NESPRESSO Ecolaboration tM FULL-TERM REpoRT 2009-2013

NespressoEcolaboration tM

FULL-TERM REpoRT 2009-2013

© nestlé nespresso Sa, corporate communications - September 2014

This “Ecolaboration™ report 2009-2013” represents our commitment to driving transparency with our stakeholders as we continue in our journey to ensure sustainability throughout our operations and seek to create shared value for our business and for society.

At Nespresso, we are involved in every aspect of the coffee value chain from the coffee tree to the coffee cup. This gives us a unique perspective as well as an ability to effect change and drive sustainability.

Sustainability is an integral piece of our business strategy and our efforts in this area will ensure that we are able to deliver against our business objectives in the future. We are driving innovation across our business, with a focus on promoting sustainable quality in coffee sourcing, capsule recycling and reducing the carbon footprint required to produce a Nespresso coffee.

In 2009, we set out three clear objectives to improve the environmental performance of our value chain by the end of 2013. I am pleased to say that we have achieved and even exceeded each of these objectives. At the end of 2013,

We were sourcing 84% of our coffee from the Nespresso AAA Sustainable Quality™ Program, against a target of 80%;

We had put in place the capacity to recycle 80% of Nespresso capsules sold world-wide, against a target of 75%; and

We had reduced the carbon footprint from a cup of Nespresso coffee by 20.7%, against a target of 20%.

We are proud of these achievements, but they are only steps in our journey towards grea-ter sustainability and towards creating continuous shared value for all our stakeholders along the value chain.

Increases in demand, as well as social, demographic, economic and environmental risks in producing countries pose a threat to the long-term stable supply of the highest quality coffee. This in turn has the potential to directly impact our ability to provide consumers with Nespresso high quality coffees consistently in the future. To this end, we are committed to developing programs to minimise these risks and secure the future for the farmers who grow our coffee and for our business. In 2013, we celebrated the 10th anniversary of our AAA Sustainable Quality™ Program, a ground-breaking partnership with the leading envi-ronmental NGO the Rainforest Alliance. The program is the cornerstone of our responsible sourcing approach and is based on a belief that the best way to protect the supply of Nespresso coffee is to build a more sustainable and equitable outcome for farmers.

Beyond sourcing, we continue to innovate across our business to improve our environ-mental performance and reduce the impact of our business, from increasing our collec-tion capacity of used capsules for recycling to improving the energy efficiency of our machines. We are one of the seven founders of the Aluminium Stewardship Initiative (ASI) that will create the first standard for responsible aluminium and are committed to playing an active part in the improvement of the overall aluminium supply chain.

We recognise that we cannot solve the challenges of the complex coffee supply chain in isolation, which is why we engage with other partners, such as coffee cooperatives, NGOs, governments and suppliers that have different skill sets, experience and knowledge.

A MeSSAGe fROM OuR CeOJeAN-MARC DuvOISINCeO, NeSTlé NeSPReSSO SA

www.nestle-nespresso.com/ecolaboration

| page 1© Nestlé Nespresso SA, Corporate Communications | Nespresso ecolaboration™ full-term report 2009-2013

This approach has proved relevant, as it has allowed us to drive impactful projects and will continue allowing us to do so in the future. In 2013, we have also set up the Nespresso Sustainability Advisory Board, comprising of renowned experts and leaders in environ-mental and social sustainability. The insight and independent perspectives brought by them will help move our sustainability efforts forward and will ensure that we remain focused on initiatives that will have a positive overall impact on the environment and social aspects of our value chain.

We recognise our obligations as the reference in portioned coffee worldwide and will conti-nue to work to drive sustainability and positive impact across our business..

With this report, we hope to demonstrate where we have made progress in regards to our 2009 commitments and share some insights into the sustainability initiatives we will focus on in the future.



CONTexT

In 2009, we committed to sourcing 80% of Nespresso green coffee from the

AAA Sustainable Quality™ Program, including Rainforest Alliance certifica-tion, by 2013.

At the end of 2013, we sourced 84% of our coffee from the unique Nespresso AAA Sustainable Quality™ Program, including 30% with Rainforest Alliance certification.

84% of Nespresso coffee comes from the AAA Program, up from 47% in 2009 30% of coffee is Rainforest Alliance certified, up from 0% in 2009 Over 62,000 farmers in eight countries, up from 26,500 in 2009 290,000 hectares of sustainably grown coffee, up from 130,000 in 2009 240 agronomists, up from 100 in 2009 22.6% better social conditions 52% better environmental conditions 82.5% farmers’ satisfaction rate and 90% loyalty rate to the AAA Program.

In 2003, Nespresso launched its AAA Sustainable Quality™ Program, a groundbreaking partnership with the leading environmental NGO, the Rainforest Alliance. The AAA Pro-gram was specifically developed to meet the needs of securing the highest quality coffee in the world, while building a future for partner farmers based on long term profitability, enhanced environmental and social outcomes.

The program is based on a belief that the best way to protect the supply of Nespresso

coffee is to build a more sustainable and equitable outcome for farmers, while protecting the environment. It combines Nespresso coffee expertise with Rainforest Alliance sus-tainable farming expertise (based on internationally recognised SAN standards). It is free for the farmers.

