sustainability practices, we
consider the following groups:

Investors
Financial institutions, bondholders, and shareholders made investments in XYZ
Corporation.
Customers
Customers, clients, and final users of goods or services offered by XYZ Corporation.
Employees
Management, staff, contractors, and current and previous workers.
Suppliers
Businesses and people who give XYZ Corporation products or services.
Communities
The local communities, towns, and areas in which XYZ Corporation conducts business.
Environmental Groups
Groups dedicated to environmental preservation, sustainability, and conservation.
Regulatory Bodies
Governing bodies, legislators, and groups that establish standards.
Media
Online influencers, media outlets, and journalists.
NGO’s
Advocacy groups and non-governmental organizations (NGOs).
Indigenous People

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 Groups that have historically held rights or interests in regions where XYZ Corporation
operates.

Assessing Stakeholder Interests and Concerns:

To evaluate how stakeholders' interests and concerns should influence the sustainability report's
content, we consider the following:
Investors
● Interest in long-term sustainability, risk management, and financial performance.
Issues include resource depletion, climate change, and regulatory compliance.
Clients
● A concern for sustainability, safety, and product quality. Issues: transparency, supply
chain accountability, and environmental impact.
Workers
● Interest in career advancement, diversity, and workplace safety. Work-life balance,
fair opportunity, and labor practices are issues.
Providers
● Interest in sustainable sourcing, prompt payments, and ethical business methods.
Risks to the supply chain, the environment, and social responsibility are issues.
Communities
● Interest in community involvement, employment creation, and local economic
growth. Issues include cultural legacy, health effects, and environmental deterioration.
Groups for the Environment
● Interest in resource efficiency, biodiversity preservation, and climate change
mitigation. Ecosystem disruption, pollution, and deforestation are issues.
Regulatory Organizations
● A concern for adhering to legal requirements, rules, and industry norms.
Enforcement, sanctions, and reputational harm are issues.
Media
● Interest in newsworthy stories, accountability, and openness. Reputation, public trust,
and crisis management are issues.

This stakeholder study suggests that the sustainability report ought to:
1. Clearly and impartially describe the sustainability performance of XYZ Corporation.

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2. Attend to the particular interests and concerns of every stakeholder group.
3. Emphasize accomplishments and advancements made toward sustainability objectives.
4. Describe the potential, risks, and problems.
5. Provide examples of stakeholder involvement and case studies.
6. Display your adherence to globally accepted sustainability frameworks and standards (such as
the GRI, SDGs, and CDP).
7. Make sure that reporting is inclusive and accessible by utilizing visual aids and plain
language.

The sustainability report from XYZ Corporation will show responsibility, openness, and
dedication to ethical business operations by taking into account the various viewpoints and
worries of stakeholders.

SUSTAINABILITY METRICS DEVELOPMENT

Creating key performance indicators (KPIs) that are in compliance with accepted frameworks like
PAS, IFRS, and GRI guidelines is crucial to measuring XYZ Corporation's sustainability initiatives.
Suggested KPIs:

Carbon Footprint (Emissions in Scopes 1, 2, and 3)

Calculate the total amount of greenhouse gasses released by both direct and indirect sources. GRI
305 stresses the need of reporting greenhouse gas emissions, while PAS 2050 offers a framework for
evaluating the lifecycle emissions of goods and services.

Energy Use (Non-Renewable versus Renewable)

Monitor the overall amount of energy used and the proportion that comes from renewable
sources. GRI 302 concentrates on energy consumption and its sources, whereas IFRS standards promote
the disclosure of energy use as part of financial reporting.

Water Efficiency and Usage Description

Calculate the overall amount of water used and the percentage of water reused in activities. GRI
303 supports sustainable water management techniques by offering precise measures for water
consumption and its effects.

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Rates of Recycling and Waste Reduction

Keep track of the overall amount of garbage produced and the proportion that is recycled or kept
out of landfills. In order to promote a circular economy, GRI 306 places a strong emphasis on waste
management techniques, such as recycling and reduction initiatives.

The percentage of sustainable procurement

Calculate the proportion of suppliers who satisfy sustainability standards. GRI 204 and PAS 2050
promote the evaluation of supplier sustainability and responsible procurement.

Participation of Workers in Sustainability Projects

Track the percentage of staff members who participate in training and sustainability initiatives.
GRI 403 emphasizes the value of employee involvement in sustainability by concentrating on workforce
engagement and well-being.

