Executive Summary

The objective of this assignment is to gain insight of the various concepts that fall
under the umbrella of Corporate Governance. The group was assigned the different
tasks to undertake a company and analyze all the concepts relating to corporate
governance. It gave us a chance to analyze the biggest MNC of food and beverage
Nestle. The report is divided into three speakers who cover different aspects starting
from the introduction of the company, consisting of the BOD, Committees of the
BOD. Moving further the second part of the report covers the brief history and
current scenario of the company, following the analysis of the actions taken for
increasing certain financial indicators of the company, and discussing the
challenges and future outlook of the company. The final part of the report discusses
about the various malpractices and criticisms against the company in different
regions, it also discusses the CSR activities of the company. Finally on behalf of the
panel recommendations are given as to how the future profitability of the company
can be increased.

NESTLE S.A

INRODUCTION OF NESTLE S.A

Nestl S.A. is the largest food and beverage company in the world with a manufacturing facility
in nearly every country of the world. Nestl define themselves as The worlds leading nutrition,
health, and wellness company. The tag line on their website isGood food, good life.

Products and Services of Nestle:

Nestl markets approximately 7,500 brands in the following categories: baby foods, breakfast
cereals, chocolate and confectionery, beverages, bottled water, dairy products, ice cream,
prepared foods, foodservice, and pet care.
General information of Nestle:
Currently the company operates in 86 countries around the world and employs nearly 283,000
people. According to a 2006 global survey of online consumers by the Reputation Institute,
Nestle has a reputation score of 70.4 on a scale of 1100.
Joint ventures:
Nestle holds 26.4% of the shares of L'Oral, the world's largest company in cosmetics and
beauty. The Laboratoires Inneov is a joint venture in nutritional cosmetics between Nestl and
L'Oral, and Galderma a joint venture in dermatology with L'Oral.
Others include Cereal Partners Worldwide with General Mills, Beverage Partners Worldwide
with Coca-Cola, and Dairy Partners Americas with Fonterra.

VISION STATEMENT OF NESTLE

To be a leading, competitive, Nutrition, Health and Wellness Company delivering improved

shareholder value by being a preferred corporate citizen, preferred employer, preferred

supplier and selling preferred products.

MISSION STATEMENT OF NESTLE

Nestls mission, in the words of our founder Henri Nestl, is to: ...positively influence the
social environment in which we operate as responsible corporate citizens, with due regard
for those environmental standards and societal aspirations which improve quality of life.
Henri Nestl, 1857.
Nestle, believes that research can help them make better food so that people live a better
life. Therefore Nestle strives to bring consumers foods that are safe, of high quality and
provide best nutrition to meet physiological needs. In addition to Nutrition, Health and
Wellness, Nestle products bring consumers the vital ingredients of taste and pleasure.
At Nestle it is believed that there is still much to discover about health, wellness and the role
of food in people lives, and they continually search for answers to bring consumers Good
Food for Good Life.

CEO OF NESTLE
The present CEO of Nestle is Paul Bulcke, born in 1954, in Belgium. Paul was appointed as
the new CEO of Nestle on 20 September 2007, and officially assumed office in April 2008.
Qualification of Paul Bulcke:
Paul Bulcke had graduated as a commercial engineer from the University of Louvian,
Belgium in 1976. He then attended the Vlerick Leuven Gent Management School, Belgium
for Post Graduate in Management in 1977. He also, attended the program for Executive
Development at the Swiss leading business school, International Institute for Management
Development, IMD in Lausanne, in 1995.
Personal life of Paul Bulcke:
Paul Buckle can speak six languages Dutch (mother tongue), French, English, Spanish,
Portuguese, and German. He is married and has 3 children.
Buckle has described Nestl under his tenure as 'une force tranquille' (English: 'calm
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strength'). He is known for having a reserved, quiet personal manner.

