The Positive Cup BECAUSE COFFEE CAN HAVE A POSITIVE IMPACT CREATING SHARED VALUE REPORT - Nestlé Nespresso
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COMPANY COFFEE ALUMINIUM CLIMATE
The Positive Cup
B EC AUS E CO F F E E C A N H AV E A POS I T I V E I M PACT
CRE AT ING S HA RE D VA LU E RE PO RT
IN ACCORDANCE WITH THE GRI G4 GUIDELINES
intro
COMPANY COFFEE ALUMINIUM CLIMATE
How can
a cup of coffee
deliver greater value
for society and
COMPANY COFFEE ALUMINIUM CLIMATE
the environment?
The terroir of the Nespresso Rosabaya,
Grand Cru, Cauca, Colombia
THE POSITIVE CUP 2/3
COMPANY COFFEE ALUMINIUM CLIMATE
THE POSITIVE CUP
is our conviction to make each cup of Nespresso an extraordinary
coffee experience, creating pleasure for consumers and benefits
for wider society and the environment.
It is a privilege for me, as CEO of Nestlé Nespresso, to present Through our engagement, we aim to show the important role the
the company’s Creating Shared Value report, setting out the work private sector can play. That means bringing new ideas, innovative
we have been doing to drive the sustainability of our business, approaches, resources and a commitment to addressing issues
creating shared value together with, and for, our partners. that ultimately affect us all. In short, being pioneers of sustainable
consumption and in this endeavour we aim to be leaders in
The success of our company is well known, in the coffee industry sustainability in our sector and encourage others to follow.
and wider business community. The power of innovation and
a commitment to excellence has propelled the strong performance One of the great privileges of my role is the opportunity to partner
of Nespresso over the last 30 years. The same level of commitment with individuals and teams from NGOs and the development sector.
to innovation and excellence, by all our employees, has also driven I never cease to be inspired by their passion and engagement and
our engagement in sustainability. This report sets out our strategy, I thank our partners, some of whom have joined us on the Nespresso
commitments and achievements – as well as identifying where Sustainability Advisory Board, for supporting our journey.
progress is still needed.
I am pleased to be able to report that at this half way stage, we are
on track with the targets we set ourselves in 2014 for achievement
Why is sustainability so important to us? by 2020. In fact, I can say with some confidence that we are already
innovating beyond the formal quantitative objectives that we set.
Because it is at the core of our business model and our Creating
THE QUALITY OF OUR GRANDS CRUS Shared Value approach. Nespresso’s innovation in portioned coffee
preparation has created a new and exceptional coffee experience
The Positive Cup is our multifaceted strategy, embodying the belief
that every cup of coffee can have a positive impact. The last couple
IS ROOTED IN SUSTAINABILITY for consumers, one which they appreciate and value. Our continuous of years have shown the perfect illustration of this and what we mean
quest to offer superior and unique profiles and aromas requires by Creating Shared Value. Our Grand Cru Suluja ti South Sudan was
a continuous improvement of coffee quality. This also increases launched in a number of markets – the first coffee to be exported
the value for the farmers producing it. Therefore, we can say from the country. Despite the recent developments and return
that our commitment to sustainable quality has led to the to armed conflict in South Sudan, we continue to be committed to
“decommoditisation” of Nespresso coffee. local communities. We also remain firmly committed to our strategy
of coffee revival. In 2017 we launched Aurora de la Paz, a Pure
We also know that we must engage in the sustainable development Origin coffee from Caquetá in Colombia, an area exposed to the
of these coffee regions. Smallholder coffee farmers are exposed civil conflict. This has been made possible by the peace process and
to unacceptable levels of uncertainty and risk to their livelihoods, Nespresso’s commitment to deploy the AAA Program among the
stemming chiefly from climate change and economic volatility. affected farming communities of the region, thus supporting
Through our unique Nespresso AAA Sustainable Quality™ Program, the post conflict agenda.
developed together with the Rainforest Alliance, we lessen these
risks, creating favourable conditions for over 70,000 farmer partners In all of this work, we are guided by the purpose of our parent
benefiting from premiums, the expert assistance of agronomists, company, Nestlé, to enhance quality of life and contribute to a
plus a wealth of other pioneering initiatives. One I derive great pride healthier future. I invite you to discover our strategy in this report
in is the introduction of the first ever retirement scheme for coffee and encourage you to share feedback, in the hope that together
farmers, developed together with the Colombian Coffee Growers we can continue to make positive impacts in the years to come.
Federation, the Colombian Government, and supported by
the cooperative in Caldas and Fairtrade International.
And finally we are aware of the changing expectations of citizens
Nespresso CEO, Jean-Marc Duvoisin, and AAA and civil society regarding the role of business, particularly in the
agronomist, Paul Karanga, visiting AAA farmers context of the COP21 agreement and the establishment of the Jean-Marc Duvoisin
Susan Waithira and Patrick Gitau in Kenya UN Sustainable Development Goals. CEO, Nestlé Nespresso
THE POSITIVE CUP G4-1, EC/EP-G4-DMA 4/5
COMPANY COFFEE ALUMINIUM CLIMATE
S U M M A RY TA B L E O F C O N T E N T S
Throughout 30 years of rapid growth, we have been learning how to integrate sustainability into COMPANY 8
our activities, seeking to improve our operations and generate positive impact. We call this approach What really matters .......................................................................................................................... 10
The Positive Cup, which is how Nespresso brings to life the Nestlé company purpose, “to enhance Creating Shared Value ...................................................................................................................... 12
Our value chain ................................................................................................................................ 14
quality of life and contribute to a healthier future”. Our journey ...................................................................................................................................... 16
Our people ....................................................................................................................................... 18
The Positive Cup reinforces the way the Nespresso model creates §§ We now source 82% of our coffee through the Nespresso Partnerships for impact ..................................................................................................................... 20
shared value. It ensures our activities deliver economic value for the AAA Sustainable Quality™ Program, supporting AAA farms Governance ...................................................................................................................................... 22
company, preserving the environment for future generations while towards compliance with certification standards. We have grown
supporting social progress for all stakeholders. It has led to the the share of certified coffee volume from zero to 41% in eight
“decommoditisation” of coffee and provided an opportunity years. We have also started to design solutions for the wider COFFEE 24
to enhance the Nespresso consumer experience by integrating deployment of AAA in the context of the traceability constraints What really matters .......................................................................................................................... 26
sustainability into our value proposition. of the East African supply chain The Nespresso AAA Sustainable Quality™ Program ......................................................................... 28
§§ We have contributed to the multi-stakeholder process which Farmer relationship management ..................................................................................................... 30
is defining new standards for sustainable aluminium (ASI). Innovation for community resilience .............................................................................................. 32
What really matters We estimate that 56% of our capsules are valorized after use. Our approach to Natural Capital ...................................................................................................... 34
However, sourcing “ASI certified” aluminium towards 100% will The AAA Program in East Africa ....................................................................................................... 36
The topics identified during our materiality assessment process set take longer than planned and further substantial progress on Coffee revival .................................................................................................................................... 38
out on page 71, has led us to define the following ambitions: capsule valorization depends on the expansion of collective systems Monitoring and evaluation ............................................................................................................... 40
§§ Ensure sustainable coffee sourcing, contributing to improve §§ We have planted 1.4 million trees in AAA coffee producing The scope of the AAA Program ........................................................................................................ 42
the livelihoods of farmers and the resilience of their communities regions over the past two years. This investment has enabled us
§§ Unlock solutions for the circular use of aluminium with a focus to inset 100% of our company’s operational carbon footprint.
