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Nestle recession strategy puts public, shareholders centre-stage

By Jess Halliday , 28-Apr-2009

Nestle has indicated that the recession need not be all about cutting costs and keeping prices down, unveiling initiatives to tackle longer-term economic and social challenges, and create shareholder- and public-value.

Even though Nestle said in February that it expects to see on-going growth in 2009, the depth of a recession may seem an odd place from which to launch new projects aimed at solving nutrition, water, and rural development issues around the globe.

But Peter Brabeck-Letmathe, chairman of Nestle, said: “The financial crisis which has resulted in the current deep recession revealed once more a basic business axiom: if you fail to work on behalf of the public interest and rake shortcuts that place the public at risk, you will also fail your shareholders.

“We believe that to have long-term business success you must simultaneously create value for shareholders and for the public.”

The company said that long-term economic and social challenges cannot be solved by governments alone, and that companies must also take responsibility. Such issues include population growth, water resources and food security.

What is Nestle doing?

The company claims that ‘shared value’ for all involved in its manufacturing – from farmers through to communities in which it operates – has always been part of its strategy.

However there is a major focus on sustainability in industry at the moment, as operators wake up to the need to secure a long-term future and demonstrate their responsibility to customers and shareholders.

A Nestle forum taking place in New York this week, in cooperation with the United Nations, is setting for the launch of three specific new initiatives:

  • Nestle plans to extend its nutrition and physical activity education projects, under the Nestle Healthy Kids Global Programme, to more than 100 counties by 2011. The programme is double-pronged, aiming to help both malnutrition and rising obesity rates.
  • Nestle is opening a new research and development centre in Abidjan, Côte d’Ivoire which it says shows its commitment to rural development in Africa. The centre will focus on productivity and safety in local crops, like manioc, corn, millet, coffee, cocoa, and cereals, and tree propagation.
  • The Nestle Prize in Creating Shared Value, to be awarded every two years to give financial support of up to CHF 500,000 to individuals, NGOs, or small enterprises offering innovative solutions to nutritional deficiencies, access to clean water, or rural development.