Professional life of Paul Bulcke:
Paul worked as a Financial Analyst from 1977 1979, at Scott Graphics International,
Bornem, Belgium.
At the age of 25, in 1979, he started working for the Nestle group, starting as a marketing
trainee than as marketing head in different countries including:
Switzerland, Spain, Belgium, Peru, Ecuador, Portugal and Germany.
Before his appointment as CEO of Nestle, he was the Executive Vice President, Head of
Americas division: United States of America, Canada, Latin America, Caribbean.
Paul Buckle is also member of different board committees of Nestle

Nestle Health Science S.A.

Board member and co-chair of the Governance Committee, Consumer Goods Forum

Co-Chairman of the Supervisory Board, Cereal Partners Worldwide.

Board member, Roche Holding Ltd (CH).

Compensation Package of CEO

In 2010, the highest compensation was given to the CEO, Paul Bulcke. His compensation
package includes the following base salary and other benefits in Swiss francs.
Annual base salary: 200,000 CHF
Short term bonus (cash): 520,019 CHF
Short term bonus: 3,929,427 CHF
Stock options: 19,999,50 CHF
Performance shares units 2,094,549 CHF
Other benefits (Other benefits include a car allowance and a contribution towards health
4

insurance premiums): 28,548 CHF

Total compensation: 10,572,493 CHF

INTRODUCTION TO THE BOD:

The Board of Directors is the ultimate governing body of the Company. It is responsible for
the ultimate supervision of the Group.
There are 14 members in the Nestle Board of Directors, excluding the CEO. Excluding the
CEO, Paul Bulcke, the remaining are all non-executive directors and independent. The
board elects for three year term and the term is extended in the AGM every year.

The Chairman Nestle S.A

Peter Brabeck, the top spot at Nestl in 2008, after overseeing its strategic transformation
into the world's foremost nutrition company. Since joining Nestl in 1968, he has been in
leadership positions in multiple countries, including Chile, Ecuador, and Switzerland. Since
1987, he has been based at Nestle's headquarters in Vevey.
Mr. Brabeck is the Chairman of the board of directors of Nestle since 2008. From 1997 to
2008, he was also the CEO of Nestle. Mr. Brabeck-Letmathe is a member of the boards of
directors of L'Oreal SA, Paris since 1997, and Roche Holding SA, Basel since 2000. He is
also a member of the Foundation Board of the World Economic Forum and a member of the
European Round Table of Industrialists.

Members of the BOD

1. Peter Brabeck-Letmathe
Chairman of the Board of Directors, Nestle S.A.
Chairman's and Corporate Governance Committee (Chairman)
Nomination Committee
Term expires: 2013
2. Paul Bulcke
Chief Executive Officer, Nestl S.A.
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Member of Nestl Board of Directors:

Chairman's and Corporate Governance Committee - Term expires: 2011
3. Andreas Koopmann
1st Vice Chairman
Chairman's and Corporate Governance Committee
Compensation Committee
Nomination Committee (Chairman)
Term expires: 2011
4. Rolf Hnggi, 2nd Vice Chairman,
Chairman's Committee and Corporate Governance Committee
Audit Committee (Chairman)
Term expires: 201
5. Jean-Ren Fourtou, Chairman's and Corporate Governance Committee
Compensation Committee ,Term expires: 2012
6. Daniel Borel, Compensation Committee (Chairman),Term expires: 2012
7. Jean-Pierre Meyers, Compensation Committee,Term expires: 2011
8. Andr Kudelski, Audit Committee ,Term expires: 2013
9. Carolina Mller-Mhl, Nomination Committee,Term expires: 2012
10. Steven George Hoch Nomination Committee ,Term expires: 2013
11. Nana Lal Kidwai, Audit Committee, Term expires: 2011
12. Beat Hess, Audit Committee, Term expires: 2011
13. Titia De Lange, Board of Directors , Term expires: 2013
14. Jean-Pierre Roth, Board of Directors, Term expires: 2013
15. Ann Veneman, Board of Directors Term expires: 2014

