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Nestlé Oceania: Creating Shared Value Report 2008

www.nestle.com.au

Nestlé O

ceania: Creating Shared

Value R

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COVER Inside FlapBACK COVER

Nestlé Oceania: Creating Shared Value Report 2008

www.nestle.com.au

Nestlé O

ceania: Creating Shared

Value R

epo

rt 200

8

COVER Inside FlapBACK COVER

Contact Us

This is our first Creating Shared Value report and our first attempt in more fully sharing our social, environmental and economic performance. As such we would welcome your comments and feedback.

Please get in touch with us at: [email protected]

For more information visit our website at: www.nestle.com.au

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BROUGHT TO YOU BY THE PEOPLE WHO

WORK AT NESTLÉ IN OCEANIA

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Creating Shared ValueFor our business to be sustainable over the longer term, we must create value for our shareholders and value for society at the same time.

Oceania Creating Shared Value Report 2008

05The CEO’s Introduction

07 Nestlé Worldwide

09 Nestlé Oceania

15Products and Consumers

25Our Environmental Footprint

35Our People

45Sourcing, Agriculture and our Supply Chain

53Our Community

60 Assurance Statement

61Contact Us

“ Our employees play a crucial role in our Creating Shared Value efforts and ensure we are responding to critical social and environmental issues and improving our performance.”

Welcome to our 2008 Creating Shared Value Report for Nestlé Oceania. This, our first such report, covers our activities in Australia, New Zealand and the Pacific Islands and complements Nestlé’s global reporting on environmental and social issues. It seeks to provide our regional stakeholders with a more localised overview of our performance, our achievements and some of the challenges facing our business.

To Nestlé, the term Creating Shared Value reflects our deep-seated belief that in order to build a business that will be successful over the long term we must go beyond sustainability, to create value for our shareholders and, at the same time, value for the society in which we operate.

We fundamentally believe that you can’t have one without the other. That’s why we’ve set out to maximise and enhance shareholder value by also creating value for our employees, farmers, the environment, consumers and the communities where we operate. This is a basic principle of business strategy for our company.

Globally, our Creating Shared Value priorities centre around water, nutrition and rural development. Not only are these key challenges facing our business, they are issues to which we, as a food and beverage company, believe we can positively contribute – and clearly they resonate with the needs of our region.

Take nutrition as an example. Our region is faced with a number of challenges, such as an ageing population, obesity, micronutrient malnutrition and relatively static fitness levels across the community.

As a Nutrition, Health and Wellness business, we know we have a strong role to play in this area. We know we need to continue to improve our product portfolio, such as reducing the amount of sugar, fat and salt in our products. We know we need to improve nutrition literacy and awareness and help create consumer demand for nutrition-based products. And because we know that no single organisation – public or private – can meet all these

challenges alone, we want to continue our work with our industry, government and non-government partners.

The water agenda is a similar story. Water scarcity and climate change present significant challenges for our agricultural sector, and subsequently to a business such as ours, which relies on the long-term supply of high quality raw materials.

This means we need to work across our entire business and value chain to better understand and manage these impacts and risks. We will also play our own part by continuing to reduce water and greenhouse gas emissions from our operations.

Our employees play a crucial role in our Creating Shared Value efforts and ensure we are responding to critical social and environmental issues and improving our performance. Their stories feature heavily in this report.

Having a long -term view, identifying and managing critical issues early on and accepting the need to change and evolve with our consumers has stood us in good stead over our history. The global financial challenges that occurred in 2008 have reinforced this thinking and emphasised the critical importance of managing for the longer term and according to responsible business principles.

Over and above all this, Creating Shared Value formally recognises that the unique role of business is value creation.

I hope you find our first report useful in understanding our approach to Creating Shared Value. We want to see our reporting evolve and improve over time, and would welcome your comments and feedback.

Graham Campbell CEO Nestlé Oceania

Message from Graham CampbellOn behalf of our Oceania employees.


Headquartered in Vevey, Switzerland, Nestlé operates 456 factories and employs 283,000 employees in 84 countries around the world.

Since its inception in 1866, the fundamental strategy of our company has been to create value for society, and in doing so create value for our shareholders. Today, this is known, across our business, as Creating Shared Value. It is not philanthropy or an add-on, but a fundamental part of our business strategy.

Simply stated, in order to create value for our shareholders and our company, we need to create value for the people in the countries where we are present. This includes the farmers who supply us, our employees, our consumers and the communities where we operate.

As a necessary condition for Creating Shared Value, we need to demonstrate responsible behaviour – by assuring compliance and sustainability.

This includes complying with Nestlé Corporate Business Principles, national laws and international norms, and ensuring that our actions are environmentally sound, socially just and economically viable.

Globally, our efforts come together around three priority areas. Not only are these key challenges facing our business, they are issues we genuinely believe, as a food and beverage company, we can positively contribute to.

Nutrition: creating more nutritious, better-tasting, affordable food and beverages for consumers at all income levels;

Water: ensuring availability for our business, and safeguarding and improving people’s access to fresh water, particularly in vulnerable regions;

Rural development: investing in operations close to suppliers and consumers in emerging markets to build our market presence and improve the living standards of rural communities at large.

Our global sustainability reporting, the Creating Shared Value (CSV) Report, outlines our performance across some 46 indicators in the areas of: Manufacturing and Environment, People, Agriculture, and Products and Consumers. Globally, we intend to publish a comprehensive CSV Report every two years. In alternate years, starting in 2008 with a nutrition report, we will report in more depth on our key priority areas.

In Oceania, our CSV reporting builds on the global report and provides a highly localised view of our performance and key issues facing our business in the Oceania region.

HARdWIRING eTHICAl ANd ReSPONSIBle BeHAVIOUR INTO OUR BUSINeSSWe draw on the below internal and external frameworks and standards to ensure that our actions are environmentally sound, socially just and economically viable.

• Nestlé Corporate Business Principles Incorporating the 10 UN Global Compact Principles on Human Rights, Labour, the Environment and Corruption, Nestlé Corporate Business sets our commitments when it comes to responsibility and accountability.

• UN Global Compact

• UN Millennium Development Goals

• Inter national Chamber of Commerce (ICC) Business Charter for Sustainable development

• Organisation for Economic Co-operation and develop ment (OeCd) Guidelines for Multinational enterprises

Nestlé WorldwideNestlé is the world’s leading Nutrition, Health and Wellness company.


Nestlé Worldwide

Nestlé Oceania

New Zealand

Australia

Fiji

Solomon Islands

SamoaTuvalu

NauruPapua New Guinea

Wallis and Futuna

Tonga

Vanuatu

Cook Islands

New Caledonia

Cook Islands

Niue

TokelauPitcairn

TuvaluKiribati

French Polynesia

Overview of Nestlé OceaniaNestlé Oceania group is wholly owned by Swiss-based global food and beverages company Nestlé S.A.

Nestlé Oceania

In Oceania, Nestlé employs approximately 5,600 people at more than 90 sites, including factories, distribution centres and business and sales offices located throughout Australia, New Zealand and the Pacific Islands, including Papua New Guinea, New Caledonia and Fiji.

Nestlé Oceania products are also distributed in French Polynesia, the Solomon Islands, Vanuatu, Tonga, Samoa and the islands of Tuvalu, Niue, the Cook Islands, Kiribati, Nauru, Tokelau, Wallis and Futuna and Pitcairn. Our regional head office is at Rhodes in Sydney, Australia. Australian manufacturing stretches from Gympie in Queensland, through New South Wales and down to Victoria.

OUR 2008 OCeANIA FOOTPRINT AT A GlANCe

2.462 Oceania sales (AUd billion)

5,615 Total number of Full Time equivalent (FTe) employees

14 Number of factories

2,573 Approximate number of product lines

Soluble coffee 23.3%

Powdered beverages 7.4%

Culinary 11.8%

Frozen 4.7%

Ice cream 12.4%

Chilled dairy 3.7%

Confectionery and snacks 28.7%

Milk 5.6%

Other products 2.4%

AUd 2.462 BIllION SAleS IN 2008


Nestlé Oceania Oceania Creating Shared Value Report 2008

OUR STRUCTUReNestlé Oceania forms part of a broader regional business which also includes Asia, Africa and the Middle East. Within Oceania, our businesses and brands sit under a number of key divisions, including Pacific Islands, New Zealand, Beverages, Foods, Confectionery and Snacks, and Ice Cream. Nestlé Waters, Nestlé Nutrition, Purina Pet Food, Nespresso and Nestlé Professional (with effect 1 January 2009) are exemptions and are managed on a global basis out of Switzerland. Our operations in Oceania incorporate our Uncle Tobys business. The Uncle Tobys business includes nutritious snacks, and a breakfast cereal business operated by Cereal Partners Worldwide (CPW), Nestlé’s joint venture with US-based General Mills.

In Australia, we are governed by a board of directors which is chaired by an independent chairman. The board has oversight of strategy, company accounts and compliance with various company reporting and statutory requirements.

OUR CSV STRATeGY, PRIORITIeS ANd GOVeRNANCeOur thinking about Creating Shared Value is straightforward.

For our business to be sustainable over the longer term, we must create value for our shareholders and value for society at the same time.

This includes our consumers and customers, our own people, the farmers who are our suppliers, our environment and the communities in which we operate.

That means practising responsible behaviour by complying with our own Nestlé Corporate Business Principles, national laws and international norms. And it means ensuring that our actions are environmentally sound, socially just, and economically viable.

In return, Nestlé Oceania aims to build business value through producing better products, differentiating ourselves from our competitors, securing our place in local communities, lowering operating costs, managing risk and improving employee satisfaction.

eMBeddING CReATING SHARed VAlUe The concept of Creating Shared Value sits with our entire 5,600-strong team. This ensures our decision making, initiatives and strategy truly reflect our commitment.

This starts with our Corporate Business Principles which set out our policy on corporate responsibility and accountability. Importantly, our adherence to these Principles is tested each year through our independently audited program, ‘The CARE Program’. Additionally, this assurance program looks at the issue of sustainability and responsibility more broadly across our operations and also tests our adherence to policies and standards across various areas including: Health and Safety, Human Resources, Business Integrity and Environmental Management.

We also arrange ourselves in a way which ensures we are identifying, and more importantly, responding to key sustainability issues across our business. This includes a sustainability governance structure, incorporating an executive-led Oceania Sustainability Council which provides oversight of our Creating Shared Value commitments and ensures we are effectively responding to our key priorities. The Council is made up of key executives from Operations, Marketing, Human Resources and External and Corporate Affairs. We also have a long-standing ‘Nutrition Council’ which governs our nutrition initiatives and claims.

We expect our governance structure to evolve over time, including through greater representation of external stakeholder groups and additional issue-specific groups.

Nestlé Oceania’s key brands

%97FATFREE*

We have some clear ideas about making sure we drive continuous improvement across our business. Focusing on our key Creating Shared Value priorities of Nutrition, Water and Rural development, our 2009 (and beyond) goals include:

FOCUS AReA CURReNT TARGeTS – 2009 (ANd BeYONd)

Future CSV Reporting & Strategy

• Improved alignment with Global Reporting Initiative (GRI) ‘G3’ guidelines.• Engage key stakeholder groups on CSV reporting and priorities.

Products and Consumers

• Reduce the level of sugar in selected products by at least 5% by 2012.• Ensure 100% of Nestlé's product range comply with our Trans Fatty Acids (TFA) requirements† by end of 2009.• Reduce salt levels in our salty products, against a 2005 baseline, by 25% by the end of 2010. • Continue our annual review of entire product portfolio against Nestlé Nutritional Profiling System to support continuous improvement.• Educate our consumers to better understand nutritional labelling, in particular Percentage Daily Intake (%DI) labelling.• Ensure 100% of our retail products contain %DI labelling.• Ensure 100% of Nestlé Oceania employees complete nutrition-based training by 2011. • Launch comprehensive system to help track and report on our nutrition performance, including on a product-by-product basis. • Develop nutrition-based stakeholder engagement strategy targeting key health professionals in Australia.

Our environmental Footprint

• Reduce energy consumption (per tonne of product) by 2% in 2009. • Reduce water consumption by (per tonne of product) 4% in 2009.• Build climate change strategy encompassing whole of value chain approach.• Develop Key Performance Indicators for our packaging performance.• Develop comprehensive greenhouse inventory in line with the Australian Government’s NGER^ requirements.

Our Community • Maintain strong community support through Nestlé Good Life programs and initiatives in lifestyle activity and education. • Continue to support community environmental projects, through the Nestlé Community Environment Program.

Our People • Reduce Lost Time Injury Frequency Rate to less than three injuries per million hours in 2009.• Maintain employee turnover below 12%.• Maintain employee engagement above 60% (within Hewitt Best Employer range).

Sourcing, Agriculture and our Supply Chain

• Ensure 100% of suppliers are in adherence to Nestlé Supplier Code and other key sustainability policies and practices. • Ensure sustainability and environment considerations form part of tenders and decisions relating to award of suppliers.

† Nestlé is committed to reduce TFA in prepared food products so that, in a normal consumption pattern, TFA intake would not exceed 3% of the total fat in foods, or 1% of the daily total energy intake as recommended by the World Health Organisation.

^ National Greenhouse and Energy Reporting Scheme.