on sourcing and recycling Given the capabilities required in the field and the time ALUMINIUM 44
§§ Take actions on climate change mitigation and adaptation, needed for appropriate community engagement, we have reset What really matters .......................................................................................................................... 46
improving our environmental performance our goal, which is now towards 5 million trees by 2020 The benefits of aluminium ............................................................................................................... 48
§§ Engage everyone in our company, our partners and our consumers, Our approach to aluminium stewardship .......................................................................................... 50
in the benefits of sustainable production and consumption Capsule life cycle management ........................................................................................................ 52
What’s next The scope of our recycling actions .................................................................................................... 54
How we are doing Based on the learning and experiences gained over recent years, we
have identified a number of key priorities: CLIMATE 56
Each section of the report sets out the detail of our programs, §§ Further expand the collective collection systems to improve the
where we are on track against our ambitions and associated goals, valorization and recycling rates of capsules after use – consistent What really matters .......................................................................................................................... 58
as well as where further progress is still required. with initiatives like the EU Circular Economy package Life cycle assessment ........................................................................................................................ 60
§§ Continue to integrate community and landscape level actions into The environmental performance of our operations .......................................................................... 62
The key highlights are: the AAA Program, such as expanding our agroforestry initiatives Sustainable machine design .............................................................................................................. 64
§§ We have identified 11 of the 17 UN Sustainable Development Goals §§ Build on the Nespresso Sustainability Innovation Fund to design Agroforestry for climate adaptation .................................................................................................. 66
(SDGs) where our programs can make a contribution and accelerate co-financing solutions for proven business models The scope of our climate actions ...................................................................................................... 68
§§ The report sets out our collaboration with some of our 45 partners such as community milling
in designing and delivering solutions to sustainability challenges §§ Set science-based targets for carbon reduction and improve our
in our value chain monitoring and evaluation systems in the context of COP21 and ABOUT THIS REPORT 70
§§ Since 2014, we have invested CHF 197 million in deploying SDG 13 Materiality – methodology ................................................................................................................ 71
our programs and expanding capabilities – for example our team §§ Continue the programs which engage employees and consumers Bureau Veritas assessment ................................................................................................................ 72
of over 300 agronomists in our sustainability initiatives such as promoting recycling, Our global partners .......................................................................................................................... 74
§§ We have set up the Nespresso Sustainability Innovation Fund (NSIF), sharing the benefits of sustainable quality coffees and offering Scope and performance overview .................................................................................................... 80
already supporting projects like climate-smart agriculture specific revival coffees from regions such as Cuba and GRI G4 Content Index ...................................................................................................................... 82
in East Africa with the World Bank-BioCarbon Fund Caquetá in Colombia Impressum ...................................................................................................................................... 101
THE POSITIVE CUP EC/EP-G4-DMA 6/7
COMPANY COFFEE ALUMINIUM CLIMATE
How does Nespresso
take responsibility
C O M PA N Y
for sustainable
consumption?
CREATING SHARED VALUE
IS AT THE HEART OF OUR
CONSUMER PROPOSITION
Efrain Ibañez and Arnoldo Cifuentes,
AAA agronomist and farmer from
Huehuetenango, Guatemala tasting coffee
in the Lausanne boutique, Switzerland
THE POSITIVE CUP 8/9
COMPANY COFFEE ALUMINIUM CLIMATE
WHAT REALLY MATTERS
“You cannot have a sustainable proposition to
LONG -TERM SUCCESS your consumers if you are not implementing
REQUIRES ACTION sustainability practices in your business.”
BEYOND CORE Arnaud Deschamps, Market Head, Nespresso France
OPERATIONS
Throughout 30 years of rapid growth we have What really matters
been learning how to improve our sustainability To integrate sustainable production
into our consumer value proposition
performance. Our impacts mostly occur beyond
the immediate sphere of our production
97 %
Building on the insights from our materiality assessment, our main focus as a portioned coffee company
and commercial operations, requiring us to is ensuring the sustainable production of coffee and aluminium and engaging consumers in the value
of sustainable consumption. Our employees have direct relationships with coffee farmers and Club Members.
engage with stakeholders upstream and 97% of the carbon footprint This gives us more opportunities to take action in areas we do not directly control but where our business
of a cup of Nespresso comes
downstream in our value chain. has significant dependencies and impacts.
from activities that occur
beyond our core operations
Implementing our Positive Cup ambition involves (e.g. on coffee farms, during the
consumption phase) Human rights Climate change
all of our people – especially those engaging SUSTAINABLE PRODUCTION Water stewardship
Nespresso Club Members in all that we do. Long-term partner relationship
Resource efficiency & waste
Community economic development
A wide range of strategic partnerships has been Environmental stewardship
integral to our progress over the years.