MANAGEMENT:
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The executive board consists of 13 members who are responsible for the efficient
management of the group consist of the following members:
1. Peter Brabeck-Letmathe, Chairman of the Board of Directors, Nestl S.A.
2. Paul Bulcke, Chief Executive Officer, Nestl S.A.
3. Werner Bauer, Executive Vice President, Nestl S.A., Chief Technology Officer,
Head of Innovation, Technology, Research & Development
4. Friz van Dijk, Executive Vice President, Nestl S.A. Asia, Oceania, Africa, Middle
East
5. Luis Cantarell, Executive Vice President, Nestl S.A. United States of America,
Canada, Latin America, Caribbean
6. Jos Lopez, Executive Vice President, Nestl S.A. Operations, GLOBE
7. John J. Harris, Executive Vice President, Nestl S.A. Chairman & CEO of Nestl
Waters
8. Nandu Nandkishore, Executive Vice President, Nestl S.A. CEO of Nestl Nutrition
9. James Singh, Executive Vice President, Nestl S.A. Finance and Control, Legal, IP,
Tax, Global Nestl Business Services
10. Laurent Freixe, Executive Vice President, Nestl S.A. Europe
11. Petraea Heynike, Executive Vice President, Nestl S.A. Strategic Business Units,
Marketing, Sales and Nespresso
12. Marc Caira, Deputy Executive Vice President, Nestl S.A. Head of Nestl
Professional Strategic Business Division
13. Jean-Marc Duvoisin, Deputy Executive Vice President Nestl S.A. Head of Human
Resources and Centre Administration
14. David P. Frick, Senior Vice President and ex officio Member of the Executive Board

COMMITEES OF THE BOD:

The powers and responsibilities of each Committee are established in the applicable
Committee Charter, which is approved by the Board. Each Committee annually performs a
self-evaluation and reviews the adequacy of its Charter.
The Chairmans and Corporate Governance Committee

This committee consists of the Chairman, the two Vice Chairmen, the Chief
Executive Officer (CEO) and other members as elected by the Board.
It acts as a liaison between the Chairman and the full Board of Directors in order to
act as a advisory body to the Chairman.
The Committee annually reviews the Corporate Governance of the Company taking
into account the input received from shareholders and other stakeholders and
prepares recommendations for the Board. Minutes of the meetings are made
7

available to the full Board.

The Compensation Committee
This committee chaired by an independent and non-executive member of the Board,
the other members is one Vice Chairman and a minimum of two other nonexecutive members of the Board of Directors. All members are independent.
The Compensation Committee determines the principles for remuneration of the
members of the Board and submits them to the Board for approval.
It proposes the remuneration of the Chairman, the CEO and approves the individual
remunerations of the members of the Executive Board.
It reports on its decisions to the Board and keeps the Board updated on the overall
remuneration policy of the Group.

The Nomination Committee

The committee includes a Chairperson, who is an independent and non-executive

member of the Board; the other members are the Chairman of the Board of Directors
and a minimum of two independent and non-executive members of the Board.
The Nomination Committee establishes the principles for the selection of candidates
to the Board,
It selects candidates for election or re-election and prepares a proposal for the
Boards decision.
It also reviews the nominations to the Executive Board.
The candidates to the Board must possess the necessary profiles, qualifications and
experience to discharge their duties.
Newly appointed Board members receive an appropriate introduction and training
into the business and affairs of the Company and the Group.
It reviews, at least annually, the independence of the members of the Board and it
prepares the annual self-evaluation of the Board.

The Audit Committee

The committee consists of a Vice Chairman, who chairs the Committee, and a
minimum of two other members of the Board, excluding the CEO and any former
member of the Executive Board.
At least one member has to have recent and relevant financial expertise; the others
must be familiar with the issues of accounting and audit.
In discharging its responsibilities, it has unrestricted access to the Companys
management, books and records. The Audit Committee supports the Board of
8

Directors in its supervision of financial controls through a direct link to KPMG

(external auditors) and the Nestl Group Audit (corporate internal auditors).

Effectiveness of BOD versus Management:

The effectiveness of the BOD, can be seen from the fact that the members are
independent with a three year term to serve of the board.