Impact and Investment in the Community Description:

Monitor and assess the social impact of investments made in community projects. GRI 413
reinforces corporate social responsibility initiatives by offering rules for reporting community
engagement.

Implementation and Reporting

To implement these KPIs effectively, XYZ Corporation should:

Data Gathering

Create reliable systems for gathering data to guarantee timely and accurate reporting.

Comparing

To find areas for improvement, compare metrics to best practices and industry standards.

Frequent Reporting

Release yearly sustainability reports that adhere to GRI guidelines in order to openly update
stakeholders on progress.

Engagement of Stakeholders

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 Engage stakeholders in the creation and improvement of KPIs to guarantee their applicability and
responsibility.

To conclude, by putting these KPIs into practice, XYZ Corporation can establish a thorough
framework for evaluating its sustainability initiatives and guarantee compliance with GRI, IFRS, and PAS
regulations. This strategy promotes ongoing sustainability practice improvement in addition to increasing
openness.

SUSTAINABILITY REPORT

INTRODUCTION AND BACKGROUND

Leading the food and beverage sector globally, Nestlé is well-known for a wide variety of goods,
ranging from pet care to infant nourishment. The business was established in 1867 and has since
expanded to become one of the biggest and most well-known companies worldwide. Nestlé, which has its
headquarters in Vevey, Switzerland, and works in more than 190 countries, provides goods that are
intended to enhance people's quality of life and promote a healthier future.

In the late 1800s, pharmacist Henri Nestlé created a formula that saved the lives of infants, which
marked the beginning of Nestlé's adventure. Due to its success, this product launched a global business
that would eventually branch out into a number of industries, including dairy, coffee, chocolate products,
seasonings, cereals, frozen and refrigerated foods and healthcare nutrition. The company's current goals
include promoting healthier lifestyles worldwide, minimizing its environmental impact, and using
sustainable sourcing. Nestlé has over 2,000 brands and its goods are found in practically every home.
Nestlé has established itself as a household name because of its wide worldwide reach and unwavering
commitment to satisfying the changing requirements of its customers.

Nestlé Philippines, Inc. (NPI) is a strong and reliable company that offers the greatest food and
beverages to Filipino consumers. The company gives opportunity to every Filipino and employs more
than 3,700 men and women nationwide. The company also has a significant impact on how the global
food industry is shaped. Functional foods and medical nutrition are two examples of the goods that Nestlé
has developed through significant research and development to promote a healthy living. Nestlé has
capacity to adjust to shifting consumer tastes and market conditions over the years. Nestlé has grown from
a manufacturer of infant food to its current position as a major player in the food and nutrition industry
while upholding its dedication to sustainability, quality, and health.

GOVERNANCE AND SUSTAINABILITY FRAMEWORK

To generate shared value, fulfill social and environmental objectives, and satisfy a company's due
diligence and reporting requirements, effective governance is crucial.

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 Nestlé's Sustainability Strategy and ESG are two important considerations when making
decisions. The Executive Board develops and delivers the strategy, which is then approved and evaluated
on a regular basis by the Board of Directors and its Sustainability Committee to guarantee that the
company will reach the long-term sustainable value creation goals. Nestlé's ESG and Sustainability
Strategy is implemented under the direction of the ESG and Sustainability Council, which also offers
strategic leadership. To help speed up and standardize decision-making on a worldwide scale, the Council,
which consists of the Executive Vice President (EVP), Head of Strategic Business Units, and Marketing
and Sales, addresses issues, meets monthly, and submits reports on a regular basis.

THE COMPANY’S GOVERNANCE STRUCTURE

Figure 2

The company's performance in the areas of social responsibility, environmental sustainability, and
governance standards is measured by the ESG score. Nestle's ESG score is 93 for environmental factors,
74 for social factors, and 62 for governance factors, per ESG intelligence. Nestlé's excellent ESG score
demonstrates the company's commitment to promoting change and reducing its negative effects on the

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environment and society. The business adopted sustainable sourcing methods, made a commitment to
environmentally friendly packaging, got rid of single-use plastics from its packaging, and encouraged
recycling. Additionally, Nestlé carries out a number of programs to guarantee equitable prices and
enhance the standard of living for farmers and small-scale producers. Lastly, the company's success and
excellent ESG score have been largely attributed to its governance procedures.