More recently, we launched the Nespresso
88 %
Community development Natural capital
& unemployment
Sustainability Innovation Fund to catalyse
STAKEHOLDER CONCERN
innovation, and we strengthened our 88% of our people would Rural development Business ethics OUR BUSINESS PRINCIPLES
recommend Nespresso AND VALUES
internal processes and governance as a place of work OUR PEOPLE Traceabillity Transparency and responsible practices
Safe, inclusive and rewarding place to work Creating Shared Value stakeholder
to improve decision-making. Responsible marketing
People development and empowerment and consumer relationships
Participative engagement
Employee relations
Women’s empowerment
Food safety
Safety & health
SIGNIFICANCE OF NESPRESSO IMPACT
Our 2020 ambition and goals
Total company engagement
2016 achievements status
Invest CHF 500 million in The Positive Cup (2014-2020) CHF 197 million
Empower everyone in our company to Strategy in execution,
contribute to our sustainability agenda employee training rolled out
Catalyse innovation through the Nespresso Two projects co-funded in the NSIF
Sustainability Innovation Fund USD 9 million blended capital
Achieved On track for 2020 Not on track for 2020
G4-19, G4-27, EC/IEI-G4-DMA, G4-EC7, EC/PSP-G4-DMA, EN/MA-G4-DMA,
THE POSITIVE CUP EN/OV-G4-DMA, HR/CL-G4-DMA, HR/FAC B-G4‑DMA, HR/FCL-G4-DMA, HR/ND-G4-DMA 10/11
COMPANY COFFEE ALUMINIUM CLIMATE
CREATING SHARED VALUE
“ We want each and every consumer
THE POSITIVE CUP to be able to appreciate the quality and
REINFORCES THE WAY the authenticity of our Grands Crus.”
THE NESPRESSO MODEL Alfonso Gonzalez, Chief Customer Officer, Nespresso
CREATES SHARED VALUE
Nespresso’s innovation in portioned coffee
preparation has created a new and exceptional
coffee experience for consumers, one which
they appreciate and value.
This required the supply of superior coffees which
are cultivated in specific terroirs. They are roasted
and blended with meticulous attention to detail and
their quality is protected by our aluminium capsules.
The origins of our Grands Crus are unique and not
interchangeable, so we cannot and do not buy our
coffee as a commodity, instead building long-term
relationships with individual farmers. Our approach
is to support producers to better manage their
farms, their businesses and their land. By doing so,
we secure the supply of higher quality crops that
meet the specific Nespresso quality and aroma
requirements. This not only delivers a better in-cup
result for our consumers but also greater income,
security and stability for the farmers.
This has led to the “decommoditisation” of
Nespresso coffees, improving the quality and
bringing more value to farmers producing the
unique profiles of coffee we depend on. It is our
expression of “Creating Shared Value”, a way of
doing business defined by Michael Porter and
adopted by Nestlé.
Chef Theo Randall, tasting the new range Daniel Delgado, AAA agronomist
of exclusive selection coffees, in a glass from Colombia, during a coffee tasting
designed especially for Nespresso by Riedel in Avenches factory, Switzerland
THE POSITIVE CUP EC/EP-G4-DMA 12/13
COMPANY COFFEE ALUMINIUM CLIMATE
OUR VALUE CHAIN
“Our sustainability investments are
SUSTAINABLE PRODUCTION part of the brand experience and
AND CONSUMPTION ARE valued by consumers in every cup.”
INTEGRATED INTO OUR Hélène Moncorger, Chief Financial Officer, Nespresso
END TO END MODEL
SUSTAINABLE PRODUCTION SUSTAINABLE CONSUMPTION
Grow Retail Experience
Scope Scope Scope: Classic line
§§ 12 countries §§ 63 countries, >11,000 employees §§ 24 permanent Grands Crus
§§ >70,000 farmers §§ 25 Customer Relationship Centres §§ Nine limited editions and variations
§§ > 300 agronomists §§ >600 boutiques §§ Two coffee revival Grands Crus
(Cuba, South Sudan)
Program Program
§§ AAA Sustainable Quality™ §§ The Positive Boutique Scope: Vertuo line
§§ 20 permanent Grands Crus
Independent acknowledgement Independent acknowledgement
§§ The Rainforest Alliance §§ OHSAS certification Scope: Pro line
§§ Fairtrade International §§ 13 Grands Crus
§§ Fairtrade USA §§ Two exclusive selections for fine
dining
Independent acknowledgement
§§ >5.5 million Facebook fans
§§ >700 Michelin star restaurants
Source Make Remake
Scope Scope Scope
§§ Aluminium Tier 1 suppliers §§ Three production centres in §§ Over 85% of Nespresso Club
Switzerland, >1,000 employees Members have access to a capsule
Program collection point
§§ Aluminium Stewardship Independent acknowledgement
Initiative (ASI) §§ ISO 22000, ISO 14001 Independent acknowledgement
and OHSAS certification §§ Third party verification tool
Independent acknowledgement §§ CDP climate change and water, for capsule collection and
§§ SMETA compliance DJSI reporting recycling (from 2017)
§§ ASI certification (from 2018)
THE POSITIVE CUP G4-4, G4-6, G4-8, G4-9, G4-12, FP2, FP5 14/15
COMPANY COFFEE ALUMINIUM CLIMATE
OUR JOURNEY
“We have identified 11 of the
FOR 30 YEARS, WE HAVE BEEN 17 Sustainable Development Goals
LEARNING AND ADAPTING HOW where we can make a contribution.”
WE INTEGRATE SUSTAINABILITY Jérôme Pérez, Global Head of Sustainability, Nespresso
INTO OUR ACTIVITIES
From developing our first prototype in the 1970s to our present day 1970s
Prototypes of the first system to 1986
initiatives, we have been learning how to integrate sustainability into
deliver barista coffee quality at home OUR PORTIONED COFFEE 1991
our business. Moving forwards, we are seeking to align our ambitions SYSTEM WAS BORN THE FIRST
and goals with those of the UN Sustainable Development Goals (SDGs) RECYCLING SYSTEM
– adopted by 193 Member States as the global priorities towards 2030. dedicated to Nespresso capsules
in Switzerland
Our Positive Cup ambitions seek to contribute to 11 of the 17 SDGs.
