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SAM Research Corporate Sustainability Assessment Questionnaire

DJSI Sustainability Assessment 2010 NESTLE SA/AG

SAM Research AG Member of SAM Group Josefstrasse 218 CH-8005 Zurich Tel. +41446531010 Fax +41446531080 www.sam-group.com [email protected]

Company Name: NESTLE SA/AG Registration Data:

Main contact person: Tim_Wolfe

(Person to be contacted in the case of questions)

Function/position: Communications Manager Department: Corporate Communications Address: Avenue Nestle

Town/city: Vevey Zip: 1800 Country: Switzerland Phone: +41 21 924 27 56 Fax: +41219242813 E-mail: [email protected] Web: http://www.nestle.com

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SAM Research Corporate Sustainability Assessment Questionnaire

DJSI Sustainability Assessment 2010 NESTLE SA/AG

DJSI Sustainability Assessment 2010

1 Economic Dimension

1.1 Corporate Governance

1.1.1 Checks & Balances: Board structure Please indicate in the following table the number of executive and non-executive directors on the board of directors/supervisory board of your company. Please find additional explanation concerning one-tier, two-tier system in the information button. r ONE-TIER SYSTEM. For companies with board of directors. Number of members Executive directors Non-executive directors (excl. independent directors) Independent directors Total board size

__________ __________ __________ __________

Number of members

TWO-TIER SYSTEM. For companies with supervisory board. SUPERVISORY BOARD Non-executive directors (excl. independent directors) Independent directors Employee representatives (if not applicable, please leave the field empty) MANAGEMENT BOARD/ EXECUTIVE MANAGEMENT Senior executives TOTAL SIZE OF BOTH BOARDS r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Modified tw-tier system, according to Swiss law 12

2

__________

13 27

1.1.2 Checks&Balances: Non-executive chairman/Lead director Is the board of directors/supervisory board headed by a non-executive and independent chairman and/or an independent lead director?

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r Yes, chairman is non-executive and independent. Please specify how many years ago this approach was adopted:

__________

Yes, role of CEO and chairman is split and former CEO/chairman is now chairman. r Yes, role of CEO and chairman is split and former CEO/chairman is now chairman, but independent lead director is appointed. Please indicate name:

__________ __________

r No, role of chairman and CEO is joint, but independent lead director is appointed. Please indicate name: r No, role of chairman and CEO is joint or chairman is an executive director. r Not applicable. Please provide explanations in the comment box below. r Not known. Comment :

________________________________________________ ________________________________________________ _______________________________________

1.1.3 Checks&Balances: Responsibilities and committees Please indicate in the table below the functions, and associated committee names, for which the board of directors / supervisory board explicitly assumes formal responsibility. Function Strategy Audit, accounting, risk management Responsibilities Formal board responsibility Formal board responsibility All members are nonexecutives Formal board responsibility All members are nonexecutives Formal board responsibility All members are nonexecutives Formal board responsibility Chairman's &Corporate Governance Committee Compensation Committee Nomination Committee Name of committee Full Board of Directors Audit Committee

Selection and nomination of board members and top management

Remuneration of board members and top management

Corporate social responsibility, corporate citizenship, sustainable development

r Not applicable. Please provide explanations in the comment box below.

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r Not known Comment :

________________________________________________ ________________________________________________ _______________________________________

1.1.4 Transparency&Accountability: Corporate governance policy Please indicate if the board of directors/supervisory board has issued a formal corporate governance policy and if it is publicly available and covers the following aspects: Yes, formal corporate governance statement: Documented in: Corporate Governance Report 2009 and/or website: http://www.nestle.com/AllAbout/ Governance/Governance.htm Statement of compliance of the formal policy with current legislation Remuneration framework and performance evaluation of the members of board of directors/supervisory board, CEO and senior executives Independency statement of board of directors/supervisory board Attendance of board of directors/supervisory board meetings disclosed Biographies, CVs of board of directors/supervisory board disclosed Other mandates of board of directors/supervisory board members disclosed r No formal corporate governance policy r Not applicable. Please provide explanations in the comment box below. r Not known Comment :

________________________________________________ ________________________________________________ _______________________________________

1.1.5 Checks&Balances: Diversity: gender How many women are members on your company's board of directors/supervisory board? 3 r Not applicable. Please provide explanations in the comment box below.

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r Not known Comment :

________________________________________________ ________________________________________________ _______________________________________

1.1.6 Checks&Balances: Board effectiveness How does your company ensure the effectiveness of your board of directors/supervisory board and the alignment with the (long-term) interests of shareholders? Stock ownership (value at the end of last business / fiscal year) Indicators/measures Non-executive directors are required to buy shares Non-executive directors' individual average stock ownership is worth (in USD): 1667761 USD Number of meetings attended in percentage last business / fiscal year All members attended 98 % of meetings of board of directors/supervisory board. Minimum of attendance for all members required, at least (in %) 98 Number of other mandates of the board of directors / supervisory board members. Number of directors with 4 or less other mandates: 11 t Number of other mandates for all directors restricted to: _ _ _ _ _ _ _ _ _ _ Performance assessment of board of directors/ supervisory board members. Regular self-assessment of board performance. Please specify or provide supporting documents: See Charters of Board Committees and Board of Directors Regulations (page 7), available on the Nestlé Internet: http://www.nestle.com/AllAbout/ Governance/Governance.htm Regular independent assessment of board performance. Please specify or provide supporting documents: Internal documentation only. r Not applicable. Please provide explanations in the comment box below.

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r Not known Comment : See attached links for detailed information of Board responsiblities as well as Regulations and Charters.

1.1.7 Entrenchment provisions Please indicate if your company has adopted any entrenchment provisions at the board of directors / supervisory board level: Entrenchment Provision Staggered (or classified) board Yes r No Limits to amend by-laws: supermajority required r Yes No Limits to amend charter: supermajority required Yes r No Supermajority requirements for mergers Yes r No Golden parachutes r Yes No Poison pill (i.e. shareholder rights plans) r Yes No r Not applicable. Please provide explanations in the comment box below. r Not known Comment : See Nestle Articles of Association requiring three-year terms; no US-style staggered board, but approximately one third of directors to be elected each year.

1.1.8 Checks&Balances: Audit Conflict of Interest Please indicate in the table audit, audit related and non-audit related fees (e.g. for management consulting) paid to your company's auditing firm at corporate level in the last fiscal year. Please attach/provide supporting documents or indicate website.

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Currency unit: CHF Amount: Audit fees 52 Comment: ( in mil CHF ), of which KPMG, in their capacity of group auditors receive CHF 50 mio ( in mil CHF ), of which KPMG received CHF 4 mio.

Audit-related fees Non-audit related fees (excluding tax services) Tax services t Tax services approved by board. Other fees paid

12

__________ __________

__________ __________

__________

__________

r Not applicable. Please provide explanations in the comment box below. r Not known Comment : See Annual Report / Corporate Governance Report

1.1.9 Transparency of senior management remuneration Does your company communicate the remuneration/compensation of your board of directors/supervisory board members and other highest paid senior directors/executives (e.g. CEO ) externally? Please attach supporting documents. Yes, on individual level of each board member and CEO and additional highest paid senior executives. r Yes, on individual level of each board member and CEO. r Yes, on an aggregated level for non-executive directors AND on aggregated level for executives directors. r Yes, on aggregated level of board/supervisory board. r No r Not applicable. Please provide explanations in the comment box below. r Not known Comment :

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Published in the Corporate Governance Report 2009 See Compensation Report, pages 27 - 28 "Say on pay" vote at AGM introduced in 2009

1.1.10 MSA Corporate Governance In this section we include a performance score on the Corporate Sustainability Monitoring with the objective to verify the company's involvement and management of crisis situations that can have a damaging effect on reputation. The evaluation will be filled in by the responsible analyst of your industry. No additional information is required from your company. Please disregard the comment box. _ _ _ _ _ _ _ _ _ _ Comment :

________________________________________________ ________________________________________________ _______________________________________

1.2 Risk & Crisis Management

1.2.1 Responsibility Risk & Crisis Management (incl. water and climate) Please indicate the name, position,reporting line and responsibilities of your chief risk officer or person responsible for this function at the group level. Name: Marc Schaedeli Position: Head of Group Risk Management Number of levels from the Board of Directors/ executive board: 2 Reporting line: CFO Includes responsibilities for water-related risks Includes responsibilities for climate change-related risks r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Group Risk Management has functional responsibility which does include: - A centre of expertise, incl. a network of trained "facilitators" throughout Nestlé. - A resource efficient methodology using facilitated workshops. - A set of tools to provide an insight about how to apply the risk management process - Support and training in risk management capability. - A regular update of ERM principles to ensure common terminology, aligned processes, minimal standards. - A regular benchmark and continuous improvement of ERM process. - A central repository

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allowing transparency and reporting. - Information on risk management for communication to stakeholders. Regular risk consolidation at Group level.

1.2.2 Analysis of Risks Do you use two- or multi-dimensional risk analysis tools (such as risk maps) in order to identify financial and business risk exposures ? ­ Please provide supporting documents. r r Yes, we use risk maps as a risk analysis tool, only for financial risks r Yes, we use risks maps as a risk analysis tool ­ for financial and business risks. Please specify which business risks are included in the risk map.

____________________ ____________________

r Yes, we use other tools as risk analysis tools, only for financial risks ­ please describe: Yes, we use other tools as risk analysis tools ­ for financial and business risks - please describe: Other tools used to quantify risks: HACCP, HAZOP, Value Engineering Analysis (VEA), SWOT, Quant, Monte-Carlo, VaR, Vendor Approval, Process, Failure Modes and Effects Analysis (FMEA), Fault Tree, Fault tree analysis (FTA), Root-Cause Analysis, etc. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Financial AND Business risks quantified with risk maps (I cannot put this information in the related section): 1. Operational: Competitor, Customer, Consumer, Brand, Generating Demand, HR, IT/IS, Quality/Food Safety, Supply disruption (man-made), D&S Planning, Commodity, Workplace Safety related risks. 2. Finance & Reporting: Counterparty, Internal controls / fraud, Shared Service Center, Treasury/Investment, Liquidity crisis, Currency / interest rate related risks. 3. External: Political / Social / Reputation / Other external (pandemic, environment, etc.), Supply disruption (natural disasters), Procurement (availability, sustainability of supply), Regulatory change related risks. 4. Compliance & Governance: Tax / royalties, Non-food compliance, Legal related risks. 5. Strategical: Major Initiative, Business strategies related risks.

1.2.3 Risks Correlation Do you perform a correlation analysis of the key risks identified ? ­ Please provide supporting documents. r Yes, we perform a correlation analysis, only for financial risks. Yes, we perform a correlation analysis ­ for financial and business risks. Please specify which business risks are included in risk correlation analysis.

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Correlation analysis are performed for financial & business risks using models such as S&P ratings, Moody's ratings, OECD leading indicators, Citibank WERM currency valuations, UBS PPP analysis, etc. r Not applicable. Please provide explanations in the comment box below. r Not Known Comment : Examples of business risks included in correlation analysis are the following: Forex (impacting raw material/ commodity procurement), OECD leading indicators, e.g. industrial production, business confidence, consumer confidence (impacting net proceed of sales), Credit spread (impacting consumer behavior).

1.2.4 Sensitivity Analysis and stress testing (incl. water and climate) Does your company perform sensitivity analysis and stress testing on a group level? Please attach supporting documents or indicate the website. yes, on changes of financial risks, such as exchange and interest rates yes, on changes in carbon pricing yes, on changes in water availability or water quality yes, on other risks (e.g. operational risks, market risks, strategic business risks, compliance risks). Please specify: 1. Financial risks: Sensitivity analysis/test performed on total portf. & benchmark dev. (monthly review in ALMC) using Bloomberg and for Impairment goodwill 2. Carbon pricing: EU Emission Trading Scheme (EU ETS) of Kyoto Protocol (23 factories). Internal process to analyse next steps. 3. Water availability / water quality: Stress testing is part of Nestlé's Water Resources Review (WRR) programme. 4. Operational / Business / Strategic risks: Business planning (MBP) process, to which Dynamic Forecast (DF) is one of the ingredients, foresees that businesses revise monthly business scenario, adapt actions to cover gaps & mitigate/fix key risks. MBP best practices widely communicated to markets. MBP implemented on a monthly basis in most markets as per Group priority. 5. Nestlé captive insurance company - All insured risks: Stress testing: The Swiss Solvency Test model includes stress testing scenarios. All details for the specific scenarios can be found attached in the reference document. r No r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Water availability or water quality: In terms of water availability, ref. to Nestlé Creating Shared Value Report 2009 (full version, pag.56) on our Water Resources review (WRR). Water quality is also an aspect analysed as part of the WRR activity. Moreover, quality of water resources used in all our factories is monitored mainly according to Nestlé Quality Management policies and standards. To date, the WRR has been conducted at 65 Nestlé Waters sites ­ more than half of its total bottled water facilities ­ and is now being rolled out to our food factories (total number is 21 factories for 2009/2010 period: 11 factories reveiwed in 2009 and 10 factories in the 2010 program). All selected sites are being prioritised by their position in our Water Stress Index, which in turn is based on external indicators of water poverty, watershed stress and internal local indicators. In fact, the 'Nestle Water Management Report' (2007) reported originally that 49 (out of total 481) factories were falling in water

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stressed countries, according to the Water Poverty Index developed by the Centre of Ecology and Hydrology of Wallingford (UK). Nestlé is currently in the process of applying a new method to assess globally all factories (by GPS locations) from a water stress prespective, using a new Index derived by the combination of available information on "freshwater availability per capita" and "water withdrawals to water availability ratio".

1.2.5 Risk Response Strategy As part of your corporate risk response strategy which risks does your company retain, which are transferred, and which risks are avoided? Please provide some examples and attach supporting documents or indicate website. Risks retained (risk exposure is accepted without further mitigation): No insurance against Credit, Fidelity, Products Recall, Products Tampering or Employment Practice Liability and against risks which represent a low financial commitment / high occurence. Risks reduced/transferred (risk exposure is reduced/transferred to others or consequences are reduced): Mitigation in place against operational (customer, competitor, consumer, etc); finance & reporting (fraud, etc); external (pandemic, regulatory, etc); compliance & governance (tax, legal, etc) risks. Risks avoided (risk exposure will be eliminated entirely, e.g. through ceasing a business): Not used as such, but can still happen by selling a business, we will certainly avoid risks in part of our business. Others, please specify: Risk taking, opportunity management: We also identify and quantify buiness opportunities and develop plans to further enhance those. More awareness leads to more risk taking and competitive advantage. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Nestle operates a hedge strategy using the derivatives traded on the relevant commodity exchanges. Nestlé normally does not consider to completely avoid risks, rather wants to create sufficient awareness / transparency in order to help the management to take sound business decisions. Nevertheless, by selling a business, we will certainly avoid risks in part of our business.

1.2.6 Crisis Preparedness Do you have any contingency plans for the key environmental risks identified? Please provide examples or supporting documents (sample document is sufficient, confidential information can be blanked out). Yes, please describe: Our Nestlé Environmental Management System (NEMS) which applies to all our activities, includes all ISO 14001 requirements, especially the following one : 4.4.7 Emergency preparedness and response The organization shall establish, implement and maintain a procedure(s) to identify potential emergency situations and potential accidents that can have an impact(s) on the environment and how it will respond to them. The organization shall respond to actual emergency situations and accidents and prevent or mitigate associated adverse environmental impacts. The organization shall periodically review and, where necessary, revise

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its emergency preparedness and response procedures, in particular, after the occurrence of accidents or emergency situations. The organization shall also periodically test such procedures where practicable. r No r Not applicable. Please provide explanations in the comment box below. r Not known. Comment : At the end of 2009, 424 factories already had an ISO 14401 certificate, out of a total of 449 factories. All our factories will be certified against ISO 14001 at the end of the year.

1.2.7 MSA Risk & Crisis Management In this section we include a performance score on the Corporate Sustainability Monitoring with the objective to verify the company's involvement and management of crisis situations that can have a damaging effect on reputation. The evaluation will be filled in by the responsible analyst of your industry. No additional information is required from your company. Please disregard the comment box. Existing CSV, Climate Change, Water, SAINS, etc. initiative are aiming to anticipate and prevent as well as reduce the impact of crisis situations that can have a damaging effect on reputation. Comment :

________________________________________________ ________________________________________________ _______________________________________

1.3 Codes of Conduct/Compliance/Corruption&Bribery

1.3.1 Codes of Conduct: Focus Please indicate for which areas corporate codes of conduct have been defined at a group level (including subsidiaries). Please attach references Corruption and bribery Discrimination Confidentiality of information Money-laundering and/or insider trading/dealing Security of staff, business partners, customers Environment, health and safety Whistleblowing

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r No group-wide code of conduct r Group-wide code of conduct to be implemented within the next (months)

__________

r Not applicable. Please provide explanations in the comment box below. r Not known Comment :

________________________________________________ ________________________________________________ _______________________________________

1.3.2 Codes of Conduct: Systems/ procedures What mechanisms are in place to assure effective implementation of your company's codes of conduct (e.g. compliance system)? Responsibilities, accountabilities and reporting lines are systemically defined in all divisions and group companies. Dedicated help desks, focal points, ombudsman, hot lines. Compliance linked to employee remuneration Employee performance appraisal systems integrates compliance/codes of conduct. Disciplinary actions in case of breach, i.e. warning, dismissal, zero tolerance policy. Compliance system is certified/audited/verified by third party, please specify: We have several compliance control tools in place. Nestlé Group Audit (see presentation in reference), KPMG (see p.21 of our Nestlé Corporate Business Principles) As part of the Nestlé Environmental Management System (NEMS), internal audits are conducted to assess compliance with legal and internal environmental requirements. Specific environmental surveys are conducted from our international head-office on a periodical basis to identify possible gaps, existing or foreseen, and close or prevent them. Besides, a procedure is in place to report systematically cases of non-compliance to national and international head-offices together with related corrective action plan. In addition, plants may be ISO14001 certified by 3rd party. The same exists for health and safety at work as part of the Nestlé Occupational Safety and Health management system and for food safety and quality as part of the Nestlé Quality System. Plants may be OSHAS 18001 and ISO 9000 certified by 3rd party. CARE, a group-wide audit initiative launched in 2005, aims through independant external auditors at verifying that our operations comply with local legislation and with Nestlé Corporate Business Principles in the areas of Health & Safety, Labor standards, Business Integrity and Environment (see attached Executive Summary and Audit Report template). Section 14 of the Code of Business Conduct asks employees to report any practices or actions believed to be inappropriate under the Code or illegal. Those reports should be made to line management, the HR, Legal or Compliance function. Section 14 further states that such complaints, if appropriate, may be made directly to higher levels, including the Group's Chief Compliance Officer and/or Chief Executive Officer. Depending on the nature of the complaint, Nestlé will assign the investigation internally or externally. If assigned internally, it will consitute a case handling team which will investigate the complaints and propose a mode of resolution. Nestlé believes in transparency, promotes an environment of open communication and condemns any form of retaliation against employees who make a report in good faith. Accordingly, employees are encouraged to bring complaints to the attention of their line management, the HR, Legal or Compliance

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Function. All of the aforesaid are fully aware of the need to treat any such complaint with the highest possible level of confidentiality. Moreover, Nestlé recognizes that employees may in some instances feel uncomfortable to file complaints openly. The Company respects such need or perceived need for anonymity and therefore provides employees with the opportunity to make complaints on a confidential basis or through employee hotlines. For investigation purposes, Nestlé will not distinguish between reports filed openly and those filed on a confidential basis. r No such systems/policies in place. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : In addition, we have an internal self-assessment tool as well as CARE, and internal audit processes which includes and integrity module.

1.3.3 Corruption&Bribery: Scope of Policy Please indicate which of the following aspects are covered by your anti-corruption and bribery policy at a group level (including subsidiaries). Please refer also to the helptext in the information button. Please attach references. Bribes in any form, including kickbacks, on any portion of contract payments or soft dollar practices. Direct or indirect political contributions. t Political contributions publicly disclosed. Please attach supporting documents and/or indicate web address: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ t Charitable contributions and sponsorship. t Charitable contributions and sponsorship publicly disclosed. Please attach supporting documents and/or indicate web address: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ r Group-wide anti-corruption & bribery policy to be implemented within the next (months)

__________

r No anti-corruption & bribery policy. r Not known r Not applicable. Please provide explanations in the comment box below. Comment :

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________________________________________________ ________________________________________________ _______________________________________

1.3.4 Codes of Conduct/Anti-Corruption&Bribery: business relationships Please indicate the percentage of coverage of your codes of conduct and anti-corruption and bribery policy relative to the total number of: Employees group-/worldwide: 100 Contractors/Suppliers/Service providers: 100 Subsidiaries: 100 Joint venture (includes stakes below 51%) : 100 r Not applicable. Please provide explanations in the comment box below. r Not known Comment :

________________________________________________ ________________________________________________ _______________________________________

1.3.5 Codes of Conduct/Corruption&Bribery: Reporting on breaches Does your company publicly report on breaches (e.g. number of breaches, cases etc) against your codes of conduct/ethics and anti-corruption and bribery policy? Please attach documents and/or web address. r Yes, please refer to the document(s) attached: _ No r Not applicable. Please provide explanations in the comment box below. r Not known Comment :

___________________

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As we believe that statistics can be misinterpreted, Nestlé fully focuses on investigating, handling and resolving any potential issues, while prohibiting retaliation against the reporting party (if applicable) and at the same time protecting the rights of any incriminated person.

1.3.6 MSA Codes of Conduct/Corruption In this section we include a performance score on the Corporate Sustainability Monitoring with the objective to verify the company's involvement and management of crisis situations that can have a damaging effect on reputation. The evaluation will be filled in by the responsible analyst of your industry. No additional information is required from your company. Please disregard the comment box. _ _ _ _ _ _ _ _ _ _ Comment :

________________________________________________ ________________________________________________ _______________________________________

1.4 Innovation Management

1.4.1 R&D Spending Please provide us with R&D spending from 2006 to 2009: Internal R&D spending Unit million USD 2006 2007 2008 2009

_______ _______ _______ _______ ___ ___ ___ ___ _______ _______ _______ _______ ___ ___ ___ ___

Outsourced R&D million USD spending (financed by company, i.e. open innovation) Total R&D spending Of which, own personnel cost million USD

1529 Million USD

1654 Million USD

1744 Million USD

1783 Million USD

million USD

_______ _______ _______ _______ ___ ___ ___ ___

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Number of R&D positions

FTE's

4500

4800

5000

5200

r Not applicable. Please provide an explanation in the comment box below r Not known Comment : For best practice Corporate Governance reasons, we are not able to provide all the answers for this section, as these are not made public and we cannot favor one shareholder over another by giving them confidential data. R&D spend including the pharma segment. Number of positions excluding the pharma segment.

