Climate Week Zurich: How Swiss food giant Nestlé tackles sustainable supply chains

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Lindsey Hall

I'm Lindsey Hall.

Esther Whieldon

I am Esther Whieldon.

Lindsey Hall

Welcome to All Things Sustainable, a podcast from S&P Global. As your host we will dive into all the sustainability topics that are reshaping the business world.

Esther Whieldon

Join us every Friday for in-depth analysis and interviews with leaders from around globe. Together we will break down big sustainability headlines and cut through the jargon.

Lindsey Hall

Welcome to our special coverage on Climate Week Zurich. We are thrilled to All Things Sustainable is the official podcast of this first ever Climate Week Zurich May4 through 9 and all this week we will bringing you daily episodes featuring from the public and private sectors. Now Climate Week Zurich is convening business leaders, policy makers, nonprofit and members of the public across hundreds of events with a goal of scaling climate action.

Of course, Switzerland is famous for a lot of things, the stunning Swiss Alps, some of the world's best watches and of course, it's chocolate. Today, we're talking with an iconic Swiss brand that makes chocolate and many other food products, Nestlé. This is the world's largest food and beverage company. It has around 271,000 employees and sells food and snacks, coffee, pet care and nutrition products in 185 countries. So it's fair to say that Nestlé approach to climate has global implications. To learn more, I sat down on the sidelines of Climate Week Zurich with the company's Global Head of Climate, Benjamin Ware. Here's our conversation.

Benjamin, thank you so much for sitting down with me on the very first day of the very first Climate Week Zurich. I'm so excited to be having this conversation.

Benjamin Ware

Me Too.

Lindsey Hall

Let's start with an easy one. Could you please introduce yourself to our audience and tell them what your title is?

Benjamin Ware

Yes. My name is Benjamin Ware. I'm working for Nestlé, and my title is Global Head of Climate and Sustainable Sourcing.

Lindsey Hall

Okay. So great title, but what does that mean in practice? What should our audience understand?

Benjamin Ware

It means people that basically looked at translating the strategy from the paper into actions in farms, in factories, in trucks that carry the KitKat that we all love. So it really means finding solutions for climate adaptation, climate change and supply resilience over time.

Lindsey Hall

Thank you. I saw you speaking at the opening ceremony for Climate Week Zurich in the Zurich Opera House this morning. For anyone who couldn't be in the audience, what should they understand? What were your takeaways from that opening ceremony?

Benjamin Ware

Well, first, the place itself is quite impressive. And I think it's a good sign of linking to the history of where we are coming from, of our heritage and climate is something like this. So the vibes were extremely positive. We were welcomed by many senior executives to basically talk about climate finance, about the need to work together into solving the world's largest challenge.

Lindsey Hall

And what should our audience know about Nestlé? You mentioned KitKat. There are so many iconic brands that sit within the Nestlé company.

Benjamin Ware

Nature-based business. So as I was saying this morning, we are a food company. So what does it mean? It means that agriculture is our kitchen cupboard, this is where we get our ingredients to make a magic recipe out of it. But this kitchen cupboard is nature. So it's an asset that we absolutely need to first understand. And this is quite difficult. That's what we call baseline in climate change accounting and then help to thrive over time, and it's even more difficult.

Lindsey Hall

So nature company and nature as the kitchen cupboard, has it always been that way? Or is this a newer mindset at your company?

Benjamin Ware

We started the thinking of we should go beyond Nestlé's factory gate back in 2010 when we started to work on conservation, deforestation-free, responsible sourcing across commodities, but really the full menu of conservation, restoration, making sure that agriculture can thrive based on nature ecosystem services is since our climate road map in 2020t

Lindsey Hall

Okay. You've been with Nestlé, I understand, for quite some time. What does that journey look like?

Benjamin Ware

It looks longer, but it looks very honest. We are not hiding when challenges come when stakeholders tell us we should maybe open our eyes bigger. This is what happened in 2010 when some of our beloved NGOs came and said that we should look at forest protection. The storyline is every 5 to 10 years, we discover a new room in the house of Nestlé, understanding that we have impact and dependencies. And yes, I've joined Nestlé back in 2004, so it's been a while. But I don't get bored. And again, it's a company which have a global footprint. So we are sourcing ingredients from 86 country of origins. The volume of commodities is 3x what Swiss agriculture produce annually, but again, it comes from 86 country of origins. So there is a very large scope.

Lindsey Hall

So if we dig in a little bit to that very large supply chain, what are some of the areas where you've seen success? And then where do you see ongoing challenges?