Through shareholder surveys, investor roundtables and bilateral meetings the Bod
have established a dialogue with shareholders and governance experts that help
Board of Directors listen to their concerns and establish best practices in the longterm interests of the Company and their shareholders.

The company has achieved higher organic growth which is mainly is the process
of businesses expansion due to increasing overall customer base, increased output
per customer or representative, new sales, or any combination of the above, as
opposed to mergers and acquisitions that are examples of inorganic growth. Organic
growth is achieved by the efficiency of the management which shows that the
management of Nestle is capable and efficient throughout the years of its operation.

The Board meets as often as necessary, at least quarterly, and on notice by the
Chairman or by the person designated by him. In addition, the Board is convened as
soon as a Board member requests the Chairman to call a meeting. All Committees
provide a detailed report to the full Board at each meeting in a dedicated Chairmans
session.

The Board reserves one full day per year to discuss the strategic long-term plan of
the Company.

In addition, every year the Board visits one operating company for three to five days
to meet members of the senior management. In 2010 Nestl visited the United States
of America. The average attendance at the Board meetings was 100%.

The CEO chairs the Executive Board and delegates to its members individually the
powers necessary for carrying out their responsibilities, within the limits fixed in the
Executive Boards Regulations.

The executive board submits reports on significant projects and events to the BOD.
9

The Chairman and CEO ensure a proper flow of information between both parties.

SPEAKER 2

HISTORY
Nestle S.A originated in a 1905 merger of the Anglo-Swiss Milk Company, which was
established in 1866 by brothers George Page and Charles Page, and the Farine Lactee Henri
Nestl Company, which was founded in 1866 by Henri Nestle. It is headquartered in Vevey,
Switzerland.

1867-1877
In September 1867, in Vevey, Henri Nestl developed a milk-based baby food and soon began
marketing it. In 1877 Anglo-Swiss added milk-based baby foods to its products, and in the
following year the Nestl Company added condensed milk, so that the firms became direct and
fierce rivals.

1900-1920

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The company was operating factories in the United States, United Kingdom, Germany and
Spain. World War I created new demand for dairy products. The 1920s saw Nestl's first
expansion into new products, with chocolate the company's second most important activity.

1938-1947
Factories were established in developing countries particularly Latin America. Ironically the war
helped with the introduction of the company's newest product. Nestl Alimenting SA was taken
as a result of the acquisition of Fabrique de Produits Maggi SA (founded 1884) and its holding
company, Alimentana SA of Kempttal Switzerland.

1950-1977
In 1947 came the merger with Maggi seasonings and soups. Crosse & Blackwell followed in
1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification came with a
shareholding in LOreal in 1974. In 1977, Nestl made its second venture outside the food
industry by acquiring Alcon Laboratories Inc.

1984-1995
Nestl's improved by launching a new round of acquisitions, notably American food giant
Carnation and the British confectionery company Rowntree Mackintosh. Trade barriers crumbled
and world markets developed into more or less integrated trading areas.

1996-2010
Since 1996 there have been acquisitions including San Pellegrino (1997),Spillers Pet foods
(1998), and Ralston Purina (2002). In December of 2005 Nestl bought the Greek company
Delta Ice Cream also acquiring in 2007 the milk flavoring product known as Ovaltine. Nestl
agreed to sell its controlling stake in Alcon to Novartis on 4 January 2010.

Current scnario:
Since its inception Nestle is still moving on and in 2008 when the world was under economic
slump even in developed countries economies were in great loss, but in 2009 Nestle started with
success and in last quarter of 2010 when whole economy faces large deficit but Nestle cotinued