Performance snapshot

CReATING SHARed VAlUe - PeRFORMANCe SUMMARY 2007 2008

Global Reporting

Initiative (GRI) Reference

Oceania total sales (AUd billion) 2.482 2.462 EC1

Manufacturing and our environmental Footprint

Total energy consumption (GJ) 1,995,860 1,895,501 EN3/EN4

Total energy greenhouse emissions+ 184,051 207,788‡ EN16

Water usage (kl) 1,476,277 1,168,893 EN8

Non-hazardous waste disposed of to landfill (tonnes) 8,209 6,267 EN22

Materials recycled (tonnes) 34,678 19,513 EN2

Our People

Workforce size 6,047 5,615 LA1

lost Time Injury Frequency Rate 3.31 3.00* LA7

Women in management 29%^ 32% LA13

employee turnover† 12.4% 11.6% LA2

Health, Nutrition and Wellness

Products covered by Nestlé Nutritional Compass (% of sales) 87% 97% PR3

Products with %dI labelling (% of sales) ° 59% PR3

Nestlé Nutrition Oceania sales (AUd) 104,227,000 129,568,000 n/a

Renovated products for nutrition or health considerations (number of renovated products) # 62 n/a

Increase in nutritious ingredients or essential nutrients (number of renovated products) # 17 n/a

Reduction of sodium, sugars, TFAs, total fat or artificial colourings (number of products) # 74 n/a

+ This currently covers our material emission sources – electricity, gas and other sources of scope 1 energy emissions – from manufacturing operations only. As part of our involvement in the National Greenhouse and Energy Reporting (NGER) scheme, going forward, we aim to include other emission sources such as our Tool of Trade Vehicles and also emissions from our offices and distribution centres.

‡ Australian National Greenhouse Energy Reporting (NGER) CO2 emission factors used from 2008 onwards. Previously, International Energy Agency (IEA) emission factors were used.

* This is an overall Nestlé Oceania figure. Previously, it excluded additional Nestlé businesses such as our Nutrition and pet care businesses.

^ 2006 baseline data used as Nestlé was not required to produce an EOWA report in 2007.† Employee turnover percentages are for resignations only and only applies to Nestlé Oceania monthly

paid employees.° %DI labelling is a new initiative, therefore 2007 data is not available.#Data is available from 2008 onwards.

“ We continue to drive improved performance across key Creating Shared Value indicators.”

Our to do list

Nestlé Oceania Oceania Creating Shared Value Report 2008

Nestlé Oceania

This is a first step in our reporting efforts. As with our Creating Shared Value performance, we aim to improve our reporting over time too, by including a broader set of performance indicators and more information about how we are performing against them.

This report builds upon global Creating Shared Value Reports produced by Nestlé in 2008 and 2009. This Oceania report provides people who are interested in or rely on our brands in the Oceania region with a highly localised view of our performance and the sustainability issues facing our business.

Incorporating our global strategy and key priorities of Nutrition, Water and Rural Development, this report focuses on the areas outlined in the table opposite. These areas are underpinned by a range of programs, targets and accountabilities to ensure we continually improve what we do.

While a number of Global Reporting Initiative (GRI) performance indicators are included within this report, the GRI principles and broader approach has been used as a foundation in determining the framework for our first report as well as ensuring the quality of the reported information.

We aim to more fully align our reporting to the GRI ‘G3’ guidelines and build upon the performance indicators in our next report. We also aim to improve our assurance and verification processes going forward.

CReATING SHARed VAlUeS

Our people: ensuring an ethical, supportive, inclusive and safe environment.

Our environmental footprint: managing key environmental issues, including climate change and energy, water, waste and packaging.

Our community:supporting the communities in which we operate.

Sourcing, agriculture and our supply chain: working with our farmers and managing sustainable production issues across our supply chain.

Products and consumers: ensuring our products are safe, fresh, healthy and nutritious and marketed responsibly.

STRUCTURe OF THe RePORTWe have structured the report in a way which makes navigating and reading it straightforward. In particular, when it comes to sharing our vision, we could think of no better voices to tell our story than the people who are contributing to it every day – our employees. These stories feature heavily in this report.

The report is structured as follows:Case studies – how our people are Creating Shared Value and driving innovation across our business

What we say – summary of our principles, policy and approach

What we do – outline of key issues, programs and initiatives

How we’re tracking – data on our performance across key indicators

WHAT’S IN ANd WHAT’S OUTNestlé Oceania has developed a ‘Materiality Framework’ to assist us in identifying the key issues facing our business and determining what should be included in this report. This process draws on a range of internal and external factors, including the issues reported by our peers, along with a range of internal Nestlé factors (such as the issues raised by our employees). This process also incorporates the issues which are of concern to our stakeholders and draws on stakeholder convenings completed by Nestlé Global in 2007. These stakeholder convenings involved some 50 stakeholders and specifically invited feedback on our Creating Shared Value strategy, priority areas and our reporting.

We have also drawn on the work undertaken by the GRI’s Food Processing Practitioners’ Network, including its survey ‘Sustainability Reporting in the Food Processing Sector’. We look forward to reviewing and utilising the upcoming Food Processing Sector Supplement in our future reporting.

Going forward, we aim to bolster our approach further through the establishment of a regional stakeholder engagement process, building on the broader outreach undertaken by Nestlé Global.

SCOPe OF THIS RePORT ANd VeRIFICATIONThis report covers Nestlé’s operations in Oceania, including Australia, New Zealand and the Pacific Islands for the year ending 2008 (unless otherwise stated). This report also includes those businesses, based in Oceania, which are managed on a global basis such as Nestlé Nutrition, Nestlé Professional, Nestlé Purina, and Uncle Tobys cereals.

Key performance indicators, namely our Safety, Health and Environment indicators and performance, including the underlying data management systems and processes, have been verified by SGS Australia Pty Ltd. Please see SGS's Assurance Statement on page 60 for further information on the verification scope and process. We aim to broaden the verification scope and cover additional indicators in future reports.

WHAT We SAY: By responding to consumers’ changing needs, producing safe, high quality and nutritious products and communicating responsibly, clearly and ethically, we improve consumer wellbeing and our sales.

WHAT We dO: led by our research centre in Switzerland, we invest in continuous development and improvement of our products to enhance their quality and nutritional value. We continue to reduce the amount of sugar, fat and salt in our products, play a key role in broader health issues such as food fortification and put in place measures to ensure our marketing is credible and not misleading in any way.

HOW We’Re TRACKING: Building on previous improvements to our product portfolio, we renovated a significant number of our products to reduce sodium, sugars, trans fatty acids, total fat or artificial colourings and to increase nutritious ingredients or essential nutrients. Nutrition-based labelling increased across our product range.


PROdUCTS ANd CONSUMeRS

About this report

When it comes to sharing our vision, we could think of no better voices to tell our story than the people who are contributing to it every day – our employees.



Passionate about influencing the food supply and supporting individuals to make better choices, corporate nutritionist Penny Small first joined Nestlé in 1983. Since then, Penny has seen enormous changes in the company as it strives to be the world’s leading company for Nutrition, Health and Wellness.

“When I first started at Nestlé, industry dietetics was really quite a new area of the profession. Nestlé was one of the first companies in Australia to appoint a corporate nutritionist. Thirty years on, nutrition is even more important in the minds of senior management. They have provided the determination and resources to facilitate a change of culture within the company where we moved from a good food company to a Nutrition, Health and Wellness company. It took great dedication.

The initial aims were to strengthen the portfolio, which was achieved by becoming active participants in the Heart Foundation Tick, Glycemic Index Program and the NSW School Canteen Association Healthy Kids Program who set nutrition targets. Nestlé also developed broader community education programs, like the Winning Diet together with our partnership with the Australian Institute of Sport.

A very important strategy was to create a team of six nutritionists placed within each division to really support and provide a voice in new product development. We also work hard to develop a more credible and transparent communications platform.

It was also essential to educate our staff and help them understand what Nutrition, Health and Wellness meant. Over 1,000 staff underwent nutrition training to help them both personally and professionally to be ambassadors for nutrition.

Our global nutrition targets have been very successful in driving better outcomes.

There are many challenges that lie ahead. Better partnerships between the private and public sectors are incredibly crucial. The private sector has an enormous capacity to help the community but we need the support of the public health sector. The challenge is to take the public on the nutrition journey with us because if we don’t do that, none of us will win. More broadly, we want to be active in the debate and try to better articulate, from a private sector perspective, some of the food industry challenges.

Going forward, we will continue to invest in continuous development and improvement of our products to enhance their nutritional value. We achieve this by monitoring existing products for their public health sensitive nutrients such as fat, sugar and salt as well as the positive nutrients that contribute to our consumers’ needs.

To drive continuous improvement across our business, we have internships for final year dietetic students and they give us very good feedback. It has been a great enabler for change. Products such as MILO B-SMART were a direct result of those audits.

Educating consumers on the benefits of nutritious products is the next challenge facing the food industry. To succeed in this, we are looking at initiatives to support consumers making more nutritious food choices.

Corporate nutritionists have a strong role within the food industry. We see ourselves as public health advocates within the company. Externally we also can give our peers an insight into the dilemmas and challenges that the food industry faces.

By working together we can achieve what we all want, better nutrition for all.”

Nestlé’s nutrition journeyCASe STUdY

Educating consumers on the benefits of nutritious products is the next challenge facing the food industry.

Penny Small, Head of Corporate Nutrition, Nestlé Oceania.



In 2008, 100% of our Oceania products were audited against the Nestlé Nutritional Profiling System and, where needed, we have identified actions for ongoing improvements to the nutritional profiles of individual products.

We are also active participants in various regionally-based endorsement programs, including the Heart Foundation Tick, Glycemic Index Program and the NSW School Canteen Association Healthy Kids Program. Many of our products have undergone reformulation in order to meet the strict nutrition standards set by these programs.

ReFORMUlATING ANd ReNOVATING OUR PROdUCTS The formulation of our products is where our Nutrition policies and programs really come together. We are committed to reducing those components which have a negative effect on health and increasing those nutrients required to maintain good health.

Building on previous improvements to our product portfolio undertaken since 2004 – in line with our nutrition policies and targets – in 2008, we specifically renovated:

• 62 products for nutrition or health considerations;

• 17 products to increase nutritious ingredients or essential nutrients;

• 74 products to reduce sodium, sugars, trans fatty acids, total fat or artificial colourings.

FORTIFICATIONFood fortification has been practised worldwide for nearly 80 years and has proved to be a cost-effective strategy to achieve specific health outcomes. Put simply, food fortification involves the addition of specific micronutrients (vitamins and minerals) to specific foods.

You might not normally associate this issue with developed countries like Australia and New Zealand; however, micronutrient deficiencies exist all over the world in both developing and developed communities.

CASe STUdY WHAT’S THe ISSUe ANd WHY IS THIS MICRONUTRIeNT IMPORTANT? WHAT HAS BeeN NeSTlÉ’S ReSPONSe?

Micronutrient deficiency: IOdINe

Australia and New Zealand

• Iodine is an essential trace element that our bodies need for normal growth and development (including brain development).

• Iodine is particularly critical for normal development of babies in the womb. The World Health Organisation states that iodine deficiency is the single most common cause of preventable mental retardation and brain damage in the world.

• In countries such as Australia and New Zealand, the soils are iodine depleted and, as a result, so are our vegetables, grains and grazing livestock. We have also seen a declining level of iodine in our milk.

• The most potent source of iodine in our diet is ocean fish and other seafood.

• Almost half of Australian primary school children are mild to moderate iodine deficient.

• Against this backdrop, Nestlé Oceania looked at how it could address this issue of iodine deficiency.

• Milo was seen as a natural solution given its popularity, especially with children.

• A new product MILO B-SMART was launched in 2008. The product has been specifically formulated for mental development, focus and concentration in children, with the addition of iodine.

• 35% of the recommended daily intake of iodine is now provided in a single serve.

Micronutrient deficiency: VITAMIN d

Australia

• Vitamin D is an important nutrient because one of its major roles is to ensure we have the right amounts of calcium circulating in our bodies. And together they are particularly important for growing children in helping to build healthy bones.

• The incidence of Vitamin D deficiency in Australia has recently been reported as being higher than previously thought, with prevalence studies of women showing 37-67% having insufficient Vitamin D levels.

• For Australians, the main source of Vitamin D is through exposure to sunlight. It is believed that the ‘sun smart’ public health messages, leading to reduced sun exposure, may be contributing to the increasing Vitamin D insufficiency problem, particularly when the availability of Vitamin D in food is actually quite limited.

• The recent 2007 Australian National Children’s Nutrition and Physical Activity Survey showed mean Vitamin D intake ranged from 2.7-4ug per day, much less than the recommended adequate intake (AI) of 5ug. It is recognised that particularly for Vitamin D, getting enough in the diet is challenging and in fact there is a call within the scientific community for increased food fortification. The survey also highlighted that children’s intake of calcium is way below the daily recommended intake amounts.

• Based on the emerging Vitamin D deficiency and inadequate calcium intake of children, Nestlé Oceania looked at how it could improve the nutritional status of these nutrients in children through its relevant brands.

• Building on its iconic children’s brand, NESQUIK, Nestlé Oceania has recently launched NESQUIK PLUS, a formulation which contains 25% of daily Vitamin D needs and 50% of daily calcium needs. It also contains 25% less sugar than standard NESQUIK powder and contains the National Heart Foundation Tick approval.

Micronutrient deficiency: IRON

Fiji

• Iron plays an important role in the body. One of the main roles of iron is to help our red blood cells transport oxygen to all parts of the body.

• A 1993 Fiji ‘National Nutrition Survey’ found that 40% of under five children and 32% of women over 15 years were deficient in iron.

• The Fiji government, working alongside UNICEF, initiated an iron fortification project.

• Wheat flour was identified as a suitable vehicle for iron fortification.

• Nestlé was able to respond to this issue through the procurement of iron-fortified wheat flour for its products, including Maggi Noodles.

• We are also ensuring our product labelling contains the necessary information regarding iron levels.

Micronutrient deficiency: FOlATe

Australia and New Zealand

• Folate is important for healthy growth and development. It is especially important in women of child-bearing age as having optimum levels of folate/folic acid during the early stages of pregnancy has been shown to help lower the risk of neural tube defects in the developing child.