The AAA Program is unique in that it adds a quality dimension to environmental sustai-nability and social welfare principles. each A of the AAA Program stands for the three foundations of our approach.

EcolAboRATIon™ FUll-TERM REPoRT, 2009-2013 AChIeveMeNT Of OuR 2013 eCOlABORATION™ COffee SOuRCING TARGeT

| page 3© Nestlé Nespresso SA, Corporate Communications | Achievement of our 2013 ecolaboration™ sourcing target

coMMITMEnT

AchIEvEMEnT

hIghlIghTS

ThE ThREE PIllARS first A: QuAlity helping farmers to adopt the best agricultural practices that will lead to meeting the

stringent quality criteria required for Nespresso Grands Crus.second A: sustAinAbility Supporting farmers in adopting social and environmental best practices, such as soil and

water conservation, wildlife protection, reforestation and integrated crop management.third A: Productivity helping farmers to improve productivity and implement cost reduction initiatives to in-

crease their net income.

bEyond SUSTAInAbIlITy To cREATIng ShAREd vAlUESupporting farmers to implement more environmentally and socially sustainable practices,

the AAA Program sets rigorous environmental and social standards (296 criteria) as defined in partnership with the Rainforest Alliance and the Sustainable Agriculture Network.

These include: 90 environmentAl criteriA such as ecosystem conservation, wildlife protection, reforestation, wastewater manage-

ment, soil preservation and waste disposal 150 sociAl criteriA such as fair treatment and good conditions for workers, child labour, health and safety 56 economic criteriA such as planning, book keeping, training, traceability and rational energy use

Through our work with partners on the ground and our network of over 240 agronomists, we are providing farmers with technical assistance and trainings to improve sustainabi-lity and productivity while maintaining quality.

Building direct relationships with farmers, the AAA Program represents a long-term com-mitment to farmers and coffee growing communities, driven by a strong network of par-tners who have a stake in securing a sustainable future.

QUAlITyWorking with farmers to protect the supply of highest quality coffee is the first essential

step toward creating shared value for all stakeholders, from the farmers to the consumers.The Nespresso AAA Program contains up to 50 quality-related criteria for farmers to fulfill.

We estimate that only 1-2% of the world’s coffee crop meets the rigorous Nespresso requirements for taste, aroma and quality. Through the AAA Program, we seek to secure these rare beans for our long-term supply and we have seen that the introduction of sustainable practices has helped improve the quality of the coffee grown. The quality of coffee grown according to AAA best practices has gone up, resulting in lower rejection rates. for example, 6.5 % of non-AAA coffee was rejected in 2009 vs. 3.2% for AAA cof-fee. In 2013, these rejection rates were 4% for non-AAA coffee vs. 1.4% for AAA coffee.

At farm level, some 30% of each harvest from farms that Nespresso works with meets those stringent requirements. The remainder of the crop provides farmers with a valuable supply, as it can be sold for a premium price to the wider sustainable coffee market. As a result, Nespresso investments in quality and sustainability benefit the wider coffee industry as well.

Key AChIeveMeNTSAND leARNINGS

1-2%of the world’sgreen coffee

crop



SuSTAINABlevAlue CReATION

SuPPORTING TOOlS

SustainableValue

Creation

Quality

Maintaininghighest quality

First

Sustainability

Respecting people &

environment

Second

Productivity

Farm management

Third

A A A

AAA COFFEEFARMER

QUALITY

SUSTAINABILITY

PROD

UCTIVITY

TASQTM

SELF-ASSESSMENTS

QUALITIVITY TM

GUIDESAAA DATABASE

TASTING KITS

TRAINING ASSESSMENTSAND VERIFICATION

PAYING INCENTIVESTO FARMERS

SUPPORTING TOOLS

DEVELOPING SPECIFIC PROJECTS WITH PARTNERS

PARTNERSHIPS

TRACEABILITY

LONG-TERM LOYALTY

YIELDIMPROVEMENT

ENVIRONMENTAL STEWARDSHIP

QUALITYBEST

PRACTICIES

AGRICULTURAL PROCESS INNOVATION

COM

MIT

MEN

T TO

INVE

STM

ENT

MUTUAL APPROACH

The program also allows producers who have fulfilled all the AAA criteria to obtain Rain-forest Alliance certification, which entitles them to an additional premium for the part of their harvest that is not sold to Nespresso.

SUSTAInAbIlITyAt the end of 2013, 290’000 ha of coffee farmland were sustainably managed within the

AAA Program in eight countries.

Overall compliance of AAA farms with AAA standards has improved from 2009 to 2013 to reach 79.8%.

eNvIRONMeNTAl STANDARDS from 68.3% to 78.5%1 SOCIAl CRITeRIA from 69.1% to 80.6%2 eCONOMIC STANDARDS from 68.8% to 81.7%3

Compliance with water criteria, such as rational water use, conservation of natural water sources and wastewater management, improved from 58% in 2009 to 71.4% in 2013. Compliance with biodiversity criteria, such as wildlife protection and ecosystems conser-vation, also improved from 74.2% in 2009 to 82.3% in 2012. Additionally, at the end of 2013, 87% of farmers in the AAA Program had implemented recycling on their farms.