11

its success. This unpredictable and volatile macro-environment, particularly in the developed
world, has weighed heavily on consumer confidence.
In such bad circumstances Nestle got heavily profit
In January Nestle announced the acquisition of the leading USA player in frozen pizza.
This deal complements nestle existing leadership in frozen meals, frozen snacks and ice
cream in the US market, enhances our distribution capabilities.
In August 2010, Nestle closed the sale of Alcon. This partnership brought the total
realized by Nestl to USD 41 billion from an investment in 1977. Nestles management
thanked the Alcon for their team work and help.
In September 2010 Nestle announced the creation of both Nestl Health Science S.A. and
the Nestl Institute of Health Sciences. Nestl is the worlds leading Nutrition, Health and
Wellness company one responsibility of leadership is to be a pioneer.
Acquisitions play a role in helping to accelerate the companys strategic priorities and to
enhance its growth profile, but its key driver of profitable growth is the organic
development of their categories and geographic positions. They have made or announced
major capital investments in the developed world and in emerging countries such as
India, China Indonesia, the Philippines, the Middle East, Russia, Brazil, and Mexico.
In 2010, Nestle announced that they have intention to invest CHF 500 million in a wide
ranging plan to address responsible farming sourcing and consumption across the coffee
supply chain.

PRODUCTS OF NESTLE:

NESTLE
MILK, DAIRY & CHILLED DAIRY:
Nestle Milkpak

Nestle Nido
Nestle Everyday
Nestle Yogurt

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Nestle Cream
Nestle Desi ghee
Pure, rich and delicious Nestle milkpak standardized UHT milk benefits from Nestles expertise
in bringing people the very best life has to offer and benefits from 140 years of consumer trust.
Milk is a must-drink for your children as it is a rich source of Calcium that helps in the growth
and development of strong bones and teeth. It is equally beneficial in keeping grown-ups bones
strong.

BEVERAGES:
NESCAFE
Nestle Milo
Nestle Juices
Nestle instant drinks.

COFFEE:
Nescafe

Nepresso

JUICES:
Nestle Fruita Vitals (wide range of flavours)
They are naturally low in calories, and an excellent source of Fiber and Vitamin C. Nestle juices
Apple Pineapple and other pure and rich sources of minerals and vitamins.

BOTTLED WATER:
Nestle pure life.
Ava

Every bottle of Nestle PURE LIFE is produced with the Nestl Safety System and is carefully
sealed with a proprietary seal. Purity of the highest standards is matched by an optimal balance
of essential minerals, enhancing the health and wellbeing of your family.
13

BABY FOOD

Nestle Cerelac
Its full of nutritions which are suitable for infants and little growing babies. Also provide shield
against diseases like diarrhea and other stomach problems.
PREAPRED MEALS:

Maggi 2Minute Noodles

Maggi Atta Noodles
A source of Protein and Fiber good for digestion great for heart and essential in the re-building of
muscles and cells in the body.

BRAKFAST CEREALS:
Nestle Nesquick
Nestle Fruits n Minerals Cereal
Nestle cereals are tasty and full of vitamins that help body remaining energizing.
CHOCOLATE & CONFECTIONARY:
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Nestle Kit Kat

Kit Kat Chunky
POLO

NESTLE is by far one of the most popular chocolates all around the world.Its trademark red and
white colors and the distinct Nestle kitkat logo make it One of the most recognized brands ever.

Actions Taken to Increase the following Financial Indicators

Net profit and earnings per share

Other income increased dramatically mainly as a result of the profit on disposal of the Groups
stake in Alcon. Other expenses increased primarily due to an increase in restructuring costs to

15

CHF 469 million and increased impairments of goodwill. Net financing costs increased slightly

during 2010 to CHF 753 million.

Net profit was CHF 34.2 billion and earnings per share were CHF 10.16. The extraordinary
increases in 2010 over 2009 reflect the gain of CHF 24.5 billion resulting from the divestiture of
our remaining holding in Alcon.

Cash flow
The operating cash flow was CHF 13.6 billion reduced from previous year of 17.9%. The
working capital increased by about CHF 600 million, reflecting sales in 2010.

16

2010 sales
The Group achieved organic growth of 6.2%, including real internal growth (RIG) of 4.6%.
Foreign exchange impacted sales by 3.6%, at the same time as divestitures, net of acquisitions,
reduced sales by 0.6%. Overall, Group sales increased by 2.0% to CHF 109.7 billion from
previous year of 107.6 billion. The foreign exchange impact was 3.8%, and acquisitions, net of
divestitures, added 1.8%. Overall, continuing operations sales increased by 4.0%.

