Making A Difference Through CSR:

Meeting the Challenges

CSR as Business Strategy

~ the NESTL perspective
Presented by:

Stephane Alby
Executive Director, Finance & Control
Nestl (Malaysia) Berhad

Making A Difference Through CSR:

Meeting the Challenges

An Introduction
An introduction
Nestls Concept of CSR
Conclusion

NESTL ~ An Introduction

The NESTL Group

NESTL MALAYSIA

Founded in 1866 by Henri Nestl

Started business operations in 1912

Nestl is present in over 100 countries

Public listed on Bursa Malaysia

Worlds largest food manufacturer,

headquartered in Switzerland

Malaysias leading halal food

company

Employs 253,000 people worldwide

Employs 4,000 employees

511 factories in 86 countries

RM3.1 billion in sales turnover in

2005

Sales of 32 billion individual products

each year

8 Factories; 6 Sales Offices and 1

National Distribution Centre

World class products & brands:

Worlds largest private nutrition

research facility

17 R&D Centers worldwide

RM5 billion investment annually on

R&D

Solid CSR Foundation

- Nestl was established as the result of the humanitarian act of our
founder, Henri Nestl. He developed a cereal milk based product in 1866
to save an infants life as the baby could not be breastfed.
-CSR is part of Nestls DNA and is inherent in Nestls Management &
Leadership Principles ~ to create long-term value for society
-CSR is built into the Nestl Corporate Business Principles and is a part of
its business strategy.
-Nestl supports The UN Global Compacts Principles which are
incorporated in the Nestl Corporate Business Principles ~ as a guide for
our business practices.

The Role of Business and CSR

For Business:
reliable, high quality sourcing
improved government functioning
regulatory
skilled, loyal workforce
superior products which successfully
compete

For Society:
improved earnings by suppliers
improved skills and earnings, job stability
employees
higher quality of life consumers
greater stability, economic and social
development - whole society

Built into Corporate Strategy

Reflects mutually dependent
relationship: business and society

The Concept of Shared Value Creation

Mark Kramer, Senior Fellow, Center for Business and

Government, John F. Kennedy School of Government,
Harvard University and Managing Director, Foundation
Strategy Group (FSG)

Shared Value Creation

Through Shared Value Creation, a company links its

operations to generating long-term value both for its business
and for society as a whole, and defines its success in terms of
internal financial returns and external social and economic
results. Ultimately, creating shared value acknowledges both
the work that corporations need to do to reduce negative
impacts on society as well as, and more fundamentally, how
they can be part of progress on global challenges.

Shared Value Creation

Create long term value for Business and Society

Mutually dependent relationship: business and society

Key part of business strategy

Value creation through the value chain: Agricultural suppliers, employees and associates, customers and society at large

Investments must be good for the country and the company

Following codes of conduct necessary, but not sufficient

To create Share value, you have to create Shared Value with society

Shared Value is applied across Nestl's

Value Chain
Agriculture and
Sourcing

Manufacturing
and Distribution

Products and
consumers

Purchasing Practices

Environmental, Safety
and Labour Practices

New/renovated products
for nutrition health and
wellness

Better Food Safety

Standards and
Workforce Development

Increase knowledge and

awareness for healthy
lifestyles

Nestl Raw material access at

benefit specified quality and
foreseeable price

Premium food
manufacturer

Profitable growth from

superior product
benefits

Society
Higher food output
benefit
using fewer resources

Higher food production

standards

Wider access to food,

and nutrition and health

Value
chain
impact

Growth Agricultural and

context Supplier Development

Shared Value Creation

Each Nestl market has its own CSR projects with the
overall umbrella theme of Shared Value Creation which
helps ensure that we meet the U.N. Millennium
Development Goals. Throughout the Group, we
try to ensure that one or more of the following goals are met :

Eradicate extreme poverty and hunger

Achieve universal primary education

Promote gender equality and empower

women

Reduce child mortality

Improve maternal health

Combat HIV/AIDS, Malaria and other

diseases

Ensure environmental sustainability

Develop global partnerships

OUR CSR WORK IN MALAYSIA

Extensive range of CSR initiatives in Malaysia which focus
on education and improving the quality of lives for less
privileged communities.
Some of our commitments include :
Contract farming for the hard-core poor;
Setting up of kindergartens in rural areas;
Providing learning resources for the physically and mentally
challenged;
Bridging the digital divide and promoting the learning of English in
rural schools via ICT;
Mentoring of SMEs in the food industry;
Helping to provide sustainable livelihoods for single mothers

Improving Farmers Income in Kelantan

Contract Farming of Chillies

Nestl works closely with the local farmers association in sourcing for quality
agricultural produce and provide technical expertise to ensure better yields
Nestl provides transfer of knowledge and assistance to the farmers on Good
Agricultural Practices and helps them be self-sufficient and independent.
Created partnerships for sustainable agriculture.
Access to raw materials from a reliable source and meeting Nestl quality
standards.
Project has won the Prime Ministers Award for Socio-Economic Development,
Farmers were accorded the respected and acknowledged SALAM accreditation
for excellence in farming practices in 2005 which is the official recognition that
Good Agricultural Practice (GAP) is implemented and abided by.

Investing in the Future of the Food Industry

The Nestle Food Mentoring Programme for SMEs

- The programme was initiated in 1999 to provide assistance to small-

medium companies in the food industry to attain world class standards

through the sharing of knowledge and experience with Nestl
- Range of mentoring topics covered including halal certification;
HACCP; marketing; legislation; sourcing; etc
- To date, the programme has successfully trained more than 2000
participants from 700 companies

INTERNALISING OUR CSR WORK

In an effort to internalise the CSR philosophy of the company, we unveiled a
company-wide initiative in 2005 ~ the Nestl REACHING OUT to COMMUNITY &
KIDS employee volunteer programme (or Nestl ROCKS for short) to further
encourage employee involvement in the communities where the Company
operates, which is aimed at reaffirming and strengthening our commitment to CSR.

Nestl ROCKs provides an avenue for all our employees to be involved in Nestls
CSR programmes while giving them the opportunity to fulfil their own social or
community obligations. This is the first initiative that is launched nationally in all work
locations involving some 3,500 employees, and allows our employees to dedicate 16
hours of their work time annually towards CSR activities, endorsed by the Company.

Currently, there are 28 homes, orphanages and charitable organisations that Nestl
has been supporting, where they may volunteer their services.

The NESTL Concept of

Corporate Social Responsibility
Conclusion:
The CSR Hierarchy
CREATE
SHARED VALUE
Reduce poverty,
Improve health
Empower people

SUSTAINABILITY
Protect the future

COMPLIANCE
Laws, Business Principles, codes of conduct

Thank You

For further info, please visit:

www.nestle.com
www.nestle.com.my
Or call Freephone:
1-800-88-3433