PRodUcTIvITyAlthough Nespresso pays price premiums of 30%-40% above the market price, represen-

ting 10-15% above the price of coffees of similar quality, the AAA Program’s approach is based on understanding the factors that drive farm profitability, rather than focusing on price only. In recent years, we have learned that farm productivity is an essential ingre-dient for economically viable and sustainable coffee farming.

The AAA Program thus seeks to shift farmers focus on revenues and coffee prices to a more balanced focus on factors that drive profitability.

As a result, Nespresso supports initiatives that improve the net income of farmers through reducing costs and improving productivity. AAA Program tools and technical support from a range of partners contribute to addressing the yield improvement challenge.

According to coffee supplier eCOM, farms taking part in the AAA Program in Carmo de Minas, Brazil, were 72%4 more productive than other farms.

Nespresso ran an integrated crop management pilot to increase the productivity levels of the farms taking part in its AAA Sustainable Quality™ Program in the Caldas region in 2010. Over a two-year period, the AAA farmers increased their productivity between 6% and 30% compared to previous years, thus also increasing their income.


1 Nespresso AAA database, based on participating farms’ performance relative to more than 90 environmental criteria, November 2013

2 Nespresso AAA database, based on participating farms’ performance relative to more than 150 social criteria, November 20133 Nespresso AAA database, based on participating farms’ performance relative to more than 56 economic criteria,

November 20134 Carlos Santana, Head Trader of Brazil Coffee Operation, ECOM, Brazil Coffee Business – Economic Aspects, presentation,

23.5.2014



2009

64666870727476788082

201262

69.1%

80.6%

AAA Farmssocialcomplianceevolution in %

2009

64666870727476788082

201262

68.8%

81.7%

AAA Farmseconomiccomplianceevolution in %

2009

64666870727476788082

201262

68.3%

78.5%

AAA Farmsenvironmentalcomplianceevolution in %

The AAA Program is having a measureable positive impact on the ground in cof-fee producing communities. At the end of 2013, we were working with more than 62,000 farmers in eight countries – brazil, colombia, costa Rica, guatemala, India, Mexico, nicaragua and Ethiopia.

While measuring and tracking performance remains a key challenge in the area of sustainability, results from the AAA Program are impressive.

A Real farmer Income™ Impact study conducted by INCAe Business School, and launched in 2008, shows that real drivers of farmers’ net income are sales, productivity, price pre-mium as well as technical and business benefits of a relationship with Nespresso.

So far, studies indicate that our integrated approach is having positive impact on quality, the environment and farmers’ livelihoods. Research by the International finance Corpo-ration (IfC)5, a member of the World Bank Group and a Nespresso partner in projects in Central America, observed that between 2007 and 2010 farms in Mexico and Guatemala with sustainable practices had higher productivity, and importantly, that these improve-ments in farm productivity and sustainability were accompanied by higher farm incomes. On average, net income for AAA farms was 27% higher than for farms that were not part of the Nespresso AAA Program.

Another study6, conducted by the independent monitoring organisation CReCe and using the COSA methodology7, surveyed more than 1,000 Colombian coffee farmers to measure the impacts of the Nespresso AAA Program over three years. It found that the AAA farms surveyed demonstrated 22.6% better social conditions, 41% better economic conditions and 52% better environmental conditions than non-AAA farms. Interestingly, the gap between non-AAA farms and AAA farms is widening in terms of sustainability outcomes. Between 2009 and 2011, index levels for non-AAA farms were generally flat or declining, while those for AAA farms increased.

The program is producing benefits not only for coffee farmers, but for our business and overall coffee quality, as well.

Through working with farmers to improve their productivity, we are increasing the quantity of green coffee that meets our specifications.

We have reduced quality rejection rates for AAA coffees to approximately 3% versus about 10% for non-AAA coffees.

On one specific project, the development of a central mill in Jardin, Colombia, not only were farmers able to reduce water use by 63% and eliminate waste water pollution, but quality rejection rates fell from 50% to 0%8.

In environmental terms, we have observed that in certain cases, AAA farms have been better able to resist diseases affecting coffee crop, such as coffee leaf rusts.

Our partnership with farm communities also allows us to take a long term view and to work collaboratively to develop new and innovative coffees.

Our Rosabaya and Naora coffees were innovations based on specific agricultural pro-cesses that were developed in cooperation with select regions. This provides value for Nespresso consumers with rare new tastes and value for farmers who learn new techniques.

5 International Finance Corporation, TITLE – ECOM Agroindustrial Corporation study, ifc.org6 Centro de Estudios Regionales Cafeteros y Empresariales (CRECE), Monitoring and evaluation study of the Nespresso AAA

Sustainable Quality™ Program in Colombia, May 2013, http://www.nestle-nespresso.com/media/library/documents7 The Committee on Sustainability Assessment (COSA™) is a consortium of institutions promoting sustainability in

agriculture with credible and globally comparable information based on quantifiable evidence. COSA provides accurate measurement of recognized sustainability indicators along social, economic and environmental lines. thecosa.org

8 TechnoServe, Central Mill monitoring



IMPACT

2009

102030405060708090

100

20110

46%54% 53%

+22.6%65%

Social indexevolution in %

Control AAA

2009

102030405060708090

100

20110

40%49%

39%

55%

Economic indexevolution in %

Control AAA

+41%

2009

102030405060708090

100

20110

49%

68%

48%

73%

Environmental indexevolution in %

Control AAA

+52%

We recognise that we cannot solve the challenges of the complex coffee supply chain in isolation. As we have done so far, we will continue to engage with other partners that have different skill sets, experience and knowledge.