Benjamin Ware

So traceability is our biggest success. So we went from, again, a few decades ago, a scope which was our Nestlé Factory to understand who is upstream and tracing the wheat that we buy, tracing the corn, tracing the cocoa and understanding that there are like 3, 5, up to 8 tiers in between our Nestlé Factory and then the origin of the seafood that is being fished in the oceans for our pet food business. So we are very proud of what we have done on traceability, leveraging people, leveraging technologies, so I'm talking about data software, but I'm also talking about remote sensing, blockchain technologies, traceability is really our biggest asset.

And that's an asset that we want to use not only, of course, to protect and conserve nature, but also to respond to consumer requests, where is it coming from, to give this feeling of proximity and to be able to also give a story about the ingredient itself. Many other facets before we talk about nature. And this morning in the opening, some of the speakers were talking about people. That's probably the second winner or gain that we've done into this journey to understand the millions of farmers that are behind the products that we sell, close to five million farmers behind all of these tiers of suppliers, which every day milk the cow, harvest the crop, bring it to the cooperative. So this, let's call it, population or community is something that we absolutely need to leverage to then take care of the planet. It's people, planet and then finally, profits. So the people side of this job is extremely rewarding.

Lindsey Hall

And you mentioned some of the stakeholders that you work for your customers, obviously, you've also got shareholders. What are you hearing from your customers? And what are you hearing from your investors when it comes to their sustainability requests?

Benjamin Ware

We are hearing, please manage risks, please make sure that you can continue to produce. So that's more like the investor community. They understand that we are dependent on nature. They see these droughts, these floods and the collapsing of certain commodities production in certain markets. So I think that the finance community is very much into risk management. I mean that's the DNA of being in finance. The clients are much more into differentiation. Of course, we talk with a lot of our clients. Carrefour, I was with Walmart a few weeks ago. And -- all of them, of course, have their shops and their stores in cities like Zurich.

And they want to understand what is behind the massive greenhouse gas emission reduction we've achieved almost a quarter. They want to understand the project. So what type of practices, what's the name of the farmer, where is it since when they farm. And when I was discussing with them, they want to understand this because they believe that their role is also to pass the message in their store. So not necessarily to market and sell on-product, on-pack, but to have some activation within the store about the story of the biogas digester of the dairy farmer nearby Zurich or the farmers that give us the wheat and that have reduced tillage use cover crop during winter and have started to crop a third crop during the year to get more income. So they want really the real story behind the number.

Lindsey Hall

And they want to go deep, it sounds like. Yes. And Carrefour that you mentioned for any listeners who aren't familiar with is a French grocery store chain.

Benjamin Ware

Yes. And Carrefour is also fascinating because I don't know from where it's coming from, if it's also honestly some of the regulation and laws in France, which are very heavy on climate, but they really take the full value chain approach. They want to know what type of trucks is being used in the logistics, what type of gases are being used as refrigerants. So behind the farm story, they also want to know the logistics and the point of sale, so big opportunities.

Lindsey Hall

And you mentioned another important set of stakeholders, which is, of course, regulators. How are you managing regulations for such a global company, such a global footprint?

Benjamin Ware

Yes, through local teams. And I have to say the regulator and the government to me have been the first to move and the first to move very seriously. We have a very deep monitoring of climate-related laws, but also human rights-related laws by country. And today, our mapping is that there are more than 50 countries which have climate regulation in place, either in terms of disclosure for corporates or in terms of performance for corporates.

And Switzerland is one of this country, and that's why we are glad to be in Zurich. So the engagement is done by our local team. We have corporate engagement teams, which are trained on climate change and accounting and the relationship is very much nurtured locally. The corporate teams like me, we get involved usually during crisis or issues. And they happen.

Lindsey Hall

So talk to me more to help our audience who's not here understand what it looks like at Climate Week Zurich.

Benjamin Ware

Yes. Well, it looks like a beehive. It looks like many different type of industry, very different type of profile as people being present, getting together, exchanging learnings, expertise with also the hope to make partnerships and to accelerate the collaborations. So you come from technology to data asset professionals to finance professional to then NGOs, which are looking also on the social angle for the just transition. So those events are overwhelming, and that's why it's also the job of the convenor is very important in structuring those events so that there is a logic.

Lindsey Hall

And you're based here in Switzerland. Yes. We have an audience all around the world. What should they understand about how Switzerland is approaching climate broadly?

Benjamin Ware

Yes. So I'm a Swiss national. I was actually born in a small village, which is known by many as a skiing resort. And this morning, in the opening, they were showing the glacier. Everybody is like, always this picture of glacier. I'm 48. I see the speed of melting every year when I go skiing. It's shocking how in the last 10 years, this has changed. At the same time, some of my best friends, the farmer nearby Villars-sur-Ollon, I also see their speed of change of practices.

