Nestle Gets It Right

08/06/2009 05:12 am ET | Updated May 25, 2011

The last thing I knew about Nestle was it tried hard to convince mothers in the developing world that its milk was better than their milk. When I received an invitation to a high level UN conference on nutrition jointly sponsored by Nestle, the Swiss Mission to the UN, and the UN Office for Partnerships I was aghast. More out of morbid curiosity than anything else, I accepted.

Nestle chairman Peter Brabeck-Letmathe set the table when he recounted a moment at the World Economic Forum in Davos, Switzerland in which the actress Sharon Stone took the mike at one of the sessions and exhorted the captains of industry sitting in the audience to "give something back" by pledging donations for philanthropic causes. According to Mr. Brabeck, she collected pledges of a million dollars in a few minutes.

As he recounted the moment to us, he became upset at the thought that he should feel obligated to give something back because he didn't think Nestle had taken anything away. Over the next few years, with the help of two Harvard professors, he began to codify Nestle's interactions with its various constituencies in order to find that magical balance that would allow the company to thrive in harmony with everyone's best interests. They called it "creating shared value," an advancement on the concept of corporate social responsibility. This was not what I expected to hear.

As Brabeck sees it, this shared value exists at all stages of the value chain starting with the smallest stakeholder farmers whose crops are purchased, and extending upward to consumers. Critics can certainly make the argument that Brabeck falls short of the classic definition of a saint, and that Nestle's operations are inherently biased toward its own need to fulfill its primary responsibility to shareholders: Maximizing profitability. Such is the challenge of any company in a capitalist economy. But, Brabeck made the point that within the structure of inherently competing interests exists the potential for all parties to find common ground. The use of water, for instance, is high on the company's list of critical issues that challenge it every day.

Their website reports a 28% reduction in "water withdrawal" which would seem to demonstrate a commitment to sustainability. It doesn't indicate if the remaining 72% of water usage comes at too great an expense of any of the essential needs of the communities dependent on those water sources, but let's give them the benefit of the doubt for the moment.

Giving the benefit of the doubt to any corporate behemoth takes a leap of faith that is rarely justified. But, even the most cynical skeptic is going to have to admit, if only grudgingly, that Nestle has taken specific and measurable steps to achieve sustainable, shared value. It quantifies its behavior with performance measurements versus the 10 UN Global Compact Principals on human rights, labor, the environment, and corruption. Two years ago it even sponsored a UNGC Leader's Summit. Its statistical evaluations, however, are now 18 months old. It's time for them to be updated.

With Nestle now appearing to be holding its own feet to the fire it's time to wipe clean the stigma of past behavior. As Oscar Wilde once said, "Every saint has a past, every sinner has a future."

P.S. As far as Peter Brabeck knows, none of the million dollars pledged to Sharon Stone was ever paid.