The most important partner is the coffee grower, but success also depends on coffee suppliers, development agencies, academic institutions, NGOs, local and national coffee federations and others. The effective management and deployment of these partnerships is a critical success factor for AAA.

Reporting and monitoring capabilities have been improved over the years. Over the last 4 years, over 12 million entries have been registered in our AAA farmer database, enabling Nespresso to track back to individual farms all coffee purchases, as well as monitor farm progress in regards to AAA criteria.

We have reinforced our process for control and reporting of potential child labour cases in coffee farms. We have created e-learning tools, together with Nestlé, to train agrono-mists on how to recognize child labour cases, and how to address and report them.

Although the AAA Program is a global initiative, we have learnt that its implementation has to be tailor-made to each country, and even to region, to best address local chal-lenges and adapt to local specificities, required priorities and focus of activities in order to drive most positive impact.

Nespresso will continue to increase reach and impact of the AAA Program in

order to positively impact the social and environmental conditions in coffee growing regions and to secure a sustainable supply of the highest quality coffee.

KEy FocUS AREAS The expansion of the Nespresso AAA Sustainable Quality™ Program in Africa is an

important component of ensuring that the company can reach its objective of sourcing 100% of its coffee from the AAA Program by 2020. Nespresso will expand the AAA Pro-gram to include more smallholder coffee farmers and will partner with TechnoServe to improve coffee sustainability at farm level.

Water remains a key focus area for the years to come, specifically in Colombia. Indeed,

as Colombian farmers are mostly smallholders processing coffee on their farms, rational water use and wastewater management are areas where significant improvement can still be achieved.

Intergenerational succession in coffee farming is also a challenge that requires atten-tion in order to ensure continuity in coffee farming. Nespresso recognizes that securing farmer welfare and providing social benefits to farmers is essential to make farming an attractive activity for younger generations. Nespresso is committed to pursue innovative solutions to farmer welfare, including the expansion of the AAA farmer future Program initially through a retirement fund for farmers in Colombia.

lOOKING AheAD

31

6 69 10

1613

20

2011

26

2012

29

201320102009200820072006200520042003

5

10

15

20

25

30

Number of AAA clusters

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Number of coffee hectares in the AAA Program

>200,000>240,000

>290,000

>165,000>130,000

>95,000>50,000

>25,000>10,000

2011 2012 2013201020092008200720062005

>500 >2,000>6,000

>23,000>26,000

>40,000>45,000

2011

>52,000

2012

>62,000

2013201020092008200720062005

10,000

20,000

30,000

40,000

50,000

60,000

Number of farms participating in the AAA Program

Percentage of annual volume of purchased coffee

2007

10%20%30%40%50%60%70%80%90%

100%

2008 2009 2010 2011 2012 2013

35%43%

47%

60% 61%68%

84%

NON-AAA VOLUME AAA VOLUME



Nespresso and Rainforest Alliance have been working in ecosystem improvement at farm level through the AAA Program for over 10 years. To further optimise carbon impacts, the agro-forestry component of the AAA Program will be expanded to seek to mitigate some of the threats that coffee farmers face from factors beyond the borders of their farms. Nespresso, Rainforest Alliance and Pur Projet will seek to reintroduce or maintain trees inside and around coffee farms, especially in agro-forestry systems to restore natural habitats, regulate water availability and increase the capacity of coffee farming areas to better adapt to climate change. By 2020, Nespresso commits to become 100% carbon neutral by insetting9 the company’s residual operational carbon footprint and increase farm climate resilience through an extensive agroforestry programme.

“After five years of joining the AAA Program, my crops have gone up and production costs

have dropped. We managed to massively increase our productivity.»

René Ceciliano,farmer in Costa Rica

“Once we began implementing the changes that the Nespresso agronomist recommended to us, we saw immediate returns on our efforts, in terms of quality as well as income.”

Duberney Arias Agudelo,farmer in Colombia

“The Nespresso AAA Program helps us keep our farm clean and preserve the natural resources around it. Although it was quite a challenge, we have built septic tanks so that waste water is no longer discharged into the rivers and streams that flow through the farm. We no longer burn our rubbish, and we divide it into organic and inorganic waste before disposal.”

hermilo Pérez,farmer in Guatemala

“The Nespresso AAA Sustainable Quality™ Program, built together with the Rainforest Alliance and the Sustainable Agriculture Network, is one of the most rigorous and com-prehensive programs in the coffee industry, with increased farmer net income and signi-ficantly improved water quality, waste management and reforestation.”

Tensie Whelan,President of the Rainforest Alliance

WhAT The fARMeRS SAy

WhAT The exPeRT SAyS



9 Definition of insetting: unlike “offsetting” traditional carbon compensation where compensation takes place in a different location using uncorrelated actors and technical activities, “insetting” integrates socio-environmental commitments at the heart of the companies’ business activities and networks.

