Contemporary Issues in Accounting for Nestlé: A Sustainability Reporting Analysis

This report analyzes the present social issues in accounting and evaluates the impact on stakeholders, with a focus on sustainability reporting for Nestlé. It includes key details about current issues and practices and their implications for financial decision-making.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student
Name of the University
Author’s Note

1CONTEMPORARY ISSUES IN ACCOUNTING
Executive Summary
The discourse of the study has highlighted on the present social issues in accounting and also
determined its effect on the stakeholders. Some of the main discourse of the study has included
the present state of sustainability reporting for Nestlé. The study has further included the key
details about current issues and practices which has explained the implications for various
stakeholder in relation to financial decision-making. The important finds have revealed that the
company has improved in areas such as renovation of products for nutrition or health
considerations, products with reduction of sodium, sugar, Trans fat, total fat, artificial colorings
or calories. However, lagged in packaging source optimization and materials used for packaging
purposes. Moreover, in terms of other parameters such as biodiversity, emission effluents and
wastes the company has been stagnant in most of the sub-parameters in both the years. There is a
slight improvement in markets covered under “sustainable agriculture initiative at Nestlé (SAIN),
however the company, needs to focus on Optimization of packaging materials used, improving
quality compliance to reduce the total number of product recalls and incidences of non-
compliance.

2CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................2
Current performance of sustainability reporting for Nestlé.............................................................2
Present issues in sustainability reporting of Nestlé and practices by Nestlé...................................6
Partnerships and collaborations.......................................................................................................9
Conclusion and recommendation..................................................................................................10
References......................................................................................................................................12

3CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
The report aims to analyze the present social issues in accounting and also evaluating the
impact on the stakeholders. Some of the main discourse of the study has included the present
state of sustainability reporting for Nestlé. It has included the key details about current issues and
practices which has explained the implications for various stakeholder in relation to financial
decision-making. The key performance indicators of Nestlé comprise of measuring and reporting
standards which are based on based on “creating shared value (CSV), sustainability and
compliance”. In order to provide transparency to the stakeholders, the company has indicated
several correlations between our KPIs and commitments along with “global reporting initiative
(GRI)” indicators. The sustainability reporting of the company is measured with several
parameters such as nutritional, rural development, water usage, environment sustainability,
consideration of people, human rights and compliance indicators (Nestle.com, 2018).
Current performance of sustainability reporting for Nestlé
The present indications as per compliance of the sustainability reporting with GRI
guidelines have shown significant improvement in all the “Creating Shared Value key
performance” indicators in compared to 2015 achievements.
Nutrition
In terms of nutrition, the company has improved in sections such as renovation of
products for nutrition or health considerations, products with reduction of sodium, sugar, Trans
fat, total fat, artificial colorings or calories (Garcia, Netto, and Miraglia, 2016).

4CONTEMPORARY ISSUES IN ACCOUNTING
Figure: CSV performance for nutrition- comparison of 2015 and 2016
(Source: Nestle.com, 2018)
Rural development
Nestlé has shown a slightly negative trend in terms of training the farmers through capacity
building programmes. There is a slight improvement in markets covered under “sustainable
agriculture initiative at Nestlé (SAIN)”, however there is significant decrease in percentage of
purchase volume compliant with the “Nestlé supplier code” (Sierra, 2017).
Figure: CSV performance for rural development- comparison of 2015 and 2016
(Source: Nestle.com, 2018)

5CONTEMPORARY ISSUES IN ACCOUNTING
Water
The total water withdrawal has slightly decrease from 2000 to 2016. This is seen as a
positive change as the company has been able to continue its operations even with lower
consumption of water.
Figure: CSV performance for water withdrawal- comparison of 2015 and 2016
(Source: Nestle.com, 2018)
Environment Sustainability
Based on the significant depictions of environmental sustainability, the company has
shown significant improvement in reducing the on-site energy consumption. However, there has
been significant drawbacks related to packaging source optimization and materials used for
packaging purposes. In terms of other parameters such as biodiversity, emission effluents and
wastes the company has been stagnant in most of the sub- parameters in both the years (Miah,
et., 2015).