In the past, spreading the manure on land to so-called fertilize the soil. I mean we've all smelled the smelled the odor, of course, of this. And now you don't see that anymore. Why? Because they have invested into a biogas digester and the government, the Swiss government have put schemes for the farmers to actually make a revenue out of the methane instead of this methane being degraded on land. And when I discuss with some of them, I say, okay, so now how do you nurture your soil. If you don't throw the manure from the cows anymore, they say, well, we cover it during winter with what we call cover crop.

So the speed of change, you see it in a small country like Switzerland, but you see it the same way if you go in the US and I was educated in Nebraska, which is called the corn belt, very flat. And you also see it there. So at that time, I was used to fly over Nebraska for hours and just see soy, soy, soy or corn, corn, corn. Now you start to see a mix of colors, which is the sign that there is diversification happening. And I think for every country, climate change is a diversification strategy.

Lindsey Hall

Benjamin, you mentioned some of the success that Nestlé has had in reducing emissions. Can you tell our listeners a little more about that?

Benjamin Ware

Sure. So our biggest success is in what we call Scope 3 , so in the sourcing of agricultural raw materials. We source coffee, cocoa, dairy, palm oil, pulp and paper for packaging, all of these commodities. Maybe to pick up coffee and palm because people always talk about cocoa, so I'm going to talk about some other. Coffee and palm, both of them have reduced their greenhouse gas footprint by more than 35%. And where is it coming from? It comes from the fact that we've intercrop those with some other. So the model, you need to close your eyes, go to Brazil and go in a coffee farm where for decades, it has been monoculture, coffee trees, Arabica trees all around. What we've done with these coffee trees is, we've intercrop them with pepper in India or we've even put like shade trees next to them so that they yield more coffee beans. And that's how basically we've achieved this already huge transition.

And that's also how we have achieved producing another crop that we also buy. So the idea is as much as the government are diversifying, we are also diversifying through our climate action, the origins of ingredients. Same on palm oil, monoculture in Malaysia, now intercrop with cocoa. When you know that cocoa, 90% of the cocoa sourcing globally is coming from Ghana and Ivory Coast, it's very precious to know that now you can source it in Malaysia. And it's even more precious to think that you haven't cut forest to do this. You've just planted it underneath the palm trees that were existing before.

I guess most of the agronomists are listening to this podcast will think, yes, but most likely the palm oil is less productive now with the cocoa trees because there is a bit of cannibalization happening. But it does not matter. You get a bit less of palm oil, but you get cocoa underneath. So your business is still more healthy than before.

Lindsey Hall

Okay. And just to jump in with a few definitions of Scope 3, when we talk about Scope 3 emissions, of course, it's everything in your supply chain. And when we talk about palm oil, this is a key input into many different types of food and also personal household goods.

Benjamin Ware

It goes in your shoes, in your clothes in the cars everywhere.

Lindsey Hall

And then intercrop, that term you were using, it's what it sounds like where you're basically growing two crops side by side instead of just one mono.

Benjamin Ware

Exactly.

Lindsey Hall

Okay. I'm learning things already. Benjamin, when we first sat down, you told me that you really wanted to make sure to share some concrete examples. And I want to make sure we have an opportunity to do that. What are some of the concrete examples that you'd like to highlight to our audience?

Benjamin Ware

Yes. So first of all, productivity increase. I think it's important to understand that climate change is also linked to potential waste of natural resources. So one of the main achievement we've done at the beginning of the climate journey was to make sure that the small farmers having two,three cows are getting more milk from the same cow without exhausting the cow, but properly feeding the cow with adequate nutrition so that there is no waste of energy or feed intake through the animals.

So climate change has to be put in balance versus food security and economical social development. So who are we to come to a dairy farmer in India or Indonesia? Who barely make a living and say, you know what, you need to stop doing XYZ while they are starving to survive. So productivity was one of the first one. Intercroping, what we've discussed was the second one.

And this is also valid for the small farmers, which were looking to potentially cut the virgin forest next to them to grow more rice. So we said, okay, why do you want to cut this forest? Why do you want to grow more rice because I don't have enough. Why I don't have enough? Because I don't make enough revenue. Why you are not making enough revenue? Because I have only an hectare and my job in the city doesn't pay me enough. Okay, what do you crop on this hectare? On palm and then you have five trees on hectare, okay, but you have much more space than this. You can have chickens, you can have cocoa, you can have chili. Some of them, they started to degrade the palm leaves into compost and have cultivated mushrooms and its started ecotourism on their farms.

