Nearly two-thirds of the Swiss food giant’s emissions come from agriculture, where reducing emissions requires working with some 500,000 farmers and 150,000 suppliers. That’s more complicated than simply switching to renewable electricity or offsetting business travel (which Nestlé is also doing).
Mark Schneider, the company’s chief executive, spoke with the DealBook newsletter about how he won support from more than 290,000 employees — and how he will sell investors on paying now to meet a goal 30 years in the future.
Long-term investors see the net-zero pledge as “future-proofing the company,” Mr. Schneider said, especially as environmental laws become stricter and consumers increasingly seek climate-friendly products. For investors with shorter horizons, the pledge is “earnings neutral,” he added: Despite costing around $3.6 billion over the next five years, these investments will be financed by operational efficiencies and will, eventually, enable the company to “charge a premium for better products.”
“There is also a revenue upside,” Mr. Schneider said. “The margin is not going backwards.”
After announcing the targets with “great fanfare,” it will become “a matter of honor” to meet them, he said. Still, the executives making these commitments will probably have retired by 2050. To give the plan teeth, starting next year the company will tie part of its executive committee’s annual bonuses to quantifiable environmental factors. “We’re putting our money where our mouth is,” he said.
Nestlé made the net-zero commitment about six months before the pandemic, which has had two major effects on the pledge, Mr. Schneider said.
On the positive side, the urgency of addressing climate change has intensified. “People see what can happen if you wait too long, and that you better fight a problem early on and get a handle on it,” he said. And being confined at home has given people time “to think through what really matters,” he added.
On the negative side, the financial stimulus to rescue the global economy — which was necessary, Mr. Schneider emphasized — has left the world with huge, unexpected debts. That means less “leeway from the public point of view” to spend on measures like long-term greenhouse gas reductions.