NESTLÉ ESG SCORE

Figure 3

STAKEHOLDER ENGAGEMENT

The company interacts with their stakeholders locally, regionally, nationally, and internationally
in order to evaluate their effects on the selected ESG material subjects. In every connection, they also
implement the Nestlé Corporate Business Principle, which calls for open and honest communication. In
order to address any risks associated with the material topics and promote regenerative food systems at
scale, they conduct projects, publish articles, and organize conferences and events. They frequently
consult with the Creating Shared Value (CSV) Council, an advisory body founded in 2009, throughout the
year.

Furthermore, the business uses a variety of channels to update and inform a wide range of
stakeholders. They interact through collaborative roadmaps, social media, analyst calls, frequent
meetings, brand marketing, and event hosting. Stakeholder management would involve locating,
interacting with, and informing all people and organizations that might be impacted by business
difficulties. The business will be better able to comprehend their objectives and wants, establish stronger
bonds with them, and control risks.

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PERFORMANCE METRICS AND ANALYSIS

In the 2023 financial year, Nestlé Philippines generated revenues amounting to approximately
2.68 billion Swiss francs, indicating an increase from the previous reporting year. Nestlé is among the
biggest food and beverage companies globally, with products ranging from coffee and milk to beverages,
dairy, and confectionery.

Furthermore, In the first nine months of 2024, the company group sales achieved organic growth
of 2.0%, with a Real Internal Growth (RIG) of 0.5%. Pricing contributed 1.6% to growth, though this was
down from unprecedented increases in previous years. Total reported sales amounted to CHF 67.1 billion,
reflecting a 2.4% decline from CHF 68.8 billion in 2023. This decline was influenced by foreign
exchange effects, which reduced sales by 4.1%, and net divestitures, which accounted for a decrease of
0.3%. Looking ahead to 2024, the company anticipates organic sales growth of around 2% and an
underlying trading operating profit margin of approximately 17.0%.

In addition, in the recent reporting period, organic growth was 3.6%, with a Real Internal Growth
(RIG) of 0.8%, reflecting ongoing consumer hesitancy toward global brands due to geopolitical tensions.
Pricing contributed 2.8%, while foreign exchange effects reduced sales by 8.7%, leading to a reported
sales decrease of 5.2% to CHF 12.5 billion. Key growth drivers included Central and West Africa, the
Philippines, and Thailand, where the company gained market share in confectionery but faced losses in
dairy and culinary sectors. By product category, coffee achieved mid single-digit growth, primarily driven
by Nescafé in ready-to-drink formats, while culinary experienced high single-digit growth fueled by
innovation in Maggi cooking solutions. Infant nutrition saw mid single-digit growth, supported by NAN,
S-26, and Lactogen. Nestlé Professional also grew at a high single-digit rate across various regions, while
confectionery reported low single-digit growth, particularly for KitKat. Purina PetCare delivered mid
single-digit growth, led by Felix and Purina One, and dairy posted slightly positive growth.

FUTURE COMMITMENTS AND GOALS

The future commitments and goals outlined focus on several key areas. First, the organization
aims to implement the Net Zero Roadmap to achieve significant emissions reductions while minimizing
exposure to transition risks. Enhancing supply chain resilience through climate-smart agricultural
practices is also a priority. Additionally, a shift to lower-emission energy sources will be pursued to
reduce direct operational costs. The organization plans to proactively manage regulatory changes and
carbon pricing impacts by further decreasing emissions.

Product innovation is another crucial goal, with an emphasis on developing and marketing
low-emission products to meet growing consumer demand. Continuous improvement of plant-based
offerings in terms of taste, texture, and nutrition will be prioritized, alongside leveraging expertise in plant
proteins to expand the range of dairy-alternative products. Finally, the organization will regularly assess
and modify recipes to lower product footprints by incorporating sustainable ingredients.

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RECOMMENDATION AND FUTURE CONSIDERATIONS

Nestle’s dedication to build a more sustainable future is demonstrated in their sustainability

reports. Based on their most recent report, the following suggestions and things to think about going
forward are provided:

● Integrate Sustainability to basic Business – guarantee a consistent approach across departments

and regions by integrating sustainability into Nestle’s basic operation.
● Invest in Innovative Solutions – make use of technology to create packaging, production
techniques and sustainable products.
● Create collaborative partnerships – work with industry peers, NGO’s and stakeholders to
exchange best practices and increase the overall impact on sustainability.

By implementing these tactics into practice, Nestle can reaffirm its dedication to sustainability
and help to create a future where people care more about the environment. Nestle can strengthen its
position as a leader in the food beverage industry.

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