So again, the concrete example relates to all of this farmer story, which is always about diversification. It's not about stopping to do something. It's about reducing the practices that are potentially too harmful for the planet and then diversifying the production models, understanding where do they take their resources, being water, being pest controls from the birds next to them and what do they get as output. After this, after kind of the basics on productivity, the diversification strategy, then we go to the hardcore innovation.

And again, there is a good example. We have to talk about feed. We have to talk about manure. Feed, we started to blend the ingredients of what is used in feed for dairy, for meat as well with some seaweed and vegetables. And why? Because there is scientific literature, which says that some of these seaweeds have components that completely stops the methane production in the stomach of the cow. So you need to study nature, you need to look at what academia does because those scientists, that's their job to find those nature-based solution.

And then after that, you need to mass market them and onboard your vendor and start with a pilot and then ramp it up. Same for manure for quite a long time, we all thought that it's about cement and building this biogas digester, which is a bit like putting a tent on top of manure and capturing the methane. But then again, through a study of the market, we realized that there are other solutions which achieved the same.

And then we discovered a few start-ups that actually use earthworms to digest this manure. And then when the earthworms die, they are used as compost and organic fertilizer. And then you go from a very heavy CapEx-intensive biogas digester, which require multimillion dollars of investment in California or the Washington states to building swimming pool of earthworms. And then after that, you have the farmer, which does wake board on the lagoon because the water is completely clean. And then they come back and they say, I want to build a second one because now my community is back with me and wants to be friend. And in the past, 60,000 heads, it's a lot of odor in the past, down to 0.

Lindsey Hall

Zero odor, you said. I mean I can't think of a more apt example of a nature-based solution from cow manure to a swimming pool full of earthworm well.

Benjamin Ware

Yes. And again, this needs time, but what is very interesting with climate action is I think everybody have heard about this and then everybody pop up, including in those events in showing their invention or technologies.

Lindsey Hall

Fantastic. Well, thank you for sharing the concrete examples. Anything else that I haven't asked you about that you think is important for our global audience to understand about how you're thinking about climate and sustainability. I know that's a huge question.

Benjamin Ware

Yes. I mean we must talk about energy. So talking about climate, you have to talk about energy. And the renewable energy market is fascinating. And it's fascinating in many fronts because when you have event or crisis happening, suddenly, everybody talks again about renewable energy. But renewable energy being at farm or at factory level, let me talk a bit about the factory side because it applies to other industry, is extremely relevant.

And for decades, we've worked out of fossil fuel type of energy sources with diesel engines and pumps. Over time, we realized this volatility of the fossil fuel price is a bit annoying. So then when the equipment come to a moment of replacement, that's where you start to study heat pumps and what we call biomass boiler, where you use biomass from agriculture to produce steam and energy.

And what's fascinating with the energy market is when this heat pump started to hit the market, their payback was seven, eight, nine years. They still have a payback, which is great. But as an industry, you feel like, okay, I have to invest into a new technology and the payback is going to be seven, eight, nine years.

They were talking this morning about incentives and rewards. Who do you think is incentivized to embrace a technology in the factory, which has a payback of 10 years when everybody changed job every five years, nobody. So there was a bit of things which were not aligned in this goal alignment of moving to renewable energy. But now over the last three years, with the fossil fuel market price volatility and also going up, this payback is less than three years. So now you have a payback for a technology that gets your factory completely immune from whatever will happen on earth because you install a technology, which work out of mother earth.

So even within the factory, equipment related to energy have now a better business case to be embraced. And they are not only interesting for being amortized and have a payback, but also because of the resiliency that they give to the company, getting completely immune from a fossil fuel shock like it's happening in [indiscernible] is superb. So that's what we are rolling out at Nestlé.

Lindsey Hall

I'm glad you bring up energy. We talk about that a lot on this podcast, of course. And what we've been talking about is how do you balance the immediate needs of energy security and affordability with sustainability in the long term, which can be a much longer play. And it kind of reminds me actually of what you were saying about how you're working with farmers and how do you get them to embrace long-term sustainability when they are facing like very immediate real needs of can I feed my family day-to-day?

Benjamin Ware

Yes. And look, I mean, linked to the energy market and to what is happening on earth, today, the cost of fertilizer or fossil fuel-based fertilizer for farmers have doubled. Nobody talked about this, but this is the case in Europe. It starts to be the case in Brazil. Why? Because fertilizers are usually coming from gas. The price of gas is also exploding. So then if you were to face a farmer that haven't yet done the transition on organic fertilizer, didn't want to make the transitional organic fertilizer because it was probably costing 10%, 20% of revenue.