• In 2004, Ministers agreed to the mandatory fortification of bread flour with folic acid. This comes into force in September 2009. In addition, other foods may continue to be fortified with folic acid.

• Nestlé and Uncle Tobys continue to fortify most of their breakfast cereals with folic acid.

By responding to consumers’ changing needs, producing safe, high quality and nutritious products and communicating responsibly, clearly and ethically, we improve consumer wellbeing and our sales.

This is fundamentally part of who we are as a business, and by ensuring our products are superior to our competitors, we are able to strengthen our brands and deliver long-term growth and profitability.

OUR eFFORTS ARe GUIded BY OPeRATING NUTRITION, HeAlTH ANd WellNeSS PRINCIPleS, WHICH:

• Encourage a balanced healthy diet, including by monitoring existing products for their content of total fat, saturated fat, sugar and other sensitive nutrients.

• Ensure our products are formulated to help our consumers meet their nutritional needs, including developing broader community education programs.

• Take care of our own people, including ensuring they are well trained when it comes to nutrition matters.

These operating principles are supported by numerous policies and targets on a range of specific issues, including sodium, health claims, fortification, trans fatty acids, sugar and marketing and labelling.

Nestlé is obviously well placed to play a key role in food fortification. As such, we are constantly reviewing our product portfolio to determine how and where we can increase micronutrients which represent public health importance.

NUTRITION, HeAlTH ANd WellNeSSOur ambition is to be recognised as the leading Nutrition, Health and Wellness company, offering products which improve our consumers’ wellbeing. Globally, Nutrition is one of our key Creating Shared Value priorities.

Led by our research centre in Lausanne, Switzerland, which employs some 550 scientists, we invest in continuous development and improvement of our products to enhance their quality and nutritional value. In 2008, we invested some CHF (Swiss Franc) 1.98 billion in Nestlé research globally.

In Oceania, Nestlé has employed some 25 dietitians throughout our major divisions across our business. This has been crucial in increasing the nutrition ‘voice’ across the business and building our capacity to improve the nutritional value of our products.

eMBeddING NUTRITION INTO OUR PROdUCTS – 60/40+We know that our consumers want healthy foods, but not at the expense of taste. To get this balance right, we’ve developed ‘60/40+’, a unique Nestlé-driven concept to ensure our products are superior both in terms of taste and nutritional value. The program aims to: gain the approval of 60% of consumers in a taste test while bringing a nutritional ‘plus’ in terms of nutritional outcomes such as calories, fat, saturated fat, sodium, added sugars and trans fatty acids.

Underpinning the nutritional component is the Nestlé Nutritional Profiling System which assesses the nutritional value of our products. This system draws both on our own rigorous internal standards along with various external standards such as those published by the World Health Organisation and regional-specific nutrient targets in Australia and New Zealand. More information can be found at our website – www.nestle.com.au

What we say What we do

GOVeRNING FOR HeAlTH ANd NUTRITION In 2000, we established an internal Nutrition Council, supported by a Nutrition Secretariat, to better drive health and nutrition outcomes across our business. Consisting of key executives from Operations, Marketing and Corporate & External Relations, the Council’s activities include:

• Ensuring claims on products and associated communications are accurate, clear and not misleading in any way.

• Overseeing compliance with our Nutrition Policies and the Nestlé Corporate Business Principles.

• Approving programs that promote Nutrition, Health and Wellness.

ReSPONSIBle MARKeTING ANd COMMUNICATIONSOur core products are crucial if we are to truly become a Nutrition, Health and Wellness company. However, equally important is how these products are marketed, in particular, how they are marketed to achieve health outcomes at the same time as commercial outcomes. We would be the first to acknowledge some of the challenges in doing this in practice; however, we have established some important responsible communication platforms to ensure this resonates across our business.

Our Nestlé Consumer Communication Principles set out our overall responsibilities to consumers, ensuring that:• Communication is not misleading and

accurately represents the product.

• Health benefit claims are backed by sound scientific evidence.

• Food advertising depicts moderation in consumption.

• Advertising encourages an active lifestyle.

• The true purpose of the product is clear, and not misleading – for example, products that form only part of a meal should clearly be depicted as such.

We are also conscious of our responsibility to vulnerable groups, including how we market to children. Building upon the Nestlé Consumer Communication Principles, which set out how we communicate to children, Nestlé Oceania led industry’s response in Australia and New Zealand and released additional regional guidelines in 2008, ensuring:

• Nestlé does not advertise food and beverage products to children under 5 years of age.

• Advertising to children between the ages of 5 and 12 is restricted to products with a nutritional profile which help children achieve a healthy balanced diet, including clear limits to product size and ingredients such as sugar, salt and fat.

We will continue to advocate for responsible marketing and communication practices, including through our involvement in the Responsible Marketing to Children Initiative ( jointly developed by the Australian Food and Grocery Council and the Australian Association of National Advertisers) and in New Zealand to the Code for Advertising for Children (developed by the Advertising Standards Authority).

Responsible food labellingWe are committed to transparency and communicating the facts when it comes to our products. In 2005, we introduced the first global nutritional labelling system, the Nestlé Nutritional Compass. This is an on-pack information panel that provides consumers with relevant, easy-to-understand nutrition information. At the end of 2008, 97% of our products carried the Nutritional Compass. To the extent that it can be depicted on labels, the compass will be progressively rolled out to our remaining products throughout 2009.

Working together with the Australian Food and Grocery Council, we are also progressively including Percentage Daily Intake (%DI) information on our packaging. %DI is a guide to how much energy and key nutrients an average adult should eat to have a balanced diet and what percentage of this our product constitutes. Currently, 59% of our products contain %DI labelling.

Infant formula marketingNestlé believes that breastfeeding provides the best start in life for infants, but for mothers who cannot breastfeed, or who choose not to, we produce the highest-quality infant formula products. Nestlé has extensive management systems in place to ensure our infant formula is sold and marketed responsibly, in accordance with the World Health Organisation’s Code of Marketing Breast-milk Substitutes.

As a minimum, our Infant Formula Marketing Policy ensures we adhere to governmental standards in all countries. In Australia, Nestlé is a signatory to the Marketing in Australia of Infant Formula (MAIF) Agreement, which is administered by the Federal Government’s Department of Health and Ageing. The MAIF Agreement is Australia’s response to becoming a signatory to the WHO Code and sets out the obligations of manufacturers and importers of infant formulas. In New Zealand, the code – Implementing and Monitoring the International Code of Marketing of Breast-milk Substitutes in New Zealand – applies to our practices.

Beyond this, to protect infants in countries with poor sanitation and higher infant mortality, we are the first company to voluntarily implement the entire WHO Code in all developing countries, even where there is no national implementation. This includes countries throughout the Pacific Islands.

Nestlé has an extensive ISO-like internal monitoring system, the WHO Code Quality Assurance System, to ensure our practices are in alignment with the relevant Codes. This also includes an annual external audit of our practices plus various internal reporting systems, including an internal ombudsman process for any employee who wishes to report potential breaches.

eNSURING THe SAFeTY OF OUR PROdUCTSFood safety represents one of the most fundamental aspects of our business. Above and beyond our legal obligations, our consumers trust is, as you would expect, founded on the safety of our products and brands.

Our global food safety system is based on external quality standards, including ISO 22000 (2005 Food Safety Management Systems) and the Hazard Analysis Critical Control Point (HACCP), a food safety risk assessment process focused on control of biological, chemical, and physical hazards within the food chain. Our Nestlé Food Safety Management System is integrated into the Nestlé Quality Management System (NQMS).

NQMS covers each and every Nestlé product and, importantly, sits across our entire value chain, from assessing consumer needs through to new product development, to consumption and everything in between. An important component of this is our supply chain. We demand the same high standards from our supply chain when it comes to quality and food safety. In 2008, 115 suppliers were audited against our standards.

All Oceania factories are progressively being certified against the food standard ISO 22000, with remaining factories in Blayney (NSW), Marton (New Zealand), Lae (Papua New Guinea) and Notting Hill (Victoria) due to complete certification in 2009.

The true indicator of our quality and safety efforts is consumer complaints. We are focused on reducing complaints across the board, with complaints regarding quality issues dropping 9% between 2007 and 2008.

PARTNeRSHIPS, AWAReNeSS ANd leVeRAGING OUR ReACHWe see enormous value in greater alliances between the public and private sectors when it comes to issues such as food safety, nutrition, health and fitness and broader matters such as malnutrition and fortification. For our part, we want to use our position in the market, our reach, our experience and practical engagement with consumers to influence improved health and nutrition outcomes. We also want to drive demand by assisting our consumers identify nutritionally-improved products.

dietitians Association of Australia (dAA) Nestlé has worked closely with the DAA over the past 10 years. The DAA is the leading nutrition body in Australia and currently has over 3,400 member dietitians.

We are partnering with the DAA on two main fronts: educating consumers on nutrition and providing consumers with nutritious product and meal solutions for their everyday needs that will help them get more out of life.

Australian Food and Grocery Council (AFGC)Nestlé is an active member of the AFGC. Our CEO sits on the board, and a number of our executives represent us on various sub-committees: Health, Nutrition and Scientific Affairs, Corporate Affairs, and Sustainability. As such we are at the forefront of food and beverage initiatives such as Marketing to Children, %DI labelling, and environmental sustainability.



This is the recommended DI for an average adult in one day.

Confectionery Manufacturers of Australasia (CMA) The Confectionery Manufacturers of Australasia (CMA) is a trans-Tasman industry group which addresses key industry issues such as sustainability; environmental management; provides technical advice to members and plays a role in advocating the industry’s position on issues such as packaging and labelling.

A key focus is the issue of forced child labour and children working in hazardous conditions in cocoa plantations. CMA’s role is to ensure the communication of the work that the major global companies are doing to address this is managed and co-ordinated. Another key initiative is ‘Be treatwise’, a consumer information program aimed at helping consumers better understand the healthy daily intake of treats such as chocolate and lollies.

Nestlé is a member of the Board of the CMA.

Australian Institute of Sport (AIS)Over the past 10 years Nestlé has worked closely with the Australian Institute of Sport, particularly in the areas of education and nutrition. This partnership allows Nestlé to learn from, and leverage, AIS’s 27 years of nutrition and fitness expertise. Nestlé supports the AIS on a number of nutrition and fitness fronts; providing a full time nutrition researcher based at the AIS, athlete career scholarships for young athletes, and customised nutrition literature for both athletes and all Australians.

In particular, Nestlé and the AIS have developed free nutrition educational resources for school teachers. Over 60% of Australian primary schools have downloaded this information since the program’s inception.

Allergen BureauThe Allergen Bureau was established in 2005 as an initiative of the AFGC Allergen Forum, and operates on a membership basis. The overall objective of the Allergen Bureau is to share information and experience within the food industry on the management of food allergens to ensure consumers receive relevant, consistent and easy to understand information. The Allergen Bureau is a good example of co-operation amongst competitors in the food industry, with national and multi-national food manufacturing and marketing companies, suppliers, importers, exporters, retailers and consumer groups sharing information on managing the risks of food allergens in the interests of consumers.

WebsiteNestlé Oceania invests heavily in its websites (including nestlé.com.au and nestlé.co.nz) to ensure they are leading health and nutrition resources for our consumers, and other stakeholders. The websites contain a separate comprehensive section on nutrition, covering topics from targeted information for mums, babies, men and seniors to resources on staying in shape and eating healthy. The websites also include nutritional information on a wide range of our products.

The websites also allow our consumers to access expert advice from our corporate nutritionist, Penny Small.

Working with the ultimate nutrition advocates: our peopleWith a 5,600-strong workforce, our employees are our greatest advocates when it comes to getting the nutrition message out to the community. Not only this – we want to help our employees make informed nutrition choices for themselves and their own families. As such, we commenced nutrition training in 2005 and have trained over 1,000 of our people. Since 2005, our training program, now known as Nutritional Quotient, has evolved and become more targeted. In 2008, around 292 employees were trained under Nutritional Quotient.

NeSTlÉ NUTRITIONNestlé Nutrition is a global, integrated business that focuses on delivering science-based nutrition products to address specific health and wellness needs. In 2008, sales from our Nutrition business exceeded AUD 129 million in the Oceania region, up from AUD 104 million in 2007.

In Oceania, Nestlé Nutrition covers three key business areas:

• Infant Nutrition – infant formula and toddler and baby food.

• Healthcare Nutrition – including products for people managing certain medical conditions.

• Performance Nutrition – promoting peak mental and physical performance for athletes and active people.

ReGUlATORY ANd SCIeNTIFIC AFFAIRSWhile meeting the challenges of compliance, our Regulatory and Scientific Affairs team supports Nestlé’s Nutrition, Health and Wellness agenda by identifying and leveraging regulatory and scientific opportunities. The team is responsible for the substantiation of product claims based on a rigorous scientific evaluation model. The team is an integral part of the Nutrition Council and Secretariat through the provision of regulatory and scientific counsel.

The team also works closely with our external regulators, government and industry bodies on key food regulations, policies and broader industry developments.

AFFORdABIlITY ANd ACCeSSIBIlITYWe want our products to be accessible and affordable for everyone, including the 2.8 billion people around the world who earn less than USD 10 per day. Our Popularly Positioned Products (PPP) initiative seeks to do this through two main strategies:

1. Affordability: PPPs often come in smaller, more affordable pack sizes so that lower-income consumers can buy them regularly.

2. Accessbility: New and innovative distribution models to ensure our products are accessible.

By utilising local manufacturing and distribution networks, PPPs can also bring broader economic development and create employment opportunities for factory workers, agents, brokers, suppliers and distributors.

PPPs accounted for about 6% of our global food and beverage sales and achieved organic growth of 27% in 2008.

