Nestlé to blacklist unsustainable suppliers

The group has also pledged to plant 3m trees in the next 3 years in a bid to address climate change issues


NESTLÉ (M) Bhd will blacklist key raw materials suppliers who are not meeting its sustainability and environmental requirements to tackle deforestation and unfair labour practices.

Its CEO and regional head for Malaysia, Singapore and Brunei Juan Aranols (picture) said Nestlé SA has been implementing a satellite-based service, namely Starling, to monitor and track the group’s palm oil supply chain.

“Starling is a project initiated by Nestlé, which is in partnership with Airbus SE and the non-profit organisation The Forest Trust, to track deforestation in the area where we obtained our immediate stocks.

“It has been in place to monitor whether the companies are meeting our stringent requirements. We will blacklist suppliers who are not meeting the requirements, such as fair labour practices, and it cannot be compromised,” he said at the launch of the RELeaf Project in Putrajaya yesterday.

In 2019, Starling picked up about 388,047 alerts on deforestation within 50km radius from the mills which Nestlé sources its palm oil from.

The total figure represents about 472,513ha of forest losses for the year.

However, it said only 5% of the total forest area lost occurred within the boundaries of its supply chain, as it does not have the specifications of its concession boundaries of its entire supply chain.

Starling service can monitor the entire palm oil companies who are in Nestlé’s list of the global supply chain, both certified and non-certified.

Last year, the fast-moving consumer goods (FMCG) group approximately sourced 455,000 tonnes of palm oil and palm kernel oil while achieving 62% traceability of the plantations, 93% traceability of the mills and 79% of responsibly sourced palm oil.

Separately, Nestlé Malaysia has pledged to plant three million trees in the next three years through its RELeaf Project in a bid to address climate change issues.

The RELeaf PROject is a reforestation initiative in Malaysia that contributes to the company’s global pledge to achieve net-zero greenhouse gas emissions by 2050.

It is a tripartite collaboration with Yayasan Sime Darby and the Sabah Forestry Department.

The green project extends Nestlé’s pioneer sustainable project, the Kinabatangan RiLeaf Project, which has helped plant one million trees in Sabah.

Nestlé Malaysia added that by widening its sustainable footprint to Peninsular Malaysia, the group aims to enhance its efforts in restoring riparian and forest ecosystems, contribute to the wildlife corridors, and mitigate conflicts between animal and human.

Aranols said Nestlé is allocating about RM6 million annually on the RELeaf Project. He added that the project is expected to focus on East Malaysia for the first and a half-year before it would be expanded to Kinabatangan.

The project will then be carried on to the peninsula at different locations along the Central Forest Spine in beginning 2021 until early 2022.

In total, Nestlé Malaysia will be planting three million trees across the Kinabatangan Wetlands and Merisuli Forest Restoration areas in Sabah, as well as in forest reserves along the Central Forest Spine in Peninsular Malaysia.

As of September 2020, one million trees have been planted across more than 2,700ha of degraded forest.

Commenting on the outlook of Nestlé Malaysia’s business, Aranols said the FMCG group is hopeful of its financial recovery in the third quarter (3Q) while recognising the unstable condition of the economy.

“Recently, our 2Q was a special period due to the impact of Malaysia’s Movement Control Order (MCO). However, we are hopeful of 3Q as the sectors, which brought us down in 2Q, are slowly recovering.

“Due to the uncertain economy not just in Malaysia but globally, we are cautiously optimistic for recovery as we adapt to the new normal,” he said.

The group said the lack of sales to commercial clients in the hotel, restaurant and cafe business has hit its sales and lowered profit for 2Q ended June 30, 2020, as its earnings declined 32.73% year-on-year to RM105.53 million.

Shares of Nestlé Malaysia rose 30 sen or 0.22% to RM139.30 at yesterday’s closing, bringing its market capitalisation to RM32.67 billion.