1.4.2 Open Innovation Which approaches have you adopted to profit from or contribute to external knowledge. Please provide examples and add supporting documents. R&D collaborations with external business partners (i.e. suppliers, universities, joint ventures)

____________________

Distributed creativity (i.e. customer design contests, crowd sourcing, open innovation networks) Eg IdeaStoreTM brings together people from diverse disciplines in order to brainstorm and prioritise ideas ­ and identify one or two with the potential for commercial success. Acquisitions http://www.nestle.com/MediaCenter/Presentations/Mergers_Acquisitions/Mergers_Acquisitions.htm Corporate Venture Capital Established in 2002 - http://www.nestle.com/MediaCenter/PressReleases/AllPressReleases/ VentureCapitalFund-5Mar02.htm?Tab=2002 Spin-offs, Start-ups

____________________ ____________________ ____________________ ____________________

Technology licensing t Open source t Other

r Not applicable. Please provide an explanation in the comment box below r Not known Comment :

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________________________________________________ ________________________________________________ _______________________________________

1.4.3 R&D Breakdown and KPI Please indicate breakdown in R&D investments, development cycles, success rates, and KPIs for various innovation stages (please provide supporting documents) If the data cannot be aggregated at the company level, indicate which business unit you have chosen to represents, as well as the number of employees and revenues generated by that unit (in % of total revenues):

______________________________ ____________________

Share of R&D budget invested (in %) Innovation stages

Please, indicate the % of your total R&D expenditure for which you would be able to provide a similar detailed set of data: Processes applied within stages (please indicate other processes) Average cycle of each innovation stage (in months) Average success Key rate (survival Performance rate from one Indicators used stage to the next, in %) 1) Core or Basic Research / Development

Core or Basic Research

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Core Research (no direct or immediate commercial benefits)

t Technical feasibility study t Market research (e.g. voice of customer analysis) t Manufacturing feasibility study t Environmental impact assessment t Business case t Alignment of project with corporate strategy t Other, please specify:

_______ _______ _______ ___ ___ ___

______ ______ ___

Ideation or Applied Research

1*) Ideation or Applied Research / Development

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______

Idea generation

t Technical feasibility study t Market research (e.g. voice of customer analysis) t Manufacturing feasibility study t Environmental impact assessment t Business case t Alignment of project with corporate strategy t Other, please specify:

_______ _______ _______ ___ ___ ___

______ ______ ___

Development

2) Development / Launch

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______

Product Innovations products new to the company (see definition in Information button)

t Technical feasibility study t Market research (e.g. voice of customer analysis) t Manufacturing feasibility study t Environmental impact assessment t Business case t Alignment of project with corporate strategy t Other, please specify:

_______ _______ _______ ___ ___ ___

______ ______ ___

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______

Product Optimizations - of already commercialized products (see definition in Information button)

t Technical feasibility study t Market research (e.g. voice of customer analysis) t Manufacturing feasibility study t Environmental impact assessment t Business case t Alignment of project with corporate strategy t Other, please specify:

_______ _______ _______ ___ ___ ___

______ ______ ___

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______

Process Innovations processes new to the company (see definition in Information button)

t Technical feasibility study t Market research (e.g. voice of customer analysis) t Manufacturing feasibility study t Environmental impact assessment t Business case t Alignment of project with corporate strategy t Other, please specify:

_______ _______ _______ ___ ___ ___

______ ______ ___

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______

Process Optimizations - of already operational processes (see definition in Information button)

t Technical feasibility study t Market research (e.g. voice of customer analysis) t Manufacturing feasibility study t Environmental impact assessment t Business case t Alignment of project with corporate strategy t Other, please specify:

_______ _______ _______ ___ ___ ___

______ ______ ___

Launch

3) Launch / 3 years after launch Product t Other, please commercialization specify: or process _____ implementation

______

_______ ___

______ ____

Share of products/ processes still existing 3 years after launch (in %)

_______ ___

_______ ___

Post Launch

Post Launch

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Customer Service

t Customer support service in place t Customer satisfaction analysis conducted t Other, please specify:

______ ______ ______ __

______

Project Evaluation e.g. evaluation of product development process

t Post-mortem analysis: evaluation of development process t Voice of customer analysis t Return on innovation spending t Other, please specify:

_______ ___

_______ ___

______ ______ ___

Total: 100% 1) Share of surviving projects from the Core Research to the Development Stage 1*) Share of surviving projects from the Ideation to the Development Stage 2) Share of surviving projects from the Development to the Launch Stage 3) Share of surviving projects from the Launch Stage to 3 years after launch r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Nestlé allocates its R&D resources in general as follows: 25% basic/early research and development, 50% for product/process development and 25% deployment/technical assistance. For all innovation projects we follow a strict stage gate process: I Strategy, II Ideation, III Exploration/conceptualisation, IV Development, V Deployment/ launch, VI Post-launch assessment. For best practice Corporate Governance reasons, we are not able to provide all the answers for this section, as these are not made public and we cannot favor one shareholder over another

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by giving them confidential data. For best practice Corporate Governance reasons, we are not able to provide all the answers for this section, as these are not made public and we cannot favor one shareholder over another by giving them confidential data. For best practice Corporate Governance reasons, we are not able to provide all the answers for this section, as this is not made public and we cannot favor one shareholder over another by giving them confidential data.

1.4.4 Structures and Mechanisms What structures and mechanisms are in place to promote and evaluate the innovation process (not yet mentioned above) e.g. management tools, formal innovation management systems and incentive schemes? Responsibilities and reporting lines systematically defined. Formal R&D and innovation committee in place. Platforms provided to support innovation process (e.g. specific intranet, dedicated meetings, time slots for "rock turning projects" brown bag seminars). Incentive schemes and awards provided to employees with innovative ideas (e.g. engagement scorecard linked to remuneration). Tracking number of patents/patent families registered globally. Tracking quality of patents/patent families registered globally (citations, ...) Tracking number of publications by own researches in peer-reviewed journals/conferences. Tracking citations of own publications t Other, please specify:

____________________

r Not applicable. Please provide explanation in the comment box below. r Not known Comment : We track the number of patents, and the quality of our patent portfolio by assessing potential use, business interest etc. We also track the number of Invention Disclosures.

1.4.5 Product Innovations Product innovations: revenues generated by your company last FY, which can be allocated to the following product types. Please specify number of years of a typical innovation cycle:

____________________

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t Newly commercialized products or services* (launched during the previous X years) Significantly improved products or services** (launched during the previous X years) Unchanged or minimally changed products or services (launched during the previous X years)

Share of revenue (in %)

______ ______ ______

Total: 100%

r Not applicable. Please provide explanation in comment box below. r Not known Comment : There is no typical number of years for an innovation cycle - see slide 7 for an example of annual innovation in Coffee Mate at http://www.nestle.com/Resource.axd?Id=B8A19E1C-A7A9-4BCD-B0DE-343812762D64 CSV Report 2009 - 71% of total sales meet or exceed Nestlé's Nutritional Foundation profiling criteria. 7,252 products renovated for nutrition or health considerations. For best practice Corporate Governance reasons, we are not able to provide all the answers for this section, as these are not made public and we cannot favor one shareholder over another by giving them confidential data.

1.4.6 Process Innovations Please indicate if this applies to your company. The company has introduced process innovations*** between 2007-2009. If yes, have these process innovations substantially contributed to a reduction of the cost of production? t If yes, cost reductions in 2009 due to these new processes have amounted to approximately which % of your COGS

__________

t Please provide other reasons than cost reductions for the introduction of process innovations in 2009:

____________________

r Not applicable. Please provide explanation in comment box below. r Not known Comment : Nestlé Continuing Excellence intiative - various examples related to process improvements - source: http:// www.nestle.com/Resource.axd?Id=34D6AE74-E559-49A1-A8F6-5D8838B893A0 For best practice Corporate

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Governance reasons, we are not able to provide all the answers for this section, as these are not made public and we cannot favor one shareholder over another by giving them confidential data. For best practice Corporate Governance reasons, we are not able to provide all the answers for this section, as these are not made public and we cannot favor one shareholder over another by giving them confidential data. For best practice Corporate Governance reasons, we are not able to provide all the answers for this section, as this is not made public and we cannot favor one shareholder over another by giving them confidential data.

1.4.7 Environmental Innovation What share of all product or process innovations has a clear focus on environmental issues? Please count only if the main objective were environmental issues. Environmental product innovations versus total product innovations launched (in %) Environmental process innovations versus total process innovations launched (in %) % of revenues generated by your company which can be allocated to environmental innovations 2007 2008 2009

_____

_____

_____

_____

_____

_____

_____

_____

_____

Please provide one or two examples of a typical environmental innovation introduced in the past 5 years. Please provide supporting documents See examples on page 25 of the R&D brochure. See also slide 17 of Investors presentation on Innovation Please indicate your company's KPIs used to measure the environmental performance or efficiency of innovations: e.g. virtual water content, grey energy content, customer CO2 abatement. Please provide supporting documents. See attached lists r Not applicable. Please provide explanation in comment box below. r Not known Comment : For best practice Corporate Governance reasons, we are not able to provide all the answers for this section, as these are not made public and we cannot favor one shareholder over another by giving them confidential data.

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1.4.8 Social Innovation What share of all product or process innovations has a clear focus on social issues? Please count only if the main objective were social issues. Social product innovations versus total product innovations or services launched (in %) Social process innovations versus total process innovations launched (in %) % of revenues generated by your company which can be allocated to social innovations 2007 2008 2009

_____

_____

_____

_____

_____

_____

_____

_____

_____

Please provide one or two examples of a typical social innovation introduced in the past 5 years. Please provide supporting documents Popularly positioned products, fortified products, meeting specific nutrit needs of vulnerable people in society (eg infants and the elderly) Please indicate your company's KPIs used to measure the performance or efficiency of social innovations. Please provide supporting documents. Nestlé Nutrition business (sales volume, CHF million) Popularly Positioned Product SKUs Popularly Positioned Products (sales volume, CHF million) Products with increase in nutritious ingredients r Not applicable. Please provide explanation in comment box below. r Not known Comment : For best practice Corporate Governance reasons, we are not able to provide all the answers for this section, as these are not made public and we cannot favor one shareholder over another by giving them confidential data.

1.5 Health & Nutrition

1.5.1 Development of Health & Nutrition Strategy Please indicate your company's strategic approach to Health & Nutrition. Please refer in the following answers to your private label products. Policy statement on health & nutrition publicly available. Please attach the relevant document and/or indicate website:

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Our signature, GOOD FOOD GOOD LIFE, captures the very essence of Nestlé and the promise we commit ourselves to everyday, everywhere as the LEADING NUTRITION, HEALTH & WELLNESS COMPANY. See: - 2009 Management Report, The Nestlé Roadmap to Good Food Good Life, p.8 - 2009 Creating Shared Value report, Areas of focus and engagement, p.4 The EXECUTIVE BOARD monitors NHW KPIs, eg: nutritionally-profiled and nutritionally-renovated products, product labels featuring the Nestlé Nutritional Compass® and/or GDA labeling on the front of pack, product advertisements and consumer communications featuring proper nutrition contents, continuous nutrition training of the business teams and outreach of our NHW education programs into communities where we operate. Our NHW DASHBOARD is now deployed to monitor NHW value evolution of the product portfolio. We also further updated POLICIES, GUIDELINES, TOOLS & PROGRAMMES to drive more NHW for consumers. Advisory panel on health & nutrition established. Please attach the relevant document and/or indicate website: The NESTLE NUTRITION COUNCIL is an independent, international advisory panel with now 32 years of history. Over the last decade only, the NNC has examined NUTRITION & HEALTH ISSUES such as diabetes, childhood obesity, cancer, nutrition and the brain, and health economics, to name just a few. It has also shaped Nestlé's NUTRITION & HEALTH POLICIES on the reduction of saturated fats, trans fatty acids, salt and sugar levels in products, and the fortification in relevant nutrients. See: - Nestlé Research website: http://www.research.nestle.com/ - Nestlé Research section in the Nestlé corporate website: www.nestle.com/nestleresearch R&D centers focused on health & nutrition established. Please attach the relevant document and/or indicate website: NESTLE RESEARCH is a global network of 28 R&D centres and Product Technology Centres (PTCs), supported by 280 'Application Groups' across countries where we manufacture products. All with no exception have a HEALTH & NUTRITION AGENDA, since the innovation and renovation pipeline delivers against the core objective of the Company to lead in this area. Nestlé continues to foster INNOVATION PARTNERSHIPS with business partners and has established 385 COLLABORATION WITH UNIVERSITIES to ACCELERATE NHW INNOVATION. Additionally, through our NESTLE GROWTH FUND, we invested CHF 742 millions in 2009 in promising new businesses active in health, well-being and nutrition. See: - 2009 Creating Shared Value Report, p.28, at http://www.nestle.com - Nestlé Research website: http://www.research.nestle.com/ - Nestlé Research section in the Nestlé corporate website: http:// www.nestle.com/NestleResearch/GlobalRnD/GlobalRnD.htm R&D health & nutrition focus area defined. Please attach the relevant document and/or indicate website: Research priorities at Nestlé cover OBESITY PREVENTION and HEALTHY WEIGHT MANAGEMENT, as well as better ways of meeting NUTRITION REQUIREMENTS of consumer groups with SPECIFIC NEEDS. These include: healthy GROWTH for an optimal life capital, better maintainance for the AGING adult and BONE & JOINT health; BIOAVAILABILITY of key nutrients and technological solutions for safe and efficient food FORTIFICATION; SATIETY, appetite management, blood glucose management, and overall nutrition for improved PERFORMANCE, both physical and mental, as well as improved RECOVERY for the ill; NUTRIGENOMICS and personalised nutrition, ALLERGY prevention, protection via PROBIOTICS; consumer beliefs, attitudes, motivations and barriers in relation to ADOPTING A HEALTHIER DIET. See: - Nestlé Research website: http://www.research.nestle.com/ - Nestlé Research section in the Nestlé corporate website: www.nestle.com/nestleresearch Measurable "healthy nutrition" criteria defined for product innovations. Please attach the relevant document and/or indicate website: Nestlé PUBLISHED IN 2008 its comprehensive approach to nutritional profiling, driving both innovations and existing portfolio renovations. DETAILED PRINCIPLES & CRITERIA are available at: - http://www.nestle.com/CSV - http://www.nestle.com/Resource.axd? Id=6FFA7201-1191-48E2-BE23-4BE4769B226E - http://www.nestle.com/Resource.axd? Id=4655AC45-7578-4E94-9B43-1B66EBF32D79 - http://www.research.nestle.com/Science+in+Action/ NestleNutritionalProfiling/ - short document titled NESTLE NUTRITIONAL PROFILING IN BRIEF, as well as tables listing exact criteria, attached in the References section. Products reaching the Nestlé 'Nutritional Foundation' level are APPROPRIATE CHOICES in the context of a BALANCED DIET for the majority

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of people even when consumed very regularly. A product not achieving the Nestlé NF and consumed frequently may need to be rebalanced by other dietary choices, eg: frequent consumption of salty snacks calls for moderate use of table salt and other salty foods. Measurable "healthy nutrition" criteria defined to measure nutritional progress of existing product portfolio. Please attach the relevant document and/or indicate website: Nestlé PUBLISHED IN 2008 its comprehensive approach to nutritional profiling, driving both innovations and existing portfolio renovations. DETAILED PRINCIPLES & CRITERIA are available at: - http://www.nestle.com/CSV - http://www.nestle.com/Resource.axd? Id=6FFA7201-1191-48E2-BE23-4BE4769B226E - http://www.nestle.com/Resource.axd? Id=4655AC45-7578-4E94-9B43-1B66EBF32D79 - http://www.research.nestle.com/Science+in+Action/ NestleNutritionalProfiling/ - short document titled NESTLE NUTRITIONAL PROFILING IN BRIEF, as well as tables listing exact criteria, attached in the References section. Products reaching the Nestlé 'Nutritional Foundation' level are APPROPRIATE CHOICES in the context of a BALANCED DIET for the majority of people even when consumed very regularly. A product not achieving the Nestlé NF and consumed frequently may need to be rebalanced by other dietary choices, eg: frequent consumption of salty snacks calls for moderate use of table salt and other salty foods. r No such approaches. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Three additional points relating to Health & Nutrition Strategy at Nestlé: - PORTION GUIDANCE is a high priority in Nestlé's NHW strategy. Correct portion size and frequency of consumption are key public health considerations as populations struggle with rising obesity problems and/or deficient intake of essential nutrients, even in affluent societies. In addition to our NUTRITIONAL PROFILING based on appropriate portion sizes for the intended consumer, and our NUTRITION COMPASS on product packagings which guides consumers on appropriate usage of the product in a balanced diet, we develop our brands and products to precisely deliver portion guidance beyond on-pack portion size declaration. Early estimates at end 2009 indicated that products empowering consumers with portion guidance represented sales of at least CHF 21 billions (audited by Bureau Veritas and published in our 2009 Creating Shared Value Report, see documents). Review of the entire portfolio for thoroughly scoping products is underway, as well as more portion guidance research and specific training of product developers & marketers. - We have entirely reviewed and enriched the NUTRITION & HEALTH ASPECTS of our internal AUDIT process. - A new exhaustive digitally-supported MARKETING BEST PRACTICE PROGRAM is being implemented worldwide to align all brand builders on tools and processes for increasing the NUTRITION, HEALTH & WELLNESS VALUE OF PRODUCTS FOR CONSUMERS.

1.5.2 Health & Nutrition reformulation programme for existing products Please indicate the status of your company's health & nutrition product renovation/reformulation program for EXISTING PRODUCT LINES based on your company's defined "healthy nutrition" criteria. Please refer in the following answers to your private label products. Health & nutrition product reformulation program IMPLEMENTED: 42 % of existing products screened and reformulated by the end of fiscal year 2009. Please attach the relevant documents and/or website: See: 2009 Creating Shared Value Report, p.26, and pp. 32-33.

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r Health & nutrition product reformulation program in PLANNING PROCESS. Please attach the relevant documents and/or website:

__________

r No such program in place. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : An incremental 42% of our products have been assessed (vs. 40% in 2009) and 14% of those have been renovated (14% also in 2009). Figures gathered from approximately 75% of our product development centres are the following: 7252 PRODUCTS RENOVATED FOR NUTRITION OR HEALTH CONSIDERATIONS (vs. 6254 in 2008 with the same scope), of which 3878 with an increase in nutritious ingredients or essential nutrients, and 3374 with a reduction of sodium, sugars, trans fatty acids, total fat or artificial colourings. In 2009, we have continued deploying our strenghtened RECIPE MANAGEMENT SYSTEM, which will allow tracking of a wide variety of nutrition and health specifics when all ingredients and recipes worldwide are uploaded using common criteria and platform. This deployment is one of the top key initiatives DRIVEN BY THE EXECUTIVE BOARD (unpublished confidential information).

1.5.3 Health & Nutrition product innovation capabilities for NEW products Please indicate your company's health & nutrition PRODUCT INNOVATIONS (based on your company's "healthy nutrition" criteria definition) as a % of total product innovations. Criteria Number of "Healthy Nutrition" product innovations according to your company's definition % of health & nutrition product innovations of total product innovations 2006 2007 2008 944 2009 1019 Target for 2010

_____

_____

_____

_____

_____

67

68

_____

r No such product innovations. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : A 'product' can have several variants (formats, flavours, etc.) and be sold in many different countries with adapted labeling. For this reason, we track the SALES VOLUME of SKUs delivering health & nutrition for

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MORE ACCURACY. We believe this better reflects our INCREMENTAL NUTRITION & HEALTH IMPRINT ON CONSUMERS' DIETS worldwide. In 2009, we sold 1019 CHF Mio worth of new products meeting all Nutritional Foundation criteria or a factual and consumer-relevant nutritional competitive advantage against competitor products, vs. 944 CHF Mio in 2008 (7.9% increase).

1.5.4 Marketing Self-Regulation on Health & Nutrition Please indicate your company's approach towards marketing self-regulation with regards to health & nutrition information facts on product labelling. Please refer in the following answers to your private label products. Use of EU CIAA Nutrition Labelling Scheme, implemented for 91 % of total product lines. r Company-specific health & nutrition labelling scheme. Implemented for _ _ _ _ _ _ _ _ _ product lines. Please provide a brief description of the key elements and/or attach the relevant document:

_

% of total

____________________

r No corporate-wide self-regulation labelling approach in place. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : By end 2009, GDA (Guideline Daily Amount) front-of pack labeling was on 91% of all Nestlé packs reaching consumers in EUROPE (vs. 88% end 2008). Beyond the EU commitment, deployment of such labeling is promoted as best practice and SPREADING ACROSS NESTLE. See: - our 2009 Creating Shared Value Report, p. 43 - www.eu-pledge.eu Nestlé also launched in 2005 an on-pack NUTRITIONAL COMPASS ® to guide consumers through understanding nutrients, percents, and balanced usage of the product. At end 2009, this CONSUMER-ENGAGING NUTRITIONAL LABELING was featured on 98% OF ALL OUR PACKS WORLDWIDE. We aim to MAINTAIN at least this level, even with a HIGH RATE OF PACK RENEWAL and new product launches. See: - our 2009 Creating Shared Value Report, p. 41 - a factsheet about the Nutritional Compass ® attached in the References section. RESPONSIBLE ADVERTISING to CHILDREN has always been part of Nestlé's wider Consumer Communication Principles, which are aimed at encouraging moderation, healthy eating habits and physical activity without undermining the authority of parents or creating unrealistic expectations of popularity or success. We strengthened these Principles in July 2007 with two important provisions, which were fully implemented by the end of 2008: no advertising or marketing activity directed at children under 6 years old, and advertising for children aged 6-12 restricted to products that help children to achieve a healthy balanced diet, including clear limits for sugar, salt and fat contents. See: - our 2009 Creating Shared Value Report, pp. 42-43 Nestlé had, by end January 2009, joined five voluntary, independently monitored initiatives on responsible food and beverages advertising at a national and regional level. NESTLE's PERFORMANCE IN RELATION TO RESPONSIBLE ADVERTISING has been confirmed as VERY HIGH OVERALL, eg: 97.98% re IFBA commitment, 98.1% in EASA/WFA survey. See: - our 2009 Creating Shared Value Report, p. 43 Nestlé also developed and widely promoted in 2009 a much strengthened STANDARD (internal mandatory principles and processes ­ competitive information) for DEVELOPING NUTRITION, HEALTH AND WELLNESS CLAIMS. In parallel, we continually pursue our vast internal NUTRITION TRAINING PROGRAM (NQ ®, for Nutrition Quotient) and had reached MORE THAN 121 000 EMPLOYEES AROUND THE WORLD by end 2009. In view of their key role in adding more nutrition, health and wellness in products and communications, MARKETERS now receive

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regular `NQ Boosters' on top of whole-day workshops to keep updated. See: - our 2009 Creating Shared Value Report, p. 41

1.5.5 MSA: Health & Nutrition In this section we include a performance score on the Corporate Sustainability Monitoring with the objective to verify the company's involvement and management of crisis situations that can have a damaging effect on reputation. The evaluation will be filled in by the responsible analyst of your industry. No additional information is required from your company. Please disregard the comment box. _ _ _ _ _ _ _ _ _ _ Comment :

________________________________________________ ________________________________________________ _______________________________________

1.6 Strategy for Emerging Markets

1.6.1 Revenues and strategy in emerging markets Please indicate your company's percentage of revenues generated in emerging markets compared to total corporate revenues. Please attach your company's business development strategy for emerging markets. Year 2006 2007 2008 2009 Target 2010 Explain trend and target 2010

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Revenues

30

35

35

35

35

Emerging markets account for 82% of the world's population* and 35% of Nestlé sales. (*Based on data from Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2008 Revision, http:// esa.un.org/ unpp). Referring to slide 3 of the 2010 Management presentation (in attached reference documents), you can see our historic results and future projections for sales from Emerging Markets. We anticipate 45% of our sales to come from Emerging Markets by 2020.

r Company operates only on local or national level. Please indicate revenue growth per year:

__________

r Not applicable. Please provide explanations in the comment box below.