6CONTEMPORARY ISSUES IN ACCOUNTING
Figure: CSV performance for water withdrawal- comparison of 2015 and 2016
(Source: Nestle.com, 2018)
Human Rights and Compliance
The human rights and compliance have shown significant decline in terms of more
number of cases for product recalls and incidence of non-compliance.
Figure: CSV performance for human rights and compliance- comparison of 2015 and 2016
(Source: Nestle.com, 2018)
Consideration for people
The comparison based on the performance of consideration of people, it has been found
there has been less reporting of injuries and illness rate in 2016 compared to the previous year. In
addition to this, the total number of fatalities on “site for employees, on-site contractors and on-
site members of public”, have significantly reduced from 10 in 2015 to 4 in 2016. Nestlé has
emphasized woman empowerment in the recent years with a significant improvement of
leadership positions held by women from 34% in 2015 to 35.4% in 2016 (Jones, Comfort and
Hillier, 2016).

7CONTEMPORARY ISSUES IN ACCOUNTING
Figure: CSV performance for people- comparison of 2015 and 2016
(Source: Nestle.com, 2018)
Present issues in sustainability reporting of Nestlé and practices by Nestlé
The reporting of the sustainability has used “GRI G4” guidelines and indicators which
have considered the material issues. These issues are in line with engagement of stakeholder and
conducive in shaping the public commitments. The issues associated to human rights is
understood by the company by millions of people being negatively affected by human rights
abuses (Flower, 2015). “The refugee crisis, and the resulting surge in migrant labour, remains a
major challenge, and a root cause of key issues such as child and forced labour in the agricultural
sector”. Nestlé faces an extensive range of intricacies associated to obesity child labour to
climate change and it is not possible for the company to tackle these problems on its own
(Isaksson, 2017).

8CONTEMPORARY ISSUES IN ACCOUNTING
The materiality analysis has been conducive in anticipating the various types of consumer
trends including the legal challenges and thereby ensuring consumer expectation of sustainable
behavior. Some of the latest matrix for this has depicted the issues such as over and underrun
water and responsible marketing which are key factors to the business strategy. Besides this,
factors such as responsible marketing hasn’t considered as key focus for delivery of business
objectives. At the same time, climate change and human rights are pivotal for success of the
business (Lee and Vachon, 2016). Based on the creating shared Value report, the investors have
been able to get an insight of performance of various types of issues by outlining the
commitments, targets and progress annually. The company has been further designed to integrate
the CSV and SDG’S in order to trace with material issues associated to the SDG to assist in the
mapping process. Based on the sustainability report published by Nestlé in 2017 and the
company has remained on track to meet the objectives set for 2020. The overall actions for the
issues in the valuation of the company has been segregated into three stages which includes
material issues pertaining to agricultural Supply chain, manufacturing, retail and consumers
(Cohen, 2017).
Stage I Agricultural Supply chain
The main material issues identified in agricultural Supply chain is depicted with rural
development, poverty alleviation, food and nutrition security, human rights, animal welfare,
responsible sourcing and traceability. In this stage, the company works with the farmers and
partners around the world in order to build a resilient and responsible supply chain.
Stage II Manufacturing

9CONTEMPORARY ISSUES IN ACCOUNTING
The key material issues pertaining to manufacturing has been focused with water
stewardship, climate change, water, sanitation and hygiene, business ethics, resource efficiency,
natural resource stewardship, women’s empowerment, employee safety health and wellness, fair
employment and youth employability. Nestlé strives to offer fair employment and integrity in the
work by maintaining openness and respect for people. The operations of the company
continually aim to utilize less energy and fewer resources thereby generating less waste and
creating fewer source of emissions.
Stage III Retail and consumers
Some of the key material issues in the retail and consumer division is depicted in terms of
overall undernutrition, food and product safety, responsible marketing and influence. Nestlé is
committed towards its consumers and ensures that they follow an active lifestyle, eat well and
consume the products in a sustainable manner.