Profitability
The Groups EBIT margin increased by 20 basis points to 14.8% of sales. The EBIT margin is
not comparable to that of 2009 following the disposal of the remaining interest in Alcon in
August 2010.

17

The improvement in EBIT margin was driven by our sales growth and business mix, as well as
by the achievement of operating efficiencies of over CHF 1.5 billion through Nestl Continuous
Excellence, which benefited the cost of goods sold, distribution and administrative costs
.

Achieving significant cost savings at the same time as increased levels of safety, quality, service
and environmental performance. These actions contributed significantly to 2010 performance of
Nestle; and at the same time laid foundations for further performance improvement in 2011.

Return on invested capital

The Nestle return on invested capital fell by 10 basis points to 15.5%, including goodwill,
following the Pizza acquisition announced in January 2010.
Company increased by 100 basis points to 36.1%, excluding goodwill.

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Dividend and Share buyback:

CHF 15.5 billion of cash returned to shareholders through CHF 5.4 billion dividend and
CHF 10.1 billion share buy-back
CHF 6.1 billion or a CHF 1.85 dividend per share (proposed) for 2010,
an increase of 15.6%

19

Financial position
The Nestle net financial debt fell from CHF 18.1 billion at the end of 2009 to CHF 3.9 billion.
The Group received USD 28.3 billion from the divestiture of Alcon and spent CHF 5.6 billion on
acquisitions during the year.
Due to strong profit in 2010 enable company to buy back its share in 2011.
It is also expected that in 2011 debt of company will increased.

Challenges:

There are uncertainties ahead including volatile raw material prices. Company ready for
challenge and are confident of achieving the Nestl Model in 2011: organic growth
between 5% and 6%.

Any major event triggered by a serious food safety or other compliance issue could
potentially impact upon Nestls reputation or brand image.

Nestle business depend on consumers habits any seasonality and adverse whether
condition impacts its operations.

The food industry as a whole is faced with the global challenge of rapidly rising obesity
levels it is a raising concern for the company.
20

Nestl is dependent on sustainable supply of a number of raw materials, packaging

materials and services or utilities in case of any drought or natural disaster can badly
affect companys performance.

Change in macro-economic environment (shift in production patterns, bio fuels

excessive trading) resulting in input price volatilities and/or capacity constraints could
potentially impact upon Nestls profitability.

The Groups liquidities/liabilities (currency fluctuation, interest rate, derivatives, and/or

hedging, pension funding obligations/retirement benefits banking/commercial credit,
increase in cost of capital) could potentially be impacted by any major event in the
financial markets.

Future outlook:

The biggest area of focus is infants believing that mothers milk is best it is the
commitment of Nestle to use their nutritional expertise for healthier generation they have
started start healthy, stay healthy approach to infant nutrition by providing products to
help parents have healthier children from beginning through their life.

In September 2010 Nestle initiated the creation of Nestle health science with the existing
global Nestle health care nutrition business, and creation of Nestle institute of health
sciences the purpose to conduct research in relevant areas of bio medical science to
translate the knowledge into nutritional strategies to improve health and longevity.

There outlook is to create a better society by preventing improving and treating acute a
chronic medical conditions.

By 2020, there will likely be an additional one billion consumers in emerging markets
Nestle expect to be achieving about 45% of Group sales in those countries.

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SPEAKER 3

CRITICISMS OF NESTLE MALPRACTICES DURING THE CORPORATES LIFE:

Apart from being the largest and most profitable multinational around the world, Nestle has also
faced certain criticisms during its corporate life.

1. Marketing of Infant formula:

One of the most prominent controversies involving Nestl concerns the promotion of the use
of infant formula to mothers across the world including developing countries, an issue that
attracted significant attention in 1977 as a result of the Nestle boycott which is still ongoing.
Nestl continues to draw criticism that it is in violation of a 1981 World Health Organization
code that regulates the advertising of breast milk formulas. Nestles policy states that breast
milk is the best food for infants, and those women who cannot or choose not to breast feed
for whatever reason need an alternative to ensure that their babies are getting the nutrition
they need.