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r Not known Comment : Business development strategies are tailored by market. See Ninho Rode Brasil UR link in references to see creative approach to reach 18 communities in the poor, highly populated northeast region of Brazil - giving families a unique, memorable experience while sampling and familarizing them to Nestle products and helping local retailers develop Nestle sales.

1.6.2 Employement of expatriate people in Emerging Markets Please indicate your company's target for the maximum percentage of expatriate employees working in emerging markets: r Category executives/top managers middle/general managers firstline/supervisors specialist groups Percent of expatriate employees

__________ __________ __________ __________

Not applicable. Please provide explanations in the comment box below. r Not known Comment : A target is not suitable for Nestlé given the complexity of the business, decentralized nature of organization and sheer number of countries and emerging markets where Nestlé does business. Nestlé's approach is to keep track of expatriate numbers in emerging markets and to appoint the appropriate management to select roles in emerging markets. Nestlé has more than 278 000 employees worldwide in more than 100 countries (Europe 33.9 % - Americas 38 %, Asia, Oceania and Africa 28.1 %). Nestlé has a total of 2'100 expatriates, 61 % of them are based in developed markets, 39 % in emerging countries. Expatriates of all categories (Executive/Top Managers, Middle/General Managers, Firstline/Supervisors and Specialists) based in emerging countries represent globally 0.60% of the total Nestlé headcount in these markets (1.8 % of their white collar population). Nestlé's expatriate population is very diverse. Out of the 2'100 expatriates, 70 % are from developed markets, 30 % from emerging countries. Both categories are appointed in developed or emerging markets, based on their competencies, skills, professional experience or development needs. Additionally, an increasing number of employees from emerging markets are sent on short term missions abroad for further exposure and knowledge transfer, to both emerging or developed markets and in particular to our Headquarters in Switzerland where 40 % of the present mission assignees come from emerging markets. Our global presence, high international mobility, cultural diversity, training and transfer of best practices help ensure a positive blend of people and talent to support sustained growth in all the markets where Nestlé operates.

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1.6.3 Internal Management of Knowledge / Processes / Technology transfer How does your company ensure the transfer of knowledge, skills and technology from headquarters to its emerging markets operations? Please provide supporting documents. Standardized information systems and technology implemented for 95 % of total Emerging Market revenues. Shared processes including business excellence best-practices implemented for 100 % of total Emerging Market revenues. Data standards and data management implemented for 95 % of total Emerging Market revenues. Headquarter responsibility for management skills training for local top & middle management level, please provide supporting documents. r No systematic knowledge transfer approach in place. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Emerging Markets (EM) benefit as any other market from the WORLDWIDE KNOWLEDGE AND TRAINING NETWORKS. NESTEC (Worldwide HQ Technical Assistance to Nestlé Operating Companies in the countries) ensures the adequate knowledge transfer from HQ to the Markets. Nestec covers all functions & categories of our businesses: Marketing & Sales, Procurement, Supply Chain, Technical & Production, R&D, Finance & Control, Human Resources, IS/IT. EMs have access information and knowledge on NESTEC INTRANET and the various REPOSITORIES. All Functions use SharePoints/TeamRooms to share knowledge amongst Expert Communities IS/IT GLOBE is now largely implemented across all Nestlé business operations and is based on 3 pillars: DATA STANDARDISATION; implementation of BEST PRACTICES; implementation of a STANDARD INFORMATION SYSTEM (SAP). In April 2009, GLOBE implementation in EM was 95% of NPS (see detailed calculation in reference). PEOPLE / TRAINING & DEVELOPMENT - HR is structured globally for clear vertical channel of knowledge. Corporate HR, & EMs mirror Centres of Expertise that enables Functional expertise & communities sharing knowledge vertically and horizontally (Example: Talent management at Corporate & Market level). Every year EMs also produce People Plans that enable them to communicate Business & People needs up the chain E-LEARNING PROGRAMMES, EM have access to the same learning curriculum and they are following the same pattern of education as other countries. Among hundreds of general e-courses offered at global level on all functional areas available in 5 languages, there are 294 especially developed for Nestlé. NESTLE "RIVE REINE" INTERNATIONAL TRAINING CENTER - In 2009 offered 95 programs (one or two weeks duration each). 2657 employees from all over the world attended. 44% of those participants came from EM. Out of the 95 programs, 45 took place at Rive-Reine itself and 50 were decentralized in various Markets, 26 of which were delivered in emerging markets, whereby several of their local managers also play the role of instructors/speakers, emulating the spirit of Rive-Reine courses where 75% of speakers are internal experts from Headquarters including all members of the Executive Board. EXTERNAL TRAINING PROGRAMMES In 2009, 95 managers followed attended IMD, our preferred business school in Switzerland. 33 of them came from EM. At local level, 23 markets (from which 10 EM) use other business schools. INTERNATIONAL TRANSFERS AND PROJECTS - used extensively to exchange knowledge and skills. 39% of expatriates at the Centre HQ are from

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EM while 63% of expatriates from Switzerland are assigned to EM. SHORT TERM MISSION ASSIGNMENTS 6-12 months duration. In 2009, 40% of these missions assignments in Vevey were from EM.

1.6.4 Product adaptation for Emerging Markets Does your company develop and produce Emerging Markets specific products that meet basic local needs? Please give examples and attach/provide supporting documents. Yes, applied for _ _ _ _ _ _ _ _ _ _ % of product lines compared to total product lines sold in emerging markets. r Yes, implemented on ad-hoc basis but no figures available. r Not yet, but planned by year _ r No r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Using science-based solutions, we seek to improve quality of life through food and diet, contributing to the health and wellbeing of consumers, including those at the "base of the income pyramid" through products with higher nutritional value at lower prices. We also aim to generate greater awareness, knowledge and understanding among consumers. In 2009 Nestle's Popularly Positioned Products amounted to CHF 8.8 bio., representing 3950 individual product stock keeping units (SKUs) with continued double-digit sales growth. Our strategy to grow in emerging markets is about meeting the needs of the lower level income groups for nutrition, pack size, pricing, distribution and communication. Over 500 initiatives are underway. With many consumers suffering from key micronutrient deficiencies (iron, vitamin A, zinc, iodine), our products help address needs based on micronutrient deficiency mapping done with local health authorities. For example we: - sold 100,000 tons of iodine-enriched bouillon in 2008 making us the world's largest carrier of iodine - sold 94 billion servings of iodine fortified products worldwide in 2009 (19 billion iodine-fortified Maggi cubes are sold in Central West Africa alone) - offer fortified, affordable milks in 60 countries (equallng 17.2 billion servings; 44 billion iron servings, 29 billion Vitamin A servings, 13 billion Zinc servings). Nestle invests CHF 12 million a year into direct R&D for dehydrated and liquid milk-based products, and this know-how is applied in affordable milks for emerging markets. See URL links in references to short articles on (1) Nutritional profiling, (2) micronutrient fortification, (3) milk fortification Africa, (4) access to affordable protein, as well as section starting on page 29 of the 2009 CSV report. Additional examples: - See URL link to "Developing products for local tastes in references". - Affordable, nutritious growingup milk launched in several countries, developed to bridge the gap of the biggest nutrient deficiencies of children in emerging markets. For example, Bearbrand Instant powder milk from the Philippines, enhanced with iron, vitamin A, Iodine, vitamin C and zinc is sold at only 8 pesos per serving (sachet of 26gram , 0.17 US$) and widely available in traditional neighborhood stores (see reference 1). - All family cereal porridge in various countries in Central and West Africa. For example Golden Morn in Nigeria which provides energy, protein, calcium and fibers and is sold at an affordable price (index of 80 versus main competitor, NASCO) (see reference 2). Golden Morn has also been introduced in Ghana and Ivory Coast and 3 other African markets. - Nestum all family cereal from Malaysia, sold only in traditional outlets, fortified with vitamins and minerals in line with Malaysia nutrition plan. Sold at less than 0.40US$ per serving (see reference 3) - Brazil factory in Feira de Santana is primarily dedicated to the manufacturing, packaging, and distribution of emerging market products, aimed at the 50 million consumers in the north east of Brazil (see press release, reference 4 and 5). The factory has created 2000 direct and indirect

_________

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jobs in this economically-deprived region of Brazil. Apart from the development, manufacturing and marketing of products targeted to emerging markets, Nestle is also focusing attention to the promotion of good nutrition in deprived areas in these markets. Nutromovil, a mobile nutrition unit in Peru visits consumers near their home giving advice on nutrition and diet. Similar concepts have been developed in various countries in Latin America, among which Peru, Chile, Venezuela, Colombia, Mexico and the Dominican Republic (see reference 6). Also see reference URL links to: (1) Nutrikid program in Hungary (2) Healthy Thai Kids and (3) Nutrir Brazil as examples of Nestle's extended Healthy Kids program which has already reached 10 million school-age children.

1.6.5 Pricing strategy & responsibility At which organizational level does your company develop the pricing strategy for emerging markets products? Please give examples and attach/provide supporting documents. Corporate level t Regional level Country level r No explicit pricing strategy for emerging markets. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Nestle has developed a general policy regarding the opportunity in emerging markets, laid down in a set of guidelines addressing 3 levers: · acceptability · affordability · availability The 2nd guideline, affordability, addresses the pricing strategy of products in emerging markets: · The price point has to be entirely driven by consumer value and consumer insights · Pricing of products targeted to the low income consumers should not only be relative to the price of other available food products, but each product should be priced in relation to a household's total disposable cash and consumption priorities. The final local pricing decision is taken at Market Head level and is driven mainly by consumer and shopper insight. We believe that affordability must be made without compromise to quality and is only a first step towards designing products that meet the needs of emerging consumers.

1.6.6 Measuring purchasing power Does your company measure local purchasing power of low income consumers (<10 USD/day) to ensure affordability of your products? Yes, applied for 100 % of the Emerging Market countries where company is present. r Yes, implemented on ad-hoc basis but not systematically.

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r Not yet, but planned by year _ r No

_________

r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Nestle uses several sources of information regarding purchasing power of the local market. Every market has access to the income-population distribution by country and other relevant data made available through the Nestle intranet. Additional local research is used to obtain insight in the purchasing power of the target group, low income consumers. This insight serves as the basis for developing of emerging markets specific products. See slide 4 in the Emerging Markets Management conference presentation (attached as document to Question 1.6.1 regarding Revenues and Strategy) showing our global analysis indicating that there will be approximately 1.4 billion more consumers in 2016 who will earn over 3000 USD annually and who are likely consumers of Nestle products.

2 Environmental Dimension

2.1 Environmental reporting

2.1.1 Quality of Environmental Reporting In this section we evaluate the content, context and coverage of the environmental reporting included in other reports or on your website (e.g. own publication, part of a sustainability/CSR report or of annual report). The evaluation will be filled in by the responsible analyst of your industry. Please proceed to the next question. Comment :

________________________________________________ ________________________________________________ _______________________________________

2.1.2 Coverage - Environmental 2.1.3 Environmental Reporting - Assurance 2.1.4 Environmental Reporting - Qualitative Data 2.1.5 Environmental Reporting - Quantitative Data

2.2 Environmental Policy/Management System

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2.2.1 Corporate Environmental Policy Has your company adopted a corporate environmental policy? (whether stand alone or integrated into a broader policy statement). Please attach the policy or indicate where it can be found on the web. Yes, documented in: The Nestlé Policy on Environmental Sustainability Other attached documents: Nestlé Creating Shared Value Report 2009 The Nestlé Corporate Business Principles The Copenhagen Communiqué on Climate Change The Nestlé Commitments on Water Link to internet information: http://www2.nestle.com/CSV/WaterAndEnvironmentalSustainability/Pages/ WaterAndEnvironmentalSustainability.aspx r No r Policy is in development and to be implemented within the next _ r Not known Comment : Following the early years of Nestlé's commitment to the environment, we published in 1991 our first global Nestlé Policy on the Environment. This Policy defined Nestlé's worldwide strategy on environmental issues and stated our long-standing commitment to environmentally sound business practices. The Nestlé Policy on the Environment was updated in 1999, confirming and strengthening our commitment. It reflects a world where preserving natural resources and minimising waste has become part of the day-to-day activities in Nestlé operations, as well as an integral element in achieving global competitiveness. The Policy was updated in 2008, and now is named The Nestlé Policy on Environmental Sustainability. It is widely communicated - both internally and externally - to all interested parties. It helps, in a positive way, to influence others with whom Nestlé has relationships throughout the supply chain and beyond. The Nestlé Corporate Business Principles set out the basic rules that we follow to make sure that the highest standards of conduct are maintained. These were updated in 2004 and include all ten principles of the UN Secretary General's Global Compact for Business, regarding labour standards, human rights and the environment. Nestlé also adheres to the International Chamber of Commerce (ICC) Business Charter for Sustainable Development. The company has implemented both public and internal environmental policies. Besides, we published the Nestlé Commitments on Water, at the 4th World Water Forum in Mexico in Feb. '06, which include the reduction of the amount of water used per kilo of food and beverage produced and taking care that water we discharge into the environment is clean, as well as the respect of local water resources, the promotion of water conservation among farmers and collaboration with others on water conservation and access. The Company also has signed the UN Global Compact CEO Water Mandate and the Bali Communiqué by The Prince of Wales Corporate Leaders Group on Climate Change in 2007. In addition to initiatives such as the Sustainable Agriculture Initiative of the Food Industry (SAI-Platform), through which members engage with their suppliers and help them to improve their environmental performance, Nestlé also shares its strategy and results through participation in the Carbon Disclosure Project (CDP) since its creation. This policy of sharing environmental knowledge and best practice is best seen in the company's award-winning Greening the Supply Chain (GSC) programme in the Philippines, which has helped 182 business partners develop their own environmental management systems (EMS). Ahead of global negotiations about climate change held in Copenhagen in December 2009, The Prince of Wales' Corporate Leaders Group on Climate Change, of which Nestlé is a member, published a short statement calling for an ambitious, robust and equitable global deal on climate change that responds credibly to the scale and urgency of the crises facing the world today. The Communiqué, launched at the UN General Assembly Climate Summit in NewYork City in September, was signed by Nestlé's Chief Executive Officer Paul Bulcke. The statement calls for a global greenhouse gas emissions cap and countries to develop long-term reduction plans for 2013­2050 with interim targets. A similar call as been issued by CIAA, the European Food Industry Association, of which the Environmental Sustainability

_________

months.

r Not applicable. Please provide explanations in the comment box below.

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Committee is chaired by Nestlé. Nestlé is also a strategic partner of the University of Cambridge Programme for Sustainability Leadership.

2.2.2 Corporate Environmental Policy, areas Please indicate which of the following options are covered by your group-wide environmental management policy/ procedures. Please attach the policy or indicate where it can be found on the web: Attached documents: The Nestlé Policy on Environmental Sustainability 2009 Creating Shared Value Report Nestlé and Water: Sustainability, Protection and Stewardship The Nestlé Supplier Code Corporate Business Principles Environmental impact of company's own operations. Environmental impacts/risks of products & services. Suppliers & service providers (e.g. contractors). Other key business partners (e.g. non-managed operations, JV partners, etc.) please specify: JV partners r No environmental policy. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Please also see sections: 2.6. form Packaging, 2.7 from the Raw Material Sourcing and 3.7 from the Standards for Suppliers

2.2.3 EMS: Certification/Audit/Verification Please indicate how your environmental management system is verified/audited/certified: ISO 14001, JIS Q 14001, EMAS certification. Third party verification/audit/certification by specialized companies. Verification/audit/certification by company-own specialists from headquarter. r Not verified/audited/certified. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : In the larger framework of NCE (Nestlé Continuous Excellence) and NIMS (Nestlé Integrated Management Systems), implementation of our ISO 14001 compatible with NEMS (Nestle Environmental Management System) is mandatory throughout Nestlé. The Nestlé Environmental Management System has been implemented throughout the Company since 1996, helping us to achieve continuous performance improvement and contribute

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towards sustainable development. 2009 marked the thirteenth anniversary of the NEMS which has served as a solid basis for continuously improving our environmental performance. We have further reinforced our leadership position by seeking independent certification of all our factories to the internationally recognised standards. On the 31st of May 2010, 398 factories hold an ISO 14001 certificate with the remaining scheduled to obtain their certificate during this year. Nestlé has been committed to environmentally sound businesses practices throughout the world since its early days. The Nestlé Policy on Environmental Sustainability defines our world-wide strategy on environmental issues in response to the environmental commitments made in the Nestlé Corporate Business principles. The NEMS is a a key component of this strategy. The objective of NEMS are to: # ensure compliance with environmental legislation and Nestlé environmental requirements, # continuously improve the environmental performance of Nestlé, # enable certification of factories against ISO 14001 international standard, # contribute to sustainable development. NEMS is completely aligned with the requirements of the international standard ISO 14001:2004 #Environmental management system # Requirements with guidance for use#. Every Nestlé activity with a significant impact on the environment must be covered by an environmental management system based on requirements of NEMS. Each plant is audited on an annual basis. Additionally, all Nestlé factories shall obtain and mantain third-party certification against this standard. NEMS applies to the management of significant environmental aspects and impacts and environmental performance in all Nestlé Markets, Globally and Regionally Managed Businesses and Plants. This includes all Nestlé activities along the supply chain which may have either a direct or indirect impact on the environment, including procurement, supply, manufacturing, packaging, distribution, research and product development, marketing and administration. Suppliers, including contract farmers, manufacturers and distributors, as well as minority joint ventures, are not required to implement NEMS. Nestlé controls the environmental aspects of these activities relevant to the Company through the NEMS components concerning the supply function, including communication, operational control and audits. Compliance with all NEMS requirements is mandatory. Where these requirements are not currently met, an action plan must be established and implemented to achieve compliance. For new acquisitions, a time frame and action plan for achievieng compliance with these requirements shall be established. In addition, all our factories have been audited by an independent third party as part of our CARE Program to verify compliance with our Corporate Business Principles including the Nestlé Policy on the Environment. Please see the Bureau Veritas Independent Assurance Statement in: http://www2.nestle.com/Common/NestleDocuments/Documents/Creating%20Shared %20Value/About_reporting/BV_statement.pdf

2.2.4 EMS: Coverage of certification Please indicate the percentage of sites in terms of revenues generated from business operations under management control verified/audited/certified according to these systems: 100 % of revenues generated from business operations under management control. r Not verified/audited/certified. r Not applicable. Please provide explanations in the comment box below. r Not known Comment :

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________________________________________________ ________________________________________________ _______________________________________

2.2.5 MSA Environmental Management In this section we include a performance score on the Corporate Sustainability Monitoring with the objective to verify the company's involvement and management of crisis situations that can have a damaging effect on reputation. The evaluation will be filled in by the responsible analyst of your industry. No additional information is required from your company. Please disregard the comment box. _ _ _ _ _ _ _ _ _ _ Comment :

________________________________________________ ________________________________________________ _______________________________________

2.3 Operational Eco-Efficiency

2.3.1 EP - Direct Greenhouse Gas Emissions Please provide your company's direct greenhouse gas emissions (DGHG SCOPE 1) for the part of your company's operations for which you have a reliable and auditable data acquisition and aggregation system. Please refer to the information button for additional information. DGHG SCOPE 1 Unit of analysis FY 2006 FY 2007 FY 2008 FY 2009

Direct metric tons greenhouse gas of CO2 emissions equivalents Data coverage percentage (e.g. as % of production of revenues, volume employees, etc.)

4050000 metric 3920000 metric 4104488 metric 3976158 metric tons CO2e tons CO2e tons CO2e tons CO2e

100

100

100

100

t In case the data coverage above is less than 100%, please provide best possible estimates of your company's total DGHG SCOPE 1 emissions and explain what was included in your estimates. DGHG SCOPE Unit of analysis FY 2006 FY 2007 FY 2008 FY 2009 1

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Estimated total DGHG emissions for the entire corporation (for 100% data coverage) Please describe what was added in the estimates (e.g. business units, geographical coverage)

metric tons of CO2 equivalents

______

______

______

______

_____

_____

_____

_____

THIRD PARTY VERIFICATION The above data has been verified by the following organization: Bureau Veritas Please see the Bureau Veritas Independent Assurance Statement in: http://www2.nestle.com/Common/NestleDocuments/ Documents/Creating%20Shared%20Value/About_reporting/BV_statement.pdf r Not verified r We do not track direct greenhouse gas emissions r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Bureau Veritas Solutions has been engaged to provide external assurance to the stakeholders of Nestlé SA (Nestlé) over the provision of information relating to its Creating Shared Value (CSV) reporting and programmes in the "Creating Shared Value" section of Nestlé website. Building on previous years, the assurance process was designed to understand how Nestlé identifies its material risks and emerging issues in a continually changing environment, and to challenge Nestlé's in its CSV implementation, performance and reporting. The process has involved interviews and follow-up communication with 48 key management staff predominantly at Nestlé's Head Office in Switzerland, visits (by Bureau Veritas' global auditor network) to nine operational factories spanning eight countries, to evaluate SHE data management, reliability and accuracy and a visit to Nestlé Brazil to review the understanding and implementation of CSV policies and related processes presented within the CSV section of the website at a market level. Please see the Bureau Veritas Independent Assurance Statement in: http:// www2.nestle.com/Common/NestleDocuments/Documents/Creating%20Shared%20Value/About_reporting/ BV_statement.pdf Nestlé's priorities on climate change are to continue to: - Improve energy efficiency throughout our operations - Expand our usage of renewable energy Our energy efficiency efforts also translate into carbon reductions, though historically, we have reduced carbon more than energy due to a number of our factories switching to cleaner fossil fuels such as natural gas, and also renewable sources of energy. We plan to further decouple energy consumption and carbon emissions in the future. These efforts have led to a reduction in our direct greenhouse gas emissions by 3.1% from 2008 levels to 3.98 million tonnes of CO2eq, or 96.57 kg of CO2eq per tonne of product. This equates to a 0.74 million tonne (16%) reduction, or a 48% reduction per tonne of production, in the 10 years from 2000, during which our production volume increased by 63%. It means that both absolute total direct greenhouse gas emissions and greenhouse gas emissions per tonne of product

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have been continuosly decreasing over the last ten years, by 15.8% and 48.2% respectively. Our indirect CO2 emissions from purchased energy remained stable at 3.0 million tonnes compared to 2008.

2.3.2 EP - Indirect Greenhouse Gas Emissions Please provide your company's indirect greenhouse gas emissions from energy purchased (purchased and consumed, i.e. without energy trading) (IGHG SCOPE 2) for the part of your company's operations for which you have a reliable and auditable data acquisition and aggregation system. Please refer to the information button for additional information. IGHG SCOPE 2 Unit of analysis Indirect greenhouse gas emissions from energy purchased and consumed (scope 2) metric tons of CO2 equivalents FY 2006 FY 2007 FY 2008 FY 2009

______

3038840 metric 3002178 metric 2998935 metric tons CO2e tons CO2e tons CO2e

Data coverage percentage (e.g. as % of production of revenues, volume employees, etc.)