Two of these goals (SDG 12, Sustainable Consumption and Production,
and SDG 8, Decent Work and Inclusive Growth) set the direction for the
role of a consumer products company such as ours. Other goals are also
material to our value chain and business principles. All 17 SDGs are 2003
2005
outlined here with our customised descriptions and are referenced The life cycle assessment
THE NESPRESSO
2009 AAA SUSTAINABLE
using their icons throughout the report. WE SET OUR PLAN highlights the importance
of Scope 3 (emissions that
QUALITY™ PROGRAM
2012 FOR CREATING 1993
SHARED VALUE are a consequence of our
2014 Aluminium Nespresso joins the collective recycling
Stewardship
80% AAA coffee sourcing operations but are not owned
THE POSITIVE CUP: Initiative system in Germany with the support
75% capsule collection capacity or controlled by Nespresso)
A CHF 500M INVESTMENT The Aluminium Stewardship Initiative of Duales System Deutschland
(ASI) for responsible aluminium -20% GHG emission/cup
INTO POSITIVE IMPACT
Total company engagement sourcing and material stewardship
Resilient coffee farms and communities
End to end sustainably managed aluminium
Integrated actions on climate change 2030
OUR APPLICATION OF THE SDGs
2016 SDG 1 End Poverty
THE NESPRESSO SDG 2 Promote Sustainable Agriculture
2015 SUSTAINABILITY
NESPRESSO BRINGS SDG 4 Learning Opportunities for All
Grand Cru, INNOVATION FUND
Suluja ti SUSTAINABLE CONSUMPTION (NSIF) SDG 5 Gender Equality
South Sudan TO THE LONG CUP USAID and the World Bank become SDG 6 Water Stewardship
with the roll out of the Vertuo system the first partners to join the NSIF SDG 8 Decent Work and Inclusive Growth
SDG 12 Sustainable Consumption and Production
SDG 13 Climate Change
SDG 15 Natural Capital
SDG 16 Peace
SDG 17 Partnerships
2017
The first Creating Shared Value report
in accordance with the GRI Guidelines
G4-10, G4-12, G4-26, G4-LA9, G4-LA12, LA/DEO-G4-DMA,
THE POSITIVE CUP LA/ER-G4-DMA, LA/LMR-G4-DMA, LA/OHS-G4-DMA, LA/TE-G4-DMA 16/17
COMPANY COFFEE ALUMINIUM CLIMATE
OUR PEOPLE
“Each and everyone is involved
RESPONSIBLE AND because we consider sustainability
INCLUSIVE BUSINESS as a company-wide project.”
IS ESSENTIAL FOR OUR Daniel Weston, Global Head of Creating Shared Value, Nespresso
PEOPLE AND A SOURCE
OF INSPIRATION
We have grown significantly and now employ Beyond a shared passion for coffee and the brand, Nespresso Our development programs promote
around 13,000 people. With this comes
employees are getting more engaged in the implementation a coffee and sustainability culture
of The Positive Cup strategy. Over recent years, this has led
a responsibility for our people’s wellbeing and to consistent operational progress on recycling, coffee sourcing On average, Nespresso employees spend 34.3 hours per annum in
development, as well as a need to accommodate and environmental performance. More than this, as most of training (2016). Coffee know-how and sustainability awareness are
our employees deal with consumers everyday, their active the two topics on which all employees are trained when they first join
the changing expectations of a future workforce.
participation in the program enriches the consumer experience. Nespresso. Customer-facing employees follow a three-year curriculum
We have found that the more we engage including a specific module on sustainability. As part of their career
in sustainability, the more our people want path, customer-facing employees can develop into the role of
Nespresso employees interact with “coffee ambassador”, disseminating the expertise of sustainable
to get involved.
customers everyday quality coffee throughout the company.
The vast majority of Nespresso people are based in boutiques or
Customer Relationship Centres, listening to and helping customers.
This enables them to give direct feedback and to generate ideas
on how we can improve our products and the overall brand 85% of our employees
experience. Since 2014, hundreds of these ideas have been embraced
with the aim of delivering a better quality of service and improved
85 % feel engaged in the company
(+7pp vs. 2012)
customer satisfaction. The 2016 MBA Challenge winners from Saïd Business School,
University of Oxford
Responsible business is even
more important for millennials A closer look at
70 %
70% of staff are in contact
with consumers on a daily basis
Nespresso employees have an average age of 33. In line with local
the Nespresso Sustainability MBA Challenge
needs and culture, our market-based teams develop employee Since 2013, the Nespresso Sustainability MBA Challenge has given
engagement programs: from “green week” events generating ideas us the opportunity to engage with the next generation of business
Our people expect and appreciate around social and environmental challenges, to volunteering, leaders enrolled in international MBA schools, increasing their
a safe workplace academic programs and origin country experiences. In 2016 Nespresso awareness of the issues and opportunities around sustainable enterprise.
USA piloted the Nespresso Coffee Leadership Program, a curriculum Participation has increased year after year and we now attract more
Our boutique managers play an active role in promoting a safe with NY University Stern School of Business aimed at empowering than 80 schools annually. Challenges have dealt with topics as wide
environment. Not only for employees but also for the thousands employees to address societal challenges through their role as ranging as climate strategy, the circular economy and consumer
of customers visiting our boutiques every week. What we call business managers. engagement in sustainability. Finalists are invited to present their ideas
“the recordable injury rate” – the log of accidents that occur within and recommendations to a jury of academics, as well as to an
the business – covers our employees but also extends to the care audience of Nespresso employees. The winning team travels to a AAA
of our customers too. coffee region to see the AAA Program at work in the field. The MBA
Challenge is managed together with the Center for Intelligence in
Markets and Sustainability at the INCAE Business School in Costa Rica.
We promote greater participation of women
in our business and value chain Since 2013, the University of Cambridge Institute for Sustainability
Leadership has been an important stakeholder engaged in ongoing
Gender balance is a major focus for us, above all in leadership Nespresso consultation processes like the Sustainability Advisory Board
positions. While the global male/female balance is 43/57, this is not or the MBA Challenge. Equally, seven senior executives from the
yet reflected in the gender ratios of senior positions. Importantly,
90
Nespresso Leadership, including the CEO, have attended The Prince 90 different nationalities make up
in coffee field operations, we have learned that the presence of Wales’ Business & Sustainability program, highlighting the need the diverse Nespresso team
of female agronomists is key for the participation of women farmers for business engagement in issues such as climate change, inclusive
in training. Women excel in the adoption and implementation growth and resource security.
of best practices on farms. Today, women agronomists at our suppliers cisl.cam.ac.uk
Coffee Specialist, Filipa Perfeito, presenting Suluja ti South comprise 30% of our global field workforce.