CONTexT

In 2009, we committed to put collection systems in place to triple our capa-

city to recycle used capsules to 75%.

At the end of 2013, our recycling capacity reached 80%, surpassing our initial commitment to triple recycling capacity.

80% of global collection capacityOver 14,000 dedicated capsule collection points in 27 countries 3 national packaging recovery systems accept used Nespresso capsules for recycling, up

from 1 in 2009 80% recycling capacity, up from 25% in 2009 Recycling@home initiatives in 13 countries, up from 0 in 2009 Recycling mobile apps in 20 countries

Nespresso uses aluminium for its Grand Cru coffee capsules because it is the best mate-rial available today to protect the delicate Nespresso Grand Cru coffees against factors such as oxygen, light and humidity, which can compromise coffee freshness, taste and quality. Indeed, with other material, oxidation could occur, leading to about 28% of loss in aromas in just two days.

Aluminium has the advantage of being infinitely recyclable. When aluminium is melted, its properties remain intact, allowing it to be reused to make new aluminium products again and again without loss in quality. An estimated one-third of world aluminium demand is met by recycled sources and 75% of the aluminium ever produced is still in circulation10.

Recycling aluminium saves approximately 95% of the energy required for primary aluminium production and produces only 5% of the CO2 emissions compared with primary production11.

Aluminium is the only material that interacts perfectly with Nespresso machines to consistently produce the best coffee. Moreover, aluminium works as a self-barrier which prevents the use of secondary packaging. And because it is lightweight, using alu-minium for the Nespresso capsules also provides transportation and environmental savings when compared to other packaging materials.

Nespresso started its aluminium capsule recycling program over 20 years ago with a dedi-

cated recycling initiative in Switzerland in 1991. Since then, Nespresso has worked with numerous stakeholders to develop capsule collection schemes tailored to the recycling pro-cess and logistics of different countries around the world. Indeed the complexities of the recycling process, coupled with varying levels of public engagement and legislation, make a standardized approach to collecting used capsules difficult.

| page 9© Nestlé Nespresso SA, Corporate Communications | Achievement of our 2013 ecolaboration™ capsule target

10 European Aluminium Association11 Global Aluminium Recycling : A Cornerstone of Sustainable Development , International Aluminium Institute, 2006

EcolAboRATIon™ FUll-TERM REPoRT, 2009-2013 AChIeveMeNT Of OuR 2013 eCOlABORATION™ CAPSule TARGeT

coMMITMEnT

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hIghlIghTS

30countries with

capsule recycling system +14,000

dedicatedcollection points

doorstep collectionn in 13 countries

Some countries lack the technology to separate lightweight aluminium from other packa-ging for revalorisation. elsewhere, aluminium capsules are not classified as packaging. This means that Nespresso capsules cannot always be processed through national or local packaging recovery and recycling schemes. Thus, Nespresso is working with partners around the world to develop its own capsule collection solutions, tailored to the resources and infrastructures available locally.

Nespresso has pursued various approaches to capsule collection: Collection points in Nespresso boutiques. Collection points at community waste recycling centres. Doorstep collection of used capsules when new capsules are delivered, through the

Nespresso Recycling@home initiative. Collection points at Nespresso retail partner stores, and in pick-up points.

Nespresso is using in priority the existing national packaging recycling scheme, when it is already adapted to recycle used capsules. It is the case in Germany, Sweden and finland, where the european Green Dot program is available. Thus, used Nespresso capsules can be sorted out along with other lightweight metal packaging and then melted for reuse.

In countries where national packaging recycling schemes are not available or don’t accept capsules, Nespresso has developed specific capsule collection solutions, establishing over 14,000 dedicated capsule collection points in 27 countries by the end of 2013, as well as collection of used capsules at home through the program Recycling@home. It is a doorstep collection system, available in 13 countries, where the postman or delivery man picks up used Nespresso capsules when delivering a new order.

In 20 countries, the Nespresso consumer website and the Nespresso iPhone app help Club Members identify the closest collection point to return their used capsules for recycling.

Thanks to the continuous expansion of collection capacity with the introduction of collection points and pick-up services in existing and new markets, Nespresso has managed to increase recycling capacity from around 25% in 2009 to 80% at the end of 2013.

Consumer participation is essential to make recycling efforts a success. To that end, we focus on making it as easy as possible for our Club Members to return used capsules for recycling. This involves increasing the number of collection points close to the homes of Nespresso Club Members and finding new ways to collect capsules, while increasing communication on the topic to raise awareness of all the options available to our consumers.

Nespresso business-to-business capsules, which consists of aluminium, PeT and Polypro-pylene, can also be valorised. They can be deposited in existing Nespresso business-to-consumer recycling collection points, as well as in existing national recycling scheme such as the Green Dot program in Germany. They can also be valorised through incineration with heat recovery in countries that use this system, meaning that they can be put in a regular waste bin, with the same environmental performance as with recycling. The environmental performance of incineration with heat recovery is similar to the one of recycling. Therefore, in countries where capsule packaging can be valorized through incineration with heat recovery, putting a used capsule in the waste bin has a similar environmental performance as with recycling.




