Case Study 1

Nestl Doing Better by the Environment

Nestle As A Sustainable Business
As the world's largest food company, Nestl S.A. is dedicated to providing consumers with
the best food throughout their lives. The primary role of the Company is the transformation of
natural resources into finished products that meet consumers expectations for safety, quality,
convenience and value. Naturally, Nestl is committed to sustainable development and
environmentally sound business practices. The key drivers for Nestl's worldwide
environmental approach are:

total compliance with all laws and regulations in all countries where it operates

that Nestl seeks to provide a leadership role - to establish the benchmark for good
business practice

By committing resources, both human and financial, to secure environmental targets,

including:

employing new technologies and processes

measuring the costs and benefits to the business of its activities

ensuring employees are aware of best practice.

To be effective a programme of environmental improvement must be supported by practical

management systems. Nestl's worldwide approach, therefore, has been to:

set targets for environmental improvements

monitor progress

audit results

review targets.

Progress To Date - An Example From Nestle uk

In the UK a series of surveys at all Nestl UK locations formed the basis for a programme of
continuous improvement. Action plans were developed for each Nestl UK site, including
capital expenditure plans for environmental protection.
Nestles Environmental Management System
NEMS is an organisational tool at the heart of Nestl's programme for the environment, and
sets the framework for all measures applied.
The NEMS objectives include:

To provide a systematic approach that ensures compliance with Nestl's

environmental policy, relevant laws and Nestl's operational standards.

To ensure the continuous improvement of Nestl's environmental performance, e.g.

through the conservation of natural resources and the minimisation of waste.

To achieve compatibility with international voluntary standards on environmental

management systems.

To build mutual trust with consumers, governmental authorities and business partners.

NEMS is being implemented throughout Nestl S.A.'s entire operation.

Ways In Which Nestle Is Doing Better By The Environment
Nestl UK's commitment to sustainable business practice is illustrated by two business
examples of areas where improvements are being made:
Packaging
Packaging is essential to maintain the high quality of the products. Nestl continuously
reviews packaging and, where possible, reduces the amount used. This results in saving on
materials such as glass and plastics. Nestl is also playing its part in meeting national targets
for the recovery and recycling of packaging waste. Nestle has established a set of criteria for
evaluating packaging. These are:

Is the packaging appropriate for the product?

Is the size of pack justified?

Are there any unnecessary components within the pack?

Could any of the components be reduced in weight or thickness?

Could the manufacture and construction of the outer packaging be made simpler?

Is the material re-usable or recyclable? Between 1991 and 2000 Nestl UK has been
able to reduce its consumption of materials by up to 10

Major achievements in this area included:

Removal of the inner plastic sleeve from Kit Kat Bumper packs saving 160 tonnes of
plastic per year.

A reduction in the thickness of 200g Nescaf jars saving 1041 tonnes of glass per
year.

A reduction in thickness of base material for chilled dessert pots saving 150 tonnes of
plastic over a two year period.

Energy management
As an integrated part of its environmental policy, Nestl UK is committed to responsible
energy management and seeks to use energy as efficiently as possible. This is done to:

improve cost-effectiveness, productivity and working conditions

prolong the useful life of fossil fuels

avoid unnecessary expenditure

prevent related emissions to the environment.

This involves seeking to buy fuels at their most economic cost and then to use them as
efficiently as possible. It also means a reduction in pollution, and less dependence on nonrenewable resources. In the short-term this involves gaining better control over energy
consumption. Different operations are measured to determine energy usage. Nestl is
investing in energy saving measures as well as staff that are properly informed. Carbon
dioxide is the most significant of the greenhouse gases believed to be responsible for the
effects of Global Warming. The Kyoto Conference on Climate Change (1999) has meant that
the UK and many other Governments have entered into a legally binding agreement to reduce
greenhouse gases. In addition, the Government has set a unilateral target of 20reduction of
carbon dioxide by 2010 from 1990 levels. This is a summary of the steps taken by Nestl UK
since 1994 to reduce greenhouse gas emissions:

the replacement of a coal-fired steam raising plant with a gas-fired combined heat and
power plant at York, saving 45,000 tonnes of CO2 per year

similar changes at Dalston - saving 24,000 tonnes

Ashbourne - saving 9,000 tonnes

Fawdon - saving 12,500 tonnes.