Sudan, Nespresso boutique, Lausanne, Switzerland
G4-9, G4-10, G4-26, G4-LA9, G4-LA12, LA/DEO-G4-DMA, SDG SDG
THE POSITIVE CUP LA/LMR-G4-DMA, LA/OHS-G4-DMA, LA/TE-G4-DMA, LA/ER-G4-DMA Learning Opportunities for All Inclusive Growth 18/19COMPANY COFFEE ALUMINIUM CLIMATE
PARTNERSHIPS FOR IMPACT
“The nature of the challenges requires
PARTNERSHIPS DRIVE a joint approach – Nespresso cannot
INNOVATION AND solve these problems alone.”
AMPLIFY IMPACT Guillaume Le Cunff, President, Nespresso USA
Long-term collaboration has been instrumental Our latest initiative, the Nespresso Sustainability Innovation Fund, Academic expertise is an important
in us making real progress and in strengthening
aims to engage further, with a wide range of impact investors source of knowledge
and social finance institutions.
our capabilities. The Nespresso AAA Sustainable Over the years, Nespresso has partnered with a range of academic
Quality™ Program and our aluminium institutions to build knowledge related to agri-business and #SouthSudan’s #coffee farmers get a boost from
Collaboration leads to capability building Natural Capital. Our long-term partner, INCAE business school,
new @USAID @Nespresso @TechnoServe
management initiatives are both practical partnership: ow.ly/10xHt3 - @ABC
and an inclusive approach and its Sustainable Markets Intelligence Center (CIMS) have
#feedthefuture Partnerships are key to driving #sustainability
#innovation. Thank you to our partners for joining
illustrations of this. been instrumental in better understanding the model of smallholder
our discussion
Our track record in sustainable coffee sourcing, together with our coffee farming and the contribution of the AAA Program to
long-standing partnership with the Rainforest Alliance, is the most improving livelihoods.
important example of how we have built mutual capability on
sustainability. Today, more than 30 operational coffee partners and For the past three years, Wageningen University has been the
over 70,000 farmers apply the best practices of sustainable quality academic partner of the Manos al Agua platform, bringing strong
coffee production. Throughout this report, you will find partner expertise on water footprinting and water management. Since 2015,
profiles which detail our collaborations, while a full list of partners the centre for climate risk at Columbia University has been working
is outlined at the end. with us on the development of a crop insurance model, tailored to the
needs of coffee smallholders.
A closer look at
To address difficult systemic challenges, In addition, we are working with Harvard University on the Natural the Nespresso Sustainability Innovation Fund
multiple stakeholders work together Capital Protocol, the Yale School of Forestry and Environmental (NSIF)
Studies to analyse agroforestry benefits in Colombia, and we have
Over the past five years, Nespresso has been involved in setting up supported a University of Cambridge postgraduate project to assess The NSIF is a new facility, launched in 2015, which directs a portion
and participating in a range of coalitions with organisations that bring the return on investment of the AAA Program. of the CHF 500 million investment in The Positive Cup, towards
relevant expertise and a strong commitment to transform practices innovative sustainability initiatives which amplify the positive impact
for a more sustainable future. Today, Nespresso is part of five of our actions. It is designed as a source of blended capital to
multi-stakeholder platforms working on coffee landscape co-invest with institutional donors and impact investors, focusing
and aluminium stewardship topics: USD 88m additional investment initially on the areas of resilience and economic development.
§§ The Manos al Agua platform in Colombia to build knowledge
USD
88m by partners in the regions where
we source coffee (2007-2015)
The NSIF has already doubled its initial seed capital of USD 10 million,
with investments by USAID in South Sudan (USD 3.2 million) and
on Natural Capital and integrated landscape management the World Bank Group in Ethiopia (USD 6 million).
manosalagua.com
§§ The Consórcio Cerrado das Águas in Brazil to leverage efforts Investors will be critical to amplify
of landscape stakeholders and build resilient watersheds positive impact
Learn more on page 34-35.
§§ The International Platform for Insetting (IPI) in France to share Between 2007 and 2015, Nespresso leveraged its operational
best practices on how to manage socio‑environmental costs within investments in coffee producing countries through a series of
the value chain public-private partnerships channelling USD 87 million additional
investment into the regions and communities where we source What’s next
insettingplatform.com
AAA coffee. In 2015, the Nespresso Sustainability Innovation Fund
§§ The Aluminium Stewardship Initiative to set a standard for Explore investment opportunities through the
was launched to innovate in blended sustainability financing
responsible aluminium sourcing and material management Nespresso Sustainability Innovation Fund in recycling and
solutions – finding new financial mechanisms to attract investors
aluminium-stewardship.org
into socio-environmental projects that result in positive impacts. circular material management.
§§ The Club de l’Emballage Léger en Aluminium et en Acier
(CELAA) in France to establish recycling facilities
celaa.fr
Signature of a multi-stakeholder agreement
for the farmers savings plan, Aguadas, Colombia
SDG
THE POSITIVE CUP G4-15, G4-16 Partnerships 20/21COMPANY COFFEE ALUMINIUM CLIMATE
GOVERNANCE
“Governance means integration of
SUSTAINABILITY IS sustainability into our business but it also
INTEGRATED INTO OUR means being open to external advice.”
REGULAR BUSINESS Yvonne Iwaniuk, Global Corporate Communication & PR Head, Nespresso
MANAGEMENT PROCESSES
Nestlé’s purpose is to enhance quality of life
LEADERSHIP
and contribute to a healthier future. This drives §§ Nespresso Leadership Team
The Positive Cup, enabling sustainable consumption, §§ Nespresso CSV Global Team
supporting resilience of coffee farming communities §§ Nestlé Operations Sustainability Council CHF 197m already invested
and taking care of natural resources for future
§§ Nestlé Brands and CSV Advisory CHF
197m of the CHF 500m commitment
(2014-2020)
generations. At Nespresso, a governance structure Scope
is in place to deliver these impacts. Sustainability is §§ The Positive Cup Strategy Partnerships
§§ Nestlé Alignment
discussed at all our monthly operational meetings.