80%

collection capacity

As part of our overall commitment to reducing our environmental impact, Nespresso commissioned Quantis, a team of world-leading experts in the field of environmental life cycle assessment (lcA), to determine the environmental performance of our capsule versus that of generic capsules on the market in France and Switzerland.

The study12 found that a coffee produced in a Nespresso machine with a Nespresso capsule has a comparable or lower overall environmental impact than coffee made from other capsules examined in the study. This difference is even bigger when Nespresso capsules are sent to recycling. When the consumer does not recycle the capsule (whatever alterna-tive is considered), the aluminium capsule has approximately 7% less impact on climate change than the alternatives. When the consumer does recycle the capsule, the difference increases to at least 11%.

The study specifically compared the impact of a cup of espresso made using the Nespresso aluminium capsules versus existing capsules made of polypropylene plastic and starch/PlA bioplastic – all used in a Nespresso machine. There are a number of different factors that contribute to the overall impact of a capsule of an espresso, including over packaging, packaging weight, etc. The findings of the study demonstrate that Nespresso aluminium capsules perform favourably from an environmental perspective when compared to com-petitors’ solutions used in Nespresso machines.

Nespresso has taken its leadership in recycling to the next level by supporting innovation in recycling technology and developing partnerships to improve the recycling of alumi-nium in general. In france, as small-size packaging are rejected in packaging sorting centres, Nespresso co-founded CelAA, the Club for Aluminium and Steel light Packaging (Club du Recyclage des emballages légers en Aluminium et Acier) in 2009. Its mission: to increase recycling capabilities for small-scale aluminium and steel packaging such as Nespresso capsules, bottle caps and aluminium foil.

As part of CelAA, Nespresso invested in eddy current separation technology, which recovers rejected aluminium small size packaging, to improve the efficiency of aluminium and steel packaging recovery through the national collection and recycling scheme.

The amount of aluminium used by Nespresso capsules is very small in relation to global aluminium consumption (1 gram per capsule, as opposed to 13 to 14 grams in a soda can). But even as a small player in the industry, Nespresso takes a pioneering role in promoting a more sustainable aluminium sourcing.

Since 2009, Nespresso has been working together with the IuCN (International union for Conservation of Nature), civil society organisations and aluminium industry leaders to de-velop the Aluminium Stewardship Initiative (ASI). The mission of the ASI is to foster greater sustainability and transparency throughout the aluminium industry. By the end of 2014, the ASI aims to establish a standard for sustainable aluminium sourcing to advance responsible leading practices in governance, as well as environmental and social performance.

IMPACT

AluMINIuM SOuRCING


12 Quantis, Comparative full life cycle assessment of B2C cup of espresso made using a packaging and distribution system from Nespresso Espresso and three generic products, May 2011, http://www.nestle-nespresso.com/media/library/documents


consumer participation in the recycling effort is essential to ensure its success. Therefore, Nespresso will continue to raise awareness about existing recy-cling solutions and to actively encourage its club Members’ participation in the recycling efforts through communication to bring back their used capsules for recycling afterwards.

Nespresso tooks its efforts to advance recycling in france even further. Within the framework of “Projet Metal”, a three-year initiative launched in 2014 to accelerate progress on CelAA’s efforts, Nespresso encourages financially the collection and recycling of small aluminium packaging within the french national packaging recovery system by paying cash incentives for every tonne sorted.

KEy FocUS AREAS

Nespresso commits expand its capacity to collect and recycle used Nespresso capsules to 100% by 2020 through collection points and pick-up collection services where we are present to ensure convenience and access to all consumers.

In countries where legislation prevents Nespresso from collecting used capsules, Nespresso will continue engaging with authorities to try amending the law and to be authorised to implement our own collection system for recycling used capsules. This approach has proven successful in Denmark, with the launch of recycling planned for 2014.

As part of its new sustainability commitments, Nespresso will recycle the used capsules that are collected into new Nespresso capsules each time it makes sense environmentally.13

By 2020, Nespresso will also ensure that 100% of the aluminium used for its capsules is sustainably sourced in compliance with the new Aluminium Stewardship Initiative (ASI) standard, being developed within a multi-stakeholder programme led by the International union for Conservation of Nature (IuCN).

“IUCN has considerable experience of working with the mining sector and can use its knowledge to support Nespresso in demonstrating leadership in sustainability. Nespresso is aware that its Club Members are increasingly concerned by sustainability issues and looks to IUCN and its diverse members to provide guidance on recycling and traceability of its aluminium capsules as well as advice on measuring the biodiversity impacts of the farms from which Nespresso’s coffee is sourced.”

Julia Marton-lefèvre,Director General, IuCN (International union for Conservation of Nature)

lOOKING AheAD




13 For example, in UK, France, Switzerland, Belgium, Luxembourg , Netherlands, Austria and Italy.

CONTexT

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AchIEvEMEnT

hIghlIghTS

In 2009, Nespresso committed to reducing the carbon footprint of a cup of

Nespresso coffee by 20% by 2013.

At the end of 2013, Nespresso had reduced the carbon footprint of a cup of Nespresso coffee by 20.7%.

Machine use and coffee growing are the main areas of environmental impact along the Nespresso value chain. Packaging is third.

Since 2009, all Nespresso consumer machine ranges have been equipped with an auto-matic stand-by mode or power-off, leading to a 70% reduction of carbon emissions in machine use.