PPPs IN PAPUA NeW GUINeA – MAGGI NOOdleSWith around 85% of Papua New Guinea’s population sitting at the ‘bottom of the pyramid’ – representing the poorest socio-economic group – affordability and accessibility principles underpin our key products in Papua New Guinea.

THe PAPUA NeW GUINeA MARKeT

• 85% of population is at the bottom of the pyramid, with a per capita disposable income of under USD 2,700.

• 820 indigenous languages spoken.

• Large proportion of people living in settlements in rural areas.

• 57% literacy rate.

• People generally consume only one meal per day .

OUR ReSPONSe Affordability – getting the price and serving size right.

• Small pack sizes have been introduced across our key products in Papua New Guinea, in particular our key PPP in the region: Maggi Noodles.

Accessibility – establishment of a comprehensive distribution strategy to ensure our products are accessible.

• Increased presence at open food markets through the provision of Maggi Noodles and Maggi-branded tables and merchandise for local sellers.

• Provision of Maggi Noodle dishes through food carts.

• Increasing the number of Maggi ‘Kai’ (food) Bars.

• New distribution channels to reach the many villages of PNG.

Health and Nutrition – ensuring products are nutritionally sound

• Awareness and educational activities, including the promotion of nutritious recipes and nutrition information.

• Maggi noodles contain iodised sodium.



Nestlé Oceania has worked closely with the AIS over the past 10 years.

UNdeRSTANdING WHAT MATTeRS TO OUR CONSUMeRSMany factors influence consumer choices, from attitudes and habits to demographics and societal issues. This is especially relevant when it comes to health and nutrition issues.

Our Consumer Services team manages the interface between our consumers and our business. The team received around 117,328 contacts in 2008. This provides Nestlé with invaluable insight into what our consumers are thinking and how we can better respond. In addition to product-related feedback, which makes up a large component of enquiries, we also get an understanding of the Social, Ethical and Environmental priorities of our consumers.

During 2008, the team handled a range of issues including environmental issues, packaging (including recycling, and the correct packaging levels), animal welfare, palm oil, coffee plantations and human rights. Through this interaction we are able demonstrate how Nestlé manages and is responding to these various issues.

Health and nutrition (making up around 6% of total calls) enquiries also keep us focused on how we can truly become a Nutrition, Health and Wellness company.

We respect our consumers’ right to privacy and set out how we collect, hold and use personal information in our privacy policy.

PROdUCTS ANd CONSUMeRS

2007 2008

Consumer Services

Nestlé Australia Consumer Services enquiries 87,862 88,253

Purina Australia enquiries 9,625 8,348

Nestlé New Zealand Consumer Services enquiries 15,942 18,098

Purina New Zealand enquiries 2,326 2,629

Total enquiries 115,755 117,328

Quality and Safety

Oceania complaints relating to quality issues 33,355 30,427

Nutrition, Health and Wellness

Products covered by Nestlé Nutritional Compass (% of sales) 87% 97%

Products with %DI labelling (% of sales) † 59%

Nutritional Profiling completed (% of products analysed for nutritional value) ^ 100%

Nestlé Nutrition Oceania sales (AUD) 104,227,000 129,568,000

Total employees receiving nutrition training 488 292

Renovated products for nutrition or health considerations (number of renovated products) ^ 62

Increase in nutritious ingredients or essential nutrients (number of renovated products) ^ 17

Reduction of sodium, sugars, TFAs, total fat or artifical colourings (number of products) ^ 74

† %DI labelling is a new initiative, therefore 2006 & 2007 data not available.

^ Data is available from 2008 onwards.


OUR eNVIRONMeNTAl FOOTPRINT


How we’re tracking

WHAT We SAY: We believe our operations should be environmentally sustainable and efficient. This means reducing our direct impact on the environment, identifying and managing climate change and water risks across our business and, uniquely, working alongside our employees in helping them help the environment.

WHAT We dO: We are committed to improving the operational efficiency and environmental performance of our business. We continue to identify and implement projects to reduce the energy and water used by our factories, distribution centres and offices, reduce waste across our business and minimise the impacts of our packaging.

HOW We’Re TRACKING: We continued to make improvements in our water and waste performance. While our total energy consumption dropped, our energy use per tonne of manufactured production increased due to a reduction in production volumes. Packaging levels remain an issue and something we will continue to focus on.


“I see sound environmental practices being implemented in our everyday work and decisions.

Specifically in 2007/2008, we completed 15 energy efficiency actions as part of Nestlé’s Eco Reduction Program. This has covered a range of initiatives, such as investing in more efficient equipment, effective operation and maintenance of energy intensive equipment including boilers and compressors, and improved scheduling of our production process. We’ve also sought to improve the efficiency of our air handling systems and lighting management.

Our team has also worked on minimising product losses. It makes good business sense as it not only saves ingredients, but also avoids investing energy into wasted products. We maintain our focus upon efficiency through weekly product loss objectives and rewarding employees for achieving these targets.

The involvement and commitment of our people has been critical. It requires a team effort – from our engineers who are selecting new equipment to technical people who maintain equipment and optimise processes, and the vital role that every operator plays in running the equipment effectively.

We use electronic performance boards to track our performance against targets, demonstrating how energy efficiency is part of daily decision making. We track the efficiency of our process lines, daily gas consumption and even our weekend electricity use. Overall, our efforts have led to a 32% reduction in our total energy consumption since 2004.

I have confidence that I work for a company that not only has a desire to be environmentally sound, but is also willing to take actions to make this possible. Our efforts reduce operating costs, help maintain consumer confidence in Nestlé, and drive my job satisfaction.”

Darren Baldwin, Safety, Health and Environment Manager, Nestlé Oceania’s Purina Pet Food Facility, Blayney.

driving energy efficiency at BlayneyCASe STUdY

Our environmental Footprint

darren Baldwin is the Safety, Health and environment Manager at Nestlé Oceania’s Purina pet food facility at Blayney in New South Wales in Australia. The Purina plant where darren works was recognised for its energy efficiency projects in the NSW Government’s energy and Water Green Globe Awards, winning Bronze for the energy Smart Business Program.

Our environmental Footprint Oceania Creating Shared Value Report 2008

RedUCING OUR OPeRATIONAl FOOTPRINTWe are committed to the sustainable management of our manufacturing operations. To us, this means reducing the energy and water used by our factories, distribution centres and offices, reducing waste across our business and minimising the impacts of our packaging.

The ‘Nestlé Eco Reduction Program’ is our key initiative and ensures we are closely measuring our performance and impacts and establishing targets which drive reductions in our energy, water and waste consumption.

In Oceania, all sites are required to develop annual Eco Reduction Plans to reduce energy and water usage and decrease waste generation, and to report on progress. These plans are reviewed monthly to ensure targets are being achieved. Achievements are shared across the business to improve performance and results are recognised through our annual Environment Awards.

In 2008, over 491 tangible efficiency actions were identified across our operations. Of this, over 200 individual water, energy and waste reduction actions have so far been implemented. Reflecting the nature of many resource efficiency projects and to drive greater investment, we also have relaxed our payback period for these projects from two to four years.

MANAGeMeNT SYSTeMS ANd RePORTINGCentral to our environmental policy is the ISO 14001-compliant ‘Nestlé Safety, Health and Environment System’, which establishes the overall framework for managing our environmental impacts and key risks and ensuring compliance with legislation. Each of our factories is required to maintain a management system which meets the requirements of the Safety, Health and Environment System and subsequently ISO 14001. To date, most of Nestlé Oceania factories have achieved ISO 14001 certification with the remaining factories undertaking certification throughout 2009. In 2009, we also intend to certify the corporate Safety, Health and Environment System against ISO 14001 (as well as OHSAS 18001).

We also report our performance through the Federal Energy Efficiency Opportunities (EEO) program, National Packaging Covenant, New Zealand Packaging Accord, various state-based reporting requirements and, for the first time in 2009, the National Greenhouse and Energy Reporting (NGER) scheme.

Our greenhouse reporting will evolve and improve as we report against NGER in October 2009. Through this process, we aim to provide a fuller picture of our carbon footprint, incorporating emission sources from our Tool of Trade vehicles and corporate offices for example.

eNeRGY ANd GReeNHOUSe GAS eMISSIONSOur energy greenhouse gas emissions† (scope 1 and 2) were 207,788 tonnes of CO2 in 2008. This represented an increase of 23,737 tonnes on 2007 levels. A change in our CO2 emission factors, used to determine our greenhouse gas emissions, largely led to this increase. In 2008, we began using the emission factors published by the Australian Government as part of its National Greenhouse and Energy Reporting Scheme. Previously, we were using International Energy Agency (IEA) CO2 emission factors.

While we achieved a 5% gross reduction in our total energy consumption from 2007 to 2008 our Key Performance Indicator (KPI) rose from 5.7 gigajoules of energy use per tonne of manufactured production to 6.1. A reduction in production volumes was the main reason for this increase. Many of our factories need to maintain a minimum energy baseload, regardless of manufacturing levels.

Even with a rise in our 2008 energy KPI, we’ve reduced our overall energy use per tonne of manufacturing production by 10% from 2004 levels.

Our Eco Reduction Plans identified around 200 specific energy efficiency actions across our factories. Of this, 72 actions have so far been implemented. This included a range of technical and cultural projects, including but not limited to:

• optimising the energy efficiency of our air conditioning systems;

• improving energy efficiency of vacuum pumps in our confectionery and culinary operations;

• optimisation of refrigeration systems;

• reduction in the use of compressed air;

• turning off lights which are not required.

WASTeIn 2008, we reduced the amount of our waste which goes to landfill by 24%, from 8,209 tonnes in 2007 to 6,267 tonnes in 2008.

To further reduce waste from our operations, in 2008 we introduced a major new initiative called ‘War on Waste’. A central emphasis of the initiative will be to operate our facilities on a leaner basis and avoid waste generation before it can occur.

To help Nestlé Oceania sites better understand and track their environmental performance in reducing solid waste generation (and energy and water consumption), and engage their teams in delivering reductions, we have developed a number of toolkits covering solid waste, energy and water. Each toolkit is designed to help sites develop a Waste Minimisation Plan, including information and ideas to assist in the completion of the plan.

† Please note: this currently covers our material emission sources – scope 1 energy emissions and scope 2 sources such as electricity and gas – from manufacturing operations only. As part of our involvement in the National Greenhouse and Energy Reporting (NGER) scheme, going forward, we aim to include other emission sources such as our Tool of Trade vehicles and also emissions from our offices and distribution centres.

We believe our operations should be environmentally sustainable and efficient. This means reducing our direct impact on the environment, identifying and managing climate change and water risks across our business and, uniquely, working alongside our employees in helping them help the environment.

We also seek to take a broader stance on environmental issues, including working with the communities within which we operate on community environmental projects (see the Community section for more details).

Our actions are guided by the Nestlé Oceania Environment Policy (available on our website – www.nestle.com.au) which was first developed in 2003 and reviewed and updated in 2008.

Lynda Applegate is the Safety, Health and Environment Manager at Cambria Park and she has been with Nestlé Oceania for 16 years. Lynda has been intimately involved in the certification of Cambria Park’s operations against our various Safety, Health and Environment Standards.

David Coutts, Logistics Manager, Nestlé Oceania’s Smithtown facility in New South Wales (where we make our MILO and NESQUIK powders). David and his team have initiated a major recycling program at our factory that saw a massive 60% reduction in waste being dumped.


WATeRAs a business that fundamentally relies on access to clean water to produce products for our consumers, water scarcity and water quality are issues close our hearts. When it comes to our own operations we seek to be as efficient as possible.

Again, through our Eco Reduction Plans, we are focused on tangible projects which achieve reductions in our consumption. Throughout 2008, our factories implemented a total of 58 water-saving actions, ranging from the capture of rainwater for cooling towers to behavioural change initiatives.

Our efforts have led to an overall 32% reduction in water usage from 2004 to 2008, moving from 5.6 kilolitres of water usage per tonne of manufactured product to 3.8 kilolitres of water usage per tonne of manufactured product.

Globally, water is our top priority and we have set ourselves the target of becoming the most efficient water user among food manufacturers. Since 1998, Nestlé has increased its food production volume by 76%. Over the same period we have reduced our water withdrawal by 28%†.

In addition to managing our direct consumption of water, we are committed to working with our supply chain and agricultural network to improve their practices and more broadly as a founding signatory of the UN Global Compact CEO Water Mandate. More information can be found on our global website www.nestle.com.

PACKAGINGNestlé’s diverse product range means we draw on a range of materials – including paper, wood, metal, glass and plastic – for our packaging. Through our Packaging Policy we are focused on reducing the environmental impact of our packaging, whilst not compromising on safety, quality and consumer acceptance.

Our overarching packaging strategy comes together around:

1. Working with our employees to develop the right procedures, the right behaviours and the right skills.

2. Working with our consumers to encourage greater recycling and waste minimisation.

3. Working with our partners to ensure our suppliers are choosing the right materials.

This approach, along with our policy, is aligned with the Australian National Packaging Covenant (NPC) and the New Zealand Packaging Accord. These covenants are important in establishing the framework for addressing the environmental impact of packaging across its full lifecycle. Our annual NPC action plans are available at www.packagingcovenant.org.au

Snapshot of our 2008 packaging initiatives and performance:

• Total amount of packaging used increased by around 11%. This has been driven by smaller pack sizes and multi-packs.

• The amount of recyclable material used in our packaging increased by 16% while the amount of non-recyclable material used decreased by 11%.

• Implementation of on-site recycling facilities at all factory sites.

• Amended our packaging procedures to ensure:

• full integration of the online Packaging Impact Quick Evaluation Tool (see over); and

• mandatory recyclability assessments on all new or modified packaging. This assessment ensures that packaging is designed for recycling.