2. Melamine in Chinese milk

In late September 2008, the Hong Kong government claimed to have found melamine in a
Chinese-made Nestl milk product. The Dairy Farm milk was made by Nestl's division in
the Chinese coastal city Qingdao. Nestl affirmed that all its products were safe and were not
made from milk adulterated with melamine. On October 2, 2008 the Taiwan Health ministry
announced that six types of milk powders produced in China by Nestl contained traces of
melamine. Nestl has announced that it will begin a recall of milk products produced in
China.

3. Zimbabwe farms
In late September 2009, it was brought to light that Nestl was buying milk from illegallyseized farms currently operated by Robert Mugabe's wife, Grace Mugabe. Mugabe and his
regime are currently subject to European Union sanctions. Nestl later stopped buying milk
from the dairy farms in question.

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4. Palm oil use

Rapid deforestation in Borneo and other regions to harvest hardwood and make way for oil
palm plantations sends massive amounts of carbon dioxide into the atmosphere. In particular,
where peat swamp forests are cleared, destroying the habitat for many threatened species of
animals such as the orangutan, much public attention has been given to the environmental
impact of palm oil and the role of multi-nationals such as Nestl in this. There is ongoing
concern by various NGOs including Greenpeace.
Nestl Chairman, Peter Brabeck-Letmathe, in answer to a question from Greenpeace, told the
Companys Annual General Meeting in Lausanne on April 15, 2010 that in 2009 Nestl used
320,000 tonnes of palm oil worldwide, comparing this with the 500,000 tonnes of palm oil
used for biodiesel in Germany and Italy alone.
In May 2010 Nestl said it was inviting The Forest Trust, a not-for-profit group, to audit its
supply chain and promised to cancel contracts with any firm found to be chopping down
rainforests to produce the palm oil which it uses in KitKat, Aero and Quality Street.
Greenpeace welcomed the agreement promising to monitor it closely

5. E. Coli
In June 2009, an outbreak of E. Coli O157:H7 was linked to Nestl's refrigerated cookie
dough originating in a plant in Danville, Virginia. In the USA, it caused sickness in at least
69 people in 29 states, half of whom required hospitalization. Following the outbreak, Nestl
voluntarily recalled 30,000 cases of the cookie dough. How the dough became contaminated
is unclear, because E. Coli is not known to live in any of its constituent ingredients.

6. Child labor
The 2010 documentary The Dark Side of Chocolate alleges that Nestl purchases cocoa
beans from Ivory Coast plantations that use child slave labor. The children are usually 12 to
15 years old, and some are trafficked from nearby countries. In September of 2001, Bradley
Alford, Chairman and CEO of Nestl USA signed the Harkin-Engel Protocol (commonly
called the Cocoa Protocol), an international agreement aimed at ending child labor in the
production of cocoa.

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CORPORATE SOCIAL RESPONSIBILITES OF NESTLE:

Nestle believes that every single company, no matter where in the world it operates, ought to be
fully integrated into the local social, cultural & economic life. Being good corporate citizens, and
give back to the societies to which we belong.
Compliance with applicable laws and international conventions such as the Universal
Declaration of Human Rights and strong support for the UN Global Compact, as well as their
internal standards and regulations, is the foundation of their business. Beyond compliance, the
business is based on sustainability; ensuring activities protect the environment for future
generations.
Yet Nestle believe a need to go further, creating shared value for both the Company and society
in areas where shareholders and societys interests intersect. Three such areas nutrition, water
and rural development are the focus for this strategy.

Nutrition:
In 2008, Nestls CEO, and those from eight major food and beverage companies made five
global commitments to the World Health Organizations Director General, to tackle obesity and
the non-communicable diseases associated with it through diet and physical activity. These
commitments led to the International Food and Beverage Alliance (IFBA), which Nestl has cochaired since its formation,

Water:
Water has been identified as the most important factor for Nestls long-term success, as it affects
the supply of raw materials, its operations and the consumption of many of its products.
Water Resource Reviews are conducted at factories and in commodity-growing areas; by
helping farmers to become better stewards of water;
support water resource awareness and education programmes;
take a leading role in the global dialogue on the issue.
Nestle have also reduced our total water withdrawal by 32% to 144 million m3 since 2000.

