Making the link between growth and social contribution…
The challenges the world faces in 2018 and beyond require bold thinking and large-scale transformational change.
The world’s population is growing, driving up consumption and putting pressure on precious natural resources. With more people moving towards urban areas in search of economic opportunities, there are fewer farmers to produce enough food for us all. Many live on low incomes, making farming a less desirable career option for the next generation. Those who remain in the industry face many challenges. Whether it is mitigating the effects of climate change on crops, training in farming practices, supporting women’s empowerment or improving nutrition and sanitation, young farmers need support. Areas like these are where I believe businesses like food companies can be a positive force in driving societal change.
This week, I’m attending the annual Shared Value Leadership Summit in New York City. This gathering brings together over 400 leaders from companies, non-profits, and governments to share real business solutions that our world urgently needs. The Shared Value Initiative is proposing a simple concept: find business opportunities in societal challenges, therefore producing value to shareholders as well as to society.
Creating Shared Value (CSV) is the key strategy that business executives have to make the link between business growth and profitability, and societal contribution in an impactful way. Michael Porter and Mark Kramer described the concept of CSV in several Harvard Business Review articles as far back as 2006, including Nestlé case examples. The theory behind CSV is that it allows corporate, NGO and government leaders, to see new opportunities for private enterprise to address societal challenges together. Engaging business as a business, not as a charitable donor, is one of the most powerful forces we have for social progress.
At Nestlé, our purpose is enhancing the quality of life and contributing to a healthier future. Creating Shared Value is the fundamental way we do business and bring our purpose to life. As the world’s largest food and beverages producer, Nestlé relies on millions of farmers around the world to supply us with the agricultural raw materials we need for our products. For our business to be successful, these farmers and farm workers must be successful too. Creating and maintaining a sustainable business means supporting rural development and the livelihoods of rural communities.
In 1987, Nestlé China built its first milk district and dairy factory in Shuangcheng. The milk district model is based on a Swiss tradition of local milk production and collection. Nestlé has used the milk district model since the company was founded by Henri Nestlé back in 1866. In 2012, having identified a need to improve the sustainability of our milk supply chain, we established the Nestlé Dairy Farming Institute. Today, the DFI helps dairy farmers to develop the knowledge to operate and manage their farms. In line with the Chinese government’s drive to transform the dairy industry, it provides training and skills development on modern dairy practices and ensures farmers have access to new dairy technologies. A key element is to work closely in partnership with about two dozen business and academic partners, who are leaders in their respective segments of the dairy value chain. Nestlé has access to high-quality raw milk and the farmers’ income has increased. The success of these farmers means that our business can also succeed and grow, as China’s milk consumption is rising. It is expected to double in the six years between 2014 and 2020.
The DFI is just one project. My hope is that others will be motivated to look for opportunities where CSV can be applied, driving a new wave of productivity and innovation that advances social progress, profitably for all.