______

100

100

100

t In case the data coverage above is less than 100%, please provide best possible estimates of your company's total IGHG SCOPE 2 emissions and explain what was included in your estimates. IGHG SCOPE 2 Unit of analysis FY 2006 FY 2007 FY 2008 FY 2009 Estimated total metric tons IGHG emissions of CO2 from energy equivalents purchased and consumed for the entire corporation (for 100% data coverage) Please describe what was added in the estimates (e.g. business units, geographical coverage) THIRD PARTY VERIFICATION

______

______

______

______

_____

_____

_____

_____

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The above data has been verified by the following organization: Bureau Veritas Please see the Bureau Veritas Independent Assurance Statement in: http://www2.nestle.com/Common/NestleDocuments/ Documents/Creating%20Shared%20Value/About_reporting/BV_statement.pdf r Not verified r We do not track indirect greenhouse gas emissions r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Bureau Veritas Solutions has been engaged to provide external assurance to the stakeholders of Nestlé SA (Nestlé) over the provision of information relating to its Creating Shared Value (CSV) reporting and programmes in the "Creating Shared Value" section of Nestlé website. Building on previous years, the assurance process was designed to understand how Nestlé identifies its material risks and emerging issues in a continually changing environment, and to challenge Nestlé's in its CSV implementation, performance and reporting. The process has involved interviews and follow-up communication with 48 key management staff predominantly at Nestlé's Head Office in Switzerland, visits (by Bureau Veritas' global auditor network) to nine operational factories spanning eight countries, to evaluate SHE data management, reliability and accuracy and a visit to Nestlé Brazil to review the understanding and implementation of CSV policies and related processes presented within the CSV section of the website at a market level. Please see the Bureau Veritas Independent Assurance Statement in: http:// www2.nestle.com/Common/NestleDocuments/Documents/Creating%20Shared%20Value/About_reporting/ BV_statement.pdf Nestlé's priorities on climate change are to continue to: - Improve energy efficiency throughout our operations - Expand our usage of renewable energy Our energy efficiency efforts also translate into carbon reductions, though historically, we have reduced carbon more than energy due to a number of our factories switching to cleaner fossil fuels such as natural gas, and also renewable sources of energy. We plan to further decouple energy consumption and carbon emissions in the future. These efforts have led to a reduction in our direct greenhouse gas emissions by 3.1% from 2008 levels to 3.98 million tonnes of CO2eq, or 96.57 kg of CO2eq per tonne of product. This equates to a 0.74 million tonne (16%) reduction, or a 48% reduction per tonne of production, in the 10 years from 2000, during which our production volume increased by 63%. Our indirect CO2 emissions from purchased energy remained almost stable at 3.0 million tonnes compared to 2008. Nevertheless, since 2007, first time these figures were published, they have been slightly reducing.

2.3.3 EP - Energy Purchased Please provide your company's electrical and thermal energy purchased (purchased and consumed, i.e. without energy trading) for the part of your company's operations for which you have a reliable and auditable data acquisition and aggregation system. In case you are reporting total consumption, indicate it in the comment box. Please refer to the information button for additional information. ENERGY PURCHASED Electricity purchased Unit of analysis FY 2006 FY 2007 FY 2008 FY 2009

megawatt hours 6345740 MWh (MWh)

6291504 MWh

6300964 MWh

6290695 MWh

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Thermal energy megawatt hours 491428 MWh purchased (MWh) (heat, steam) Data coverage percentage regarding of production energy volume purchased (e.g. as % of revenues, employees, etc.) 100

497681 MWh

431698 MWh

435100 MWh

100

100

100

t In case the data coverage above is less than 100%, please provide best possible estimates of your company's total energy consumption and specify the missing coverage. ENERGY Unit of analysis FY 2006 FY 2007 FY 2008 FY 2009 PURCHASED Estimated electricity purchased for the entire corporation (for 100% data coverage) Estimated thermal energy purchased for the entire corporation (for 100% data coverage) Please describe what was added in the estimates (e.g. business units, geographical coverage) megawatt hours (MWh)

______

______

______

______

Megawatt hours (MWh)

______

______

______

______

_____

_____

_____

_____

THIRD PARTY VERIFICATION The above data has been verified by the following organization: Bureau Veritas Please see the Bureau Veritas Independent Assurance Statement in: http://www2.nestle.com/Common/NestleDocuments/ Documents/Creating%20Shared%20Value/About_reporting/BV_statement.pdf r Not verified r We do not track energy consumption r Not applicable. Please provide explanations in the comment box below.

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r Not known Comment : The reported data in previous CDP Questionnaires in the field of total Energy consumed, Electricity purchased was the total energy consumption minos . In 2010, the reported data corresponds to the electricity purchased minos the total thermal energy purchased, that is why the data is different. Data reported before: Electricity purchased 2006: 23400000 MWh Electricity purchased 2007: 23200000 MWh Electricity purchased 2006: 23700000 MWh The 2006 reported data has been estimated on the basis of the total energy consumed. From 2007 onwards, the reported data corresponds to the actual amounts of electricity purchased and thermal energy purchased. Bureau Veritas Solutions has been engaged to provide external assurance to the stakeholders of Nestlé SA (Nestlé) over the provision of information relating to its Creating Shared Value (CSV) reporting and programmes in the "Creating Shared Value" section of Nestlé website. Building on previous years, the assurance process was designed to understand how Nestlé identifies its material risks and emerging issues in a continually changing environment, and to challenge Nestlé's in its CSV implementation, performance and reporting. The process has involved interviews and follow-up communication with 48 key management staff predominantly at Nestlé's Head Office in Switzerland, visits (by Bureau Veritas' global auditor network) to nine operational factories spanning eight countries, to evaluate SHE data management, reliability and accuracy and a visit to Nestlé Brazil to review the understanding and implementation of CSV policies and related processes presented within the CSV section of the website at a market level. Please see the Bureau Veritas Independent Assurance Statement in: http://www2.nestle.com/Common/NestleDocuments/Documents/Creating%20Shared%20Value/About_reporting/ BV_statement.pdf In addition to operational efficiency improvements and energy-saving equipment, we will continue to explore the industrial feasibility of switching to more renewable energy sources to reduce our CO2 emissions and our reliance on fossil fuels; 12.2% of our total on-site energy use has come from renewable sources. A number of projects have come on-stream in 2009 which will increase our overall proportion of energy derived from renewable resources. For example, a landfill gas project at Solon, Ohio, USA, captures methane from a local landfill site and uses it as an energy source. Meanwhile, at our Bugalagrande factory in Colombia, the installation of our latest spent coffee grounds fueled boiler allows the recovery of energy from this biomass. This renewable fuel provides 13% of the total energy required in the factory and has 95% lower CO2 emissions than the fossil fuel it replaces. Nestle has been implementing this type of technology for the last 30 years, and of our 27 coffee factories where spent grounds are a by-product, 21are equipped with such technology. We are also planning to replace the boiler at Nestlé France's facilities in Challerange with a wood-fired boiler. The project will result in an 85% reduction in the factory's CO2 footprint, and save an estimated 9 million over 10 years. The timing will also allow us to benefit from government subsidies available for renewable energy schemes, which will cover 40% of the cost of the project. The wood supply plan has been approved by the local authorities and is considered to be fully compatible with local wood resources management. As Challerange is a key site for the supply of quality creamer for Nescafé Dolce Gusto, this project will be a further opportunity for us to communicate about sustainability through our brands.

2.3.4 EP - Water Please provide your company's total water withdrawal (GRI EN8) including a breakdown of the three subitems (salt/brackish water, municipal water, water from other sources), as well as the amount of water discharged at equivalent quality as the raw water extracted. Please also click on the information icon to see what denominator you should use for the data to be normalized for your industry and provide the amount for the following years in the industry-specific denominator row of the table. Water Consumption Unit of analysis Financial Year 2006 Financial Year 2007 Financial Year 2008 Financial Year 2009

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Total Water Million cubic Withdrawal (GRI meters EN8, process and cooling water) (i.e. sum of 3 subitems below) > Subitem: Total Million cubic salt / brackish meters water withdrawn > Subitem: Total Million cubic municipal water meters supplies (or from other water utilities) > Subitem: Total Million cubic water from all meters other sources Water returned Million cubic to the source meters of extraction at similar or higher quality as raw water extracted

155 Million cubic meters

157 Million cubic meters

147 Million cubic meters

143 Million cubic meters

0 Million cubic meters

0 Million cubic meters

0 Million cubic meters

0 Million cubic meters

0 Million cubic meters

40 Million cubic meters

42 Million cubic meters

47 Million cubic meters

155 Million cubic meters

117 Million cubic meters

105 Million cubic meters

96 Million cubic meters

118 Million cubic meters

101 Million cubic meters

96 Million cubic meters

91 Million cubic meters

Industry-specific See information 38240000 denominator icon for the denominator used for your industry Data Coverage 100 (e.g. as % of revenues, employees, etc.) 100

41070000

41060000

41170000

100

100

100

t In case the data coverage above is less than 100%, please provide best possible estimates of your company's total water withdrawal and explain what was included in your estimates Unit of analysis Financial Year Financial Year Financial Year Financial Year 2006 2007 2008 2009

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Estimated total water withdrawal for the entire corporation (for 100% data coverage) Please describe what was added in the estimates (e.g. business units, geographical coverage)

Million cubic meters

______

______

______

______

_____

_____

_____

_____

THIRD PARTY VERIFICATION The above data has been verified by the following organization: Bureau Veritas Please see the Bureau Veritas Independent Assurance Statement in: http:// www2.nestle.com/Common/NestleDocuments/Documents/Creating%20Shared%20Value/ About_reporting/BV_statement.pdf r Not verified r We do not track water consumption r Not applicable. Please provide explanations in the comment box below. r Not known Comment : In the field of Water returned to the source of extraction at similar or higher quality as raw water extracted, we have reported the total water discharge. Bureau Veritas Solutions has been engaged to provide external assurance to the stakeholders of Nestlé SA (Nestlé) over the provision of information relating to its Creating Shared Value (CSV) reporting and programmes in the "Creating Shared Value" section of Nestlé website. Building on previous years, the assurance process was designed to understand how Nestlé identifies its material risks and emerging issues in a continually changing environment, and to challenge Nestlé's in its CSV implementation, performance and reporting. The process has involved interviews and follow-up communication with 48 key management staff predominantly at Nestlé's Head Office in Switzerland, visits (by Bureau Veritas' global auditor network) to nine operational factories spanning eight countries, to evaluate SHE data management, reliability and accuracy and a visit to Nestlé Brazil to review the understanding and implementation of CSV policies and related processes presented within the CSV section of the website at a market level. Please see the Bureau Veritas Independent Assurance Statement in: http://www2.nestle.com/Common/NestleDocuments/Documents/ Creating%20Shared%20Value/About_reporting/BV_statement.pdf Nestlé aims to be the most efficient water user among food manufacturers. Both absolute total water withdrawal and water withdrawal per tonne of product have been continuously decreasing over the last ten years, by 33% and 58.8% respectively. In 2009, the Company withdrew 143 million m3 of water, ­ a decrease of more than 3.2% compared to 2008. This equates to 3.47 m3 per tonne of product, 3.5% down on the 2008 level or 3.8% when adjusted for constant production volume; the difference coming from changes in product mix evolving towards products with more added value, and from acquisitions and divestitures. Nestlé has also reduced its water withdrawal by 33% since 2000, while our food and beverage production volume increased by 63%. Our total water withdrawal rate has been improving over recent years as a result of both extensive efforts by Nestlé engineers, environmental professionals and our employees to reduce water consumption in our operations, and the changing product mix within Nestlé's portfolio. Our goal is to reduce consumption on a comparable basis by a further 10­15% over the next five years and we plan to develop

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more sophisticated and localised metrics for this important area. In the face of growing concerns regarding water scarcity and its impact, especially on farmers, with estimates that the livelihoods of one-third of the world's population will be affected by water scarcity by 2025, Nestlé's focus has evolved from simply reducing our water withdrawal in our operations to prioritising our efforts and investments to where water is especially scarce. Most of the water we withdraw is returned back to nature, including the water treated in our wastewater treatment plants. We reported total water discharge in the field of water returned to the source of extraction at similar or higher quality as raw water extracted.

2.3.5 EP - Waste Generation Please provide your company's total waste generated (not reused or recycled) for the part of your company's operations for which you have a reliable and auditable data acquisition and aggregation system. Please refer to the information button for additional information. WASTE GENERATION Total waste generated Unit of Analysis FY 2006 metric tons 400000 metric tonnes 100 FY 2007 370000 metric tonnes 100 FY 2008 410000 metric tonnes 100 FY 2009 360000 metric tonnes 100

Data coverage percentage of (e.g. as % revenues of revenues, employees, etc.)

t In case the data coverage above is less than 100%, please provide best possible estimates of your company's total waste generated and explain what was included in your estimates. WASTE Unit of analysis FY 2006 FY 2007 FY 2008 FY 2009 GENERATION Estimated total waste generation for the entire corporation (for 100% data coverage) Please describe what was added in the estimates (e.g. business units, geographical coverage) metric tons

______

______

______

______

_____

_____

_____

_____

THIRD PARTY VERIFICATION The above data has been verified by the following organization: Bureau Veritas Please see the Bureau Veritas Independent Assurance Statement in: http://www2.nestle.com/Common/NestleDocuments/ Documents/Creating%20Shared%20Value/About_reporting/BV_statement.pdf

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r Not Verified r We do not track waste generated r Not applicable. Please provide explanations in the comment box below. r Not Known Comment : Bureau Veritas Solutions has been engaged to provide external assurance to the stakeholders of Nestlé SA (Nestlé) over the provision of information relating to its Creating Shared Value (CSV) reporting and programmes in the "Creating Shared Value" section of Nestlé website. Building on previous years, the assurance process was designed to understand how Nestlé identifies its material risks and emerging issues in a continually changing environment, and to challenge Nestlé's in its CSV implementation, performance and reporting. The process has involved interviews and follow-up communication with 48 key management staff predominantly at Nestlé's Head Office in Switzerland, visits (by Bureau Veritas' global auditor network) to nine operational factories spanning eight countries, to evaluate SHE data management, reliability and accuracy and a visit to Nestlé Brazil to review the understanding and implementation of CSV policies and related processes presented within the CSV section of the website at a market level. Please see the Bureau Veritas Independent Assurance Statement in: http:// www2.nestle.com/Common/NestleDocuments/Documents/Creating%20Shared%20Value/About_reporting/ BV_statement.pdf Eliminating waste in our own operations is an important priority for Nestlé as part of our commitment to reduce consumption of natural resources and to reduce food wastage along the value chain. Our goal is zero waste and full recovery of unavoidable by products. Through Nestlé Continuous Excellence (NCE) our factories reduced waste by 11.4% and increased reuse or recovery of by products by 23.5% in 2009. This amounts to 1.35 million tonnes of by products (6.4% of total material used) sent for reuse or recovery and only 0.36 million tonnes (1.7% of total material used) for disposal in landfills or incineration without heat recovery.

2.4 Climate Strategy

2.4.1 GHG Inventory - organizational boundaries Please indicate the organizational coverage of your company's GHG inventory. For wholly owned entities/facilities 100 % of total revenue. For entities/facilities that controlled but not wholly owned 100 % of total revenue. For jointly controlled assets/entities 100 % of total revenue. t For entities not controlled but over which the company has significant influence

__________

% of total revenue.

r No GHG inventory.

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r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Nestlé is committed to being a leader in reducing greenhouse gas emissions from our own operations, within our supply chain and by helping consumers make a difference. Our ambition is to offer products with the lowest environmental impact compared to alternatives, including those prepared at home. As a company with a sound environmental track record and a commitment to further improvement, we support strict and fair standards to curb greenhose gas emissions and natural resource consumption as these will reward the most resource-efficient companies and value chains. To optimise the environmental performance of our products, we not only consider the environmental impacts of our manufacturing operations but also those associated with the other steps in the value chain. We therefore apply a life cycle approach, systematically assessing our product categories from farm to fork and beyond. We have been conducting Life Cycle Assessments (LCAs) to determine the environmental impacts of our major product categories including their packaging. This process, which considers production of agricultural raw materials, animal husbandry, processing, packaging, transportation, distribution, consumption and end-of-life, enables us to identify the risks and opportunities beyond our factories, and to work with our stakeholders to define and implement improvements. For example, the LCA of Nescafé Classic and a comparison with alternatives (drip filter and capsule espresso), as published in the Journal of Cleaner Production, found that approximately 50% of environmental impact occurs during the use phase. The study showed that overall, Nescafé Classic uses less energy and has a lower environmental footprint than drip filter coffee or capsule espresso coffee, particularly during the cultivation, treatment and delivery stages as it requires less green coffee per cup than for one cup of the two alternatives.

2.4.2 GHG Inventory - operational scope Please indicate the scope of your company's GHG inventory (according to WBCSD/WRI Protocol or other): Direct GHG emissions (i.e. "scope 1" of WBCSD/WRI Protocol) GHG emissions from imports of electricity, heat or steam (i.e. "scope 2" WBCSD/WRI Protocol) Other indirect GHG emissions (i.e. "scope 3" of the WBCSD/WRI Protocol) r No scope r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Scope 1 and 2 emissions have been already published. Our efforts have helped to reduce direct greenhouse gas emissions by 3.1% to 3.98 million of CO2-eq or 96.6 kg of CO2-eq per tonne of product, which represents a 48% reduction per tonne of product over the last ten years. Our indirect CO2 emissions from purchased energy remained stable at 3 million tonnes compared to 2008. Scope 3: Transportation & distribution of sold products: 2160000 metric tonnes of CO2-e Methodology: The total distance driven by trucks for distribution was calculated based on the overall tonnage of products distributed to customers, an average load of trucks, an estimated average distance for complete distribution and an estimate for empty running of the trucks. A truck uses in average 35 litres of diesel per 100 km, resulting into a total fuel consumption of 920 mio litres of diesel. Using an emission factor of 2.63 kg CO2 / liter of diesel, this generates a total of 2.416 mio tonnes of CO2.

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These figures were cross-checked with two other top-down approaches: analysisng the distribution costs lead to an estimated fuel consumption of 966 mio litres of diesel and 2.54 mio tonnes of CO2 (5% more than first calculation). Calculating the CO2-emissions based shipped tonne.kms and average CO2-emission of 72 g CO2/ tonne.km gives an estimate of total 2.36 mio tonnes of CO2-emissions (2% smaller than first calculation). Nestlé estimates that about 10% of its transports are done with trucks owned by Nestlé, leading to the rounded estimates of 300 mio km driven by its fleet, generating about 250000 tonnes of CO2. The major part of transport (90% of its transports) are however done by external carriers. Through supplier rationalisation, new tender policies and driver training, our "green fleet" project -awarded second prize in the International Green Fleet Award 2009- has reduced CO2 emissions across our European fleet of cars and commercial vehicles by 17% since 2007. Similar initiatives, with local adaptations, are now being instigated in North America, Mexico, Brazil and Asia-Pacific. To further reduce our impact on the environment, Nestlé Waters aims to use alternative transport modes wherever possible. In France and Belgium, 50% of our bottles were distributed by train or "intermodal" transport (truck and train) in 2008, resulting in 60000 fewer truck loads, a saving of 12 million litres of fuel and lower transport-related greenhouse gas emissions. Total products value chain: 48825651 metric tonnes of CO2-e Methodology: Based on LCAs made on its different products categories, manufacturing operations represent between 10% and 20% of total GHG emissions along the entire product life cycle. On this basis Scope 3 emissions are estimated as representing about 7 times scope 1 + scope 2 GHGs emissions.

2.4.3 GHG inventory - third-party verification Please indicate which non-governmental, independent organization verifies your company's GHG inventory. Verified by different organisations r Not externally verified. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Projects resulting in tradable emissions credits, eg. the conversion of our Nescafé and Milo factory in Graneros (Chile) to natural gas, are audited by thrid-party. The same applies to plants involved in EU Emissions Trading Scheme which are periodically audited by a third-party. Bureau Veritas Solutions has been engaged to provide external assurance to the stakeholders of Nestlé SA (Nestlé) over the provision of information relating to its Creating Shared Value (CSV) reporting and programmes in the "Creating Shared Value" section of Nestlé website. Building on previous years, the assurance process was designed to understand how Nestlé identifies its material risks and emerging issues in a continually changing environment, and to challenge Nestlé's in its CSV implementation, performance and reporting. The process has involved interviews and follow-up communication with 48 key management staff predominantly at Nestlé's Head Office in Switzerland, visits (by Bureau Veritas' global auditor network) to nine operational factories spanning eight countries, to evaluate SHE data management, reliability and accuracy and a visit to Nestlé Brazil to review the understanding and implementation of CSV policies and related processes presented within the CSV section of the website at a market level. The objectives were to: 1. provide reasonable assurance over the stated content within the CSV section of its website for the reporting period including assurance against the report's adherence to the GRI G3 Sustainability Reporting Guidelines and Nestlé's stated GRI application level; and 2. provide an impartial commentary on the implementation of CSV, its reporting process and associated systems and, where appropriate, propose recommendations for future development The scope of the assurance included: 1. a review of relevant CSV activities undertaken by Nestlé over the reporting period 1 January 2009 to 31 December 2009; 2. a review of information relating to Nestlé's CSV issues, implementation, responses, performance data, case studies and underlying systems to manage relevant information and data; and 3. an evaluation of Safety, Health and Environmental (SHE) data and systems across a sample of global operational sites. The Nestlé

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Environmental Management System has been implemented throughout the Company since 1996, helping us to achieve continuous performance improvement and contribute towards sustainable development. We have made major progress towards our goal of certifying our operations to the internationally recognised standards for environmental management (ISO 14001). By end May 2010, 398 certificates has been issued; this helps drive our performance and demonstrate compliance. Our aim is to certify all our factories to by year-end 2010. This certification is done by a third-party.

