CORPORATE RESPONSIBILITY 2008: SUSTAINING MOMENTUM AND RESPONSIBLE GROWTH

Paul PolmanEVP Zone Americas, Nestlé S.A.

13 March 2008Chatham House

DisclaimerThis presentation contains forward looking statements which reflect Management’s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.

Nestlé Corporate Business Principles & UNGC

One Worldwide Environmental, Health and Safety Standard

Moga Punjab Factory

Creating Shared Value: Environment

• Water withdrawal per tonne of product down 28% 1998-2007• Greenhouse gas emissions down 16% 1998-2007• Despite 76% production increase

COMPLIANCELaws, Business Principles, codes of conduct

SUSTAINABILITYProtect the future

Shared Value:Hierarchy of Corporate Social Responsibility

CREATESHARED VALUEReduce poverty, Improve health

Empower people

UNDP AnalysisNew Generation of CSR

Philanthropy

Pro-poor business models/inclusive marketsPolicy dialogue /

advocacyCSR Social investment

•Contribution of financial or in-kindresources to development projects

• Dialogue whichcontributes to more effective governanceinstitutions, rules, policiesand processes

•Enterprise solutions thataccelerate and sustainaccess by the poor to needed goods and services and to livehoodsopportunities

•Social investment that isstrategic to the corebusiness and thatcontributes to achievement of the MDGs

Relevance to UNDP strategypriority areas:

5. CSR for inclusive marketsand MDGs

5. CSR for inclusive markets& MDGs

1. Policy & institutionalinfrastructure

1. Policy & institutions

2. Value chains3. Pro-poor goods &

services4. Entrepreneurship

Traditional CSR New Generation CSR

Business Benefits

Developmentbenefits

UNDP MODEL – CORPORATE IMPACT

Definition •Operations and activitiesoften unrelated to corebusiness operations wherethere is no expected return

•Operating in a manner thatmeets or exceeds the ethical, legal, commercial and public expectations that society has of business•Designed to generate social return (and possibly economicreturn)

•Extending operations or provision of coregoods/service offerings to economically disatvantagedsegments of the population in such a way as to generateeconomic profit

Return or benefit •Social: Goodwill, benefit to community•Economic: Tax benefit, not profit-generating

•Social: Goodwill, benefit to community•Economic: Not generallylinked to profit, however couldincrease consumer base

•Social: Goodwill, benefit to community•Economic: profit, growth of market to new consumer segment

Alignment withbusiness operations and strategy

•Little or none •Possible alignment •Strong alignement withcompany's core business

Investment •Small (<US$MM) •Ranges in size •Significant (US$MM+)

Division ownership •Foundation, CSR division •CSR Division •Business Development Unit

Sustainability •Limited, one-time outlay • Limited, one-time outlay •Going concern (operationshould aim for commercial sustainability)

GSB Model

Philanthropy CSR Social Enterprise

Technical Assistance to Farmers - India

4,000 Women Livestock Advisors:UNDP & Nestle Pakistan

•Free technical advice to 600,000 farmers globally

•25 million USD in micro-credit

•UNDP funded Pakistan women’s project

4,000 Brazilian Women Entrepreneurs –Popularly Priced Nutritious Products

• Feira de Santana, Brazil - new "PPP" factory (CHF60 million)• Direct jobs -125; indirect jobs – 625; consumers served: 50 million• Direct and door to door distributors – "Nestlé Até Você": 4000

• Many PPP products nutritionally fortified (vitamins, A, C, D; Iron)

Brazil Factory InaugurateFeira de Santana

President Luiz Inácio Lula da Silva – February 9, 2007

Nestlé Nutrition Duchess Club: Nigeria and Ghana

• Nestlé Nutrition Duchess Club / 100'000 women

• Nestlé Nutrition school competition / 800'000 students

Value for Society: fortified products, nutrition knowledgeValue for Nestlé: relationships with consumers, consumer trust

Project WET: Water Educationfor Teachers

• Project WET: 400,000 teachers, millions of children in 22 countriesValue for Society: future generations saving waterValue for Nestlé: building relationship with potential future consumers

2007 CREATING SHARED VALUE REPORT