Embedding ESG throughout the business

Two parallel challenges are dominating my conversations with clients at the moment – the Ukraine crisis and the rising cost of living. The events in eastern Europe are not only having a humanitarian impact but also showing the further challenges of our globalised supply chains following the pandemic. Meanwhile the cost of living crunch is putting a major squeeze on spending as many households try to make ends meet.

Against this backdrop, you may ask whether the environmental, social and governance (ESG) agenda – should be put on the backburner?

My answer to that is: No. We need to pursue the ESG agenda more than ever. Not because it is the right thing to do (it is) but because it can make important contributions to addressing these situations around us through economic investment and business resilience.

I was therefore pleased to be joined at our latest In Conversation event by Emma Keller, Head of Sustainability at Nestlé UK & Ireland and Nathan Beaver, Head of ESG Consulting at KPMG to discuss how to embed ESG more strongly into organisations and make real headway against key goals.

As the largest publicly held food company in the world with a portfolio of huge brands from coffee to cereals and confectionery to pet food, Nestlé is a massive player that can make a real difference across its extensive global value chain. And as Emma explained, the business is committed to driving a progressive ESG agenda and becoming an advocate for change across a number of key areas including advancing regenerative food systems at scale, meeting its climate roadmap and Net Zero target, pursuing a more sustainable and innovative packaging strategy, contributing to community regeneration, and being a purpose-driven company.

Like most big organisations, Nestlé has developed a number of formal commitments and strategies in relation to ESG – but how do you really push this forward, on the ground? For Emma, it’s all about bringing people with you on the journey.

“You can’t have ESG sitting on the side as the responsibility of the sustainability team and a handful of others,” she said. “It’s got to become part of everybody’s job. You have to focus on engaging people, educating them, upskilling, getting them impassioned and bringing them along. You’ve got to tap into the hearts and minds of colleagues. My favourite days in the office have been where a brand or a functional team have taken actions upon themselves to make a positive impact because they really get the challenge.”

Is there a danger, though, in a huge organisation like Nestlé and with so many areas of priority, of simply trying to cover too much?

Here Emma had some great words of advice. “It’s about filtering,” she commented. “You need to think about where you can make the most material impacts. The question I always ask myself is: ‘How does this activity ladder up to our bigger goals – Net Zero, transforming our product portfolio, delivering healthy and nutritious food?’ That’s the crux of the challenge.”

This concept of ‘laddering up’ is a really useful way of thinking about things. There are actions that lots of different teams and functions can take, but they all need to lead towards those top-level ambitions.

Another key area is undoubtedly data. Emma referenced that it’s the word she hears most often at the moment. We all know the challenges around data – to collate it, filter it, glean insights from it and use it to measure progress. It’s easier to say than to do. But as Emma observed, it’s all about putting data “into a shape that’s useable for different users” so that it can inform and drive real action. This can help with the all-important challenge of bringing the business with you.

“You’ve got to put data into a format that will resonate with each audience,” Emma said. “So, for the Board, presenting it in a similar format to which they’re used to analysing financial and other performance data. While for marketing colleagues, for example, we use data to show how ESG can contribute to their key concerns of accelerating brand purpose and reaching consumers in a deeper way.”

There is also using data in your reporting. As Nathan Beaver observed, “The leading players are using data to add real granularity to what they report, filling in the gap between their big picture targets and where they are now. This really supports the authenticity of your story.”

But when we talk about the big picture, what concerns are there in the food & drink and consumer market more widely that the cost-of-living crisis could stall consumer buy-in to making more sustainable choices?

According to Nathan, there is some room for encouragement here. “Our research shows that we’ve passed a tipping point. Over half of grocery consumers will now consider sustainability as part of their buying decision. It’s become the fourth pillar, alongside quality, value and convenience, even if it’s not the primary driver for most. The question is, how fast will that curve rise?”

Cost of living concerns may slow that curve somewhat but price differentials between sustainable and other products are narrowing. Price parity between plant-based and meat-based products, for example, is expected by next year. This will help shift consumer behaviour towards more sustainable options – though organisations need to nudge, encourage and make it easy for consumers to do so. One question on my mind, is how do we encourage those consumers fortunate enough to be able to afford these products to do so; ultimately scale will enable investment and bring prices down for those who understandably can only ever choose the cheapest.

There’s a lot to think about and much to do. Driving down packaging waste, encouraging a more circular economy with higher levels of recycling and re-use (such as Podback, a coffee pod recycling scheme co-founded by Nestlé to retrieve pods and spent coffee grounds), supporting the UK farming industry as it transitions to become less meat-based – all of these are also key.

This just reinforces the need to get everyone in the business engaged. As Emma’s final key piece of advice, “You’ve got to build a network because you can’t do it all alone. Scientists, data experts, communicators – you’ll need all of them!”

It was a great discussion that for me just underlined both the scale of the task and the exciting opportunities ahead. ESG is not a trade off against other priorities – it’s a key part ensuring we address them now and in the longer term and it can inform every aspect of business in positive and progressive ways.

We’ve designed our sustainable supply chain services to put ESG at the core of your operations. If you wish to discuss this in more detail please contact Linda Ellet, Nathan Beaver or Jon Hughes.