All figures shown relate to savings made per year.As a company which produces frozen,
chilled and other perishable foods, refrigeration is essential to many parts of Nestl's
production and distribution systems. Nestl is progressively cutting refrigerants that are
potentially harmful to the environment. In the late 1980's a survey indicated that up to 10of
refrigerants used by the company in the UK were CFCs. The decision was made to phase out
CFCs in all but small, hermetically sealed systems and today this programme is complete.
Nestl Policy and the Environment Protection Act all forbid the deliberate discharge of
refrigerants into the atmosphere. Where refrigerant has to be removed from a system and
cannot be immediately reused, it is recovered and sent for recycling or disposal by suitably
qualified companies.
Conclusion
World governments are increasingly realising their responsibility to develop and implement
shared solutions to global environmental issues. At the same time responsible businesses like
Nestl S.A. are taking on a leadership role. This should drive forward changes in policy and
practice which will help us all to enjoy a sustainable future.

For Discussion
1.
2.
3.
4.
5.

How can the removal of the inner plastic sleeve from Kit Kat Bumper packs be seen as a
move towards sustainability?
Why are International Treaties like Rio and Kyoto important in encouraging sustainable
business practice?
Give one other example of how Nestl has developed business practice in line with
Agenda 21s seven point plan for business.
Why is it important for organizations like Nestl to show leadership in developing
sustainable business practice?
What further steps could Nestl take in contributing to sustainability?

Case Study 2
IKEA Systems BV
IKEA Systems BV (IKEA) is a Sweden-based furniture retail giant. Since its 1943 founding
in Sweden, IKEA has offered home furnishings and accessories of good design and function
at low prices so the majority of the people can afford them. IKEAs vision is to: Create a
better everyday life for the many people.The present case highlights its journey in becoming
environmentally responsible by taking various initiatives to ensure that its operations did not
have adverse effects on the environment. IKEA was primarily involved in furniture retailing;
initially most of its furniture was made of wood, which required the felling of trees. To
process the wood, many chemicals were used, which were harmful to the environment and to
the consumers. IKEA realized that better environmental practices within the company and
among its suppliers would have long-term benefits, not only economically but also in
presenting a positive corporate image of it to customers.
Environment Friendly Products : In order to minimize the use of wood in its furniture,
IKEA concentrated on bringing out products made of recycled and reusable material. The
team ensured that the products were free from substances that caused allergies or products
that were harmful to the health and the environment.
Environmental Training : IKEA started off with a 'train the trainers' approach to spread
environmental awareness across the organization. Trainers from each department, employees
involved in product design and those in direct contact with customers from the purchase,
distribution, and retail departments, attended a weeklong training course. The training
modules included the imparting of basic environmental knowledge
Eco- Friendly Practices. Apart from developing a wide range of eco-friendly products,
IKEA also adopted several eco-friendly practices, right from choosing the location of its new
stores to using alternative sources of energy, waste management, and transportation. For
constructing new stores, IKEA followed policies and procedures that ensured that the
buildings were durable and sustainable. IKEA generally chose Brownfield land for its
showrooms. Selecting brownfield land had advantages, as these sites were generally situated
in densely populated locations, which was ideal for IKEA's business.
Making suppliers Environmentally Responsible and Following Sound Forestry
Practices : IKEA's main activity was furniture retailing, which required huge quantities of
wood. The company relied on its suppliers to obtain wood. IKEA realized that if the wood

was obtained from illegal sources and protected forests, it could considerably damage its
reputation. Hence, an audit of suppliers was put in place to ensure that sustainable forestry
practices were employed in the sourcing the wood. IKEA obtained timber from 44 countries
and took care not to use the timber obtained from intact natural forests. The long term goal of
the company was to source all the wood from well- managed forests. IKEA followed
staircase models for the suppliers and with regard to forestry practices. IKEA's products were
manufactured at the facilities of 1600 suppliers spread across Europe, North America, and
Asia. Almost two-thirds of IKEA's suppliers were in Europe, one-third in Asia, and about 3%
were in North America. The products were made by the suppliers according to IKEA's
specifications. Purchasing was handled by 43 trading service offices under 16 regional
trading areas.
For Discussion and Analysis
1.
2.
3.
4.

List 4 steps taken by IKEA towards Environmental Conservation.

Analyse how eco-friendly practices can help a company minimize its costs
Examine how eco-friendly practices can enhance an organization's image
How IKEA went about implementing its environmental policies across its global
operations
5. How IKEA extended its environmental responsibility initiatives to its employees and
consumers
6. Identify a case similar to IKEA ,benefited from eco-friendly practices