COMMERCIAL OPERATIONS TECHNICAL OPERATIONS COFFEE FIELD OPERATIONS CONSULTATION
§§ Market Heads §§ Procurement Network §§ AAA Regional Managers AND PARTNERSHIP
§§ Local Sustainability Champions §§ Factory Managers §§ Agronomist Workforce Nespresso Sustainability Advisory Board NSAB members 2016, New York, USA
§§ Coffee Ambassadors §§ SHE and Quality Managers Nespresso Sustainability Innovation Fund
§§ Technical Quality Managers Scope Multi-stakeholder Coalitions
Scope §§ Farmer Relationship Management A closer look at
Scope Strategy implementation on site §§ Supplier implementation Scope The Nespresso Sustainability Advisory Board
Local strategy implementation §§ Sustainable Quality Management Global/Local Advisory and Implementation (NSAB)
(recycling, machines, boutiques Management program
and consumer engagement) §§ The Nestlé Quality Management System Management program Set up in 2013, the NSAB comprises leading NGOs, academics,
(N.Q.M.S) The Nespresso AAA Sustainable international organisations and our brand ambassador,
Management program §§ The Nestlé Corporate Compliance Quality™ Program George Clooney. The Board meets formally once per year
§§ The Nestlé Responsible Sourcing audits Assessment of Human Resources (C.A.R.E) and the agenda is framed around:
(S.M.E.T.A; Ecovadis) §§ The Nestlé Environmental Management §§ Progress against our public commitments
§§ The Nestlé Quality Management System (N.E.M.S) §§ Concerns on strategy execution and gaps
System (N.Q.M.S) §§ The Nestlé Responsible Sourcing Audits §§ Discussion around future opportunities
§§ The Nestlé Corporate Compliance (S.M.E.T.A; Ecovadis)
Assessment of Human Resources (C.A.R.E) Other external experts are invited to present and interact with
§§ The Nespresso Recycling Management System the Board to ensure a wide range of views are represented.
All discussions are non-binding and serve more to channel external
advice on the role of the private sector on societal challenges.
Every year, the NSAB discussions focus on coffee production,
aluminium management and climate risks.
Today, the members are: brand ambassador George Clooney,
Cambridge Institute for Sustainability Leadership, Colombian Coffee
Growers Federation (FNC), Fair Labor Association (FLA), Fairtrade
International, Fair Trade USA, INCAE Business School, International
Union for Conservation of Nature (IUCN), TechnoServe, Rainforest
Alliance, World Business Council for Sustainable Development.
Coffee specialist explaining the circular use of aluminium, A team of AAA agronomists, Colombia Participants in a consultation process pre NSAB 2015,
Lausanne Boutique, Switzerland London, UK
THE POSITIVE CUP G4-24, G4-26, G4-34, G4-EN31 22/23COMPANY COFFEE ALUMINIUM CLIMATE
How does Nespresso
COFFEE ensure sustainable
quality coffee?
OVER A DECADE OF COLLABORATION
HAS BEEN CRITICAL IN DELIVERING
SUSTAINABLE QUALITY
AAA green coffee bags awaiting export at
Cooperativa de Caficultores de Aguadas, Colombia
THE POSITIVE CUP EC/PSP-G4-DMA 24/25COMPANY COFFEE ALUMINIUM CLIMATE
WHAT REALLY MATTERS
“The big challenge going forward is to
OUR PROMISE TO engage consumers with the benefits
CONSUMERS DEPENDS of sustainable production.”
ON RESILIENT FARMING Lawrence Pratt, Senior Lecturer, INCAE Business School
COMMUNITIES
To fulfil our commitment to Nespresso What really matters
consumers, we depend on a reliable source To ensure consumer appreciation of sustainable quality coffee
of the highest quality coffee. Working closely
with farmers, cooperatives and other partners
1-2 % Our Grands Crus coffees are recognised for their exceptional taste and flavour profiles. Behind this
is a long-standing commitment to sustainable coffee production, which helps protect the future supply
strengthens the resilience of our coffee producing of our coffees. Using our materiality assessment as a basis, we work with stakeholders in the coffee
sector to support resilient agricultural communities and to protect vital ecosystems and landscapes.
regions – especially to economic uncertainties Only 1-2% of worldwide We are also building the value of sustainable quality coffee into the consumer experience.
coffee meets our quality
and climate change. The Nespresso AAA
standards
Sustainable Quality™ Program was launched
in 2003 with the Rainforest Alliance. It fosters
Human rights Climate change
long‑term relationships with farmers, embeds Water stewardship
sustainable practices on farms and the
surrounding landscapes, and improves the yield
17 % Resource efficiency & waste
COFFEE LANDSCAPE CONSERVATION
Reforestation
and quality of harvests. At the same time, it Biodiversity conservation
Water stewardship
contributes by bettering the livelihoods of 17%, the share of consumers Community development Natural capital
& unemployment
willing to pay more for
farmers and their communities. It is now being
STAKEHOLDER CONCERN
sustainable production
implemented in East Africa, in line with our (Euromonitor 2016) Rural development
RESILIENT FARMING COMMUNITIES
commitment for 100% AAA sourced coffee Quality and productivity Traceabillity CONSUMER EXPERIENCE
by 2020. Economic stability Responsible marketing Transparency
Intergenerational succession Terroir discovery
Climate adaptation Product innovation
Women’s empowerment
SIGNIFICANCE OF NESPRESSO IMPACT
Our 2020 ambition and goals
Resilient coffee farms and communities
2016 achievements status
Source towards 100% of our permanent coffees
82% AAA sourced coffee
through the AAA Sustainable Quality™ Program
Increase the share of certified coffees in AAA +5 pp (vs. 2014)
Harvest time for AAA farmer
Diego María Lopez, Cauca, Colombia Expand our value proposition to rare origins and pursue Two origins: Cuba, South Sudan
innovative solutions to better livelihoods for farmers CHF 2.6 million in innovative solutions
Achieved On track for 2020 Not on track for 2020
THE POSITIVE CUP EC/IEI-G4-DMA, EN/OV-G4-DMA, EN/WA-G4-DMA, SO/LC-G4-DMA, G4-SO1 26/27COMPANY COFFEE ALUMINIUM CLIMATE
THE NESPRESSO AAA SUSTAINABLE QUALITY™ PROGRAM
“We’re proud to have helped build AAA.
THE AAA SUSTAINABLE It’s working to drive our shared mission and achieve
QUALITY ™ PROGRAM meaningful social and environmental impacts.”