Now it has a 200% impact based on what is happening today. So energy is not only the energy itself, it's where the energy is used as an input for agriculture. And for us, that's what we have put a lot at the center of our climate action at the beginning is to work on farm inputs, entrance to understand the dependency of the farmer. For example, you take a coffee farmer in Mexico, they will be dependent of migrant labor. It's coming from Guatemala and Honduras and they come in Mexico, they do coffee after they pineapple and [indiscernible].

So it will be dependent on labor. Then it will be dependent on agrochemicals fertilizer, if it is not yet into an agroforestry model or switch to organic fertilizer. And then it will be dependent, of course, of storage and then a point of sale for a buyer.

So if you work with them in understanding, again, what are these dependencies and how can we tackle it together over time and build the plan by cooperatives or by group of farmers, this is how you implement change. And this morning, I was talking about timing, we don't have time in climate change, but at the same time, to implement nature-based action and to make nature working for us, we need time.

And again, implementing these practices, I was saying this morning, in average, yes, there is a yield decline for a good two to three years. I don't know why everybody doesn't want to talk about this. It's not about -- the problem is how do you make this transition. So if there is a yield decline from this crop for two, three years, what are the mechanisms that we put in place as a buyer, as a community, as a stakeholder, so that the farmer and the cooperative make the transition long-term agreement, a premium on the material price, a letter of intent, I have probably signed hundreds of letter of intent for farmers to get a micro financing scheme from Rabobank.

Just once they know that they are in business with Nestlé, they will get the micro financing, they will buy the new drill to till only 10 centimeter instead of 30 centimeters. So there is a portfolio there are really many different solutions that we can offer to the farmer to implement the practices. And most of the time, what they ask is knowledge, that's one of our bottleneck. There is a lack of knowledge in implementing this nature-based solution.

Again, I've been educated as an agronomist, but I've been educated by the green revolution, meaning you feed the plant, you as a human through the fossil fuel input. I haven't been educated as nature feed the plants. So what farmers and cooperatives are talking about is, but can you be next to us for this transition every week. So that's where our Nestlé agronomists and our responsible sourcing team and the people working on that are very useful.

Lindsey Hall

You said agronomists. Am I hearing you correctly? Okay. And Rabobank is, of course, the big Dutch agricultural lender. It's fascinating because what you're describing, often when we talk about climate change, we talk about the technology needed. But what you're talking about is behavioral changes and education that's needed.

Benjamin Ware

Yes. And again, it's probably linked to the nature of our business, again, food and nature. But yes, everything starts with a farmer engagement day. It's about getting people to a place, giving them food so that they listen to what we have to tell them and why we do this. And it's fascinating when you do this farmer engagement, most of them see what we are fearing as a company, meaning ensuring supply, reliability of supply within their business. And for them, it will be, yes, I got short of water. It's true. I got short of actually not being full [ sun ] for six months in coffee. So they will have exactly the same experience, putting in a different kind of angle within their farm context, very much related to what they need to farm.

Lindsey Hall

Benjamin, I've asked you lots of questions. I know you've had a long first day of Climate Week Zurich. Can we end on a forward-looking note. Can I ask you, what are you hoping to get out of the remainder of this week? Any key questions you're hoping to have answered?

Benjamin Ware

Yes. Look, what I like everybody to do is to start measuring progress and the delivery of the commitment and the targets that were done many years ago. As an individual and as an employee working on this since more than two decades, I'm tired to be measured as a company or as a professional based on do you have a commitment, do you have a target? Do you have a breakdown of the target by scope or ingredients? Let's talk about measures and impact today.

And of course, it's easy to say because I work for a company which I have done a lot and which have a rock solid climate performance. But it's also to trigger the -- then the next question, which is great, you have achieved almost a quarter of greenhouse gas emission reduction. But what's really the impact on the farm? Can you show us yield increase, income increase, reliability of the farm business model under drought. So why I'd like the conversation to go into -- everybody should measure outcome on climate. It should trigger this conversation on then what's the impact and to move to a totally different set of measures.

Lindsey Hall

I think that's a great note to end on, and we will hope for that as we move forward. Thank you so much for sitting down with me.

Benjamin Ware

Thank you, Lindsey.

Lindsey Hall

Thanks for joining us for this special Climate Week Zurich episode of All Things Sustainable podcast. We'll be back with more coverage tomorrow. So please stay tuned. Thanks for tuning into this episode of All Things Sustainable, if you like what you heard, please subscribe, share and leave us a review wherever you get your podcasts.

Esther Whieldon

And a special thanks to our agency, The 199. See you next time.