• Extensive engagement with suppliers around our packaging policy and our environmental packaging requirements.

The challenges of packagingThe net amount of packaging used by Nestlé, as well as the amount of packaging used per product, has increased over the past few years.

Nestlé Oceania’s decisions about packaging are informed and influenced by many factors. Key amongst them are the expectations of our consumers. While our consumers are becoming more and more environmentally aware, adequate packaging remains a key concern, especially when it comes to the freshness and safety of all products.

There is also a growing trend – reflecting smaller households in Australia and New Zealand in particular – toward smaller pack sizes and multi-packs. This in turn contributes to the use of more packaging per product.

Our responseBecause packaging remains one of those challenging areas, our response is multi-dimensional.

First, we continue to focus on the areas where we have direct control, such as increasing the recycled content of the packaging we use and increasing the recyclability of our products. The packaging case study (see over) provides an example of this in practice.

Second, while the amount of packaging we use is crucial, we also want to better understand the ‘full’ environmental impact of our packaging, from how and where the materials are sourced, their transport and how they are eventually disposed. Our use of PIQET© (Packaging Impact Quick Evaluation Tool – see over) helps us do this and its application often challenges current thinking when it comes to packaging decisions, and the trade-offs between material selection, packaging sizes and weights, recyclability and recycled content and their true impact on the environment.

Third, we are in the process of establishing a range of Key Performance Indicators for our packaging performance. We are working with our suppliers to improve the accuracy and frequency of our packaging data and seeking to determine the most appropriate KPIs for our business.


Geoff Young works at Nestlé Oceania’s Pakenham facility in Victoria where noodles, lasagnes, frozen meals and pizzas are produced. Before moving onto mains supply, water used in the factory was stored in tanks. For a number of years after the switch, the tanks sat idle. The site’s Water Wise team – made up of volunteers and experts across the factory – started to think about how we could use the tanks to collect rainwater from the factory roof. Since rainwater can’t be used in food production, they came up with the option of reusing the rainwater in our cooling towers, which is what we now do.

† Nestlé Global Creating Shared Value Report 2008.

PIQeT© - Packaging Impact Quick evaluation ToolNestlé Australia is one of five company sponsors of a rapid lifecycle assessment-based tool, known as PIQET. The tool has been developed by the Sustainable Packaging Alliance, a joint initiative of the Centre for Design at RMIT University, Birubi Innovation, and Victoria University’s Plastics and Polymer Research Unit.

The tool allows us to quickly assess the full environmental impact – from ‘cradle to grave’ – of our proposed packaging across a number of environmental indicators, including climate change, energy, water use, and solid waste.

Any new or modified packaging must now undergo a PIQET review. For new packaging, comparisons in PIQET must be made against current packaging. Any negative results require an action plan to be developed and are escalated to the internal Sustainability Council.

In a positive development, PIQET, an Australian invention, is now being used throughout Nestlé globally.

Packaging Case StudyShawnee Henson is the Packaging Specialist, Manufacturing Services, Beverages Division at Nestlé Australia Ltd. She’s worked with Nestlé since October 2003 and has been a part of the work that has helped us turn the corner in recycling.

“We’ve worked hard to address a recycling issue for a product of ours, ‘Short Black’, which is packaged in a tinted jar.

Initially, it was only partially acceptable at recycling sorting facilities. The degree of the jar’s transparency and its level of tint meant that the recycling sorting technology couldn’t identify the tinted components of the jar as glass and ended up rejecting much of the potentially recyclable material. Nestlé felt that was unacceptable for a company that is committed to reducing waste.

A recycling partner gave us some direction on how we could make the packaging easily identified for recycling while retaining our product branding. We then worked with another supplier to modify the formulation of the tint for a more transparent shade. Marketing reviewed the changes to ensure the aesthetics of the pack still met consumers’ expectations and our factory did trials to ensure the changes didn’t adversely affect production.

A test of these lighter shade jars conducted by the recycling partner saw a 30% increase in acceptability for recycling and diverted some 10 tonnes of glass per annum fron landfill. This is a great result and ultimately makes for an improved product when it comes to the environment.”

labelling Environmental labelling is an important component of our packaging strategy. It helps our consumers know what to do with our packaging when they have finished with it. Environmental labelling is a requirement on all of our products.

Our labelling consists of information to assist in identifying if the packaging can be recycled or how it should be disposed of.

ClIMATe CHANGe RISKAs a food and beverage business, climate change presents us with a number of specific business risks, and on the flip side, opportunities.

We believe these risks reside right across our value chain. For example, volatile weather conditions and water availability affect our largely agricultural supply chain; higher energy costs as a result of emissions trading affect our operational costs; and regulatory and reporting requirements add additional costs to our business.

As such, in 2008 we initiated a whole of business sustainability strategy, looking at where the potential risks reside across our business and how we can go about translating risk into opportunity. Addressing climate change will be progressed as part of our overall focus on environmental sustainability.

Our carbon management strategy, as part of our overall Sustainability Strategy, will evolve going forward and throughout 2009 we specifically aim to confirm the identified climate change risks and develop actions.

Climate change is one of the most significant issues of our day.


Shawnee Henson, Packaging Specialist, Manufacturing Services, Beverages, Nestlé Australia.

WeATHeR RISKS• Increased raw materials and packaging costs• Reduced ability to secure raw materials• Increased energy costs• Increased water costs• Water and electricity/gas supply restrictions• Damage to facilities and equipment• Increased insurance premiums• Changing consumer habits

ReGUlATORY RISKS• Increased packaging and raw materials transportation costs• Increased energy and water costs• Increased reporting requirement• Increased production costs• Emission permit costs• Increased product transport costs• Increased packaging and labelling requirements

MARKeT RISKS• Failure to understand what the consumer wants• Increased labelling requirements• Failure to meet stakeholder expectations

WeATHeR RISKS

ReGUlATORY RISKS

MARKeT RISKS

SUPPLIERS AND PROCUREMENT

MANUFACTURING AND PACKAGING

SALES AND MARKETING

DISTRIBUTION

CUSTOMERS AND CONSUMERS

POTeNTIAl RISKS FOR THe FOOd ANd BeVeRAGe SeCTOR


OUR PeOPle


OUR eNVIRONMeNTAl FOOTPRINT

2004 2005 2006 2007 2008

energy consumption and greenhouse gas emissions#

Total energy consumption (GJ) 2,967,904 2,303,788 1,927,779 1,995,860 1,895,501

Key Performance Indicator (GJ/tonne of production) 6.8 5.9 5.6 5.7 6.1

Scope 1 – Direct energy emissions – – † 52,184 47,386

Scope 2 – Energy indirect emissions – – † 131,867 160,401

Total energy greenhouse emissions+ 206,729 123,146 113,713 184,051 207,788‡

Water#

Water usage (kL) 2,430,724 1,909,162 1,571,639 1,476,277 1,168,893

Key Performance Indicator (kL/tonne of production) 5.6 4.9 4.6 4.2 3.8

Waste#

Non-hazardous waste disposed of to landfill (t) 8,055 8,221 8,063 8,209 6,267

Materials recycled (t) 35,448 33,609 36,878 34,678 19,513

Key Performance Indicator (kg/tonne of production) 18.4 21 23.6 23.3 20.1

Packaging* ^°•

Net tonnes of product sold – – 297,788 323,511 272,697

Net tonnes of packaging used – – 46,382 48,492 53,585

Product to packaging ratio – – 6.42:1 6.67:1 5.09:1

Total 'recyclable' packaging sold (tonnes) – – 37,201 39,150 45,242

'Non-recyclable' packaging sold (tonnes) – – 9,181 9,342 8,343

Recycled content by weight (%) – – 68.6 68.8 65.7

# Nestlé in Market – Oceania, Purina, Nutrition and CPW.† Scope 1 and Scope 2 emission sources were not reported separately from 2004 and 2006.+ This currently covers our material emission sources – electricity, gas and other sources of scope 1 energy emissions – from

manufacturing operations only. As part of our involvement in the National Greenhouse and Energy Reporting (NGER) scheme, going forward, we aim to include other emission sources such as our Tool of Trade vehicles, also emissions from our offices and distribution centres.

‡ Australian National Greenhouse and Energy Reporting (NGER) CO2 emission factors used from 2008 onwards. Previously, International Energy Agency (IEA) emission factors were used.

* Australia only. ^ As at 30 June (as per National Packaging Covenant (NPC) requirements).° Nestlé began reporting packaging performance in 2006.• Packaging data is independently verified by Hyder Consulting as part of Nestlé Australia's NPC Reporting.

WHAT We SAY: Attracting and retaining first-class, talented people remains the number one priority for us. We seek to achieve this by creating a great place to work for all of our employees and by providing a workplace which is ethical, safe and where our people are challenged to make a difference.

WHAT We dO: We continue to develop an ethical and responsible culture across our workforce, put in place measures to improve our occupational health and safety practices, and offer training and development opportunities for our people.

HOW We’Re TRACKING: We employed some 5,600 employees across Australia, New Zealand and the Pacific Islands in 2008. We continued to offer comprehensive training and development opportunities for our people. Our Health and Safety performance continued to improve with a further reduction to our lost Time Injury Frequency Rate (lTIFR). We also began to see some improvements in our employee turnover.


“Nestlé has a long history in the Pacific Islands, dating back to the early 1970s. Now, our operations stretch over 18 countries, employ some 700 people and incorporate four sales offices and three factories in key countries such as Fiji, New Caledonia and Papua New Guinea and Tahiti.

With a population of some 8.4 million – of which 90% earn under AUD 20 a day – and with varied cultures, religions and languages, each country has its own unique HR challenges.

For example, in Fiji we face challenges of attracting, retaining and developing our people, particularly within middle management and technical roles, given the high levels of emigration to countries such as Australia and New Zealand.

Building the right Human Resources platform The independently-audited CARE Program has ensured that our key corporate responsibility and HR principles and policies (incorporating the UN Global Compact Principles) are embedded in our day-to-day practices in the Pacific Islands. Our factories in PNG, New Caledonia and Fiji were audited as part of The CARE Program in 2006 and 2007.

As a result of the audit process, we were able to improve our facilities; update and improve security measures; develop local procedures and tighten recruitment and induction processes; improve communication channels; and ensure the use of temporary workers was managed appropriately.

Each factory achieved a 100% audit result for the HR component. This was outstanding and is among the best results we’ve seen across Nestlé’s operations globally.

Responding to our people’s feedback Our employee feedback survey, Climate Survey – completed by 90% of our Pacific Island employees in 2007 – saw a range of issues emerge including salaries, training and recruitment.

In PNG, there was feedback on the need for training and developing local skills so the use of expatriates could be minimised. Security was improved by providing an on-site canteen and meal facilities which among other things has reduced major absenteeism on night shifts.

Responding to employee feedback, we’ve also established a Graduate Program targeting Fiji, New Caledonia, PNG and Tahiti. This two-year program seeks to develop the capability of our local Pacific Island people.”

Anne Kingston, Divisional HR Manager, Nestlé Oceania.

developing our people in the Pacific IslandsCASe STUdY

Our People

As the person responsible for HR issues within the Pacific Islands, Anne Kingston is only too aware of the significant challenges facing employers in the region.

Our People Oceania Creating Shared Value Report 2008

OUR WORKFORCe*

4,245 Australian employees

636 New Zealand employees

735 Pacific Island employees

5,615 Total number of Oceania employees

79% Percentage of full time employees

4% Percentage of part time employees

17% Percentage of casual employees

CReATING THe RIGHT CUlTURe ANd THe RIGHT eNVIRONMeNTPrinciples, values and policiesOur overarching employment commitments are set out in our Nestlé Corporate Business Principles, Nestlé Leadership and Management Principles, Nestlé Human Resources Policies and Nestlé Code of Business Conduct and are supported through a range of Oceania-specific policies.

Above all, these policies ensure that our practices are right for our people, specifically when it comes to explicit workplace issues such as discrimination and harassment, work life balance, remuneration, ethical practices, safety, learning and development and industrial relations.

Policy is important; however, it is also crucial that our employees fully understand and apply our policies in their day-to-day work- activities. This has been a major focus for Oceania in 2008. We established the ‘Knowing Nestlé’ education initiative – including an information seminar which was attended by most employees – to bring to life our Corporate Business Principles, company values and other key policies.

Human rightsOur commitment to human rights cuts across our entire business operations; however, it is particularly significant when it comes to our employment practices. Our Corporate Business Principles detail our human rights practices. Our approach is guided by the UN Global Compact and covers key issues such as freedom of association, collective bargaining, forced and compulsory labour, child labour and discrimination.

Assuring our adherence – The CARe ProgramOur independently-led assurance program, The CARe Program (Compliance Assessment of Human Resources, Occupational Safety, Health, environment and Business Integrity), plays a critical role when it comes to our corporate responsibility commitments across our HR activities. Importantly, the project ensures we are compliant against our own internal policies and principles (such as the Nestlé Business Principles, HR Policies and Code of Business Conduct) and also external norms and regulations (such as the UN Global Compact).

The project sets out a range of minimum standards when it comes to our labour and ethical standards. If a factory or corporate office fails to meet any of the minimum standards they are required to immediately (often within 24 hours) rectify the issue. At the end of 2008, there had been no instances where minimum standards had not been met.

Since 2005, all Oceania factories have undertaken CARE Program audits. All sites achieved over 98% compliance with the following factories receiving 100% on all areas: Mulgrave (Victoria), Echuca (Victoria), Lae (Papua New Guinea), Blacktown (NSW), Chalet Patisserie (Queensland). All Oceania factories will be reaudited in 2009 and we also aim to audit our remaining facilities (head offices, distribution centres) by 2010/2011.

