The world’s largest foodmaker Nestlé is to spend €3bn equivalent of about $3.6bn in the next five years on measures to cut its greenhouse gas emissions, in the biggest financial commitment to “net zero” initiatives by a consumer goods group.
The Swiss company on Thursday laid out plans to meet a goal set last year to eliminate all emissions from its operations and supply chain by 2050. These range from changing the way its agricultural suppliers operate to cutting business travel.
Mark Schneider, chief executive, told the Financial Times: “It is particularly challenging to make good on this goal because the vast majority of what we are talking about is not within our own four walls — the vast majority [of emissions] sit in our supply chain.
“To be effective we will need to influence the behaviours of the many thousand farmers and suppliers that work with us. We need to change the way agriculture is done and we need to shift consumer preferences towards plant-based food and beverages. It’s truly a long-term undertaking.”
Nestlé is one of a group of multinationals that have adopted targets in line with scientists’ recommendations to limit global warming to 1.5C above temperatures before industrialisation began, which requires dropping to “net zero” emissions by 2050.
A larger group of companies have adopted less stringent targets aiming to limit warming to 2C.
The maker of Kit Kat and Nespresso said it would fund the measures by charging a premium for some sustainable goods and by achieving “operational and structural efficiencies”.
The group had revenues of SFr2.6bn ($2.9bn) in 2019. The spending comes on top of up to $2bn the group has pledged to spend to increase recycled plastic in its packaging.
Mr Schneider said the changes would be “earnings neutral” and would not affect margins.
“This is not a plan that comes straight out of investors’ pockets,” he said. It follows a commitment by rival Unilever this year to spend €1bn over 10 years on climate projects such as reforestation.
At Nestlé, key challenges include the cows, a big greenhouse gas emitter, on which it depends for dairy products used in baby formula and foods.
Meat, which also racks up high emissions, is key to its fast-growing pet food division. Mr Schneider said the company would not look to offload or shrink those businesses.
“We don’t want to avoid dairy, meat products and meat byproducts. We want to make them in a more carbon efficient way. If we . . . walk away from [those divisions] and the emissions continue unabated, the world is not better off.”
Nestlé aims to source half of its ingredients, or 14m tonnes, through regenerative agriculture — methods to improve soil health and restore diverse ecosystems — by 2030, using SFr1.2bn of the funding.
It will push the 500,000 farms that supply its ingredients to adopt measures that aid carbon sequestration in the soil, such as avoiding tillage and using organic fertiliser.
In exchange it will pay a premium for their products, Nestlé said.
It is trialling alternative cow feed ingredients such as algae and seaweed in an attempt to cut down on methane that the animals burp into the atmosphere, said Magdi Batato, head of operations.
Nestlé intends to switch its operations across 800 sites to renewable energy by 2025 and plant 20m trees a year using so-called “insetting” programmes, which take place within or close to the company’s own supply chain.
The group aims to halve its 2018 emissions, which amounted to 92m tonnes of greenhouse gases, by 2030.
Nestlé has been ahead of many peers in addressing climate change; disclosures group CDP ranked it second only to Danone among food and drink makers last year in preparing for the climate transition.
But it has lagged in some areas. Data from the Ellen MacArthur Foundation last month showed Nestlé’s use of recycled plastic had remained static at 2 per cent despite a target to cut its use of virgin plastics by a third by 2025.