2.4.4 GHG emissions target What is your company's target for reducing GHG emissions and how will this target be achieved (inc. sources of emissions covered, baseline, timescale)? What is your progress against this target? Intensity target: 6.5% reduction from base year Base year: 2009 Target year: 2015 Nestlé has established a specific target on GHG: Continue de-coupling of energy generation and CO2 emissions; ie greenhouse gas emissions at least -6.5% by 2015 Reduction of GHG emissions are driven by: - Energy and GHG emissions reduction targets set at global and local levels - Implementing energy and GHG emissions reduction projects worldwide - Local initiated Clean Development Mechanisms projects, icluding fuel conversion (eg. conversion from coal to natural gas at our Graneros factory in Chile) - New co-generation plants (eg. at our Himeji factory in Japan) - Industrial ecology projects (eg. purchase of by-product energy from neighbour industrial company at our Singen factory in Germany to 11000 tonnes CO2 reduction) - Focused GHG reduction projects in factories qualified for the EU Emissions Trading Scheme See specific projects in the comments section below. r No target. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Other targets: - 5% reduction of energy consumption per tonne of product by 2015: additional measures will help Nestlé to achieve at least a further 5% improvement in energy efficiency in each of its key product categories by 2015 - 1% reduction of energy consumption per tonne of product from base year. Base year: 2008. Nestlé overachieved its target on energy consumption per tonne of product in 2009 (Achieved: reduction of 2.3%) Reduction of GHG emissions are driven by: - Energy and GHG emissions reduction targets set at global and local levels - Implementing energy and GHG emissions reduction projects worldwide - Local initiated Clean Development Mechanisms projects, icluding fuel conversion (eg. conversion from coal to natural gas at our Graneros factory in Chile) - New co-generation plants (eg. at our Himeji factory in Japan) - Industrial ecology projects (eg. purchase of by-product energy from neighbour industrial company at our Singen factory in Germany to 11000 tonnes CO2 reduction) - Focused GHG reduction projects in factories qualified for the EU Emissions Trading Scheme Nestlé is implementing energy and GHG saving projects worldwide. Some of them are: Implementation of 6 projects identified during Energy Target Setting done in 2009. (Final Cooler Heat Recovery, Recycling of cooling tower blowdown, Improvement of Power Factor, Steam flash recovery in decaffeinated plant, Steam line insulation, Steam trap maintenance) Toluca factory - Mexico. Investment: 15000000 MXN ($). Annual energy savings: 68000 GJ. Annual emission reduction in metric tonnes CO2-e: 4800. Implementation is on-going. Savings are annual figures. - Replace all of the 320W & 400W lights by more efficient 220W T5 lighting system. Danville Buitoni factory - USA. Investment: 229000 USD($). Annual energy savings: 5400 GJ. Annual emission reduction in metric tonnes CO2-e: 900. Implementation is on-going. Savings are annual figures. - Install a spent coffee ground boiler to produce steam from waste biomass. Toluca factory - Mexico. Investment: 13000000 CHF. Annual energy savings: 600000 GJ. Annual emission reduction in metric tonnes CO2-e: 33700. Implementation is on-going. Savings are annual figures. - Install Variable drives on chillers and compressed air systems. Install a economizer on steam boiler. Chembong factory- Malaysia. Investment: 1100000 MYR. Annual energy savings: 12000 GJ. Annual emission reduction in metric tonnes CO2-e: 1200. Implementation is on-going. Savings are

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annual figures. - Instal a condenser for latent heat recovery in the flue gas of steam boilers. Biessenhofen factory - Germany. Investment: 380000 EUR(). Annual energy savings: 14500 GJ. Annual emission reduction in metric tonnes CO2-e: 900. Implementation is on-going. Savings are annual figures. In 2009, Nestlé has launched the Energy Target Setting Initiative. Teams of internal and external experts are sent to factories to identify energy/ water and CO2 savings opportunities in the most energy-intensive manufacturing sites. Energy savings identified in 2009 amount to 1,000,000 GJ/year, corresponding to 74'000 t of CO2 emission avoidance. The implementation of these projects is ongoing. This initiative will be rolled out more widely in 2010 and the following years.

2.4.5 Carbon strategy Please indicate what your company's strategy for reducing/managing carbon risk is based on. Based on intra-company emissions trading. Based on national/international emissions trading. Based on carbon sequestration projects. Based on Clean Development Mechanisms (CDM). Based on Joint Implementation (JI) projects. Based on switching fuel sources. Based on reducing carbon intensive operations / technologies / products / services. Other methods, please specify: Energy savings Co-generation plants when relevant Industrial ecology projects Energy management software Renewable energy sources (solar energy, biomass energy, geothermal energy, photovoltaic energy) r No carbon risk strategy. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Climate Change is an integral part of Environmental Sustainability which support Nestlé Creating Shared Value, its fundamental business principle. This drives the environmental targets worldwide. In 2009 Nestlé started an updated comprehensive Climate Change Diagnostic with the support of SustainAbility consultants and involving representative Business Units. The objectives: * To provide an initial stress-test of the Nestlé value chain against different climate change outcomes eg. identifying business risks and opportunities and * To help prioritize material areas where Nestlé might consider developing specific strategic responses. The Climate Change Diagnostic shows that the Company has specific risks but also opportunities. Some identified risks: - Yield declines of commodities in low-latitude regions will increase commodity prices. - Cost inflation from rising energy prices and oil volatility. - Disruptions to coffee and cocoa yields will not only impact prices, but quality is likely to change even with minimal warming. This could impact core Nestlé brands. - Producers may adapt by producing crops for domestic or local production, reducing agricultural supply for export. - Agricultural labour supply could be disrupted by extreme weather events and climate change-related migration. - Policy responses to climate change (e.g. carbon tax, cap-and-trade) may increase logistics costs. - Carbon taxation could heighten tariffs on imported goods. - A global cap-and-trade system (or a combination of regulatory regimes) would put a higher price on carbon, penalizing companies that have failed to reduce their operational footprint. - Retail chains may require more integrated environmental reporting on products. Some actions Nestlé has taken or plan to take to minimize the risks are: Cap and trade scheme: So far Nestlé has analyzed the biggest impact during Phase III of EU-ETS,

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which might come from the 5 coffee factories which will participate in this Phase. Nestlé's efforts will be focused in further minimizing emissions in these factories through projects to reducing energy use and possibly using sustainably-managed renewable fuels. Other potential cap and trade schemes are closely analysed to minimize their impact on Nestlé business worldwide. In order to assure the continuous supply of its main commodities, one of the initiative Nestlé has in place is working with suppliers, providing training and technical assistance, for example, Nestlé and the International Finance Corporation each committed US$250 000 a year for three years to a project coordinated by ECOM and supported by the Rainforest Alliance to strengthen the supply chain for sustainable coffee in Central America. Some identified opportunities: - Opportunity to engage employees, helping them to deliver low carbon performance by identifying and implementing low carbon solutions across all business areas. - Sourcing should shift ­ where possible ­ to take advantage of higher yields in mid-to-high altitude regions. - Optimize the opportunities in extreme weather areas. eg. In 2009 the R&D Abidjan in Côte d'Ivoire was opened and its focus is on agriculture, raw materials and traditional African ingredients. It helps to improve the cocoa in extreme weather conditions. This R&D, where more than 40% of the world's cocoa originates, will provide farmers with 1 million high-potential cocoa trees each year from 2012. - Reducing dependence of agricultural supply on oil could help strengthen relationships with producers by making farmers less vulnerable. Nestlé invested over CHF 220 million in environmental sustainability programmes and initiatives during 2009. Half of this amount applies to projects directly related to Climate Change. Please see specific projects in section 2.4. GHG emissions target.

2.5 Genetically Modified Organisms

2.5.1 GMO Policy Does your company have a publicly available GMO policy? Yes, please attach supporting documents or indicate website:

____________________

r Not publicly available. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Nestlé does not produce genetically modified organisms (GMOs) nevertheless; Nestlé's global policy on Gene Technology is available at the following link: Nestlé and Gene Technology As stated in the policy, Nestlé respects local needs, cultural differences and consumer attitudes concerning the use of ingredients derived from GMOs. Therefore, in response to European consumer preferences, our ingredients in Europe are non-GMO. Nestlé's European position is publicly available at this link: Nestlé position on European GMO legislation As explained in the position, in response to the European legislation, a traceability and quality system is implemented when non-GMO ingredients are used. This system named Identity Preservation (IP) ensures that a particular ingredient characteristic such as conventional, non-GM crop, origin is monitored and preserved throughout the supply chain. Nestlé's ingredients used in Europe are certified as non-GMO IP. The European market represents 39% of the group's Food & Beverages sales and in many countries outside Europe, Nestlé is selling non-GMO derived ingredients as well, as defined by local regulations. Moreover, Nestlé is increasingly offering products in the organic market. Nestlé is selling a variety of organic baby foods in Germany, Nordic countries, Austria and

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Switzerland. More recently, with the acquisition of Gerber, Nestlé is also offering a line of organic products in the USA in addition to organic products offered by Uncle Tobys in Australia.

2.5.2 GMO Labeling Does your company have a labeling policy concerning the GMO content of its products where not required by local legislation? Yes, please attach supporting documents or indicate website:

____________________

r Yes, no reference indicated r No, the company do not have a labeling policy concerning the GMO content of its products. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : As stated in our global policy Nestlé and Gene Technology Nestlé strictly adheres to national laws concerning the labelling of GMO derived ingredients in food or pet food products. As explained in our European position Nestlé position on European GMO legislation the EU regulation did not affect the labelling of our products since in response to European consumer preference our ingredients in Europe are non-GMO. According to the latest survey by the European commission (Eurobarometer, March, 2008), fewer Europeans (20%) are concerned by GMOs and among top 15 issues of concern; GMO is ranked 11 showing a relatively low level of concern. This might be in part the result of the enforced European GMO regulation. As a consumer oriented company we encourage authorities around the world to continue managing GMOs, including creating tailor made regulations, in a way that put consumers at ease with regard to the safety and use of GMO derived ingredients. We are confident to maintain our competitive advantage also in complex regulatory environments, to keep serving our consumers. Nestlé chose not to have an additional labelling policy, which differs from what is required by national regulations, in order to avoid confusing consumers with labelling standards varying from company to company in the same country. Rather, in some countries like India, we use non-GMO ingredients even though there are no GMO labeling requirements. In others, as stated before, we increase offering in the organic market. Nestle is selling a line of organic Gerber products in the USA, in addition to organic products offered by Uncle Tobys in Australia and organic baby foods in Germany, Nordic countries, Austria and Switzerland.

2.5.3 MSA: GMO In this section we include a performance score on the Corporate Sustainability Monitoring with the objective to verify the company's involvement and management of crisis situations that can have a damaging effect on reputation. The evaluation will be filled in by the responsible analyst of your industry. No additional information is required from your company. Please disregard the comment box. _ _ _ _ _ _ _ _ _ _ Comment :

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________________________________________________ ________________________________________________ _______________________________________

2.6 Packaging

2.6.1 Integration of environmental aspects into the packaging policy Does your company's packaging policy integrate environmental aspects? Please attach your policy and/or add references. Yes, packaging policy integrates environmental aspects r No, packaging policy does not include environmental aspects. But we systematically consider environmental aspects in the packaging development. Please provide examples: _ _ _ _ _ _ _ _ _ _ r No packaging policy available r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Nestlé's Packaging Policy integrated environmental aspects as far back as 1991 and forms part of the Nestlé Policy on Environmental Sustainability. This Policy was updated in 1999 and in 2008, but the fundamental principles from 1991 are still valid and form the foundation of our packaging development. The Policy states that we apply a holistic life cycle approach involving our partners from farm to consumer in order to reduce the environmental impact of our products and activities. The way we achieve this is to: - reduce the weight and volume of materials - lead in the development and use of materials from sustainably-managed renewable resources - support initiatives to recycle of recover energy from used packaging - use recycled materials systematically use Eco-Design both in optimising packaging and in new developments The Environment Group at our Central Research facility in Lausanne, Switzerland has been reinforced with experts in Life Cycle Assessment and Packaging Development. The main responsibility of this group is to develop guidelines and procedures, to perform training throughout the worldwide organisation, to advise on the choice and implementation of packaging with lower environmental impact and to scout for new technologies and materials. A worldwide Packaging Environmental Sustainability Network was formed in 2008 to ensure that all businesses and geographical areas of our business have access to this specific expertise. During 2009 & 2010 the network has had regular network meetings both physical meetings, webinars and e-meetings. To complement the Nestlé Operations Sustainability Council that is chaired by our Executive Vice President of Corporate Operations and the Creating Shared Value Alignment Board chaired by our CEO Mr Bulcke; in early 2010 we formed an R&D Sustainability Council chaired by our CTO Professor Bauer. This Council ensures that sustainability is taken into consideration at the earliest stage of the development cycle and is fully integrated into our 5 Generation R&D pipelines with development plans up to 2014, or beyond. These pipelines are reviewed by Senior Management during the annual, or biannual, RandD Strategy Conferences for each business.

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2.6.2 Packaging criteria Please indicate what environmental aspects are systematically used in your policy and packaging development.Please attach documents and/or add references: Packaging reduction Recyclable packaging Recycled packaging Biodegradable / biobased packaging Take-back system r No policy or packaging examples available r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Packaging reduction is one of the key elements of our Packaging Policy and Nestlé has been working for many years to reduce the weight and volume of packaging. The results are tracked every year by country and for globally managed businesses. Since 1991 a total of 444'000 tonnes of packaging material have been saved. In 2009 the savings of 59'000 tonnes were even higher than those achieved in 2008 of 58'000 tonnes (previous years averaged 20'000 tonnes) This shows clearly the impact of the Packaging Policy and the measures described above. In the reference 1 some specific examples are given from 2009 - there are numerous other examples around the world. In order to maintain this momentum, a new process has been implemented that exploits Nestlé's worldwide IT data base ­ GLOBE. By accessing all the purchasing events through GLOBE, Pareto analyses can be done to identify the biggest opportunities for packaging reduction. Cross-business & cross-region teams are now focusing on 5 key projects that cover a total packaging spend of 400 million CHF while smaller projects are still being conducted in the individual markets. Recyclable packaging The use of recyclable packaging is systematically evaluated and pursued when there is a true environmental benefit. The good recyclability of PET is one of main reasons that PET is the material of choice not only for water packaging but also for the launches of new Ready to Drink products in several countries like Brazil, Mexico & the USA. In Argentina bulk ice cream is now packaged in recyclable polypropylene (PP) including in-mould PP labelling. Recycled packaging. Nestlé uses significant quantities of recycled paper and board, glass and tin plate wherever the safety and quality of the packed product is not jeopardised. New examples in 2009 include the introduction of recycled PET in the USA for water packaging under the brand Re-Source and in Switzerland for confectionary trays for chocolate. Nestlé is also working towards establishing responsible recovery schemes for used packaging in markets where this does not exist. Biodegradable/biobased packaging Nestlé is at the forefront in the use of biobased packaging materials and has pioneered the commercial introduction of a number of materials. Biobased materials are systematically evaluated in all new material developments and are used wherever it makes environmental sense. In addition specific new material development projects have been initiated with key supplier partners and several new applications will be launched in 2010. Nestlé is a founding member of the new Chair of Bioplastics at the Ecole de Mines in Paris and a series of doctoral theses have started. Take back systems are used extensively in transport packaging such as pallets and in 5 gallon water containers as well as for water bottles in some countries but Life Cycle Assessment shows that they do not provide a true environmental benefit in the majority of primary packaging applications due to the environmental impact of transportation and cleaning.

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2.6.3 Quantitative packaging targets Does your company have quantitative packaging targets for the aforementioned criteria? Please attach supporting documents. Company has set a number of corporate-wide quantitative targets. r Company has set one corporate-wide quantitative packaging target. r Company has set quantitative packaging target(s) on a country/divisional level. r Company is in the process of formulating quantitative packaging target(s). r No quantitative packaging targets r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Zero Waste is a Corporate wide target that is a central part of our Nestlé Continuous Excellence initiative. In factories throughout the world the DMAIC process (Define, Measure, Analyse, Improve, Control) is being rolled out. In packaging it is being used to reduce the waste of product and packaging materials in our factories. For example, DMAIC projects in 2009 led to 30% reduction in film losses in a pet food factory in France and 75% reduction in can losses in a beverage factory in Brazil. These loss reductions have a significant environmental benefit. Another Corporate wide target is to reduce the environmental impact of all new packaging by 15%. This is evaluated using the Eco Design tool PIQET (Packaging Impact Quick Evaluation Tool) that was developed over 3 years and was first introduced in 2008. This easy-to-use Life Cycle Assessment based tool enables calculation of the environmental impact and allows the optimum choice of packaging material solution at an early stage in the development process. PIQET compares directly different material options and calculates the impact in the following eight areas: water use, global warming, cumulative energy demand, minerals and fuel, photochemical oxidation, solid waste, eutrophication, and land use. The use of this comprehensive set of environmental indicators is consistent with the requirements of the ISO Life Cycle Assessment standards and ensures a holistic approach to true environmental impact reduction. Sustainability training including the use of PIQET has been given in sessions around the world. By autumn 2010 over 200 people will been using the PIQET tool as part of their regular packaging work. This tool is now integrated in the Nestlé Project Management system (NPDI) process and is mandatory for all new product development throughout the company. Any new package development that does not show an environmental benefit is escalated to the Packaging Manager and ultimately to the Head of the Business. A further development in 2009 is our firm commitment to ending the deforestation of rainforests. A partnership has been set up with the NGO TFT (The Forest Trust) and an action plan is being developed with priority in the areas of palm oil and pulp & paper for packaging.

2.7 Raw Material Sourcing

2.7.1 Guidelines or standards for agricultural raw material Please indicate the environmental guidelines or standards your company has implemented for agricultural raw material (for your own agricultural production, direct procurement and/or procurement over wider trade channels). Please describe and attach relevant documentation: see comments

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r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Nestlé has two main sources of supply: 1. directly from 540'000 farmers (in the case of milk, coffee, fruits, vegetables and specific supply chains e.g. cereals in Africa or cocoa in Ivory Coast and Ghana) 2. indirectly through 165'000 suppliers (e.g. local manufacturers of semi processed materials, or trade companies for raw, packaging and services and indirect materials) This chapter is entirely dedicated to 1., supply directly from farmers. The 2. will be adressed in the questions 3.7. Nestlé highly promotes sustainable farming practices and agricultural production systems that ensure long-term economic, environmental and social developments. Within its procurement strategy Nestlé applies direct procurement systems for fresh milk (40% of total fresh milk worldwide is bought at farm level, in more than 30 countries and from 315'775 farmers), coffee (10% of total green coffee worldwide is bought at farm level in 7 coffee producing countries from more than 100'000 farmers), and cocoa (11 origins, 2 core countries Ghana and Ivory Coast). Figures certified by Bureau Veritas. Our sourcing approach first of all concentrates on raw materials quality and safety to ensure compliance with regulatory requirements. The materials have to be produced according to given standards and regulations that are resumed into the newly published Nestlé Supplier Code. Nestlé applies following practices to ensure long term supply of raw materials: Guidelines on Sourcing of Agricultural Raw Materials 1998 - Chapter on production methods, environment, pricing, etc. See attached document. The Nestlé Policy on Environmental Sustainability 2008 - Chapter on Agricultural Raw Materials - confirms that Nestlé encourages sustainable farming methods and, where appropriate, assists farmers in crop or milk production. The Nestlé Supplier Code - This is a code that ensure that all Nestlé suppliers respect a number of minimum requirements such as prohibition of child labor, adequate pesticide uses, upgraded water management techniques etc... this apply to all our farmers. To help suppliers to comply, Nestlé has elaborated and implemented Manuals describing what we consider as Good Agricultural Practices such as "Reducing Green house gas emissions from farms", "Spring Catchment Manual", "Water Assessment Manual Dairy Farm", "Post Harvest treatment of coffee Cherries", "Preference" Milk - Potatoes in France... Similar schemes have been produced locally in many other countries such as Brazil (avoiding mycotoxins in feed for animals), Argentina (cleaning in place methodology), Chile (awarding proper water harvesting technics), Greece, Italy (Drip irrigation, tomatoes), Spain etc... In countries such as China, India, Pakistan and Indonesia, Nestlé bases projects to improve sustainability of small-scale dairy farming systems on direct contacts with farmers and on farmers' trainings programs by joining efforts with NGOs or international organizations (see UNDP & Nestlé Pakistan on web). To support the direct procurement of coffee (about 80'000 tons per year) Nestlé has a network of coffee buying stations in 7 coffee producing countries. This system is usually combined with technical assistance programs (in China, Vietnam, Indonesia, Mexico, the Philippines, Ivory Coast and Thailand) and experimental and demonstration farms to enforce the training programs (they comply with SAI Platform principles. During these trainings focus is made on burning issue such as efficent use of water in depulping systems. Another initiative in the coffee sector is the Nespresso AAA Sustainable Quality Program. The objective of this program is to improve the performance of coffee planters and of the whole supply chain by providing assistance in coffee growing. The program is continiously scaled up. By 2013 80% of the coffee will be sourced through the Nespresso AAA programs which are verified by Rainforest Alliance and Bureau Veritas.

2.7.2 Issues covered in environmental guidelines and standards Please indicate what issues are covered by these guidelines or standards: Reduced water consumption in agricultural production Protection of soil fertility Protection of biodiversity

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Restricted use of pesticides Organic production Transport distance for agricultural raw material Other, please indicate: see comments below r Not applicable. Please provide explanations in the comment box below. r Not known Comment : All agricultrual raw materials directly sourced from farmers have to meet strict quality specifications when delivered to the Nestlé factory gate. A wide range of physical, chemical and microbiological tests are conducted to ensure the food safety and quality standards of Nestlé. For example in Pakistan, Nestlé is conducting 27 different quality tests for fresh milk from the farm to the factory gate. Additional standards exist on farm management / economy - emissions (noise, odours, smoke, ...) and in particular GHG emissions - energy (transportation, biogas at farm level,...) - plant nutrients - water management (protection from pollution) - labour - community and welfare - quality assurance All of these topics are covered in both the Nestlé Supplier Code, The Nestlé policy on environmental sustainability 2008 and the SAIN concept. Comment: In some cases, e.g. where specific food product specifications require restricted use of pesticides, specific recommendations are provided especially for baby foods and Nestlé Nutrition products (see also question 2.7.4 on organic supply).

2.7.3 Coverage of guidelines or standards for agricultural raw material Please indicate the coverage of your agricultural raw material standards in the year 2009. 100 % of agricultural raw material costs for goods sourced according to these standards r Not applicable. Please provide explanations in the comment box below. r Not known Comment : All the raw materials sourced by Nestlé have to meet very specific quality specifcations on phyisical, chemical and microbiological requirements. All raw materials arriving at a Nestlé factory site are sampled and analyzed based on a detailed quality monitoring system (NQMS - Nestlé Quality Monitoring System). Around 15% of all raw materials are sourced directly from the farmers. For all these raw materials sourcing specialist are in direct contact with the suppliers or are managing collection centres or buying centres. There the elements of questions 2.7.2 are monitored and managed. The other 85% of raw materials are purchased through suppliers, processors or traders. All these raw materials have to meet as well the Nestlé Quality Monitoring System. For more information on the different elements, see question 2.7.1, 2.7.2 and also 3.7 on Standards for Suppliers.

2.7.4 Share of organic products Please indicate the share of food and beverage revenues from certified organic products as a percentage of total revenues in the year 2009.

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r

__________

% of total revenues

Yes, products available but no share figure available r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Sourcing of raw materials from certified organic products depends strongly on product categories, geographical location, brand strategy, consumer preferences, etc.The highest level of organic raw materials are used in Nestlé Nutrition products in Germany and other European countries. For some Nestlé Nutrition products in Germany for example 100% organic certified raw materials are used. Also many suppliers in developing countires are practising farming without the use of chemical fertilizers or pesticides, but in most cases they are not certified.

2.7.5 Exposure to fisheries Please indicate the share of fish and seafood products or products containing fish or seafood as a percentage of total food revenues in the year 2009. 1 % of total food revenues r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Nesté is purchasing fish and sea food products worth around 300 mio CHF, which is around 1.5% of total raw material cost. Out of this, around 65% (200 mio CHF or 1%) are fish and sea food products, the rest are fish and see food by-products (for the pet food business) of around 100 mio CHF, this correspond to around 0.5% of total raw material cost. Combined this is around 1.5% of total raw material cost, which coresponds to around the same % of total revenues for the year.