Transport optimization of goods between production centres in Switzerland and england, Germany, the Netherlands and Norway has allowed to cut the transportation annual car-bon emissions in these countries by 35-40%.

Since 2005, we have been using a process called life cycle assessment (lCA), developed according to international standards, ISO 14040 and ISO 14044. lCA is a solid, integrated and long-term approach for measuring and reporting environmental performance against five key indicators: climate change (also known as carbon footprint), water footprint, biodiversity, human health and energy.

lCA helps us make informed decisions on how to improve our environmental performance, by evaluating opportunities to reduce energy, material inputs or environmental impacts at each stage of the lifecycle. A study performed by Quantis, a team of world-leading experts in the field of environmental life cycle assessment (lCA), shows that, across the Nespresso value chain, the biggest environmental impacts come from using the Nespresso machine and growing the coffee. Packaging is third.

following its commitment in 2009 to reduce the carbon footprint of a cup of Nespresso coffee by 20% at the end of 2013, Nespresso has been focusing on developing energy efficient machines to reduce the carbon emissions from the machine use, the area the most directly dependent from our own R&D capabilities.

Nespresso has also been working on reducing the environmental impact in every aspect of its business, for example, promoting sustainable agriculture to farmers through the AAA Sustainable Quality™ Program.


resource extraction

IMPACTS

THE LIFE CYCLE APPROACH

end of life

recycling

manufacturing

packaging & distribution

use

ECOSYSTEMQUALITY

HUMANHEALTH

CLIMATECHANGE

RESOURCEDEPLETION

WATERFOOTPRINT

| page 13© Nestlé Nespresso SA, Corporate Communications | Achievement of our 2013 ecolaboration™ carbon target

EcolAboRATIon™ FUll-TERM REPoRT, 2009-2013 AChIeveMeNT Of OuR 2013 eCOlABORATION™ CARBON TARGeT

One significant focus in reducing the overall carbon footprint has been on optimising the environmental performance of our machines. As part of our efforts, we brought together Nespresso machine suppliers, engineers and sustainable technology experts to design greener Nespresso machines.

Since 2009, all new Nespresso consumer machine models have been equipped with energy saving systems: auto stand-by (such as the CitiZ range, the U range, or Inissia) or auto-off switches (such as in PIxIe and Maestria), leading to a 70% reduction of carbon footprint of the machine use. PIxIe, the U range and Inissia, the most recent machines, automatically go into off mode after 9 minutes of inactivity, consuming between 40% and 60% less energy than A-ranked machines according to feA / CeCeD standards.

Additionally, we promoted the use of recycled materials in our machines. The U machine for example can claim 52% (in weight) of plastics not in food contact to come from recycled materials.

As part of our efforts to reduce our carbon footprint, we have worked in building environmental efficiencies within our production centres of Avenches and orbe. These include:

100% of our green coffee is delivered to our production centres by train.

In our latest factory in Avenches, advanced roasting techniques save approximately 16%-20% of the energy compared to previous generation of roasting techniques, while rain water is collected, recycled, and used as utility water in the factory.

The energy recovered through the factory’s energy recovery system in Avenches is partly used for heating purposes in the factory, representing savings of around 230,000 m3 of gas per year.

Around 95% of waste generated at the Avenches production centre is revalorized through recycling. for example, wood can be sent to recycling to become wooden panels, big bags that transport coffee can become insulation and fleeces when recycled, and jute coffee bags can be used for car seat or bedding stuffing. Metals are also recycled. The remaining 5% is incinerated to produce heat.

At Orbe, we have implemented a system of using river water to cool the factory.

We have set to achieve the leeD (leadership in energy & environmental Design) certifica-tion for our third production centre, currently under construction in Romont. This certification takes into consideration sustainability and energy efficiency of processes, as well as the environmental and social context of the building and employees’ well-being.

OPeRATIONAl effICIeNCIeS



MAChINe INNOvATION

PIXIE

U

By finding the best combination of rail, road and sea transport to move our products between our production centres and our regional distribution warehouses, Nespresso has found ways to reduce its environmental impact across europe, where most of our business is located.

Combining road and rail transport between the Nespresso Production and Distribution Centre in Avenches and Nespresso warehouses in england, Germany, the Netherlands and Norway has allowed us to cut the transportation annual carbon emissions in these markets by 35-40%.

for deliveries to the Netherlands alone, for example, Nespresso has reduced CO2 emissions by some 120 tonnes, the equivalent of 170 trucks, per year.

A 100% railway solution has been used for transport between the Nespresso Production and Distribution centre in Avenches, Switzerland and the Nespresso distribution ware-house in Austria.

In 2012, Nespresso also moved from combined transportation to 100% rail for deliveries to Sweden and Denmark, which led to a reduction of our carbon emissions by about 80 tonnes, or 50 trucks, per year.

lCA can also be used to measure the environmental impacts of specific parts of our value chain and operations. In 2011, we commissioned Quantis to conduct a new lCA to com-pare the environmental impacts of using different kinds of capsules to make an espresso coffee in a Nespresso machine. Their study showed that the Nespresso espresso product, with a capsule that is sent to recycling, is the option among the investigated alternatives that has the lowest overall environmental impact.