IS OUR SOLUTION FOR Nigel Sizer, President, Rainforest Alliance
BUILDING RESILIENCE
The AAA Program is a quality coffee sourcing program, Quality and sustainability go hand in hand
designed and implemented specifically for Nespresso
in collaboration with the Rainforest Alliance and launched Experience has taught us that there is no quality without
in 2003. Through long-standing partnerships with farmers, socio‑economic and environmental sustainability, and vice versa.
coffee suppliers and cooperatives, with support from NGOs, The three pillars of the AAA Program encapsulate this learning.
it has evolved considerably over time. Sustainable farm
A | Firm commitment to quality
management is still at its heart, but today it also focuses The Rainforest Alliance and Nespresso have been working together
on community and landscape resilience and the wider since 2003 in the design and development of the AAA Program.
systemic challenges facing the sector. This collaboration led to the concept of Sustainable Quality and its
Everything starts with quality. It is the major driver for farmers deployment at farm level, combining the socio-environmental criteria
to access differentiated markets and increase farm revenues. of the Sustainable Agricultural Network (SAN) with the quality
Wider systemic solutions Practices such as harvest and post harvest processing, traceability, expertise of Nespresso. As part of more recent work, the collaboration
and also input management and varietal selection affect the quality also led to the piloting of the Rainforest Alliance/SAN climate module
The AAA Program participates in a range of multi-stakeholder of the crop. Farmers are rewarded with price premiums when their with the AAA farmers of the Huehuetenango cluster in Guatemala
coalitions that leverage the collective resources of farmer coffees are approved as high quality. and the Monitoring and Evaluation tool of the AAA Program.
organisations, academics, municipalities and governments to bring rainforest-alliance.org
A | Practical support for productivity
comprehensive solutions addressing challenges in the sector. san.ag/web
Resilient communities and landscapes Greater productivity of high quality coffees directly impacts
farmer revenues. On top of quality practices, renovation and cost
The AAA Program acts as a platform for partners to build community management also contribute to higher yields and profitability.
and landscape resilience against wider ‘off farm’ risk factors, Consistent farm management over the long-term leads to
developing solutions for both social welfare and climate adaptation. income stability.
A|
Farm management Clear focus on social and
environmental sustainability
The AAA Program supports the implementation of sustainable
agricultural practices at farm level by investing in technical assistance, Taking care of the socio‑economic and environmental conditions of
paying premiums directly to coffee producers and co-financing the farm is critical to secure consistent quality and a responsible supply
infrastructure for both quality and sustainability improvements. chain. Practices such as working conditions, water stewardship,
biodiversity protection and climate resilience contribute to long-term
stability and improved livelihoods.
CHF 35m/year – yearly The AAA approach is delivering
CHF
35m /year investment in technical assistance
and premiums to farmers
positive impacts at farm level
The celebration of the late harvest coffee Naora, launched
in 2012 with the community of Pinchote, Colombia
Five years after the initial launch of the AAA Program in Colombia,
Nespresso commissioned an independent study to evaluate the
impact on farmers. Undertaken by research institute CRECE between
2009 and 2012, it showed that the AAA Program delivered positive
The three levels of AAA intervention: Cauca landscape, impacts versus conventional coffee farming on social (+22.6%),
Colombia; coffee processing at the community mill in Jardin, environmental (+52.1%) and economic (+41.0%) indices.
Antioquia, Colombia; a AAA farmer harvesting coffee in
Cauca, Colombia
G4-16, G4-EC7, G4-EN31, EN/SEA-G4-DMA, HR/SHRA-G4-DMA, SDG SDG
THE POSITIVE CUP LA/SALP-G4-DMA, SO/LC-G4-DMA, G4-SO1 Inclusive Growth Promote Sustainable Agriculture 28/29COMPANY COFFEE ALUMINIUM CLIMATE
FARMER RELATIONSHIP MANAGEMENT
“Technical assistance, such as the kind provided
A A A IS FIRST AND by FNC and Nespresso on AAA is, in my view,
FOREMOST A FARMER essential to build trust with coffee producers.”
REL ATIONSHIP PROGRAM Roberto Velez, Chief Executive Officer, Colombian Coffee Growers Federation
Sustainable quality practices are fundamental Since 2003, Nespresso has been investing at farm level The AAA Farmers Award – a recognition
for farmers building an economically viable
– providing technical assistance, paying premiums and of excellence and dedication
delivering specific socio‑environmental projects to generate
coffee farming business. Through a process better and more sustainable quality. Every year since 2013, we have celebrated the outstanding
of continuous improvement and collaborative achievements of exceptional farmers and agronomists from every
effort, farmers are encouraged to learn‑by‑doing, producing country. They are welcomed to Switzerland to discover
A farmer’s journey towards the other end of the value chain: visiting our production centres,
with the support of our agronomists and trainers. sustainable quality meeting Nespresso employees, and discussing their coffees with
Club Members in boutiques.
As soon as coffee farmers join the AAA Program, they receive technical
assistance in the form of training sessions, individualised guidance and
a customised action plan. In return, there is a very clear expectation
that they will commit to achieving a set of socio‑environmental,
quality and productivity practices as defined in the Tool for the
Assessment of Sustainable Quality™ (TASQ™ CORE). A premium
is paid for the quantity of approved coffee they sell. However, an
important principle of the AAA Program is that farmers are under
no obligation to sell their coffee to Nespresso.
A closer look at
Tool for the Assessment of Sustainable Quality
(TASQ™)
>
300 >300 the number of
AAA agronomists
The TASQ™ assists farmers on their journey towards sustainable
quality and comprises three elements:
§§ Pre-requisites for entry – no child labour, no forced labour and
no incidence of harassment and abuse
§§ TASQ™ CORE consists of 39 criteria which must be met within
AAA farmers, Miller Hurtatiz and Marc-Aurelio Alonso, a three-year time frame
rewarded for their dedication §§ TASQ™ ADVANCED consists of additional criteria, guiding farmers
to further improve quality, productivity and sustainability and
advancing them to a possible certification. Certified farmers receive
additional premiums, not only for the coffee they sell to Nespresso,
90 90% of the AAA farmers are satisfied but also for the certified coffee they sell elsewhere
%
with the AAA Program (CRECE, 2012)
The Colombian Coffee Growers Federation (FNC) is a
long-standing partner of Nespresso for the implementation of the
AAA Program in Colombia. We jointly invested in regions like
Cauca, Nariño and Santander, distributing high quality coffee plant The critical role of suppliers and cooperatives
material and implementing water treatment systems and have
partnered on a significant water stewardship program in 25 water Coffee suppliers and cooperatives play a central role in the
basins in the country. The nature of this relationship has allowed us deployment of the AAA program, not only in the commercialisation
to work together on innovations such as the late harvest Naora of coffee but also in training and in monitoring the progress of
Limited Edition and Aurora de la Paz, a special coffee related to the farms.
