Nestlé Upgrades Climate Transition Plan
Background and context
Almost a year ago, Planet Tracker published its first Climate Transition Plan assessment report of a Climate Action 100+ company. The research report featured Nestlé. The Planet Tracker analysis recommended more transparency, especially regarding mitigation investment disclosures. We pointed out that the disclosed investment in mitigating agricultural emissions, the main source of emissions for the company, should be two and a half times higher if the company was to achieve its Net-Zero targets.
A year of developments
Since the research report, Nestlé has announced significant developments. In October 2022, Nestlé launched the ‘Nescafe Plan for 2030’ with additional mitigation investment disclosures, aligning with our recommendations. The plan aims to drive regenerative agriculture and reduce greenhouse gas emissions (GhG) by having 100% responsibly sourced coffee by 2025, with 20% of coffee sourced from regenerative agricultural methods by 2025 and 50% by 2030.
Although Nestlé has further to go, especially when it comes to livestock emissions mitigation as highlighted by Changing Markets Foundation and Mighty Earth publication of “Net-zero integrity: Nestlé’s methane blindspot”, we note the company’s progress. However, we would still like to see Nestlé join Danone in the Global Methane Pledge ambition.
Furthermore, Climate Action 100+, the world’s largest investor engagement initiative, officially launched Phase 2 on the 8th of June 2023, which will be effective until 2030. In this new phase, companies on the focus list will now be requested to develop and disclose transition plans. François Humbert, Chair of the CA100+ steering committee, highlighted that capex alignment will be a significant focus area. He emphasised that capex serves as a reality check, connecting non-financial aspects with financial considerations and demonstrating the transformation of words into actions, something that we have advocated in all our Climate Transition assessments.
In line with these developments, Nestlé announced on June 28th, 2023 it will walk away from ‘carbon neutral’ targets, put forward for brands such as KitKat or Nespresso coffee. Instead, the company will focus its investment on cutting GhG emissions, as disclosed by a Nestlé representative to Just Food magazine: “We are moving away from investing in carbon offsets for our brands to invest in programs and practices that help reduce GHG emissions in our own supply-chain and operations, where it makes the most difference to reach our net zero ambition.”
As a reminder, the company is aiming to cut its scope 1, 2 and 3 emissions by 20% by 2025 against a 2018 baseline, and by 50% by 2030, in order to align with the Paris Agreement. Planet Tracker applauds this development as it shows the company is aligning investment with public statements. Nestlé continues to increase its investment in the most relevant parts of its Climate Transition, Dairy and Livestock sourcing, and the company’s impact on Soil and Forests.
Moreover, on June 26th 2023, the International Sustainability Standards Board (“ISSB”) also published its inaugural standards for sustainability-related disclosures for international capital markets, namely, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (“IFRS S1“) and IFRS S2 Climate-related Disclosures (“IFRS S2“) (together, the “ISSB Standards“). And although these proposals are still pending approval from the International Organization of Securities Commissions (“IOSCO”), Planet Tracker is reassured by the alignment with our Climate Transition recommendations to corporates, especially when it comes to transition investment disclosures and climate-related risk management. For more detail, the IFRS S1 states that it requires “an entity to disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term.“
Closing comments
In conclusion, Planet Tracker is gratified to see our Climate Transition recommendations being implemented and finds Nestlé’s actions commendable. What is more, we are encouraged to see Climate Action 100+ and ISSB, making those recommendations mandatory, and are looking forward to the implementation of these new standards.
Planet Tracker’s CA100+ consumer sector reports:
Nestlé | Coca-Cola Company | PepsiCo | Danone | Unilever | Colgate-Palmolive
Download the Shareholder Engagement Sheet here
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For further information please contact: Nicole Kozlowski, Head of Engagement, Planet Tracker. nicole@planet-tracker.org