SuPPly ChAIN effICIeNCIeS

cARbon FooTPRInT EvolUTIon oF A Nespresso cUP oF coFFEE bETWEEn 2008 And 2012

2008 2012

CO2reduction

-20.7%

Usestage

Usestage60 %

10 %

0 %

20 %

30 %

40 %

50 %

70 %

80 %

90 %

100 %

Coffee supply

Capsule production

Packaging production

Production centre

Administration & overheads

Distribution & Logistics

Machine production and use

Coffee preparation (water and energy)

Cup productionand washing

Capsule, packaging and machines end-of-life

cARbon FooTPRInT oF A Nespresso cUP oF coFFEE In 2012

Coffee supply (19.9%)

Capsule production(13.3%)

Packaging production(3.6%)

Administration & overheads (1.9%)

Coffee preparation(water and energy) (10.9%)

Distribution &Logistics (4.6%)

Machine productionand use (7.8%)

Production centre(4.5%)

Cup productionand washing (28.0%)

Capsule, packaging and machines end-of-life (5.5%)

Use stage (46.6%)

Our efforts to improve our environmental performance can only be successful if we have a dee-per understanding of our impacts across our entire business. While we have robust measuring and reporting systems in place for our own operations, the impacts of coffee growing are not as well understood. That is why we are investing in a solid, integrated and long-term measure-ment and reporting program for our sustainability performance, particularly in the countries from where we source our coffee.

We continue to improve our own AAA Sustainable Quality™ database to gather, analyse and share information about sustainability with coffee farmers, to help them plan for the future. It will allow us to reinforce the tailor-made support in environmental management that agrono-mists provide in accordance to farmers’ individual needs, as well as provide us with a more refined global overview of our program implementation and the adoption of sustainability best practice (i.e. cluster monitoring & decision tool, traceability and geo-localisation), allowing us to build even more robust sustainable initiatives in producing countries. We continue to work with Quantis on a project to measure qualitative and quantitative effects of TASQ™, our sustainabi-lity self-assessment tool for coffee farmers.

furthermore, to ensure that we are helping to protect biodiversity in coffee growing regions, we need to measure the impacts we have on local ecosystems. We are working on a long-term project with IuCN to better understand the biodiversity impacts of our operations in coffee countries of origin, especially around coffee growing. A part of this work involves designing a robust eco-monitoring system to evaluate possible future initiatives.

After managing to reduce its carbon footprint by 20.7% between 2008 and 2012, Nespresso is commited to further reduce it by another 10% by 2020.

We will also expand the agro-forestry component of the AAA Program, started as a pilot in 2013 in Guatemala, to mitigate some of the threats that coffee farmers face from factors beyond the borders of their farms. By 2020, Nespresso together with its partners Rainforest Alliance and Pur Projet, aims to plant 10 million trees in and around the AAA coffee farms to help to restore natu-ral habitats, regulate water availability, improve soil quality and increase the capacity of coffee farming areas to better adapt to climate change.This extensive agroforestry programme will help Nespresso to become 100% carbon neutral by insetting (note de bas de page déjà dans la section COffee) the company’s residual operational carbon footprint and increase farm climate resilience.

We are also continuing to engineer additional environmental benefits into the design of our new and future machine ranges, while increasing the collection capacity of our used capsules to 100%.

“The approach that Nespresso is taking to measure their carbon footprint and to set realistic and measureable targets to reduce it throughout the entire value chain is a commendable approach to addressing a serious issue.”

yves loerincik,CeO, Quantis




lOOKING AheAD

comPArAtive full life cycle Assessment b2c cuP of esPresso mAde using A PAckAging And distribution system from Nespresso esPresso And three generic Products

Quantis, May 2011 www.nestle-nespresso.com/media/library/documents

globAl Aluminium recycling A Cornerstone of Sustainable Development International Aluminium Institute, 2006

imPlementing collection cAPAcity for recycling used Nespresso cAPsules Nespresso factsheet, July 2014

monitoring And evAluAtion study of the Nespresso AAA sustAinAble QuAlity™ ProgrAm in colombiA

Centro de estudios Regionales Cafeteros y empresariales (CReCe), May 2013 www.nestle-nespresso.com/media/library/documents

Nespresso AAA sustAinAble QuAlity™ ProgrAm shAred commitment (2013) www.nestle-nespresso.com/media/library/documents

Nespresso AAA sustAinAble QuAlity™ ProgrAm Protecting the future of our highest quality coffees Nespresso factsheet, July 2014

Nespresso sustAinAble PrActices for fArmers TASQTM (Tool for Assessment of Sustainable Quality™), 2013 www.nestle-nespresso.com/media/library/documents

tAking resPonsibility for environmentAl PerformAnce Nespresso factsheet, July 2014

Working together for A sustAinAble future Nespresso factsheet, July 2014


yvonne iWAniuk head of Corporate Communications & Public Affairs T + 41 21 796 95 67 E [email protected]

diAne duPerret Corporate PR Manager T + 41 21 796 92 89 E [email protected]



RefeReNCe DOCuMeNTS

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CONTACTS

Documents

NESPRESSO Ecolaboration tM FULL-TERM REpoRT 2009-2013