rethink sustainability

    The CLIC® Chronicles: How global food giant Nestlé is putting regenerative agriculture at the heart of sustainable food

    The CLIC® Chronicles: How global food giant Nestlé is putting regenerative agriculture at the heart of sustainable food

    Lombard Odier participated at the 2022 Building Bridges sustainable finance conference in Geneva alongside international actors such as the WWF, FAIRR Initiative, World Bank; prominent thought-leaders including Paul Polman and Emmanuel Faber as well as multinational companies BlackRock, SwissRe and Nestlé. The role of this event is to bring together world thinkers to address global challenges and articulate innovative solutions to advance sustainable finance. We interviewed Nestlé’s Head of Operations and Executive Vice President Magdi Batato on how this food giant is aiming for net zero and sustainable food systems.   

    Mentions to specific companies do not constitute an investment recommendation and are not meant to be considered as investment advice to buy, hold or sell securities in the referred companies.

    You have committed to achieving net zero by 2050. Why is this so important to Nestlé as a company? 

    Climate change is one of the biggest challenges humanity is facing. And, of course, climate change impacts food systems. When you have floods, crops will be damaged, and as temperatures rise some crops will no longer grow at all – for example, statistics show that if the current trend stays the same then by 2040, we might run short of arabica coffee. 

    As a part of this ecosystem, we want to make sure that food systems become more sustainable and feed 9 billion people on this planet by 2050. We are an agro-based company and our blood and oxygen come from what Mother Earth produces. So it’s a compelling call to action for the planet, for humanity, but also, quite frankly, for the sustainability of our own business.

    Read also: Tackling food waste with Too Good To Go

    As such a vast and varied organisation, what are the biggest obstacles you are facing in adapting to tomorrow’s food systems? 

    I would not call those obstacles, I would call those challenges along the way. If you look at our roadmap, which we published in 2020, more than two-thirds of our carbon footprint comes from agriculture. We are an agro-based company. We have been working with farmers for decades, helping them to increase their yields. Now we’re working to help them be more regenerative. 

    In the past, the focus in food systems was only on yields, but now the focus should be on yields with regeneration. It's important to combine both. Regenerative agriculture tries to find the sweet spot, which is reducing the use of pesticides and herbicides without jeopardising yields. 

    We have about 100 pilot farms where we are proving this, the so-called “net-zero farm”. This is about having an approach, which is farmer-centric, because we need to respect what the farmers know, and build on that knowledge and complement it with those new practices. It must also be soil-centric, because soil health is very important. 

    How do you achieve that?

    One way is to implement intercropping. Just before Covid I visited our experimental coffee farm in the Philippines. There, the farmers are planting chilli and bananas between the rows of coffee. We buy the coffee but we also commit to buying the chilli under a different Nestlé brand. So the intercropped plants are good for the farmer because they generate more income, and they’re also good for the soil and the environment overall because they provide more nutrients to the soil and help reduce erosion. 

    By the end of this year we will be at 100% no deforestation for all of those commodities that we have identified

    Nestlé was one of the first major companies to commit to net zero by 2050. You have also committed to zero deforestation. How close are you to meeting all of your targets? 

    In 2010, we made a commitment that within ten years we would reach zero deforestation on the twelve agro-commodities that are very important to us. When we got to 2020, we had achieved around 93% deforestation free. The reason we hadn’t got to 100% was because we did not want to leave out smallholder farmers – it was a conscious decision. 


    Big farms have more tools, more means to abide by our guidelines, but smallholder farmers are part of an ecosystem that they can’t entirely control, and we do not want to leave them out of the value chain. So that’s why it took us two years more. But I’m happy to say that by the end of this year we will be at 100% no deforestation for all of those commodities that we have identified. In the meantime, we added coffee and cocoa to the zero-deforestation commitment, and for those we will be at zero risk of deforestation by 2025. 

    Read also: Putting an end to deforestation – starting local, going global I Lombard Odier

    All this helps us in our journey on carbon reduction. We are extremely confident that by 2025 we will achieve the 20% absolute carbon reduction in our value chain that we are aiming for. We have already reached and passed peak carbon.

    We have also made commitments to have 20% of our key ingredients bought through regenerative agricultural practices by 2025, and 50% by 2030. Again, I’m happy to report we are well on track in this journey. It’s a puzzle of many pieces, and all those pieces need to form together so that we achieve our targets. 

    What was the trigger for Nestlé to make the zero-deforestation commitment before other companies?

    In 2010, a campaign raised the alarm bells around deforestation. We have a complex supply chain, and back then the technology was not available for us to have full visibility on everything. So, we had to go “boots on the ground”, sending people to check what was happening in the forests. 

    Then we came across a system called Starling, which is a satellite system that gives visibility on where deforestation is happening. We were able to see exactly where instances of deforestation were occurring. As a result of those images, we de-listed some of our suppliers. Sometimes the de-listing is permanent, but sometimes it helps suppliers pull their socks up, and then we can work with them again. This is an important point – we’d rather have the mindset of helping people get better. We want to lift up the value chain.

    What we want at Nestlé is not only that our farmers are better, but we want farming more broadly to move towards regenerative practices

    The same mind set is important for regenerative agriculture. We don’t stop working with farmers just because they don’t immediately implement 100% regenerative agriculture. If we did that then we wouldn’t work with anybody, and nobody would improve. What we want at Nestlé is not only that our farmers are better, but we want farming more broadly to move towards regenerative practices. We want farming to move towards no deforestation. Not only Nestlé farming – all farming. The more come to the party, the better. 

    You have a transparency dashboard, where you inform the public of your progress towards your commitments. Why is it important to take a public approach?

    Nestlé has been doing this work for a long time. I was recruited in 1991 to assess the environmental footprint of Nestlé factories worldwide, and also to assess the lifecycle of Nestlé packaging. So, Nestlé has been walking the walk for thirty or forty years, but for most of that time we have not been talking about the work we’re doing in this area. 

    But when you don’t talk then it has less impact. With the dashboard we are being public. We think it will have more impact if we continue to talk the walk. 

    Read also: Indigenous communities in the fight to protect tropical forests

    What can you tell us about growing consumer interest in sustainability?

    We did a study on consumer insights and more and more consumers, up to 70%, are interested in sustainability.

    We must be transparent on our sustainability – so we are communicating to the consumer through our brands. A good example is Nespresso, where we have a QR code on the sleeve of special editions, where you can listen to stories from the farmers, you can link to data, you can take the GPS coordinates of the farm and go and check for yourself. We will have a similar approach with KITKAT special editions next year. Every brand stands for something, and the communication on sustainability and regeneration is embedded into the brand story. 

    Does this mean the consumer will pay more money, because of sustainability? I don’t think so. Sustainability is simply becoming a must have for the consumer. 

    We need to sustainably feed 9 billion people by 2050

    Nestlé is a member of the World Business Council for Sustainable Development. What do you gain from working with other companies?

    The size of the challenge is such that no single company can do this on its own. So, when it comes to teaming up in order to share practices that are pre-competitive – why not? 

    We also talk to regulators. You need policy and framework to help, otherwise the impact will remain limited even though we put a lot of effort and money into it. When you go as many businesses together, then you have more chance of being heard. 

    We need to sustainably feed 9 billion people by 2050. This was published by the World Business Council for Sustainable Development under the name Vision 2050. We contributed to this, along with a lot of other companies. And we are fully buying into it. This is our story. And it’s my story as well. 

    Important information

    This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

    Read more.


    let's talk.