SAMPle HR MINIMUM ReQUIReMeNTS:

Safety • Policy and system implementation. • Compliance. • Safety equipment is provided where required. • Equipment, building and workplace sound. • Training and employee consultation.

Health • First aid treatment is available. • Safe drinking water is available.

Hiring and employment • The site does not use forced labour. • Overtime is voluntary. • All workers are above the minimum age.

Compensation • Minimum wage is exceeded.

Bribery and corruption • Bribery and corruption does not exist

in any way.

Building on the minimum requirements the project assesses general performance and provides a useful framework for improving policies and systems across four key areas: Health and Safety, Labour, Business Integrity and Environment.

Attracting and retaining first-class, talented people remains the number one priority for us. We seek to achieve this by creating a great place to work for all of our employees and by providing a workplace which is ethical, safe and where our people are challenged to make a difference.

We also know this is particularly important when we look at some of the challenges facing employers like Nestlé. Regardless of the current economic conditions and the labour changes we are seeing globally, the war for talent continues to intensify within our sector. Our workforce – like many others – is also ageing; this is a particularly relevant issue at certain factories. And the need for innovation is as important as ever as our market becomes more and more competitive.


* Based on full time equivalent employees.

UNdeRSTANdING OUR eMPlOYeeS' CONCeRNS, THOUGHTS ANd PRIORITIeSWe seek feedback from our employees both through regular dialogue and also formal channels.

Our 'Climate Survey' is our key employee satisfaction survey for monthly paid employees and we use these responses and feedback to improve what we do. In 2008, we participated in a Nestlé global employee survey, ‘Nestlé and I International Opinion Survey’ so we did not run a local Climate Survey. In 2007, 83% of our people participated in the Climate Survey and a range of issues emerged, including change management, communications, developing talent, and training and learning.

The Nestlé global survey – Nestlé and I International Opinion Survey – was completed in October 2008 and covered global questions (relating to communication, recognition, management principles, safety and values). 90% of our people participated in the survey. The survey found that 86% of our people are proud to work for Nestlé Oceania and 86% believe Nestlé makes quality products. Interestingly, the survey also highlighted we still have some more work to do on embedding the Nestlé Corporate Business Principles across our region. 9% of our people were not aware of the principles while 9% felt that the principles are not applied to their working group.

In Australia and New Zealand, we also benchmark our performance against our peers through the Hewitt Best Employer Survey. Given we undertook the Nestlé global survey, we did not undertake this survey in 2008. In 2007, our overall employee engagement was 60%, marginally down from 61% the previous year. This result put us in the ‘Best Employer Range’. We will continue to benchmark our performance against our peers going forward.

employee turnoverWe achieved a 5% improvement in our employee turnover (voluntary resignations), taking employee turnover from 12.4% in 2007 down to 11.8% in 2008. Looking further back to 2004 our employee turnover was 9.1%. The increase has been mainly driven by the 'war for talent' in the external employment market. Although our rates are lower than industry norms, retaining our people will continue to be an area of focus for us.

Concern and grievance reportingIn September 2008, Nestlé Australia and New Zealand launched a new ethics and grievance reporting service, the Nestlé Business Conduct Line. The service is independently run and allows our employees to report fraudulent and unethical behaviour in our workplace.

This can cover anything from fraud, theft, misconduct, bullying, harassment, to discrimination and any other breaches of our various policies, including the Nestlé Corporate Principles and the Nestlé Code of Conduct.

All concerns are dealt with promptly and efficiently by the relevant representative of the Oceania Compliance Committee, while protecting the confidentiality and rights of the employee who raised the concern in the first place.

WORKING WITH OUR PeOPlePerformance management When it comes to managing the performance of our employees, we believe the best approach is to ensure our people can meet their personal goals and company goals at the same time. As such, personal development is a key component of our approach and we seek to work with all employees to develop their leadership and functional competencies.

A new global Nestlé initiative is being piloted across a sample of employees in Nestlé Oceania in 2009, which is an enhancement to our performance management framework to more explicitly look at both ‘what’ was achieved and also ‘how’ it was achieved. The ‘how’ – which looks at key behaviours relating to results, integrity, collaboration and initiative – will sit alongside the ‘what’ when it comes to reviewing our people’s performance. This is an important initiative in recognising and rewarding appropriate values and behaviours across the business.

labour relationsNestlé’s relationship with our people is based on trust, integrity and honesty. Participation in unions and representative groups is a matter of individual choice. We also respect our employees’ right to collective bargaining.

While our labour management principles and policies are developed at a national and global level, consistent with best practice standards such as the UN Global Compact, we feel industrial relations are often best handled at a site level. Through this approach, we seek to establish a constructive dialogue with unions on a practical level.

Getting the balance right We all know – often through first-hand experience – the challenges in balancing work and family life. Unsurprisingly, work-life balance was raised by our people in our most recent Climate Survey.

In response we are putting in place family friendly practices, such as flexible working hours and working from home opportunities. We also allow our people to become active in their communities through our Nestlé Volunteer Day (see the Our Community section for more information). We also provide opportunities for our people to use their personal sick leave to care for family members who are ill.

More broadly we are seeking to develop an environment where employees feel comfortable to suggest alternative working arrangements.

Our parental leave policy provides for a lump sum ex-gratia payment equivalent to a maximum of 10 weeks pay, 12 months basic unpaid maternity leave plus an additional 12 months unpaid leave for employees who have been with Nestlé for three years.

OCCUPATIONAl HeAlTH ANd SAFeTYThe health and safety of our people at both work and outside of work is paramount to us.

Our commitments are set out in our Oceania Health and Safety Policy and are delivered through a Nestlé Safety, Health and Environment System which is based on the international standard, OHSAS 18001.

We’ve improved our Health and Safety Performance dramatically over the past five years. Our key measure, Lost Time Injury Frequency Rate (LTIFR), has dropped by some 70% since 2004. In 2009, we’re aiming to further reduce our Lost Time Injury Frequency Rate to less than three injuries per million hours.

While our performance has improved significantly, our ultimate goal is to develop a zero-injury culture right across our business. This will require some new thinking and innovation going forward, including a new set of behavioural leadership expectations for all employees, a ‘near miss’ reporting and investigation program, a focus on specific issues such as manual handling, and better risk reduction strategies to stop injuries happening from the outset.


WellNeSS AT NeSTlÉReflecting our ambition to become a leading Nutrition, Health and Wellness company we have also developed a comprehensive employee wellbeing initiative known as the ‘WellNes’ program. Operating across Oceania, the program covers three key areas:

Physical – addressing individual health concerns including nutrition, exercise, sleep, fatigue and stress, initiatives include seminars, flu vaccinations, skin cancer assessments, physiotherapy services to deal with soft tissue discomfort, Posture @ Work® to ensure core strength, flexibility and postural alignment.

Psychosocial – confidential counselling and support for our employees and their immediate families through our Employee Assistance Program.

Financial – enhancing our employees' financial wellbeing through seminars and resources covering a range of issues including ‘transition to retirement’, budgeting, salary packaging, debt and superannuation.

TRAINING ANd edUCATIONOur career development strategy focuses on ‘lifelong learning’ whereby our people continually develop their skills and capabilities.

Nestlé Oceania’s training and development reflects a 70/20/10 rule, that is ideally our people gain 70% of their development through career experiences and on the job opportunities, 20% through feedback and coaching and 10% through formal training.

Nestlé Oceania’s formal training offers programs such as professional skills-based training and leadership training, orientation training and safety and compliance training. We also offer function specific training aimed at specific areas of the business such as sales and marketing, finance, operations, supply and HR. The functional-based training enables staff to enhance their specific competency-based skills and knowledge needed to enhance capability within the running of these specific business areas.

We actively encourage our people to continually develop their tertiary qualifications and provide assistance to employees who undertake approved part time studies.

Overall we spent some AUD 5 million on training across Oceania in 2008.

dIVeRSITY ANd eQUAl OPPORTUNITYBeing a food and beverage business our consumer base is incredibly diverse. By creating an inclusive environment and by basing career opportunities on merit and merit alone we are committed to representing this diversity within our business.

Our equal employment opportunity and antidiscrimination commitments ensure recruitment, promotion and conditions of employment are based on performance, ability and potential, irrespective of colour, age, national origin, religion, gender, disability and veteran status.

WOMeN IN MANAGeMeNT In Australia, Nestlé reports its performance against key priority areas to the Equal Opportunity for Women in the Workplace Agency (EOWA).

Overall, across our workforce, 47% of our people are women. In 2008, 32% of total management positions were held by women, up from 29% in 2006.

The percentage of females in senior positions, whilst still relatively low, has increased across all management levels. From 2006† to 2008, our reporting found that the percentage of women employed in:

• Senior Executive positions grew from 4% in 2006 to 8% in 2008.

• Senior Management positions grew from 25% in 2006 to 28% in 2008.

• Management positions grew from 31% in 2006 to 34% in 2008.


We recognise innovation and safety achievements through our Workplace Safety Awards. Key achievements, championed by our people, over 2008 included:

Choc Chip Vacuum System at Wahgunyah Factory – The lifting of 10kg boxes of choc chips above shoulder height was identified as a hazardous manual handling activity using the Nestlé Risk Matrix. Options were examined, and it was decided to use an innovative technique where the operator vacuums the chips out of a tub located at waist height. The operator places the suction hose into a large plastic tub containing choc chips and proceeds to perform other tasks. The chips are vacuumed/sucked into an overhead hose and delivered to the chip feed hopper. There is no deterioration or damage to the chips in this transfer. The cost of the project was $15,000.

Fan Cooling at Gympie – The installation of a new fan cooling system significantly increased air flow in affected areas, resulting in increased comfort during summer. The energy-running cost of the new approach is only 2.5% of that of air-conditioning and environmental benefits include the avoided use of refrigerants and low energy use.

Wall of Safety at Campbellfield – A new format of communication was released in the form of a visual 'before and after' scenario along with a risk assessment score. This has provided an opportunity to display, communicate and prioritise safety concerns and issues to all employees and the factory where necessary. Since the inception of the Wall of Safety in early September 2007, a zero recordable injury record has been achieved.

Patisserie Packing Room Safety Upgrade at Chalet – The engineering project aimed to eliminate the amount of manual handling in the site’s packing room and create a smooth flow of packed product. This has resulted in the elimination of a significant strain risk. The goal was to make sure the heights and widths were suitable for all staff working in the area. The operators were also involved in the layout of the packing line. Also the process time for each cake has been reduced, minimising impacts of temperature fluctuations on product. The project has also eliminated the use of all wooden pallets in the area.

Nestlé Uncle Tobys’ Wahgunyah factory also received the 2008 Victoria WorkSafe Award for ‘Best Strategy for Health and Safety Management’. Uncle Tobys’ manual handling risk reduction strategy was developed in consultation with employee Health and Safety Representatives, managers and a range of external stakeholders.

Lisa Browning is the Health and Safety Officer and Rehabilitation Co-ordinator at Nestlé Oceania’s Chalet facility in Queensland where our Chalet Patisserie range of cakes are made. Lisa joined Nestlé not long after the factory was purchased by Nestlé and at a time when the safety culture needed some attention. She’s worked hard with her team to turn this around and they have made a real difference.

† Nestlé was not required to produce an EOWA report in 2007.


SOURCING, AGRICUlTURe ANd OUR SUPPlY CHAIN

2006 2007 2008

Workforce – Full Time equivalent employees

Australian employees 4,671 4,655 4,245

New Zealand employees 664 651 636

Pacific Island employees 692 741 735

Total number of employees 6,027 6,047 5,615

employee engagement

Hewitt Employee Engagement Score°■ 61% 60% +

Occupational Health and Safety

Lost Time Injury Frequency Rate 4.3 3.31 3.00*

employee turnover

Employee turnover‡ 10.9% 12.4% 11.6%

diversity

Gender profile (total) – % male^ 53% † 53%

Gender profile (total) – % female^ 47% † 47%

Women in management (%)^ v 29% † 32%

Female/Male salary ratio (women : men)^#

– Senior Executives 46:54 † 43:57

– Senior Management 50:50 † 51:49

– Management 48:52 † 49:51

– Technical/Professional 48:52 † 48:52

– Administration/Clerical/Other 49:51 † 48:52

– Weekly/Fortnightly Paid 45:55 † 47:53

° Australian and New Zealand employees only.+ Given Nestlé participated in a global employee survey, the Hewitt survey was not completed in 2008.* This is an overall Nestlé Oceania figure. Previously, it excluded additional Nestlé businesses such as our Nutrition

and pet care businesses.‡ Employee turnover percentages are for resignations only and only applies to Nestlé Oceania monthly

paid employees.

^ Excludes Nestlé Pacific Islands employees.† Nestlé was not required to produce an EOWA report in 2007.v Incorporates Senior Executives, Senior Management and Management.# NZ salaries converted to AUD on basis of NZD 1 = AUD 0.7780


WHAT We SAY: As a company which sits right across the food supply chain, Nestlé works to protect the security of its supply, the quality of raw materials available, and enhance rural development and sustainable production.

WHAT We dO: Through our Supplier Code and Responsible Sourcing Program, we start by ensuring that our suppliers are responsible and sustainable. We are also working with our farmers and also the broader agriculture sector through initiatives such as the Sustainable Agriculture Initiative. Our activities also extend to our distribution channels to ensure our finished products get to our consumers safely and efficiently.

HOW We’Re TRACKING: Over 2008, we continued to screen all suppliers against our Supplier Code. In addition, 115 supplier audits, looking at quality, safety and the environment issues, were undertaken. With a large sales force and merchandising teams, the safety of our own employees on the road remains an issue and something we will continue to focus on.


John Pitcher leads the oat breeding program for Nestlé and General Mills in Australia under the banner of their 50/50 venture Cereal Partners Worldwide (CPW). John has been working with Uncle Tobys for nine years.