2.7.6 MSC certification What is the share of your company's MSC certified fish and seafood as a percentage of total fish and seafood revenues in the year 2009? r

__________

% of total fish and seafood revenues

Not applicable. Please provide explanations in the comment box below. r Not known Comment : The main user of fish and seafood is the Nestlé Food Serivce Business Davigel in France.. Davigel has engaged since a long time with responsible sourcing of fish and other raw materials. For example Davigel is sourcing only "Dolphine Safe" Tuna fish. See link below for more information. http://www.davigel.fr/france/fr/Expertises/

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Developpement-durable-un-fournisseur-responsable/Pages/Ameliorer-la-gestion-et-eviter-la-surexploitation-desressources-naturelles.aspx The sourcing of fish and sea food by products for the pet food business is contributing to a reduction of waste in the fish industry.

2.8 Water Related Risks

2.8.1 Exposure by water stressed areas When considering physical water scarcity issues at a local level, please indicate what percentage of your company's production plants / sites are located in water-stressed area and what percentage of gross profits these contribute to in the last fiscal year. If you use different definition of "water stress" , please specify the alternative definition below. Please also indicate whether the water stress analysis for current operations include social sensitivty analysis. NB: This question will not be assessed in isolation, but in combination with other questions in Water-related Risks. in water-stressed areas (<1700 m3/(person*year)) % of production plants in last FY: % of gross profits in last FY: Alternative definition: 46 46 Water stress (<1700 m3/(person*year) evaluated at watershed level based on World Resources Institute projection 2025 (from Global Water Tool WBCSD).

t Included social sensitivity analysis Amongst the production plants / sites currently located in water-stressed areas, please indicate your company's top fresh water consumers (in this case, fresh water consumption = fresh water withdrawn (surface water + ground water + municipal supply) minus water discharged and returned to its source at similar or higher quality than it has been withdrawn) in last FY: Plant Name Location Water Use Water intensity (m3/ (area, country) (m3/y) gross profit USD) (see info box) Plant / Site #1 Plant / Site #2 Plant / Site #3 Vosges Sheikupura Springville France Pakistan USA 2610621 1463455 1191757 1.66 3.21 6.41

r According to our assessment and the above definition of water-stressed area, we currently have no productions plants / sites located in water-stressed areas. r Not applicable. Please provide explanations in the comment box below.

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r Not Known Comment : - Global Water Tool elaboration is based on physical water availability and does not incorporate any social sensitivity evaluation. - % of gross profits in last FY: EBIT (Group) Earnings Before Interest, Taxes, restructuring and impairments, assuming proportional distribution among factories. - Water intensity (m3/per tonne of product): We report m3/tonne of product since m3/gross profit USD is affected by currency exchange rate fluctuation and therefore does not properly reflect water management performance. - Water Use (m3/y): We enter fresh water consumption according to your definition (fresh water consumption = fresh water withdrawn (surface water + ground water + municipal supply) minus water discharged and returned to its source at similar or higher quality than it has been withdrawn).

2.8.2 Water quality by production plants Please indicate your company's 3 most sensitive production plants / sites in terms of water quality (i.e. where water intake treatment and/or water discharge treatment is critical) and the respective key water quality parameters used (e.g TSS, TOC, TKN) Plant Name Location (area,country) Intake Please tick and indicate main water quality parameter TSS, Microbiology t Discharge Please tick and indicate main water quality parameter Zero Discharge Requirement COD

Plant #1

Chachoengsao

Thailand

Plant #2

Dieppe

France

_________ _

Plant #3 Clayville South Africa t

_________ _

COD

r According to our assessment, we currently have no production plants / sites which are sensitive with regard to water quality (neither on water intake nor water discharge) r Not applicable. Please provide explanations in the comment box below r Not Known Comment : Because good water quality in the areas surrounding our plants has direct benefits for our business, society and the environment all our water is treated in wastewater treatment plants. Our preference is to use municipal wastewater plants to ensure we return only cleaned water back into the environment, but where these are insufficient, we invest in our own on-site facilities (approximately 292 to date, including our latest in Tema, Ghana). We remove 97% of the organic load of the water leaving our factories before it is returned to the

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environment. In 2009, we discharged 91.34 million m3 of water , a decrease of more than 5% on 2008, with an average level of organic load of 91 mg COD/l (Chemical Oxygen Demand per litre). During 2009, we have reviewed this KPI and have determined that figures for previous years were underreported. Our Chachoengsao factory in Thailand, for example, was designed around a minimum water withdrawal and near zero discharge concept. This limits the discharge of cleaned wastewater to a small amount of saline water into the ocean (around 40m3 a month with approximately 20% salt content), and the remaining water is treated before being used to irrigate our own land.

2.8.3 Tools / Processes / Systems / Standards / Frameworks used Which tool(s) / process(es) / management system(s) / standard(s) / framework(s) does your company use to achieve the following objectives: Objective Name of tools / management systems / standards / frameworks Internal tool (NEST: Nestlé Environment & Safety Performance Tracking Tool). - Supplier Code. - Responsible sourcing audits. Internal tool (NEST: Nestlé Environment & Safety Performance Tracking Tool). Life Cycle Assesment of our products includes their water footprint.

Report and aggregation at corporate level: Manage water risk in the supply chain: Track and calculate plant / site water intensity: Determine virtual water content of products: t Determine virtual water exchange mapping: Systematically track and map plant water usage: (e.g. WBCSD Water Tool) Define water stress: Map water stress: Project future water stress:

__________

- Internal tool (NEST: Nestlé Environment & Safety Performance Tracking Tool). - Global Water Tool from WBCSD. - ETH Zurich database. - Global Water Tool from WBCSD and - ETH Zurich database. - Global Water Tool from WBCSD projection 2025. - Global water Tool from WBCSD projection 2025.

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Provide external data verification:

Bureau Veritas. Bureau Veritas Solutions has been engaged to provide external assurance to the stakeholders of Nestlé SA (Nestlé) over the provision of information relating to its Creating Shared Value (CSV) reporting and programmes in the "Creating Shared Value" section of Nestlé website. The process has involved interviews and follow-up communication with 48 key management staff predominantly at Nestlé's Head Office in Switzerland, visits (by Bureau Veritas' global auditor network) to nine operational factories spanning eight countries, to evaluate SHE data management, reliability and accuracy. Please see the Bureau Veritas Independent Assurance Statement in: http://www2.nestle.com/Common/ NestleDocuments/Documents/Creating%20Shared %20Value/About_reporting/BV_statement.pdf - Founding signatories of the UN Global Compact CEO Water Mandate. - Working group "Reporting and Communication" co-leader in the development of ISO Water Footprint standard. - Member of the Water Footprint Network.

Contribute to collaborative initiatives: (e.g. signatory of the CEO Water Mandate)

This cross-sector analysis measured actual abstraction for human use against existing accessible, reliable and sustainable supply in watersheds, leading to a comprehensive Nestlé is a committed leader in the public policy understanding of water overuse at national and global debate on restoring the balance between water levels. The effectiveness and cost of various ways withdrawals and the availability of naturally renewed to reduce that overuse were then compared, so that water. In 2009, we led a joint project, which included decisions on water management can be integrated the International Finance Corporation of the World into wider economic decisions. Nestlé will use these Bank Group and McKinsey, producing Charting Our findings in our public policy dialogue, with the aim Water Future: A new economic framework to decision that they have a major impact, both on national and making in November 2009. regional water policies and on our own efforts. Other objectives related to water risks, please describe: r We do not use any particular tools / management systems / standards / frameworks to reach any of the above objectives. r We plan to start using some tools / management systems in 2010. r Not applicable. Please provide explanations in the comment box below. r Not Known. Comment :

________________________________________________ ________________________________________________ _______________________________________

2.8.4 Risk Management - Quantity & Quality

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How does your company manage risks with regard to the available quantity and quality of water relevant for your operations? At corporate level, we have the overview of the following measures (please tick only if the statement is valid for at least 60% of your production plants / sites located in water-stressed areas and provide supporting documents): Corporate water management policy and plan in place. Systematic tracking and monitoring of availability at local level. Estimates of future changes in water availability on a local level. Scenario analysis with potential impact on operations r We have already taken some measures but for less than 60% of our productions plants / sites in waterstressed areas r We do not manage this at group level. r Not applicable. Please provide explanations in the comment box below r Not known Comment : - Nestlé Environmental Requirements are in place. - Guidelines for Sustainable Water Resources Management are distributed to all technical directors, factory heads and Water Resources Community in Nestlé Waters factories. This document is supported by the Water Resources Review program, an internal audit system that is conducted on a regular basis. - On the local level, a continuous water resource managing system is in place with daily monitoring (quantity and quality) done by Water Resources Champions or Factory Environmental Officers at each Nestlé factory. - A meeting with general management and water management is held on a quarterly basis to verify the available resources per factory versus Business Plan; an action plan is developed if a gap is identified. - Tools like our internal Water Stress Index and the Global Water Tool from WBCSD are used to rank the different sites, develop action plans and to continuously improve water management. This is reviewed quarterly with the general management.

2.8.5 Risk Management - Regulatory changes and pricing structure How does your company manage water-related risks in terms of regulatory changes and potential changes in price structure (e.g. water tariffs, withdrawal restrictions, discharge standards and discharge tariffs)? At the corporate level, we track and monitor the following (please tick only if the statement is valid for at least 60% of your production plants / sites located in water-stressed areas and provide supporting documents): Regulatory changes at the local level. Estimates of future potential regulatory changes on a local level. Scenario analysis with potential impact of regulatory or tariff changes on operations at local level. r We have already taken some measures but for less than 60% of our production plants / sites in water-stressed areas. r We do not manage this at group level. r Not applicable. Please provide explanations in the comment box below

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r Not known Comment : The Nestlé Regulatory Affairs team works with a network of regulatory contacts in the markets. These contacts track regulatory changes and also estimate future potential regulatory changes on the local level. Any changes and potential impacts are shared with Regulatory Affairs at market (country) level. A regulatory database is managed where all relevant regulatory documents are gathered for each market. It is updated as the local situation changes. Our Water Resources Review (WRR) programme focuses on five areas: water quantity; water quality; regulatory compliance; site protection; and relationships with other stakeholders.

2.8.6 Risk Management - Stakeholder conflicts How does your company manage stakeholder conflicts concerning water resources? Please tick only if the statement is valid for at least 60% of your production plants / sites located in waterstressed areas and provide supporting documents: Systematic tracking and monitoring of existing stakeholder conflicts. Estimates of future potential stakeholder conflicts. Scenario analysis with potential impact of stakeholder conflicts on operations. Active engagement with key stakeholders (local communities, NGOs, government bodies, large water users, etc.). Participation in integrated watershed management initiative in locations with key operations r We have already taken some measures but for less than 60% of our production plants / sites in water-stressed areas. r We do not manage this at group level. r Not applicable. Please provide explanations in the comment box below r Not known Comment : About 70% of the world's available freshwater is withdrawn for agriculture, and an average of 3000 litres is needed to produce one kilogramme of agricultural raw material, compared to less than 4 litres per kilogramme of finished goods for processing those materials into food and beverage products. Good water management is therefore fundamental to the livelihoods of the 2.6 million farmers who supply us both directly and indirectly through traders; it is also vital to us as a food company, for producing high-quality raw materials and in food processing, and also for the cooking and preparation of many food products by consumers. Beyond strict monitoring and compliance, we engage in specific water preservation activities with local stakeholders, depending on the local situation and needs. In Nestlé Waters Henniez, Switzerland, for example, water has been used sustainably for bottling since 1905 and for 15 years work has been done with local stakeholders on the implementation of land use practices that respect the environment and local water resources. Water used for bottling operations is collected only from existing springs, where hydrogeological modelling and water resources

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monitoring are used to track groundwater stability. This is already implemented across three-quarters of the recharge area.

2.8.7 Suppliers exposure to water risks Does your company know how exposed your critical tier 1 suppliers are to water-related risks? If so, please indicate how your supply chain exposure was determined. Yes, please comment: For key commodities representing 90% of our raw material spend, we have started in 2008 analysing main supplier's site locations (delivering Nestlé) in order to preliminary assess their water risk exposure. This was done in cooperation with the International Water Management Institute (Based in Sri Lanka) and the Word Business Council for Sustainable Development (WBSCD). As an example for milk supply (50% of our global spend being made through trade) we concluded that the main source of our milk derivatives are Australia and New Zealand. While these regions are not considered as water stress areas we had to go deeper in using the Global Water Tool from WBSCD to go at local level to confirm the preliminary assessment. For direct procurement of milk (the second half of our total spend) we are actually identifying our Nestlé sites via GPS locations in order to strongly assess the milk district around by using local data. r We plan to start in 2010 r Not applicable. Please provide explanations in the comment box below r Not Known Comment : Final information packages are not yet public but Commercial Contract with the IWMI can be given upon request.

2.8.8 Suppliers water risks management Do you collaborate with critical tier 1 suppliers located in water-stressed areas to minimize the following types of risks? If so, please indicate what measures are being taken. Measures

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Risks related to the quantity and quality of water

Since 2009 we started to make responsible sourcing audits of our key suppliers (see Supplier's standards chapter). Environment and water management are indeed entire part of the audit made at site level. Based on the gap analysis and, in certain case (India, China, Brazil) the outputs of the WBSCD Water Risk tool, Nestlé purchasing have the full hand book to work together with suppliers to: Either close gaps to local environmental regulations (regarding water management, site recycling plant etc) Or improve situation by disseminating best practices from other industry piers. A good example of what has been done on the ground can be found into the Nestlé Creating Shared Value Report under Supplier Development in India.

Risks related to regulatory changes or changes in Since 2009 we started to make responsible sourcing audits of our key suppliers (see Supplier's standards pricing structures chapter). Environment and water management are indeed entire part of the audit made at site level. Based on the gap analysis and, in certain case (India, China, Brazil) the outputs of the WBSCD Water Risk tool, Nestlé purchasing have the full hand book to work together with suppliers to: Either close gaps to local environmental regulations (regarding water management, site recycling plant etc) Or improve situation by disseminating best practices from other industry piers. A good example of what has been done on the ground can be found into the Nestlé Creating Shared Value Report under Supplier Development in India. Risks related to stakeholder conflicts Since 2009 we started to make responsible sourcing audits of our key suppliers (see Supplier's standards chapter). Environment and water management are indeed entire part of the audit made at site level. Based on the gap analysis and, in certain case (India, China, Brazil) the outputs of the WBSCD Water Risk tool, Nestlé purchasing have the full hand book to work together with suppliers to: Either close gaps to local environmental regulations (regarding water management, site recycling plant etc) Or improve situation by disseminating best practices from other industry piers. A good example of what has been done on the ground can be found into the Nestlé Creating Shared Value Report under Supplier Development in India.

r We plan to start in 2010 r Not applicable. Please provide explanations in the comment box below r Not known Comment :

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Under the framework of the Sustainable Agriculture Initiative (SAI), a collaborative, food industry-led group promoting the development of sustainable agriculture worldwide, the members of its Water and Agriculture Working Group, including Nestlé, are developing online resources through which to share best practice and helping to develop the methodology for water footprinting in agriculture. These resources will be tested and refined through several projects, including a six-month pilot project with the International Water Management Institute (IWMI) to study the water footprint of milk and other local crops in Punjab, India. Largely due to local over-exploitation by agriculture, industry and domestic use, the local water table is dropping by up to a metre a year and could affect the supply of milk in our Moga milk district, from which we buy 1.25 million litres a day from 100 000 farmers. Measures already in place include the recent Punjab Preservation of Subsoil Water Act, which promotes water conservation by delaying rice paddy transplantation, changing crop rotation patterns and encouraging less waterintensive crop species. Nestlé is currently working with the IWMI to identify key areas where local initiatives for better water management in agriculture could be developed.

2.8.9 Target and progress For the top 3 water-consuming plants currently located in water-stressed areas, what water-related targets have been established at plant level and what measures are being taken to achieve these targets? Please see the information button for the definition of fresh water consumption. Base line year Fresh water consumption of baseline line Target year Reduction Target Fresh water consumption in last FY Unit of data Year (YYYY) m3 Plant #1 2006 3434751 cubic meters Plant #2 2006 1573237 cubic meters Plant #3 2006 1318640 cubic meters

Year (YYYY) % of baseline value m3

2011 12 2610621 cubic meters

2011 12 1463455 cubic meters

2011 12 1191757 cubic meters

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Measures taken

Strong focus in water saving initiatives, resulting in much higger water withdrawal reduction than targets set. Additionally, a local water risk assessment has been performed (Water Resources Review) at this site in order to evaluate the sustainability level of water resources management, including a macro analysis of different water usages inside the factory to identify water savings opportunities areas.

Strong focus in water saving initiatives, resulting in much higger water withdrawal reduction than targets set. Additionally, a local water risk assessment has been performed (Water Resources Review) at this site in order to evaluate the sustainability level of water resources management, including a macro analysis of different water usages inside the factory to identify water savings opportunities areas.

Strong focus in water saving initiatives, resulting in much higger water withdrawal reduction than targets set.

Other target(s) r We plan to start in 2010.

_________ _________ _________ _ _ _

r Not applicable. Please provide explanations in the comment box below. r Not Known Comment : Our goal is to reduce consumption on a comparable basis by a further 10­15% over the next five years and we plan to develop more sophisticated and localised metrics for this important area.

2.8.10 Water used during products' life cycle Do you take water used during products' life cycle and potential shift of customers away from water intensive products into consideration when designing new products? We determine the virtual water content of each product. Our product declarations indicate our products' virtual water content and are readily available to our customers. We optimize the total quantity of water used through the utilization of each product over its lifespan and the impact that the product utilization might have on water quality.

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We take potential shift of customers demand away from water intensive products into consideration. We consider the impact of product disposal on water quality. r We plan to start in 2010. r Not applicable. Please provide explanations in the comment box below. r Not Known. Comment : To optimise the environmental performance of our products, we not only consider the environmental impacts of our manufacturing operations but also those associated with the other steps in the value chain. We therefore apply a life cycle approach, systematically assessing our product categories from farm to fork and beyond. We have been conducting Life Cycle Assessments (LCAs) to determine the environmental impacts of our major product categories including their packaging. This process, which considers production of agricultural raw materials, animal husbandry, processing, packaging, transportation, distribution, consumption and end-of-life, enables us to identify the risks and opportunities beyond our factories, and to work with our stakeholders to define and implement improvements. For example, the LCA of Nescafé Classic and a comparison with alternatives (drip filter and capsule espresso), as published in the Journal of Cleaner Production, found that approximately 50% of environmental impact occurs during the use phase. The study showed that overall, Nescafé Classic uses less energy and has a lower environmental footprint than drip filter coffee or capsule espresso coffee, particularly during the cultivation, treatment and delivery stages as it requires less green coffee per cup than for one cup of the two alternatives. The study resulted in four recommendations: · raise consumers' awareness regarding ways to improve efficiency during use, such as not boiling more water than is actually needed; · promote lowerimpact green coffee production methods, such as limiting the use of fertilisers; · optimise energy consumption when processing; · rethink packaging, eg by using lighter weight jars. For example, if consumers only boiled the required amount of water for each of the 4100 cups of Nescafé consumed each second, this would save twice the energy consumed by all Nescafé factories over the course of a year. Implementing these recommendations will help consumers to lower their own, individual "environmental footprints of eating (and drinking)". Our ambition is to further assist consumers of our other products in reducing their own environmental footprints through continuing to quantify the environmental impacts of our products and identifying ways in which we, our broader supply chain and our consumers can contribute to reducing these impacts. We use the results of such LCAs internally in our R&D processes, and share some of them with the scientific community to further improve reliability in sustainability assessment methods.

3 Social Dimension

3.1 Social reporting

3.1.1 Quality of Social Reporting In this section we evaluate the content, context and coverage of the social reporting included in other reports or on your website (e.g. own publication, part of a sustainability/CSR report or of annual report). The evaluation will be filled in by the responsible analyst of your industry.Please proceed to the next question. Comment :

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Please see the 2009 Nestlé CSV Report, online version. http://www2.nestle.com/Common/NestleDocuments/ Documents/Reports/CSV%20reports/Global%20report%202009/Global_report_2009_GB.pdf

3.1.2 Social Reporting - Assurance 3.1.3 Social Reporting - Coverage 3.1.4 Social Reporting - Qualitative Data 3.1.5 Social Reporting - Quantitative Data

3.2 Labor Practice Indicators

3.2.1 Labor KPIs Please complete the table and indicate which of the following performance/management indicators your company uses regarding the following labor relations related issues? Please provide figures covering the entire scope of the company and attach supporting documents. Issue Non-Discrimination / Diversity(ILO convention No. 111) Management / performance indicators Female of total workforce (%): 33 Female in management positions (% of total management workforce): 27 Breakdown of workforce based on minority, culture or similar Other diversity indicator, please specify: Employees split per geographic area: Europe 33.9%, Americas 38.0%, Asia, Oceania, Africa 28.1%. r No such indicators used

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Equal Remuneration female/male(ILO convention No. r t Executive level: 100) Average female salary:

__________

Average male salary:

__________

t Management level: Average female salary:

__________

Average male salary:

__________

t Non-management level: Average female salary:

__________

Average male salary:

__________

t Please specify currency: No such indicators used Freedom of Association(ILO convention No. 87; No. 98) t Employees represented by an independent trade union or covered by collective bargaining agreements (%):

____________________

__________

Number of consultations, negotiations with trade unions over organizational changes (e.g. restructuring, outsourcing): 4 Other indicators, please specify: Nestlé CARE Program r No such indicators used Layoffs (based on ILO's A GuideTo Worker Displacement) t Number of employees laid off in the last fiscal year: _ _ _ _ _ _ _ _ _ _ Number of consultations, negotiations with employees over organizational changes (e.g. restructuring, outsourcing): 4 Other indicators, please specify: Ratio between N° of employees in 2008 and 2009: there is a decrease of 1.6%. r No such indicators used

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Health and Safety (based on ILO'scodes of practices SafeWork)

Tracking of safety performance Tracking of work-related fatalities Tracking of near misses or similar crisis events Other indicators, please specify: Permanent disabilities, recordable injuries and occupational illness. r No such indicators used

r Not applicable. Please provide explanations in the comment box below. r Not known Comment : NON-DISCRIMINATION / DIVERSITY (ILO convention No. 111) - As a general rule, Nestlé adheres to a strict policy of non-discrimination based on gender, ethnic background, nationality, religion, and any other nonperformance personal characteristics. A major business strength of the company is that people from over 100 countries work together in one corporate culture, yet at the same time maintain their own national identity and culture. Nestlé has built its success and culture on this strong multicultural diversity. To leverage this critical competitive advantage further, we have implemented a worldwide initiative to accelerate gender balance. A series of concrete measures facilitating more gender diversity at the top have been implemented. This has initially focused on giving our leadership teams the necessary background and best practice guidance to increase gender balance. Nestlé introduced a series of metrics (KPIs), that will be monitored on an annual basis, to keep track of the evolution on gender statistics in the areas of recruitment, developing and retaining at both global and local levels. Some key human resources processes have also been reviewed. Locally adapted action plans are also being deployed in all markets. BREAKDOWN OF WORKFORCE: Nestlé is present in 83 countries both emerging (WHO definition) and developed. However, no consolidated breakdown of workforce is performed given that in some counties is considered as private information. EQUAL REMUNERATION FEMALE/MALE (ILO convention No. 100) : - Although we have no consolidated information at global level, the Nestlé Remuneration Policy provides that "Remuneration levels should properly reflect the skills and the efforts of an employee. Nestlé gives equal consideration to all employees, regardless of the level of their remuneration and without any discrimination with respect to their gender, age, nationality or religion". Moreover, regular meetings are held at market level between HR managers and employee representative to debate the question. FREEDOM OF ASSOCIATION (ILO convention No. 87; No. 98) - Nestlé CARE Program rolled out in all our operations checks (through independant external auditors) that Freedom of Association is respected. Since 1996, Nestlé Management and the employee representatives - recognising the value of exchange of information- established a "Nestlé European Council for Information and Consultation" (NECIC) based on an agreement in accordance with Directive 94/45/1994. This agreement provides a framework for the fair and frank exchange of timely and comprehensive information, dialogue and consultation between Management and employee representatives in EUR in order to improve mutual understanding and cooperation. 2 plenary meetings and 2 SC meetings are held twice a year. NUMBER OF EMPLOYEES LAID OFF in the last fiscal year: - This indicator is followed at Market level. HEALTH & SAFETY (based on ILO'scodes of practices SafeWork) : - We adhere completely to the international standard OHSAS 18001, which encompasses the ILO codes of safe work. We have plans to certify all our factories against this standard within the next two years. Tracking of safety performance is done through intranet software (NEST), which tracks individual incidents in all Nestlé sites worldwide. The system is totally transparent for the SH&E community, i.e. Safety Managers worldwide can benchmark themselves vs. other sites within the Nestlé Group (including Joint Ventures with >=50% Nestlé control). Tracking of work-related fatalities is done through the same software, plus immediate direct communication to company's top management through an ad-hoc

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procedure. Near misses are tracked locally in factories as well as all permanent disabilities, recordable injuries & the proportion of occupational illnesses in the total number of occupational injuries.