10CONTEMPORARY ISSUES IN ACCOUNTING
Figure: Key issues in sustainability reporting and actions taken by Nestlé
Source: Nestle.com, 2018)
Partnerships and collaborations
EpiGen Global Research Consortium (EpiGen)

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This type of partnership for the company is identified as one of the largest “public-private
partnerships” which has emphasized on impact of nutrition and lifestyle on infant and maternal
health is a part of the main goal of “EpiGen Global Research Consortium (EpiGen)”.
International Federation of Red Cross and Red Crescent Societies (IFRC)
Nestlé has an imminent history of working with are you foresee for more than 15 years in
order to support its sanitation and global water initiatives for improved access to sanitation and
safe water for 30 million people by 2030. The main efforts of the company have laid on existing
the rural communities and population especially in the book were growing regions of “Côte
d’Ivoire and Ghana”. In a more recent activity, the community is around the bottled water
factories in Ethiopia has helped the company in gaining better access to clean water and
sanitation.
Working with the United Nations Global Compact
The “United Nations Global Compact (UNGC)” is identified as strategy policy initiative
by Nestlé, which is aligned with the strategies and operations in more than 10 universally
accepted principles covering the environment, human rights, labour and anticorruption. The
corporate business principle incorporates the 10 UNGC principles which reflects the concepts
associated to honesty, respect and fairness for people and environment at large (Levy, Reinecke
and Manning, 2016).
Conclusion and recommendation
Based on the discourse of the learnings, the current performance the company has
improved in sections such as renovation of products for nutrition or health considerations,

12CONTEMPORARY ISSUES IN ACCOUNTING
products with reduction of sodium, sugar, Trans fat, total fat, artificial colorings or calories.
Moreover, Nestlé has been depicted with a negative trend for training the farmers through
capacity building programmes. There is a slight improvement in markets covered under
“sustainable agriculture initiative at Nestlé (SAIN)”, however there is significant decrease in
percentage of purchase volume compliant with the “Nestlé supplier code”. Environmental
sustainability, the company has shown significant improvement in reducing the on-site energy
consumption. Some of the many initiatives taken by the company, needs to focus on
Optimization of packaging materials used, improving quality compliance to reduce the total
number of product recalls and incidences of non-compliance. There needs to be significant
improvement made by the company in terms of biodiversity, emission effluents and wastes
Management.

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References
Cohen, E., 2017. Sustainability Reporting for SMEs: Competitive Advantage Through
Transparency. Routledge.
Flower, J., 2015. The international integrated reporting council: a story of failure. Critical
Perspectives on Accounting, 27, pp.1-17.
Garcia, L.G.A., Netto, C.C. and Miraglia, S.G.E.K., 2016. Sustainability in the Chemical
Industry in Brazil. SBIJOURNAL, (62).
Isaksson, R., 2017, December. Assessing sustainability reports based on Quality Management
principles–a preliminary review. In Toulon-Verona Conference" Excellence in Services".
Jones, P., Comfort, D. and Hillier, D., 2016. Water stewardship and North America's food and
beverage companies: a case study in corporate sustainability. International Journal of Corporate
Strategy and Social Responsibility, 1(1), pp.26-43.
Lee, K.H. and Vachon, S., 2016. Carbon Management in the Supply Network: Measurement and
Reporting. In Business Value and Sustainability (pp. 135-170). Palgrave Macmillan, London.
Levy, D., Reinecke, J. and Manning, S., 2016. The political dynamics of sustainable coffee:
Contested value regimes and the transformation of sustainability. Journal of Management
Studies, 53(3), pp.364-401.
Miah, J.H., Griffiths, A., McNeill, R., Poonaji, I., Martin, R., Morse, S., Yang, A. and
Sadhukhan, J., 2015. Creating an environmentally sustainable food factory: a case study of the
Lighthouse project at Nestlé. Procedia Cirp, 26.

14CONTEMPORARY ISSUES IN ACCOUNTING
Nestle.com. (2018). [online] Available at: https://www.nestle.com/csv/downloads [Accessed 20
May 2018].
Sierra, J.P., 2017. The Behavioral Effects of Sustainability Reporting (Doctoral dissertation,
Appalachian State University).