Nestlé S.A. Climate Transition Analysis

New research examines Nestlé’s strategy for achieving Net-Zero, forecasting an emissions scenario of +2°C by 2030 if changes are not urgently actioned.

LONDON, 26 July 2022: The food and beverage industry is responsible for a third of global greenhouse gas emissions and Nestlé, the largest company in the industry, is not currently investing enough in its upstream supply chain activities to achieve Net-Zero by 2050, according to the latest research from financial think tank Planet Tracker. In fact, if it continues on its current trajectory, Nestlé’s emissions in 2030 will be almost double that advised by the Science Based Targets Initiative.

Despite providing a detailed disclosure of its main CO2e sources and a broad Net-Zero Roadmap, Nestlé would need to invest at least USD 3.2 billion in its upstream activities to align with 1.5°C by 2030 (compared to its current USD 1.3 billion upstream abatement plan).

Whilst Nestlé’s strategy is encouraging in its intentions, its strategy lacks sufficient granularity to confidently demonstrate that it will reach Net-Zero by 2050. Between 2016 and 2020, Nestlé achieved a 5 percent reduction in greenhouse gas emissions, where upstream emissions increased by 9 percent, and downstream emissions decreased by 43 percent. However, this abrupt reduction is not a result of the execution of an effective strategy, but rather a change in Nestlé’s method of assessment. The emissions included in Nestlé’s 2021 Climate Change report were calculated under financial control rather than operational control, in contrast to previous disclosures.

Similarly, the company’s 2010 ambition to eliminate deforestation from all its products globally by 2020 was updated to eliminating deforestation from five key commodities. This enabled Nestle to state that, in 2020, 90 percent of itsfive key ingredients were deforestation-free.

Although Nestlé is advancing positively in engaging its suppliers and deforestation-free commodity sourcing, it is a member of multiple industry groups with mixed positions on climate policy, including the Confederation of Employers and Industries of Spain and the Kansai Economic Federation in Japan. Nestlé’s association with industry groups that lack a clear position on climate policy might undermine the impact of its own climate intentions.

Ion Visinovschi, Company Analyst at Planet Tracker comments, “Based on our findings, Nestlé lacks a well-grounded plan. Instead, it presents a series of intentions and initiatives which cannot demonstrate whether net-zero will be reached.
“If the company is to convince investors about achieving Net Zero by 2050, they will need more detail and the company will need to increase the investment in its suppliers”.

Nestlé commented: “Nestlé is committed to delivering against our 1.5oC aligned SBTi-approved Net Zero roadmap, and we have already passed “peak carbon. We welcome scrutiny of corporate strategies on climate, particularly where this encourages more companies to commit to Net Zero targets. Urgent action at scale is needed to decarbonize the economy”.

ABOUT PLANET TRACKER
Planet Tracker is an award-winning non-profit financial think tank aligning capital markets with planetary boundaries. Created with the vision of a financial system that is fully aligned with a net zero, resilient, nature positive and just economy well before 2050, Planet Tracker generates breakthrough analytics that reveal both the role of capital markets in the degradation of our ecosystem and show the opportunities of transitioning to a zero-carbon, nature positive economy.

PLANET TRACKER’S CLIMATE TRANSITION ANALYSIS – FOOD SYSTEM COMPANIES
As part of its Food and Land Use programme, Planet Tracker is examining the transition plans of the food system (Consumer Goods) companies covered by the Climate Action 100+ list (https://www.climateaction100.org/whos-involved/companies/). Our goal is to provide investors with the key information and analysis they need to be able to hold food system companies to account for the quality of their climate transition plans and their execution against those plans, and to encourage them to use this information to engage effectively with these companies with the ultimate aim of driving the sustainable transformation of the global food system.

Media contact
Ophelia Jeffrey
Aspectus Group
ophelia.jeffrey@aspectusgroup.com
+44 7584657646

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Planet Tracker is a non-profit financial think tank aligning capital markets with planetary boundaries. It was created in 2018 to investigate the risk of market failure related to environmental limits, focusing on oceans, food & land use and materials such as textiles and plastics.

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