John Pitcher, Senior Technology Manager, Cereal Partners Australia.

Program advances oats developmentCASe STUdY

Sourcing, Agriculture and our Supply Chain

“Oats was once a grain grown largely for animals but is now tagged the ‘super grain’ and has become a mainstream dietary ingredient for humans. This has been driven by a greater awareness of the health benefits which include sustained energy and cholesterol lowering.

Oats is traditionally a difficult crop to grow and is vulnerable to disease and climatic extremes such as drought and flooding.

That’s why we are committed to helping farmers via the oat breeding program. Working closely with the South Australian Research and Development Institute (SARDI) and farmers, we are researching and testing new varieties with the ultimate goal of breeding oats which are disease and drought resistant, provide better yields of higher quality oats, and offer increased nutritional value for consumers. A more resilient and sustainable crop could also create greater export market opportunities.

Many Australian farmers currently use oat as an ‘off’ crop to supplement their main crop such as wheat. We’d like to make oats more attractive to plant and easier for farmers to get greater returns.

If we increase paddock yield and disease resistance we actually increase farmers' kilograms of oats per litre of fuel used. This helps farmers reduce their carbon footprint. It’s a fringe benefit but one that’s becoming increasingly important.

Our farmers are our life blood. It’s a mutual relationship – we want Australian farmers to be successful so we can be successful.

Since 2004, the breeding program has resulted in three new breeds of oats: Possum, Mitika and Yallara. These have delivered improved crop yields, higher quality oats for milling, better appearance, and improved nutrient properties such as increased levels of beta glucan, a soluble fibre that is associated with lowering cholesterol”.

THe ReGIONAl AGRICUlTURAl CONTexTBeing part of a global business which relies on a global food supply chain, means Nestlé Oceania is impacted by global macro-economic issues such as: the growing demand for food in countries like China and India because of improving family incomes; the growing scarcity of water globally; and the continued poverty, ill health and lack of purchasing power of over two billion people in rural areas.

Regionally, our agricultural sector is also being impacted by a range of very specific issues.

Climate change, drought and water scarcityAgriculture is highly vulnerable to climate impacts. Most of Australia suffered through a disastrous ‘one in one thousand year’ drought throughout 2006, with many regions experiencing prolonged dry periods.

Current climate projections, including through the latest assessment by the Intergovernmental Panel on Climate Change (IPCCC), point to this drying trend continuing across Australia and New Zealand. We are likely to see water security problems intensify, leading to potential impacts on the amount of produce, quality of produce, and the reliability of production across the agricultural sector. We are also likely to see reduced precipitation and a growing risk of bush fire incidences.

Farming and rural developmentAgriculture is a key sector for both the Australian and New Zealand economies, generating up to AUD 36 billion† and NZD 7 billion‡ respectively in gross value each year.

In Australia, the sector directly supports some 150,000 businesses and is indirectly part of the lifeblood of regional towns all around Australia. Farming covers some 55% of Australia’s total land area. Cropping directly accounts for 3% of this.

Australian farmers are faced with some of the toughest conditions in the world. In 2008, around 84%# of Australian farmers said they were experiencing adverse seasonal conditions.

While Australia experienced relatively improved conditions over 2007/2008 (with production levels higher than in the previous drought-affected year) current performance continues to track lower than recent year averages.

For example, compared to 2006, the 2008 season° experienced a:

• 24% drop in barley production.

• 8% drop in oats production.

• 45% drop in wheat production.

A general drying trend also brings with it an increased prevalence of plant disease which affects a number of our key crops, including wheat and oats.

Away from the paddock, farmers face a range of broader challenges such as commercial management issues (including enterprise management and farm planning) and broader societal issues such as succession planning.

† Australian Farming in Brief (Australian Bureau of Statistics, 2008).‡ Agricultural Economies of Australia and New Zealand (ABARE and MAF, 2006).# Principal Agricultural Commodities (Australian Bureau of Statistics, 2008).° Principal Agricultural Commodities (Australian Bureau of Statistics, 2008).

Sourcing, Agriculture and our Supply Chain Oceania Creating Shared Value Report 2008

As a company which sits right across the food supply chain, Nestlé works to protect the security of its supply, the quality of raw materials available, and rural employment and development. In Oceania, we seek to purchase locally wherever possible.

We buy through the Global Nestlé procurement structure for major commodities such as coffee and cocoa. We work with trading organisations to purchase cereals and grains and also work directly with farmers and other manufacturers to ensure overall raw material supply and improve sustainability practices.

We start by ensuring that our suppliers are, at the outset, responsible and ethical, including working closely with the farmers who provide us with raw materials and extending right through to getting our finished products to our millions of consumers efficiently and safely.

The issues which affect our farmers and our suppliers intrinsically affect us as well. By working alongside our primary producers, not only are we able to influence better environmental practices, for example, but we are also able to secure access to high quality and continuous raw materials.

Along with water and nutrition, rural development is one of our key Creating Shared Value focus areas globally.

OUR SUPPlY CHAIN PROFIleProcurementAs you would imagine for a food and beverage business, Nestlé is a major buyer of raw materials. Given our diverse product portfolio, this covers a wide range of agricultural products and commodities, including, for example: cereals and grains; cocoa; coffee; dairy products; fruit and berries; vegetables and sugar.

distributionOur supply chain incorporates our vast distribution channels, taking our products from factories all around the region through to our major customers and retail partners. This covers effective demand and supply planning, warehousing and transportation and customer service.

Our distribution channels include:

• Some 2,500 individual product lines.

• Major warehousing and distribution centres in Arndell Park, NSW; Altona, Victoria; Waygunyah, Victoria; and Auckland, New Zealand.

• Some 15,600 retail partners and customers, including major retailers such as Woolworths, Coles and Metcash.

In Oceania, we seek to purchase locally wherever possible.


ReSPONSIBle SOURCING: SeleCTING THe VeRY BeST SUPPlIeRSGlobally, we expect our suppliers to conform to the same rigorous ethical, social and environmental standards that we hold ourselves to.

Our new Nestlé Supplier Code, released in April 2008, builds on out Corporate Business Principles and sets out certain non-negotiable minimum standards and what we expect from our suppliers, their employees, agents and subcontractors on areas such as:

• Business integrity.

• Sustainable production.

• Labour standards, including child labour, discrimination and working hours.

• Safety and health, including the quality and safety of supplied products.

• Environmental management.

The Code also extends to any farmers or primary producers which the particular supplier relies on.

The Nestlé Supplier Code is referenced in all Oceania contracts and purchase orders. Building on this, we formally assess suppliers against a range of explicit financial and non-financial factors through our supplier selection process, including our Oceania Request For Proposal. This includes issues such as innovation, risk management and environmental sustainability.

Responsible Sourcing Program In a new initiative, our Responsible Sourcing Program puts the Nestlé Supplier Code into practice and aims to improve the social and environmental performance of our suppliers. It also seeks to eliminate any potential risks associated with our suppliers’ non-compliance with our own Code, other social and environmental norms and local legislation.

Suppliers operating in ‘high risk’ countries will now be required to demonstrate their compliance with the Nestlé Supplier Code through a third party audit. These audits allow Nestlé to identify any potential gaps in our suppliers' operations and work closely with suppliers to develop corrective actions to fill these gaps. In line with the Supplier Code, the audit looks at labour conditions, business integrity, occupational health and safety and environmental performance.

Nestlé is also a founding member of an industry initiative dedicated to making the supplier evaluation process effective and efficient. To avoid ‘survey fatigue’, given our suppliers are increasingly being asked these questions by other companies, suppliers can utilise SEDEX ('Supplier Ethical Data Exchange'), a web-based data management platform, to share questionnaires and audit reports with many of their key customers. This aims to avoid multiple assessments and duplication.

Quality, food safety and environmentWe audit our suppliers regularly to ensure our food safety, quality and environmental requirements are being adhered to and consistently met. High risk suppliers, particularly those that supply raw materials to Nestlé, are audited every two years.

The supplier assessment covers a range of issues, including food safety, specific issues such as GMO (genetically modified organism) and allergens management, manufacturing practices, environmental and waste management, and, more broadly, whether the supplier has the appropriate policies, certification and management systems in place.

In 2008, 115 supplier audits were conducted which is around 14% of the supplier base.

PROdUCTION ANd AGRICUlTUReBeing inextricably linked to the food supply chain, means that we must work extremely closely with buyers, traders and in some cases, directly with our farmers and primary producers if we are to achieve sustainable production.

This is particularly relevant when we look at the emerging sustainable production agenda. Issues such as fair trade, food safety and quality, climate change, and water scarcity can only be truly addressed through effective partnerships all the way along the food supply chain from ‘farm to fork’.

Sustainable Agriculture Initiative Building on the global Sustainable Agriculture Initiative (SAI), co-founded in 2002 by Nestlé, Danone and Unilever, Nestlé Australia was a key initiator of an Australian chapter, SAI Platform Australia, in 2007. The membership of the Australian Chapter now comprises 11 of the leading agricultural, food and beverage processing and input supply corporations in Australia.

With an overarching objective to advance sustainable agriculture, SAI Australia has established seven working groups:

1. Livestock and Livestock Products

2. Climate Change

3. Water

4. Horticulture

5. Grains

6. Biofuels

7. Customer Demand

These groups were formally established and began work on a range of initiatives throughout 2008. To better leverage best practice and innovation, the member companies also began sharing experiences, lessons learned and key sustainability initiatives with each other.

Working with farmers and managing supply – oatsNestlé is one of the largest buyers of oats in our region. Being a major player in the oats market presents our business with a range of challenges:

Continuity of supply – seasonal conditions continue to affect output, and, in times of challenging conditions, growers tend to shift towards more reliable grains.

Quality – oat quality is extremely important for Nestlé’s products and manufacturing processes.

Nutrition – Nestlé seeks additional nutritional advantages in oat procurement.

domestic supply – we look to source our oats domestically, this is particularly important in meeting ‘Australian made’ claims for example.

Against this backdrop and to formulate our long-term approach to oat procurement, Nestlé’s Procurement Team has developed a comprehensive Oat Strategy. In developing our Oat Strategy in 2008, we met with a number of oat growers in Western Australia (Kojonup), NSW (Wagga, Griffith, Wangaratta) and various grain traders in Victoria and South Australia. These meetings allowed us to understand conditions, grower motivations, oat varieties and also provided an opportunity to discuss a range of environmental sustainability issues such as crop rotations and tree planting.

The overarching aim of the Oat Strategy is to establish long-term relationships with a loyal network of growers, and encourage farmers to grow oats for Nestlé.


dISTRIBUTION – TRANSPORTATION ANd SAFeTYSpanning the entire Oceania region, our products are transported to some 21,000 individual delivery locations. In this process of getting our products from our factories to our customers, the safety of our employees and contractors is paramount. With our employees and contractors travelling some 60 million kilometres each year, road safety is a particular concern of ours.

Improving our safety performanceWe have developed comprehensive Key Performance Indicators to measure and improve our safe driving performance. This tracks the total number of accidents (with or without injuries), total kilometres driven and our Vehicle Accident Frequency Rate (VAFR) which measures the number of accidents against the total number of kilometres driven. This covers both our own employees and also our contractors.

Through this improved measurement and tracking of road safety issues, we’ve been able to highlight an area where focus is needed: the road safety of our own employees. The VAFR for our own employees (whilst covering a broader range – including minor and incidental incidents) remains high at 25.73†.

We have now stepped up our focus on this issue through a range of policy mechanisms and broader awareness and education initiatives. To provide oversight and leadership of our strategy, we’ve established a Safe Driving Committee. Our safe driving policy and standard sets out a range of requirements, including measures such as: safe driving behaviour; driver training; safety of vehicles; journey planning; and reporting of accidents and injuries.

Throughout 2008, we also developed a number of initiatives to make our employees more aware of safe driving practices as well as our policies and requirements. This included the development of internal videos, a focused campaign around the festive season and also engagement of the senior management team through a comprehensive driving training program. Over 150 of our Pacific Island employees also undertook driver training in Fiji, Papua New Guinea and New Caledonia.

Retail logistics Supply Chain Code of ConductNestlé is working with the broader industry to promote a safe and efficient transport sector. This has included the development of the Retail Logistics Supply Chain (RLSC) Code of Conduct, a voluntary code which prescribes minimum levels of operational behaviour to dramatically improve safety across the distribution and supply chain. This covers a range of issues such as scheduling and transit times, safe loading, driver fatigue, speed compliance, and vehicle safety. The code is made up of four components:

• The 10-point policy document which is endorsed by signatory companies.

• A guideline document, which sets out the operational and administrative guidelines.

• A responsibility matrix, which details the responsibilities of each of the supply chain partners.

• An audit tool which identifies non-conformances and assists in development of corrective actions.

Nestlé Oceania sits on the Operational Committee of the RLSC and has also had involvement in the development of principles for ‘time slotting and queuing’ at dispatch and receipt locations. This brings together a common understanding and framework on issues such as realistic scheduling and driver fatigue.

WAR ON WASTeOur ‘War on Waste’ initiative seeks to reduce all forms of waste across our business. This includes reducing wastage and bad goods from our manufacturing and distribution activities. Further information can be found in the Environment section.


OUR COMMUNITY

† Vehicle Accident Frequency Rate per million km driven.

WHAT We SAY: It’s fair to say that our business success genuinely hinges on the relationships with the communities in which we operate. That’s why we’ve set out to create value for our neighbouring communities and ensure our interests are aligned.

WHAT We dO: We continue to grow and develop the Nestlé Good life Program, a group of community initiatives covering a wide range of activities in areas of sport, health, education and environment. This cornerstone community program includes our major nutrition education partnership with the Australian Institute of Sport, the Nestlé Community environment Program and the MIlO in2CRICKeT program.