3.2.2 Grievance resolution Please indicate which systems are in place to collect and handle employee grievances and complaints to ensure that workers can raise their concerns in confidentiality. Help line Whistleblowing policy Independent person or department in charge of solving complaints by employees such as diversity committee, company ombudsman, please indicate name: Hotlines in various countries as ICAS (external outsourced hotline) + Nestlé CARE Program + Human Resources, Legal and Compliance departments in all countries Counseling Strict confidentiality ensured. Please specify: Employees are ensured that any complaint is dealt with confidentially and without any endangering of job safety Policies and related information widely circulated in appropriate languages r No systems available r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Regarding complaints handling, the Code of Business Conducts states on page 8, section 14, that complaints may be made on a confidential basis or through EMPLOYEE HOTLINES. If it is appropriate, in view of the nature of the reported matter, reports of violations may be made directly to higher levels including the GROUP'S CHIEF EXECUTIVE OFFICER and/or CHIEF COMPLIANCE OFFICER. Regarding the question on confidentiality, Nestlé believes in transparency, promotes an environment of open communication and condemns any form of retaliation against employees who make a report in good faith. Accordingly, employees are encouraged to bring complaints to the attention of their line management, the HR, LEGAL or COMPLIANCE FUNCTION. All of the aforesaid are fully aware of the need to treat any such complaint with the highest possible level of CONFIDENTIALITY. Moreover, Nestlé recognizes that employees may in some instances feel uncomfortable to file complaints openly. The Company respects such need or perceived need for ANONIMITY and therefore provides employees with the opportunity to make complaints on a confidential basis or through employee hotlines. For investigation purposes, Nestlé will not distinguish between reports filed openly and those filed on a confidential basis. We have hotlines in numerous Markets as well as Corporate hotlines for WHO Code violations and HR matters; We have an INTERNAL OMBUDSMAN system enabling employees to alert the company on potential non-compliance with the WHO Code on the Marketing of Infant Formula in a confidential way (p. 9 our Nestlé Corporate Business Principles) Morevover, the Nestlé CARE PROGRAM, a group-wide audit initiative launched in 2005, aims through independant external auditors at verifying that our operations comply with local legislation and with Nestlé Corporate Business Principles in the areas of Health & Safety, Labor standards, Business integrity and

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Environment. The Nestlé CARE Program comprises INDIVIDUAL CONFIDENTIAL INTERVIEWS that enable the external auditors to identify potential issues raised by the employees during those interviews.

3.2.3 Public commitment Does your company publicly endorse (having signed or publicly acknowledging adherence to) one or more of the following charters/frameworks? UN Universal Declaration of Human Rights ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy OECD Guidelines for Multinational Enterprises Other national / international charters related to labor practices/basic rights issues (e.g. based on above mentioned guidelines), please specify and attach document: see comments r No charter/s signed or publicly endorsed r Not applicable. Please provide explanations in the comment box below. r Not known Comment : The Nestlé Corporate Business Principles endorse the 10 Principles of the United Nations Global Compact (UNGC), whose Human Rights and Labour Principles are based on the Universal Bill of Rights (Universal Declaration and the two Covenants), as well as on the fundamental ILO Conventions. Furthermore the Corporate Business Principles commit the company to the OECD Guidelines for Multinational Enterprises, the ICC Business Charter for Sustainable Development and specifically refer to the UN Convention of the Rights of the Child, the ILO Convention 138 on the Minimum Age for Employment, the ILO Convention 182 on the Worst Forms of Child Labour and to the World Health Organisation's (WHO) International Code of Marketing of Breast-milk Substitutes. Nestlé also publicly supports the ILO Tripartite Declaration on Multinational Entreprises (see speech by Chairman Peter Brabeck at the ILO for the 30th Anniversary of the Tripartite Declaration, 16 November 2007 (http:// www.ilo.org/public/english/employment/multi/events/multiforum07/speeches/brabeck.pdf) The implementation of the Nestlé Corporate Business Principles is audited both internally and externally (through Nestlé CARE Program). The essence of the Corporate Business Principles is also contained in the Nestlé Supplier Code. Evidently, Nestlé complies with national law and regulations in the countries, in which it operates. At present, Nestlé is conducting a comprehensive Human Rights Compliance Assessment (HRCA) with the Danish Institute for Human Rights, in order to evaluate potential human rights risks in corporate policies or monitoring systems

3.2.4 MSA Labor Practices Indicators In this section we include a performance score on the Corporate Sustainability Monitoring with the objective to verify the company's involvement and management of crisis situations that can have a damaging effect on reputation. The evaluation will be filled in by the responsible analyst of your industry. No additional information is required from your company. Please disregard the comment box. _ _ _ _ _ _ _ _ _ _ Comment :

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________________________________________________ ________________________________________________ _______________________________________

3.3 Human Capital Development

3.3.1 Human resource skill mapping and developing process Please indicate the level of implementation of your company's formalized skill mapping and developing process. Please indicate the coverage for each employee category and attach supporting documents. Yes implemented for: Employee Category Executive/Top management Middle/General management First line management/Supervisor Specialists groups Other employees, please specify: _

Coverage in % 100 100 100 100

___________

________

70

r No formalized skill mapping and developing process implemented r Not applicable. Please provide explanations in the comment box below. r Not known Comment : In 2010, a new Performance Evaluation and Progress Development Guide was launched globally for all employees except those in hourly-paid jobs. All non-hourly paid employees are expected to participate in a formal process of Performance Evaluation and PROGRESS & DEVELOPMENT REVIEW which links achievement of objectives with an analysis of strengths and developments relative to functional skills requirements and behavioural competencies which are described in the NESTLE LEADERSHIP FRAMEWORK document. In addition, career development aspirations are discussed and documented. These are completed by employee in discussion with their immediate manager between December and February. The average completion rate of PDG (PROGRESS & DEVELOPMENT GUIDES) worldwide is around 80% (manual process in some markets prevents a fully accurate measure). For Hourly paid employees, local practices vary depending on the stage of maturity of the site, normally a simplified version of the PDG. It is Nestlé's aspiration that all employees have development plans. As part of the annual TALENT DEVELOPMENT CYCLE, management teams at Market, Regional and Corporate levels conduct talent reviews to agree on those with potential for further career development opportunities and make succession plans. Some functions (eg: Finance and Supply Chain) provide intranet-based detailed COMPETENCY-DESCRIPTIONS for all key functional positions, recommended curricula or other learning tools and career maps to show how to progress from one position to another, and recommended

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ways to acquire the competencies. A key Corporate HR initiative is to complete this for all Functions by end of 2010. This project is on track.

3.3.2 Human Capital performance indicators Please indicate which performance indicators your company uses to measure the execution of your skill mapping and developing strategy. Please provide specific documents on performance indicators. Non-financial indicators/ratios (e.g. number of hours spent in trainings, company-specific skills categorization), please specify: see comments t Cost-based indicators/ratios (e.g. training cost per employee), please specify:

____________________ ____________________

t Value-based human resource indicators (e.g. ROI - Return on investment per employee, EVA - Economic value added per employee), please specify: Other HR performance indicators, p lease specify: Nestlé Leadership Framework 13 behaviors - Nestlé on the Move r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Nestlé have established 15 Strategic / Globally mandated HR KPis to arm managers with the information needed to focus efforts in the Human Resources areas that have an impact on the business. The Strategic KPis that relate to developing strategy are * % Key Positions Filled by Succession Plan * Quality of Selection * Development Plan Quality * High Performer Turnover * Leadership Effectiveness Index Percent * % Female Managers * Low Performer Improvement Rate. Nestlé also expect each HR Function to produce "People Plans." People Plans are Business documents that align Business Tactical & Strategic Needs, People dimension risk management, & insight from HR Indicators to provide direction for how the talent within the organization is best managed and leveraged to drive business success.

3.3.3 Personal and organizational learning and development Please indicate the tools and processes widely adopted by your company to manage organizational learning and knowledge management. Formal knowledge/learning networks with regular meetings and staff support Intranet based Knowledge Repositories/Databases Intranet based interactive knowledge platforms integrated into daily work processes Peer group KPI comparisons across Business Units

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Systematically accessible process descriptions of best practice processes Company university or external comparable education facility Employee idea management system integrated r No such tools and processes used r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Emerging Markets (EM) benefit as any other market from the WORLDWIDE KNOWLEDGE AND TRAINING NETWORK of Nestlé. At Corporate level, NESTEC (Worldwide HQ Technical Assistance to Nestlé Operating Companies in the countries) ensures the adequate knowledge transfer from HQ to the Markets. Nestec covers all functions & categories of our businesses: Marketing & Sales, Procurement, Supply Chain, Technical & Production, R&D, Finance & Control, Human Resources, IS/IT... More than 3000 people work for Nestec. All people around the world can access information and knowledge on NESTEC INTRANET and the various REPOSITORIES. The IS/IT GLOBE project is now largely implemented across all Nestlé business operations and is based on 3 pillars: DATA STANDARDISATION; implementation of BEST PRACTICES; implementation of a STANDARD INFORMATION SYSTEM (SAP). In April 2009, GLOBE implementation in EM was 95% of NPS (see detailed calculation in reference). TRAINING & DEVELOPMENT actions are in place at various levels (Market, regional and global) to ensure that Nestlé people has the right understanding, skills, capabilities and behaviours to perform their jobs effectively and according to Nestlé standards. Nestlé Training & Development offering comprehends: - ON-THE JOB TRAINING, by far the fundamental element of training at Nestlé, ensuring handson experience in developing skills. This learning process is facilitated through: LINE MANAGERS as the first employee trainer. SUPER-USERS, subject matter experts dedicated (part or full time) to teach their colleagues on the use of best practices and SAP transactions related to employee's working processes. MENTORS, informal approach to learn from more experienced people within the same working site. - The TRAINING DEPARTMENT in every Market runs an annual training programme designed to close performance gaps that have been detected through a training needs assessment based on the PERFORMANCE EVALUATION (PE) and PROGRESS & DEVELOPMENT GUIDE (PDG) processes (for more details on the PE & PDG processes, please see Q77 to 79). - Through E-LEARNING PROGRAMMES, EM have access to the same learning curriculum and they are following the same pattern of education as other countries. Among hundreds of general e-courses offered at global level on all functional areas available in 5 languages, there are 294 especially developed for Nestlé. INTERNATIONAL WORKSHOPS are organized by Corporate Functions at Headquarters, aimed at consolidating/ improving participants' knowledge and/or skills in an area of existing expertise. - In 2009, NESTLE "RIVE REINE" INTERNATIONAL TRAINING CENTER in Switzerland offered 95 programs (one or two weeks duration each) to which 2657 employees from all over the world attended. 44% of those participants came from EM. Out of the 95 programs, 45 took place at Rive-Reine itself and 50 were decentralized in various Markets, 26 of which were delivered in emerging markets, whereby several of their local managers also play the role of instructors/speakers, emulating the spirit of Rive-Reine courses where 75% of speakers are internal experts from Headquarters including all members of the Executive Board. - In 2009, 95 managers followed a PROGRAMME at IMD, our preferred business school in Switzerland. 33 of them came from EM. At local level, 23 markets (from which 10 EM) use other business schools. In addition to our global technology platform and training programs, Nestlé uses INTERNATIONAL TRANSFERS AND PROJECTS extensively to exchange knowledge and skills. As noted in Q30, 39% of expatriates at the Centre HQ are from EM while 63% of expatriates from Switzerland are assigned to EM. In addition, we use SHORT TERM MISSION ASSIGNEMENTS of 6-12 months duration. Those missions are currently essentially driven by the NCE ( Nestlé Continuous Excellence Program ) but not only. In 2009, 40% of these missions assignments in Vevey were from EM.

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3.4 Talent Attraction & Retention

3.4.1 Coverage of employees through predefined performance appraisal process Please indicate the percentage for each employee categorization, which are covered by a predefined and standardized performance appraisal process. Employee Category Executive/Top management: Middle/General management: First line management/Supervisor: Specialist groups: Other employees, please specify: _ Coverage in % 100 100 100 100

___________

________

100

r No predefined and standardized performance appraisal process r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Please refer to Question N° 77. In addition, during 2010, a new PERFORMANCE EVALUATION PROCESS will be deployed globally which is designed to help managers and employees to clarify objectives and performance expectations have ongoing review and coaching as needed complete an interim review after 6 months complete a formal end of year evaluation of performance. Performance in this context is defined as WHAT (OBJECTIVES & JOB RESPONSIBILITIES) and HOW (with 4 GLOBALLY DEFINED BEHAVIOURS). This will enable all employees to have feedback about their performance and where they can improve

3.4.2 Percentage of performance related compensation for each employee category What is the share of performance-related compensation for each employee category as a percentage of total compensation (excluding pension plans and fringe benefits) that your company paid out in the last year? Employee Category Executive/Top management: Middle/General management: First line management/Supervisor: Specialist groups: Other employees, please specify: _ Percentage of total compensation 65 40 35 15

___________

________

6

r No performance related compensation r Not applicable. Please provide explanations in the comment box below.

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r Not known Comment : Performance criteria can be individual or collective. Ratio depends on level of the position.

3.4.3 Balance of variable compensation based on corporate and individual performance Please indicate for each employee category the percentage of variable compensation that is based on corporate and/or individual performance respectively. The sum of the percentages in each employee category (row) must equal 100%. Employee Category Share of variable compensation based on corporate performance [%] 30 30 30 100 100 Share of variable compensation based on individual performance [%] 70 70 70 0 0

Executive/Top Management Middle/General Management First Line management / Supervisors Specialist Groups Other employees, please specify: _

______________

r No performance related compensation r Not applicable. Please provide explanations in the comment box below. r Not known Comment : The payout of variable compensation is determined on the achievement of a set of predefined objectives. These can reflect corporate (collective) as well as individual performance. The weight of these two elements can vary between different Nestlé units. The overall objective is to have a balance between corporate and individual objectives. The split is determined by the level of the position in the organisation, the nature of the respective Nestlé Unit (operating company, head office). The figures in the table above provide an example for the head office of the Group. In operating companies, the weight of the corporate objectives is generally higher than in a head office unit. For Executive Board Compensation please refer to the Corporate Governance Report 2009 ( page 29 & 33 )

3.4.4 Corporate Indicators for performance-related compensation Please indicate your company's pre-defined corporate indicators relevant for the variable compensation of Executive / Top Management. Internal Financial Success Metrics (e.g. cashflow, EBIT, Revenues).

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t External Financial Success Metrics (e.g. Share price, Tobins Q). External Perception Metrics (e.g. reputational risks, customer satisfaction, feedback from stakeholder engagement). Environmental metrics (e.g. corporate Emission reduction). Social figures (e.g. corporate Health & Safety figure). r No corporate indicators relevant for performance related compensation pre-defined. r Not applicable. Please provide explanations in the comment box below. r Not known Comment : The variable compensation of Executive and Top Management at Nestlé is specific to the individual and to the function. Nestlé uses a combination of different Metrics in the performance related compensation, this is primarily Internal Financial Metrics ( examples: REAL INTERNAL GROWTH (RIG) , ORGANIC GROWTH, EBIT or WORKING CAPITAL EMPLOYMENT) but also includes External Perception Metrics ( examples: REPUTATIONAL RISKS, CUSTOMER SATISFACTION ); Environmental metrics (examples: WATER CONSUMPTION, GGH EMMISSIONS) and Social figures (examples: SAFETY & HEALTH FIGURES) For Executive Board Compensation criteria please refer to the Corporate Governance Report 2009 ( page 29 & 30 ) For Top Management an extensive list of Compensation criteria can be found at the beginning of the 2009 CSV report in the two pages performance summary

3.4.5 Type of individual performance appraisal Please indicate the type and employee coverage of individual performance appraisals, which are used for individual performance-related compensation. Management by Objectives: Systematic use of agreed measurable targets by line superior 100 % of all employees Multidimensional performance appraisal (e.g. 360 degree feedback) 100 % of all employees Formal comparative ranking of employees within one employee category 10 % of all employees r Not applicable. Please provide explanations in the comment box below. r Not known Comment : All managers and employees who receive individual performance related compensation are covered by a performance evaluation program. The objectives are stated at the beginning of the performance year, the achievement levels determined at the end. The achievement level of each objective (corporate and individual) determine the payout of the variable compensation For Executive Board Compensation please refer to the Corporate Governance Report 2009 ( page 29 & 33 )

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3.4.6 Communication of individual performance to upper management Is the individual performance of each employee (relevant for variable compensation) communicated to the next upper management level? Yes, regularly communicated. Please specify: Performance Evaluation (PE) and Progress and Development Guides (PDG) are reviewed and signed by the next level of management. In the new PE as from 2010, PE ratings will also be reviewed and calibrated by peer level management to ensure good levels of consistency. r Not communicated r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Performance Evaluation (PE) and Progress and Development Guides (PDG) are reviewed and signed by the next level of management. PE ratings are also reviewed and calibrated by peer level management to ensure good levels of consistency.

3.4.7 Payout type of total performance-related compensation Please indicate the type and its percentage share of total performance-related compensation (excluding pension plans and fringe benefits) which your company paid out/granted for the last year. The sum of all types of performance-related pay equals 100%. Payout Type Annual cash bonus Shares/share options immediately available or with a locking period of less than 4 years Shares/share options with a locking period of minimum 4 years Other pay-out types immediately available or with a locking period of less than 4 years, please specify: Percentage (Sum must equal 100%) 85 15

__________ __________ __________

____________________ ____________________

r No performance related compensation

Other pay-out types with a locking period of minimum 4 years, please specify:

r Not applicable. Please provide explanations in the comment box below. r Not known Comment :

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The company puts considerable emphasis on variable compensation. It is a reflection of its COMMITMENT TO PERFORMANCE. The large portion of variable pay is made up of the Annual Cash Bonus. It is determined by a combination of corporate and individual objectives. A smaller portion of variable pay is delivered through LongTerm Incentive Plans. These are essentially retention plans for key management staff. Participation in such plans is limited to around 1% of the total Nestlé population The blocking period of LTI benefits is generally three years. For Executive Board Compensation please refer to the Corporate Governance Report 2009 ( page 29 to 33 )

3.4.8 Trend of employee satisfaction Please indicate in the following table the satisfaction level of your employees based on your company's employee satisfaction surveys. Indicator 2006 2007 2008 2009 Trend explanation New Survey provider - see below

Employee satisfaction, e.g. committed, motivated, satisfied employees (100% equals maximum satisfaction level)

82

85

85

78

Percentage 58 of employees covered through employee surveys

35

45

12

12% equates to 34,077 employees participating in the new Survey in 2009

r No employee satisfaction trend analysis r Not applicable. Please provide explanations in the comment box below. r Not known Comment : In 2009 Nestlé asked Hay to become their preferred Global External Employee Survey provider. In 2009, 34,077 employees (12% of 283,000 employees) completed the Pilots and November 09 Survey Windows - Nestlé USA, Canada, Brazil, USA Dreyers, Nestlé Central America, GLOBE Centre Americas, Greece, South Africa, Nespresso HQ in Switzerland. All other Nestlé Markets will survey in 2010. Total of 80 Questions to choose from. First 22 Questions are global and mandatory, and include Engagement, Enablement & Leadership sections. The Engagement Section is our term for "Satisfaction" and the above % Favourable score above Hay's amalgamated score for the following questions - I am proud to work for my company / I feel motivated to go beyond my formal job responsibilities / My company motivates me to contribute more than is required / I would recommend my

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company to family or friends as a place to work / Given your choice, how long are you likely to work for the company?