the peace process in the country.
federaciondecafeteros.org These partnerships are organised through the “AAA shared
commitment”, a mutual agreement that places importance on
the long-term relationships with producers, transparency, economic
Daniel Augusto Delgado, an FNC AAA agronomist,
traceability to farms and agronomist workforce management.
training farmer Nilson Jair Diaz Muñoz
on agricultural practices
G4-12, G4-16, G4-LA15, G4-EN33, HR/CL-G4-DMA, G4-HR5, SDG SDG
THE POSITIVE CUP HR/FCL-G4-DMA, SO/LC-G4-DMA, G4-SO1 Learning Opportunities for All Promote Sustainable Agriculture 30/31COMPANY COFFEE ALUMINIUM CLIMATE
INNOVATION FOR COMMUNITY RESILIENCE
“With the retirement savings plan,
THE AAA PROGRAM the coffee farmers and their
PROMOTES COLLABORATIVE children can see a future.”
INNOVATION FOR Dario Soto, Chief Executive Officer, Fairtrade International
LONG -TERM COMMUNITY
STABILITY
Smallholder coffee farmers are exposed to Over recent years, the AAA Program has evolved to extend Community milling for Sustainable Quality –
uncertainties that hinder long-term planning and
its support beyond farm level. This means contributing to improve livelihoods and water stewardship
to strengthening community resilience and providing more
investments in their farms. Volatility of exchange security at a local level – with encouraging results already In many cases, smallholder farmers process coffee cherries on their
rates and market prices, and inconsistency in being observed in Colombia. The following innovations have own farms as there is no centralised infrastructure available to deliver
been piloted in specific AAA regions to test the potential the crop. “Wet milling” at farm level is hard work because the
crop quality have direct impacts on farm revenue.
for scalability. cherries are fragile and need to be processed within a few hours of
More and more, these risks are exacerbated the harvest to protect quality. This means long working days and
by external factors such as climate change, creates a significant risk to the quality, and consequently the value, Fairtrade International (FLO), the producer network of
Farmers can now plan for retirement of the production. Moreover, it requires proper water treatment
especially where economic securities such as Latin America* and Nespresso have been collaborating since 2013
installations that are often not in place, leading to water contamination to further promote farmers’ organisation and empowerment within
crop insurance and pensions are not in place. Social surveys in the Caldas region of Colombia, highlighted the fact for the community. A successfully managed centralised mill presents the AAA Program. This work also led to the design and implementation
As a result, the sector becomes less attractive that only 10% of the coffee farmers had access to a pension while their significant benefits. Some of these are reflected in the following of a savings plan for the retirement of coffee smallholders in the
average age was 53*. In 2014 Nespresso contributed to develop the results obtained with the Jardin community mill, a collaboration
to the next generation of coffee producers. region of Caldas, Colombia. The success of this program relied on
first-ever retirement savings plan for smallholder coffee farmers. The between the farmers, the cooperative of Antioquia, and Nespresso’s the collaborative engagement of local and national institutions.
long‑term relationship established through the AAA Program, served as partners Cafexport and USAID. *CLAC: Coordinadora Latino Americana y del Caribe de Pequeños Productores
a solid foundation for its implementation. This initiative also seeks to §§ 100% increase in the volume of AAA quality coffee y Trabajadores de Comercio Justo
incentivise the next generation to enter the industry. Developed §§ 17% increase in farmer income fairtrade.net
together with the Colombian Ministry of Labour, the Aguadas Coffee §§ 60% reduction in water usage
Growers Cooperative and Fairtrade International (FLO), the scheme §§ 100% of waste water is properly treated
provides farmers an additional 20% from the Colombian Government, §§ Three hours of time gained per farmer per day during harvest season
on top of farmers’ investment into the savings plan.
A closer look at
At the end of 2016, Nespresso had contributed USD 2.2 million,
crop insurance
benefiting around 1,100 AAA and Fairtrade-certified farmers, of which CHF 2.6m invested in innovative
35% saved additional money. The popularity of the initiative means that
now even non‑AAA farmers are enrolling. To our knowledge, a further
CHF
2.6m solutions (savings plan and
community milling)
Coffee smallholders do not have access to insurance schemes
that protect against climate change risks. Nespresso has partnered
two cooperatives have independently adopted a similar mechanism.
with Blue Marble Microinsurance to create a tailored crop insurance
*Source: CRECE
proposition. PlaNet Guarantee and the International Research
Institute for Climate and Society (Columbia University) started
to develop the basis for an index-based insurance system that
provides compensation when the weather index reaches certain
pre‑determined levels. Nespresso and Blue Marble Mircoinsurance
are collaborating with these partners and with AgriLogic to refine
this concept and implement a complete insurance proposition.
In 2017, this proposition will be piloted with AAA producers
in the Caldas region of Colombia.
Fair Trade USA has been collaborating with Nespresso since 2013 to
promote smallholder organisation and community-led development
projects in areas where farmers lack formal organisational structures, Central Mill, Jardin, Colombia
such as cooperatives. Working closely with the Colombian Coffee
Federation, Fair Trade USA has certified more than 6,800 smallholder The objective of this first mill in Jardin was to test the operational What’s next
farmers in the Southern Colombian regions of Cauca and Nariño. feasibility of centralised coffee processing in Colombia. In 2015,
a second initiative was launched with the objective to pilot a financial §§ Consolidate the learning of Huila community mill business
In 2016, the newly-formed Fair Trade committees, elected by the farmers
model supported by impact investment for scalability. In collaboration model for scaling
themselves, decided to invest their development funds in potable
with Acumen and the farmers’ group “El Desarrollo”, we invested §§ Test the crop insurance model in Caldas
water projects and collective procurement actions to facilitate access
to agricultural nutrients for improved productivity. in a new community mill in Huila (Colombia) which started production
AAA farmers at the launch of the Farmer Retirement fairtradeusa.org in September 2016. Results are currently being monitored.
Savings Plan, Aguadas, Colombia, 2014
SDG SDG SDG
THE POSITIVE CUP G4-16, EN/WA-G4-DMA, G4-HR6, SO/LC-G4-DMA, G4-SO1 End Poverty Water Stewardship Partnerships 32/33You can also read