HOW We’Re TRACKING: The Nestlé Good life Program contributed some AUd 4 million to community programs and broader sponsorship initiatives in 2008. This included some 16 environmental projects implemented as part of our Nestlé Community environment Program.


Ravi Anand is the Manager, Operations Performance and Safety, Health and environment at the Ba facility in Fiji, where we make our Maggi noodles and a number of snack and confectionery products. He has been with Nestlé for 13 years.

Ravi Anand, Manager, Operations Performance and Safety, Health and Environment, Nestlé Fiji.

environment project secures water for local schoolCASe STUdY

Our Community

We received a proposal back in 2005 and were shocked to discover that a local school did not have access to the most basic necessity – clean water.

“We usually write to various organisations calling for nominations for specific environmental projects in line with the NCEP (Nestlé Community Environment Program). We received a proposal back in 2005 and were shocked to discover that a local school did not have access to the most basic necessity – clean water. Their drinking water came from the river but had no sanitation and no treatment so hundreds of students were often getting sick.

As part of NCEP, we decided to change all that and after extensive investigations and discussions with experts, we paid for a filtration unit to be installed.

It’s wonderful to see the direct benefits – people can drink the water without getting sick. It makes you feel proud that you’ve made a difference.

In 2008, our NCEP efforts have included removing large amounts of rubbish from a park to allow children to play there again, installing barbecue stands in a picnic area, which has stopped visitors burning the trees for their makeshift fires. The group also installed rubbish bins at seven parks in the community to ensure a cleaner and more hygienic environment.”

Our cornerstone community program in Oceania, the Nestlé Good Life Program, is a group of community initiatives covering a wide diversity of activity and interest in areas of sport, health, education and environment. This includes our major nutrition education partnership with the Australian Institute of Sport, our MILO in2CRICKET program , the Nestlé Community Environment Program, the Nestlé Golden Chef’s Hat Award and Meals on Wheels Program. Our Nestlé Good Life Program contributed some AUD 4 million to community programs and broader sponsorship initiatives in 2008. More information is available on our website – www.nestle.com.au

We have also established a Sponsorship Committee which seeks to ensure our sponsorship and community activities are appropriate and targeted towards nutrition and fitness outcomes.

AUSTRAlIAN INSTITUTe OF SPORT (AIS)Over the past 10 years Nestlé has worked closely with the AIS, particularly in the areas of education and nutrition. This partnership allows Nestlé to learn from,

and leverage, AIS’s 27 years of nutrition and fitness expertise. See the Products and Consumers section for more information.

NeSTlÉ COMMUNITY eNVIRONMeNT PROGRAMThe Nestlé Community Environment Program (NCEP) has been running since 2003. NCEP aims to identify and facilitate projects which enhance the local environment in which our facilities operate.

Nestlé Oceania sites liaise with local authorities as well as community and environment groups to find suitable projects, and Nestlé employees and members of the local community directly participate in many of them. Each Oceania site contributes AUD 25,000 each year to a local environmental project. On top of the financial contribution our people actively participate directly in the projects and dedicate their time, energy and expertise.

Since 2003, we’ve contributed over AUD 2 million to local communities through NCEP. 2008 saw over 16 projects implemented across a diverse range of environmental issues, including regeneration and tree planting, environmental learning, erosion management and carbon sequestration projects. The total contribution across Australia, New Zealand, Fiji and Papua New Guinea was some AUD 425,000.

MIlO COMMUNITY INITIATIVeSNestlé is committed to promoting a healthy active lifestyle, especially for kids. Through the MILO brand, Nestlé has partnered with Cricket Australia for over 16 years to support junior cricket development. Through the grassroots introductory program, MILO in2CRICKET, over 5 million Australian kids have participated in cricket programs and school clinics in the past 16 years.

As part of the MILO in2CRICKET program, all participants receive a structured 6-12 week program, which provides each child with the opportunity to develop cricket skills, physical fitness, social skills, sportsmanship and an understanding of the game of cricket.

SITe NCeP INITIATIVe

Altona, Victoria A combined environmental education project between local schools of Hobsons Bay, Werribee Plains Water Watch, City West Water, Melbourne Water and Hobsons Bay Council.

Arndell Park, NSW and Blacktown, NSW

Establishment of 12ha of native vegetation (12,000 plants and 200+ volunteers) along a creek line in western Sydney. Partnering with Greening Australia, the project acts as a biodiversity corridor, improves water quality and establishes a carbon sink, absorbing greenhouse gas emissions.

Ba, Fiji Waste and rubbish management project at local Council Parks.

Blayney, NSW Environmental learning project with two local primary schools: Establishment of educational vegetable garden at Blayney Public School and St Joseph’s Central School (additionally incorporating resource management and recycling initiatives).

Bradford, Victoria Establishment of a Nestlé/Landcare Mobile Environmental Display, travelling to various community locations and events.

Cambria Park, New Zealand

Establishment of native trees on a degraded site near Manuka City Centre. Building on a long-term relationship with the local council, the project also involves the creation of an environmental education initiative with local students.

Campbellfield, Victoria Habitat restoration project alongside the Merlyston Creek involving a number of schools.

echuca and Tongala, Victoria

Water conservation project at Tongala Bowling Club, saving some 1.5 million litres of water per annum. The project involved the installation of two 46,000 litre rainwater tanks and supplementary water bore.

Gympie, Queensland Building on a previous NCEP project, this project has completed the restoration of Tozer Gull through water management, and habitat restoration initiatives.

lae, Papua New Guinea Rubbish management and tree planting project with the Soroptimist International officials of Lae.

Marton, New Zealand Environmental beautification project† with Marton School, including native tree planting, and the establishment of a boarded pathway and mulch and irrigation system.

Mulgrave, Victoria Sustainability education project with Aurora School, involving the establishment of a sustainable vegetable garden and poultry farm.

Pakenham, Victoria Working with Kooweerup Regional Health Service, the project involved the establishment of a native garden for educational and relaxation purposes.

Rhodes, NSW Development of a new bush garden at Concord West Primary School, providing habitat for native fauna with plant species indigenous to this area.

Smithtown, NSW Working with Macleay Landcare Network, this project sought to reinstate native vegetation along the banks of the Macleay River.

Wahgunyah, Victoria Environmental learning initiative, including the establishment of themed gardens and the installation of a rainwater tank, with Wahgunyah Primary School.

Our Community Oceania Creating Shared Value Report 2008

It’s fair to say that our business success genuinely hinges on the relationships with the communities in which we operate. That’s why we’ve set out to create value for our neighbouring communities and ensure our interests are aligned.

Most importantly, we seek to leverage our expertise and target those areas where we can truly make an impact: that is food, nutrition and health.

Snapshot of 2008 NCeP initiativesWhat we say What we do

† This project was postponed midway through 2008 and is to be completed in 2009.

Adam Gilchrist, Australian Test Cricketer, and MILO in2CRICKET participants.

Les Perkins was previously the Senior Project and Industrial Services Engineer at Nestlé Oceania’s Tongala facility and is now at our Wahgunyah facility. Whilst at Tongala, Les completed some fantastic projects through the Nestlé Community Environment Program. This has included developing an indigenous gardens area and environmental learning centre for a local primary school. In 2008, Tongala worked with a local bowls club on a water recycling project.

ROAd SAFeTY PROGRAM IN NeW CAledONIAAlthough best known for its pristine beaches and vibrant French culture, New Caledonia also has the highest number of road deaths per capita in the world. In 2006, 700 people were seriously injured and 62 died as a result of car accidents with 90% of these as the result of drink driving.

As part of Nestlé’s Road Safety Program, Nestlé employees handed out road safety information packs at the Noumea highway in 2007 and subsequently in 2008. The packs included an alcohol test, information about the risks related to drink driving, information about Nestlé New Caledonia and the nutritional benefits of key products and a free sample of Nestlé coffee. Nestlé’s employees in New Caledonia also completed comprehensive driver training in 2008.

HIV/AIdS AWAReNeSS CAMPAIGN IN PAPUA NeW GUINeAAn extensive program of education work was conducted by Nestlé in Papua New Guinea to combat the HIV/AIDS crisis. The program is about AIDS awareness and prevention, and Nestlé has joined forces with the AIDS Council, the Red Cross and the Papua New Guinean government to introduce this into our workplace education program. Nestlé has continued to show corporate leadership in the fight against HIV/AIDS in PNG by donating AUD 50,000 as part of a three-year agreement with Australian Doctors International and its local partners to develop new community programs on HIV/AIDS and other infectious diseases in the Western Province.

MeAlS ON WHeelSFor the past nine years, Nestlé has been a proud sponsor of the Australian Meals on Wheels Association, a community-based program that assists people of all ages to remain at home with dignity and independence once they are unable to prepare meals themselves. Through the sponsorship, both parties work closely to develop new products and provide relevant Nutrition, Health and Wellness information that will assist Meals on Wheels outlets in servicing their clients.

FOOdBANK AUSTRAlIA Foodbank Australia provides food to a network of non-profit welfare agencies which prepare meals and provide food relief for the poor and hungry. Foodbank Australia helps to feed over 18,000 people each day – that’s over six and a half million meals each year. Nestlé donates unsaleable or surplus (but nutritious) food that is distributed through state Foodbanks, as well as donating shop-saleable food to the annual ‘Donate Food Day’.

In 2008, Nestlé donated some 377 tonnes of food products to Foodbank Australia. Since 2004 our total food donations equate to some 3,500 tonnes.

NeSTlÉ’S VOlUNTeeR PROGRAMThe Nestlé Volunteer Program is a key part of our ongoing commitment to the community. By providing an additional day’s paid leave every year, the program assists our people get out in their communities. We also help our people find worthwhile community projects.

Through the program, our people participate in a range of community projects. In 2008, we clocked up 112 days of volunteer work across our business.

PROJeCT AFRICAProject Africa is a Nestlé employee initiative supporting ‘Habitat For Humanity Ghana’, a not-for-profit international housing organisation. In March 2009, Nestlé employees from Australia and USA will travel to Ghana to build houses and make donations to local schools and orphanages. This initiative has been organised and led by an employee within our marketing team and has our corporate support.

OUR COMMUNITY

NeSTlÉ COMMUNITY eNVIRONMeNT PROGRAM 2006 2007 2008

Community Environment Projects (through the Nestlé Community Environment Program) (AUD) 330,000 425,000 425,000

NeSTlÉ VOlUNTeeR PROGRAM

Number of volunteering days logged 97 100 112

NeSTlÉ COMMUNITY eNVIRONMeNT PROGRAM - PROJeCT FOCUS

Our Community Oceania Creating Shared Value Report 2008


Nestlé Oceania employees handed out road safety information as part of the road safety program in New Caledonia.

Restoration/conservation/revegetation/community (incl. educuation element)

Waste (incl. education element)

Water (incl. education element)

Sustainability (incl. education element)

Energy/climate change (incl. education element)

2006 2007 2008

SGS AUSTRALIA PTY LTD’S INDEPENDENT ASSURANCE REPORT ON SAFETY, HEALTH AND ENVIRONMENTAL (SHE) DATA AND TEXT IN THE NESTLÉ OCEANIA “CREATING SHARED VALUE REPORT 2008”.

NATURE AND SCOPE THE ASSURANCE SGS Australia Pty Ltd was commissioned by Nestlé Oceania to conduct an independent assurance of the SHE

data and text contained within their “Creating Shared Value Report 2008”. The scope of the assurance, based on

the SGS Sustainability Report Assurance methodology, included the 2008 data and text contained in pages 29-30,

34, 41-42 and 44 of this report. The data collection process followed is as per previous years (2004 to 2007). This

is through the NEST database (Nestlé Environmental & Safety Performance Tracking) according to the Nestlé

Oceania procedure “SHE Reporting Requirements”.

The information in the “Creating Shared Value Report 2008” of Nestlé Oceania and its presentation are the

responsibility of the directors or and the management of Nestlé Oceania. SGS Australia Pty Ltd has not been

involved in the preparation of any of the material included in this report. Our responsibility is to express an opinion

on the text, data, graphs and statements within the scope of verification set out below.

The SGS Group has developed a set of protocols for the Assurance of Sustainability Reports based on current

best practice guidance provided in the Global Reporting Initiative Sustainability Reporting Guidelines (2006) and

the AA1000 Assurance Standard (2003). These protocols follow differing levels of Assurance depending the

reporting history and capabilities of the Reporting Organisation.

This report has been assured using our protocol for content veracity. The assurance comprised a combination of

interviews with relevant employees in Nestlé Oceania; evaluation of systems and processes for collection and

collation of data; documentation and record review.

STATEMENT OF INDEPENDENCE AND COMPETENCE The SGS Group of companies is the world leader in inspection, testing and verification, operating in more than 140

countries and providing services including management systems and service certification; quality, environmental,

occupational health & safety, social and ethical auditing and training; greenhouse gases emissions verification and

sustainability report assurance. SGS Australia Pty Ltd affirms our independence from Nestlé Oceania, being free

from bias and conflicts of interest with the organisation, its subsidiaries and stakeholders.

The assurance team was assembled based on their knowledge, experience and qualifications for this assignment,

and comprised approved Environmental & Occupational Health & Safety Lead Auditors, Greenhouse Gas

Emissions Verifiers and Sustainability Report Assurors.

ASSURANCE OPINION On the basis of the methodology described and the verification work performed, we are satisfied that the SHE data

and text contained within “Creating Shared Value Report 2008” verified is accurate, reliable and provides a fair and

balanced representation of Nestlé Oceania’s SHE performance in 2008. We believe that Nestlé Oceania has

chosen an appropriate level of assurance for this stage in their reporting.

Phil Hocking General Manager – Auditing Division SGS Australia 20th April, 2009

ASSURANCE STATEMENT

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