Rural development:
Nestle will also continue to support 144 926 farmers through capacity building training
programmes, access to financial assistance, farm assessment tools and investment in biogas
generation, amongst others.
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Healthy Kids Programme:

Neslte believes that education helps children to understand the value of nutrition and healthy
lifestyles. Building on Nestl-sponsored education programmes, will have implemented Healthy
Kids Global Programme through partnerships in all countries where they have operated by the
end of 2011.

Human Rights:
Nestl recognises the corporate responsibility to respect human rights, as outlined in the UN
Framework on Human Rights and Business proposed by John Ruggie, Special Representative of
the UN Secretary General on Business and Human Rights. In cocoa-growing areas, child labour
is a challenge, so Nestl and others in the International Cocoa Initiative (ICI) continue to tackle
child labour and improve access to education.

Environmental sustainability:
Nestles aim is to continuously improve our performance and produce tastier, nutritious food and
beverages that are better for the environment. By assessing the environmental impact of their
value chains including procurement, logistics, manufacturing, marketing and consumer
engagement using a life cycle approach. Through an ongoing commitment to operational
environmental efficiency and a move towards cleaner energy Nestle have kept direct greenhouse
gas emissions stable at 4 million tones CO2eq and increased energy consumption by only 4% to
88.6 PJ, despite an increase in production volume of 6.2%.
They continue to focus on packaging optimization and two additional factories in the UK
achieved zero waste to landfill in 2010.
Nestl is also a founding signatory of the UN Global Compacts CEO Water Mandate, and has
provided a Communication on Progress on water since 2009.
Being committed to use only palm oil from sustainable sources by 2015 and became the first
company to commit to eliminating tropical rainforest deforestation in our supply chain. Through
membership of The Forest Trust, they are working with suppliers to meet a series of principles
to achieve this.
In recognition of improved environmental performance, Nestl was ranked second in the
consumer goods sector in the Carbon Disclosure Projects (CDP) Carbon Disclosure Leadership
Index 2010, and contributed to the CDPs Water Disclosure Project.

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RECOMMENDATIONS:

BY further improving the operations of the company and adhering to the issues faced by
the company relating to child labour, and infant milk powder, the corporation can
enhance its list of Fair Trade products of which only kit kat is a part. By doing so the firm
can enhance their future profitability and also gain the respect and likings of the
customers who dislike nestle products.

Nestle has opened a company of nutrition and health with further growth and
enhancement in this area they can add on to their current expertise, as nutrition and health
are one of its prime concerns.

Nestle has to give more focus on its advertisements and make them more attractive for
the consumers as Nestle only advertises specific products and most of its products are not
very popular in the markets

Entering emerging markets are the key competitive advantage of Nestle, however prices
are quite high of nestle products. If the prices are set according to the PCI of the average
people of the emerging markets, everyone would be in a position to purchase their
products thus enhancing their profitability.

The opportunities are realised through a strong pipeline of innovation, through increasing
distribution, through product superiority for both taste and nutrition. Also, developed
markets are often the launch pad for innovations that will end up with global reach and
enhance firms profitability.

In September 2010, Nestle announced two initiatives: the creation of Nestl Health
Science, incorporating the existing global CHF 1.7 billion Nestl HealthCare Nutrition
business; and the creation of the Nestl Institute of Health Sciences, which will conduct
research in relevant areas of biomedical science to translate this knowledge into
nutritional strategies to improve health and longevity. It believes that personalized health
science nutrition will create value for Nestl, and for society, by preventing, improving
and treating acute and chronic medical conditions.
If Nestle successfully implements its practices it is likely to expand further and improve
its profitability in the coming years.

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References:
www.wikipedia.com , history of Nestle and background.
www.nestleglobal.com
nestle corporategovernance report
nestle board regulations report.

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