Nestlé tops influential sustainability index, but industry scores are below par

By David Burrows

- Last updated on GMT

Nestle's main headquarters are located in Vevey, Vaud in Switzerland.
Nestle's main headquarters are located in Vevey, Vaud in Switzerland.

Related tags Human rights

Nestlé is the top-rated food and beverage company in the Dow Jones Sustainability Index (DJSI) – its score of 92 out of 100 was more than double the sector average (39).

The company also top-scored in each of three ‘dimensions’ used in the assessment – economic, social and environmental. In the latter, Nestlé actually managed a perfect 100 points.

The world’s largest 3,400 publicly traded companies are invited to participate in the assessment, with the top 10% in each sector then evaluated and ranked in a ‘best of the best’ index. Companies can therefore be added or drop off the list each year – PepsiCo was one of the biggest additions to last year’s index, for example.

Food and drink companies are grouped together with those in the tobacco industry. Coca-Cola European Partners also made the list this year – the company’s website showing that it too scored 100 points in six areas, including packaging and health and nutrition. Criteria are weighted depending on the sector.

Industry scores

Data on individual companies is not publicly available (though it is available through Bloomberg’s investment terminal). However, DJSI shared the industry (food, drink and tobacco) scores with FoodNavigator. These showed scores of 50 or more were achieved in only two areas – health and nutrition (53) and occupational health and safety (50). The sector scored 49% for supply chain management.

The industry as a whole struggled in areas such as packaging (35), raw material sourcing (37) and operational eco-efficiency (33). However, it’s unclear who is dragging the scores down given the lack of detailed information available due to “confidentiality”.

What DJSI did say is that the poor scores for human capital development (32) and labour practice indicators and human rights (38) were mirrored in other industries. New questions introduced to the analysis for the latter category played a part in a drop in overall score of 35, said DJSI. Many firms have human rights policies in place but “few”​ companies have the tools to comprehensively assess, mitigate and remediate human rights risks, the report noted.

DJSI’s summary notes how, “Over the past five years, [Nestlé] has integrated 11 human rights issues into its life-cycle approach. Nestlé's first-class human rights due diligence program demonstrates the outstanding steps the company has taken to embed human rights measures into suppliers' management policies.”

Nestlé also came out top of the Thomson Reuters Diversity and Inclusion Index this month. The company was ranked 13th​ out of more than 4,000 publicly traded companies worldwide.

Rising investment

The company’s life-cycle approach, encompassing both products and the 76,000 farmers that supply it directly, impressed the DJSI assessors. In the past three years direct water withdrawal has also been reduced by 33%, 37% and 41% respectively (compared to 2005 levels). Some 7.7 million cubic metres of water were also recycled. Meanwhile, Nestlé UK & Ireland recently announced that half its electricity would soon come from a new wind farm in Scotland.

‘Environmental policy and management systems’ is an area in which many companies scored highly in this year’s DJSI, with the appetite for investing in sustainability “on the rise”.

“With 2016 likely to be the hottest year on record, investors are again reminded that companies’ environmental and sustainability efforts are crucial to their financial outcomes,” ​said David Blitzer, MD and chairman of the index committee.

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1 comment

Please sign this online petition

Posted by Sean Roberts,

Please sign an online petition that needs only 1600 more signatures to provide to the Minster of Enviroment to deny Nestle another 10 year permit for water taking in Aberfoyle-->

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