The move will help protect, renew and restore the environment and improve the livelihoods of farming communities, the company said.
Nestlé said it will work with its food system partners, including the company’s network of more than 500,000 farmers and 150,000 suppliers, to advance regenerative farming practices at the heart of the food system. The company will also launch new programs to help address the social and economic challenges of the transition.
Defining regenerative agriculture
Typically, regenerative agriculture incorporates practices such as cover crops, no-till methods, crop rotation, mixed farming, and hedges to support biodiversity. In its broadest sense, regenerative agriculture can be used to extract carbon from the atmosphere and return it to the soil. In the longer term, this delivers results not only in terms of combating atmospheric CO2, but also improves soil health and productivity through carbon sequestration, with the potential to reduce reliance on chemical fertilizers.
Nestlé has declared that it wants to promote the improvement of biodiversity, soil conservation, the regeneration of water cycles and the integration of animal husbandry.
Agriculture accounts for almost two-thirds of Nestlé’s total greenhouse gas emissions, with dairy and animal husbandry accounting for around half. In the dairy sector, for example, Nestlé said it was evaluating cutting-edge science and technology to reduce emissions at the farm level. The company will begin working with 30 benchmark dairy farms in 12 countries to test scalable, climate-friendly and regenerative farming practices that help achieve zero net greenhouse gas emissions. Nestlé is also working with farmers to select and grow nutritious and tasty varieties of legumes for use as milk substitutes.
Nestlé’s regeneration efforts are launched under the generic title of “Generation Regeneration” focused on farmers, young people, consumers and its own employees.
Nestlé is committed to supporting improved and diversified farm incomes through its sustainability programs. This includes implementing new living income programs for farmers in its value chain to make farming more attractive. Later this year, Nestlé will unveil specific plans for its coffee and cocoa supply chains.
Nestlé will also launch a new training platform in November to attract and train the next generation of farmers. The training will focus on regenerative farming practices and improving the resilience of farms to climate change for more than 40,000 farmers participating in one of Nestlé’s agribusiness programs.
Nestlé is investing 1.2 billion Swiss francs over the next five years to boost regenerative agriculture across the company’s supply chain, using three main levers to help farmers adopt regenerative practices:
- Apply advanced science and technology, provide technical assistance: Drawing on its extensive network of R&D experts and agronomists, Nestlé is developing, for example, higher-yielding varieties of coffee and cocoa with lower environmental impact and evaluating new solutions to reduce emissions in the dairy supply chain. Nestlé will also provide agricultural training and help farmers exchange information and good practices that can be adapted locally.
- Provide investment support: The transition to regenerative agriculture comes with initial risks and new costs. Nestlé will support farmers by co-investing with them, facilitating loans or helping them obtain loans for specific equipment. The company will also work with partners to fund pilot projects to test and learn how to best advance regenerative agriculture.
- Pay premiums for regenerative agriculture products: Nestlé will offer bonuses for many raw materials produced using regenerative farming practices and will purchase larger quantities. This means rewarding farmers not only for the quantity and quality of ingredients, but also for the benefits they bring to the environment through soil protection, water management and carbon sequestration.
“A unique opportunity” to be part of the solution
Stefano Agostini, CEO of Nestlé UK & Ireland explained that the launch of the Generation Regeneration mimic was a recognition that “we are the first generation to suffer the impacts of climate change and potentially the last generation who can do anything about it. remedy” . The results will include more biodiversity, soil conservation, regeneration of water cycles and integration of livestock, he said.
“We know that the food system is a significant contributor to climate change and is often at the center of environmental and societal challenges, but it also has a unique opportunity to play an important role in the solution.”he said.
He added that the world’s largest agribusiness has a responsibility to reduce its impact on the environment while helping feed a growing global population. “But we must go further” he said. “We need to go beyond ‘do no harm’ to positively impact large-scale food systems.
“We know that the food system is a significant contributor to climate change and is often at the center of environmental and societal challenges, but it also has a unique opportunity to play an important role in the solution. We need to improve the food system so that it sustains and regenerates the planet instead of depleting it. “
But who will bear the costs?
The push for regenerative agriculture Is part of Nestlé’s global commitment to greater sustainability. The steps are going to come at a cost, but are inevitable, said Pascal Boll, equity analyst at Stifel. “Nestlé must assume its responsibilities and contribute to global efforts to preserve our environment,he said. “The alternative costs of future regulation or public criticism weigh more heavily in my opinion.”
Who will bear these costs? Both shareholders and end consumers, Boll believes. CEO Mark Schneider has already explained to investors that he expects somewhat softer margins in the coming years (10-20 basis points per year) compared to the recent past. The possibility that consumers will have to bear part of the costs is also likely, he added.
“The reason for the price increases will be very difficult to distinguish, because with the increase in the prices of raw materials, the disguised price increases linked to the costs of sustainability will be easier to achieve ”,he explained. “Nestlé has one of the strongest pricing power and for some products consumers are indeed willing to pay a little more. Nestlé will do this selectively and intelligently, in order to control the prices of more affordable products (8% of the portfolio) In addition, if we enter a period of longer inflation, consumers will get used to rising prices, which would make them more open to accepting higher prices (linked to sustainability).