3.4.9 MSA Talent Attraction & Retention In this section we include a performance score on the Corporate Sustainability Monitoring with the objective to verify the company's involvement and management of crisis situations that can have a damaging effect on reputation. The evaluation will be filled in by the responsible analyst of your industry. No additional information is required from your company. Please disregard the comment box. _ _ _ _ _ _ _ _ _ _ Comment :

________________________________________________ ________________________________________________ _______________________________________

3.5 Corporate Citizenship and Philanthropy

3.5.1 Group-wide Strategy (consumers focus) Does your company have a group-wide strategy that provides internal guidance to your corporate citizenship / philanthropic contributions? Please provide supporting documents and indicate which main business drivers underpin your company's business case for engaging in corporate citizenship / philanthropy. Yes, please specify the name of the internal document and add a reference: Nestlé Creating Shared Value Report 2009 A significant proportion of our existing customers are located in emerging markets OR our growth strategy focuses primarily on expanding in emerging markets Our products / services meet basic needs and stakeholders expect us to provide these to lower-income communities It provides input into new business development / product adaptation and enables us to expand our offering to match the diversity of customers Our business activities represent a major source of local development and added value to the local economy Other: Case studies: Gender Balance Japan, Women's Dairy Development Programme, Healthy Kids Global Programme, r We do not have a group-wide strategy r We plan to develop a group-wide strategy in 2010

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r Not applicable. Please provide explanations in the comment box below. r Not Known Comment : Question Nr. 1. pages 30, 36, 45, 4 Question Nr. 2: pages 30, 36, 37 Question Nr. 3: pages 72 Question Nr. 4: pages 70, 72 At Head Office, Corporate donations make contributions totalling CHF 4 mio (1 mio food donations - 3 mio money donations) Nestlé Earthquake Relief Chili and Haiti, Croix Rouge - Secours Enfants, Aide Suisse aux Montagnards, Swisscontact, Fondation Theodora, Epiceries Caritas, Pro Senectute, Nestlé Art Foundation, Alimentarium (Nestlé Foundation - Museum Nutrition), Nestlé foundation (Agriculture)

3.5.2 Type of philanthropic activities For the last fiscal year, please indicate on a consolidated group-wide basis what percentage of your corporate citizenship / philanthropic contributions falls within each category. Please see the information button for definitions and explanations on the categories. Category Charitable Donations Community Investments Commercial Initiatives Total must equal Percentage of Total Costs 50 50 0 100%

r We plan to start reporting our philanthropic activities according to these categories in 2010 r We do not report our philanthropic activities according to these categories r Not applicable. Please provide explanations in the comment box below. r Not Known Comment :

________________________________________________ ________________________________________________ _______________________________________

3.5.3 Input

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For the last fiscal year, please estimate the total monetary value (at cost) of your company's corporate citizenship / philanthropic contributions for each of the following categories. Please note that marketing and advertising budgets should be excluded from the calculation. Please specify currency: CHF Type of Contribution Cash contributions Time: employee volunteering during paid working hours

Total amount (in local currency) 90000000

__________

In-kind giving: product or services donations, projects/ 87000000 partnerships or similar Management overheads

__________

r Not applicable. Please provide explanations in the comment box below. r Not Known Comment : Time : Employee volunteering and Management overheads are not calculated separately

3.5.4 Measuring Benefits Does your company have a group-wide system in place to systematically measure the impact of your company's voluntary contributions in order to assess whether you have met your objectives for your corporate citizenship / philanthropic activities? If so, please indicate which KPIs your company uses to measure the impact of your contributions (max. 5 KPIs in each category) and provide supporting documents. Business Benefits KPIs Social / Environmental Impacts KPIs 165 553 Farmers trained through capacity-building programmes, CSVR 84/85/86

KPI #1, please specify:

CHF 107 618 million Nestlé Nutrition Sales volumes, page 30 of CSVR

KPI #2, please specify:

7252 Products renovated for 77 % Direct procurement markets nutrition or health considerationsm, covered by SAIN programmes, CSVR pages 33/34 CSVR pages 25/28/70/72

KPI #3, please specify: KPI #4, please specify:

__________ __________

3950 Populary Positioned Products, CSVR page 36 10 SAIN projects associated with water, CSVR page 70

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KPI #5, please specify:

__________

__________

r We plan to develop KPI to measure the output of our corporate citizenship / philanthropic activities by the end of 2010 r We do not have a group-wide system in place to systematically measure the impact of the company's voluntary contributions r Not applicable. Please provide explanations in the comment box below. r Not Known Comment :

________________________________________________ ________________________________________________ _______________________________________

3.6 Occupational Health and Safety

3.6.1 Lost-time injuries frequency rate (LTIFR) Employees & Contractors Please complete the following table with your company's lost-time injuries frequency rate (e.g. lost-time injuries per 1 mio hours worked) for employees and contractors. Please also indicate a benchmark figure for your industry / peer group and specify the unit. LTIFR Unit 2006 2007 2008 2009 Please explain trend

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1,000,000 0.52 incidents 0.42 incidents 0.32 incidents 0.23 incidents Nestlé invests hours - Nestlé per 100.000 per 100.000 per 100.000 per 100.000 enormous measures hours worked hours worked hours worked hours worked energy to work related increase the injury/illness awareness rate per 1 of safety in million hours the company. of exposure. Managers, This method team applies leaders and to both employees employees (many and contractors contractors. too!) are being nestlé has trained and approximately organisations 278,000 are constantly empoyees being worldwide. upgraded so as to reduce our accident rate by at least 20% every year. In the period 2005-2009, we have eliminated 80% of the injuries in the workplace. Please see "http:// www2.nestle.com/ CSV/ OurPeople/ HealthSafety/ Pages/ HealthSafety" for details. Unfaltering leadership commitment, initiated by the CEO (P. Brabeck until 2008 and P. Bulcke since then) and followed through by the Execuitve Board and all the command chain, is the main component 94 of 108, Copyright © SAM Research Inc., 2001 ­ 2010 of our safety strategy. It includes full employee involvement

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1,000,000 0.28 incidents 0.19 incidents 0.14 incidents 0.11 incidents The safety hours - Nestlé per 100.000 per 100.000 per 100.000 per 100.000 strategy measures hours worked hours worked hours worked hours worked mentioned work related above injury/illness includes rate per 1 any person million hours working for of exposure. Nestlé in This method our sites. applies Contractor to both safety is as employees important as and employee contractors. safety. Nestlé Contracts estimates the specify that number of contractor contractors to workers must approximately adhere to the 63,000 Nestlé Safety full time principles equivalents. and comply Contractors with the generally work Nestlé Safety with Nestlé Management only for short System periods and requirements. therefore the Contractors estimation is receive safety made based induction on the number before they of work hours start the work, declared and their by the managers are contractors thoroughly to the briefed about administration Nestlé's of the objective of respective not having sites where any accidents they worked. in our sites. In as much as possible, contractors are trained on safety matters, especially when their work requires interaction with Nestlé processes and systems. Any person entering a Nestlé site for 95 of 108, Copyright © SAM Research Inc., 2001 ­ 2010 work reasons, and who is not an employee, is considered a contractor.

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Benchmark Employees

A large 0.18 company active also in the Food sector is Unilever. They declared 163,00 employees for 2009. Unilever reports their injury/illness frequency rate per 1,000,000 hours since 2009. Previously, they used 100,000 hours.

0.12

0.10

_____

We believe the benchmarked company applies roughly the same strategy as us for safety, except they started a systematic effort 10 or 15 yeas before we did. We expect to be at roughly the same level as the leaders of safety in our industry in a couple of years, and we invest as much effort as necessary to attain this objective.

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Benchmark Contractors

We have not been able to find published data on contractor accident rate from other companies in our sector and our size range.

_____

_____

_____

_____

Most large companies we know do not keep track of contractor accidents. Many consider their temporary employees (temporary workers paid by an external organisation but managed functionally by the company) as contractors, contrary to Nestlé, who considers them as regular employees for all matters related to occupational safety and health.

r Not applicable. Please provide explanations in the comment box below. r Not known Comment : We have not been able to find benchmarking data about contractors in other companies. Also, the benchmark numbers indicated here are extracted from graphs published by the benchmarked company in the past (the benchmarked company decided not to publish LTIFr data as of 2009, replacing it with Total Recordable Injury Frequency rate). Nestlé publishes both LTIFr and TRIFr (Please see "http://www2.nestle.com/CSV/OurPeople/ HealthSafety/Pages/HealthSafety.aspx").

3.6.2 Occupational Illness Frequency Rate (OIFR) Employees & Contractors Please indicate your company's occupational illness frequency rate (OIFR) for employees for the year 2009. If you do not use OIFR, please indicate whether you use an alternative management tool to measure OIFR. in 2009 0.0138 incidents per 100.000 hours worked per million hours worked.

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r Not known r Not applicable Comment : Nestlé measures occupational illness frequency rate as "non event related injuries", i.e. any injury that is not due to an instantaneous event (accident). In 2009, less than 6% of all our Lost Time Injuries were due to non event related (NER) causes. Our NER LT Injury frequency rate is 0.138 per million hours of exposure, or 0.0138 per 100,000 hours. ERROR on this page: The legend below the box for data (see above) says "per thousand working hours", but it should say "per hundred thousand working hours".

3.6.3 Fatalities (total no) Employees & Contractors Please complete the following table with the number of fatalities for employees and contractors. Fatalities Unit 2006 2007 2008 2009 Please explain trend

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Employees (work-related fatalities)

Nestlé 3 employs approx. 278,00 people around the world, which means approx. 550 million hours of exposure.

11

11

3

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The absolute number of fatalities on site does not follow the trend we see in the reduction of all accidents. Despite all our efforts to prevent accidents in 2007 and 2008, we deplored 11 employee fatalities. In 2009, we had only 3. But we are not clear about whether there is a trend. When normalised vs. the hours of exposure, the figures become minute (0.005 per million hours in 2009, 0.02 in 2008). In these conditions, we believe the signal/ noise ratio is too weak to show true trends. Also, for several years now, we register more employee fatalities on the road than on our sites. In 2008 we started a companywide effort to increase our driving safety (Nestlé Safe Driving Program); unfortunately, the company has little or no control on the safety

SAM Research Corporate Sustainability Assessment Questionnaire

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Employees (non workrelated fatalities)

550 million hours exposure

2

4

6

5

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We believe there is no trend to be defined here. These fatalities are almost all due to cardiovascular problems or other noninfectious personal health conditions. Nestlé has programs to inform and educate employees about nutrition and lifestyle factors that may influence life expectancy. Please see http:// www2.nestle.com/ CSV/Nutrition/ Pages/ Nutrition.aspx. However, cardiovascular and other medical conditions may have been acquired before the victims entered into the Nestlé sphere of influence. Therefore, it is impossible to correlate this type of fatalities with our preventive and educative actions. In countries where HIV is endemic (e.g. South Africa), Nestlé has programs to help our employees deal and

SAM Research Corporate Sustainability Assessment Questionnaire

DJSI Sustainability Assessment 2010 NESTLE SA/AG

Contractors (work-related fatalities)

In 2009, we 5 registered approximately 150 million hours of contractor work (all contractors included: construction, repair, maintenance, support to production, etc.).

4

3

1

Nestlé is increasing its influence and control over work done by contractors on our sites. And the number of fatalities seems to be dropping consistently. However, we are not sure that this seemingly clear trend is true, since we do not see a similar correlation for our employee fatalities. We nevertheless put all our energy to prevent any deaths of employees or contractors indifferently.

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Contractors (non workrelated fatalities)

150 million hours of exposure

2

4

3

6

Contractor fatalities non related to work are a reflection of the health conditions in the countries where they work. Please refer to the comments about employee non work related fatalities. To learn more about Nestlé's efforts to educate employees and public in general about healthy nutrition (which can help increasing the life expectancy and therefore reduce non work related fatalities), To know more about our efforts to improve nutrition awarenes as a way of improving life in general and also life expectancy (reduction of non work related fatalities) please see http:// www2.nestle.com/ CSV/Nutrition/ Pages/ Nutrition.aspx.

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r Not applicable. Please provide explanations in the comment box below. r Not known Comment : The figures given above are absolute numbers. A proper comparison with other companies (benchmark) should be normalised, so as to take into account the size of the exposure and not simply the absolute numbers. Most non work related fatalities are due to cardiovascular problems. We gather information about fatalities (whetehr or not related to work) occurring on site for employees and contractors. We also have information about fatalities of employees at work off-site. But we are unable to gather off-site information for contractors.

3.6.4 MSA OHS In this section we include a performance score on the Corporate Sustainability Monitoring with the objective to verify the company's involvement and management of crisis situations that can have a damaging effect on reputation. The evaluation will be filled in by the responsible analyst of your industry. No additional information is required from your company. Please disregard the comment box. _ _ _ _ _ _ _ _ _ _ Comment :

________________________________________________ ________________________________________________ _______________________________________

3.7 Standards for Suppliers

3.7.1 Standards for suppliers For which of the following areas has your company established standards for suppliers across all countries of operation? Please provide supporting documents. Environmental standards/requirements Environmental management systems for the suppliers' operations Environmental standards for products and services delivered by suppliers Other environmental standards, please specify: Environmental Standards for farmer's operations (considered as suppliers) t Environmental standards of suppliers under development. Roll out planned within ( months):

____________________

Labor standards/requirements Non-Discrimination (based on race, sex, etc.)

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OHS (Occupational Health & Safety) Layoff practices Forced or slave labor Child labor Freedom of association Wages Working hours and overtime Disciplinary practice Guidance regarding sub-contracting Other labor standards, please specify: Labor standards for Collection and Buying Stations (middle men in upstream supply chain) t Labor standards of suppliers under development. Roll out planned within (months)::

____________________

r No standards r Not applicable. Please provide explanations in the comment box below. r Not known. Comment : Nestlé has two main sources of supply (Introduction): 1. Directly from 540'000 farmers (in the case of milk, coffee, fruits, vegetables and specific supply chains e.g. cereals) 2. Indirectly through 20'000 currently in use suppliers (local manufacturers of semi processed materials raw, packaging and services and indirect materials), while 8'025 regrouped suppliers (same company names) represent 90% of our total spend. This chapter goes into details of 2. However the same principles apply to 1. and is described into 2.7 Raw Material Sourcing. A- SUPPORT OF INNOVATIVE AND ECO FRIENDLY OPERATIONS (Question Environmental Standards/requirements) Delivery of all materials/goods to Nestlé has to be carried out by energy-efficient, economic, and pollution-controlled means of transportation. Suppliers are evaluated based on environmentally sound business practices detailed into "Env. Policy Quick reference Guide 2010". Suppliers are audited accordingly by approved and certified external third party auditors. B- PRE REQUISITE: As a pre requisite all materials bought from suppliers must meet local and international regulatory compliance requirements as well as Nestlé food safety and quality specifications, including limits on possible environmental contaminants. This, as described on C and D- is audited accordingly. C- OPERATIONS OF OUR SUPPLIERS Nestlé does audit manufacturing sites of our selected suppliers and requires that supplier's production sites: ­ RATIONALIZE the use of natural resources in order to minimize the NEGATIVE IMPACT on the environment (noise, air pollution, odors, energy, unnecessary transportation); ­ MAXIMIZE the production cycles in order to MINIMIZE the amount of WASTE produced and disposed of (gases, solids, liquids, waste water, etc.); ­ PREVENT any cross contamination or adulteration entering manufacturing process (e.g. heavy metals in pigments & printing inks, etc.) to ENSURE critical control points are safe. This is described into the "GMP Quick reference Guide 2010" attached and is audited on a risk assessment basis (from 1 to 5 years) by internal Nestlé audit group in by external third party companies (50/50), checking reality of operations at supplier site level. D- SELECTION OF SUPPLIERS (Question Labor Standards / Requirements) At Nestlé, there is a clear procedure to select new suppliers. This procedure is called the Vendor Approval Process (document "Vendor Approval Process Quick Reference Guide 20100429.docx") and is following 3 major phases: 1- Pre qualification of suppliers (following a risk assessment evaluating suppliers regarding their financial stability, technical & ensuring supply ability, food safety & quality standards, responsible sourcing = ethical practices); 2- Audit of the suppliers pre-selected out of phase 1. This regarding Food safety, quality as well as responsible sourcing = ethical practices. For critical materials technical & ensuring supply (including eco friendly practices) ability is audited as well. This is audited through external audit companies to preserve objectivity. 3- Approval of vendors (internal Nestlé) where we give global visibility of supplier being officially approved out of phase 2. to

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all Nestlé markets around the world (to unlock supplier's chance to supply other countries). E- RESPONSIBLE SOURCING = AUDIT OF SUPPLIER ETHICAL PRACTICES The Nestlé Supplier Code defines the minimum requirements we ask our suppliers to respect in making business with us ("NSC Quick reference Guide 2010" attached). The Nestlé Supplier Code is communicated systematically to suppliers through our business contract and is compulsory requirement to respect. Nestlé made it SIGNED and ACKNOWLEDGED by ALL SUPPLIERS, regardless of material, service or location in order to organize the second step of the Vendor Approval Process (see D- above) which is the external third party audit of supplier's ethical practices called Responsible Sourcing.

3.7.2 Implementation of standards for suppliers Please indicate which of the following elements your company has established to assure effective implementation of its standards for suppliers. First audits conducted at 100 % of sites of new suppliers in 2009. Internal re-audits/spot-checks conducted at 50 % of supplier sites during 2009. Independent external audits/spot-checks conducted at 25 % of sites during 2009. Require certification of suppliers to international standards (such as SA8000, ISO14001 or similar), please specify these standards and the level of implementation across your suppliers' base: A- Suppliers have to comply with the Nestlé Supplier Code which is based on international standards and conventions. BCertified management systems according to ISO 14001, OHSAS and SA 8000 are recognized as evidence of compliance with the corresponding requirements of the Supplier Code. This is an incentive for suppliers to obtain such certification and to avoid Responsible sourcing audits. Corporate-wide information system for audit results, degree of compliance, action plans, schedules, please specify: A- Nestlé promotes the use of Sedex (www.sedex.org.uk) to suppliers in order to store supplier ethical performance, Responsible Sourcing audit results, monitor degree of progresses on action plans. B- Sedex allows suppliers to share audit reports and self-assessments with customers of their choice and thereby avoids duplication of assessments and audit fatigue. Sedex is also a third party company which guarantees the confidentiality of the information to suppliers, see SEDEX website attached. Provide opportunity for third parties to report non-compliance. Activities to integrate sub-contractors into the compliance system, please specify: Contract-manufacturers and sub contractors are considered as suppliers and should either make proof of certifications valid for parts of the Responsible Sourcing audit or either organize a full Responsible Sourcing audit in an agreed time frame (max 6 months) with Nestlé. So far all co-manufacturers have been covered since they use Nestlé brand, image and recipes. Other activities to assure effective implementation of your standards in your suppliers operations. Please specify: Nestlé is a member of the AIM-PROGRESS Task Force, an initiative of the leading FMCG companies that support the use of common evaluation methods to determine supplier performance and help to promote responsible sourcing practices within the supply chain. Through this task force we are running Supplier Days in fast growing markets to increase awareness of our suppliers but also suppliers that are not yet our partners. This is indeed leveraging our program to the industry level. r No formal assurance system for the implementation of standards for suppliers in place. r Not applicable. Please provide explanations in the comment box below.

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r Not known Comment : Regarding percentages given above: - According to the Vendor Approval Process described in 3.7.1 all new suppliers have to go through food safety/quality AND Responsible Sourcing audits, no exception (see "VAP Quick Reference Guide 2010" attached). - Nestlé has an internal target of re auditing 50% of its supplier base every 2 years (for Food Safety and Quality) and every 3 years for Responsible Sourcing. - This is done using external third party approved and recognized auditors (SGS, BVQI, ITS for Responsible Sourcing, larger group for Food Safety and Quality). Taking into consideration chapter 3.7.1 Nestlé check the on site implementation of standards by suppliers regarding: A- SAFETY and QUALITY (Performance indicators and achievements) As described Nestlé requests Food Safety and Quality audits of its suppliers based on the material risks. In most of the case, these audits are performed by Nestlé Quality Teams to ensure that suppliers comply with our internal high level specifications. In 2009 Nestlé has achieved the target of 3'200 audits of supplier sites to ensure that food safety and quality as well as regulatory compliance mandatory practices are respected. In 2 years time we cover 50% of our entire supplier base to be audited. B- RESPONSIBLE SOURCING = ETHICAL AUDITS (Performance indicators and achievements) In line with the full acknowledgement of the Nestlé Supplier Code by our entire supplier base, we are actually aggressively running the audit phase as well. In the past our global database contained 165'000 vendors, however we finished the exercise to clean our database of obsolete and unused vendors and we came with a clean database of 20'000 vendors. However 90% of our total spends is covered only by 8'025 vendors. · Raw Materials -> 1'054 vendors = 90% of spend · Packaging Materials -> 377 vendors = 90% of the spend · Services and Indirect Materials -> 6'594 vendors =90% of the spend The Responsible Sourcing objective is to carry 1'800 audits for 2010-2011, always covering 90% of our total supplier's spend and cover accordingly 25% of our total supplier base. Current status is 10% in April 2010 while increasing daily (please refer to "Responsible Sourcing Quick reference Guide 2010" attached). Indeed the process to verify compliance of our suppliers with the minimum requirements of the Nestlé Supplier Code is called "Responsible Sourcing". This is done by external third party audit companies to ensure objectivity of the audit results.

3.7.3 Managing non-compliance Please indicate which of the following options your company has implemented to deal with non-compliance of its standards for suppliers. Please provide supporting documents. Policies and procedures for management of non-compliance in place Defined categories of non-compliance and defined categories of remediation actions Joint company-supplier corrective action plan coupled to reaudits Organisational learning built into non-compliance management (e.g. change in reporting lines) Effects of remediation on worker's/community's social fabric taken into account r No guidelines existing r Not applicable. Please provide explanations in the comment box below. r Not known Comment : Background (as per 3.7.1. and 3.7.2) - Acknowledgement of the Supplier Code is a condition to supply, Compliance with the Nestlé Supplier Code is a standard criterion for the approval of suppliers, - This compliance is checked through external third party Responsible Sourcing audit. A- DEFINITION OF NON COMPLIANCES

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(questions "Policies and procedures", "defined categories") There is a clear Nestlé definition of minor, major, critical non compliances (see document attached "Responsible Sourcing Program Reference PPT 2010" slide 8). At the discovery of non-compliance, Nestlé demands that appropriate corrective measures are taken in an agreed time frame. Nestlé doesn't draft the actions and the time frame required alone, it is done with the external third party auditors with the full involvement of suppliers. If critical non compliances are found, external third party audit companies have the duty to alert Nestlé within 24 Hours following the audit visit. If major or critical non compliances are found Nestlé reserves the right to stop the commercial relationship with the suppliers without buffer timing as stated in the business contract. B- FOLLOW UP OF NON COMPLIANCES (questions "joint company-supplier" and "organizational learning", "Effects of remediation") There is a joint effort made by Nestlé together with suppliers to improve non best in class practices highlighted during ethical audits. Nestlé and external auditors gives as benchmark best practices seen in other supplier's sites and suppliers learn accordingly from their peers. Evidence of effective implementation of corrective actions is mandatory - either through a follow-up audit or desktop evidence if appropriate. Nestlé strategic buyers have the personal objectives to follow up actions plan agreed with suppliers during the Vendor Performance Monitoring embedded into the Vendor Approval Process steps. Nestlé reserves the right to terminate supply agreements in case of major or critical noncompliances or if follow up actions are not taken. There is a monthly procurement call per zone to review major non complaint's supplier' situation in order to take necessary actions and decisions.

3.7.4 Coverage Please indicate the share of procurement costs for goods sourced according to these standards as a percentage of total procurement costs in the year 2009. 98 % of total costs of goods r Not applicable. Please provide explanations in the comment box below. r Not known Comment : A- Acknowledgement of the Nestlé Supplier Code is a pre requisite for suppliers to make business with Nestlé. We made it compulsory since 2008. B- Few suppliers didn't acknowledge it yet but this is only related to very few exceptions where we are currently closing gaps (i.e. suppliers of raw cocoa located in Ivory Coast which don't have full transparency on upstream supply chain of cocoa beans). In few exceptional cases we had mutual recognition process of codes of conduct with for example big commodity supplying companies. C- Audit phase of our suppliers is running as described in 3.7.1; 3.7.2; 3.7.3; and is expanding day to day to cover the entire supplier base in the midterm.

3.7.5 MSA Standards for Suppliers In this section we include a performance score on the Corporate Sustainability Monitoring with the objective to verify the company's involvement and management of crisis situations that can have a damaging effect on reputation. The evaluation will be filled in by the responsible analyst of your industry. No additional information is required from your company. Please disregard the comment box. No comment as requested Comment :

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________________________________________________ ________________________________________________ _______________________________________

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