#1Nestle Good food, Good life Sustainable livelihoods: reducing child labor risks in cocoa Rob Cameron, Head of Public Affairs Yann Wyss, Human rights, Public Affairs#22 Nestlé: our sustainability agenda is evolving Dec. 2020 NESTLE'S NET ZERO ROADMAP Our path to regeneration for future generations Moving faster Scaling up Delivering our promise 2018 2021 2025 2030 by 2050, we will reach net zero 2050 Jun. 2021 TOWARDS A FOREST POSITIVE FUTURE Bank of America - March 2022 Nestle Sept. 2021 Regenerative agriculture Biodiversity Increase plant and animal biodiversity above and below the ground. Soil Scale up farming practices that protect soil health and increase soil organic matter. Water Reduce chemical farm inputs, optimize organic fertilization, biological pest control and irrigation techniques. Farmers Dec. 2021 Livestock Integrate livestock and optimized grazing in farming systems where feasible. Nestle Good food, Good ife NESTLE'S HUMAN RIGHTS FRAMEWORK AND ROADMAP Supporting just transition toward a regenerative food system DECEMBER 2021 Jan. 2022 Helping them reach. a living income Nestle Good food, Good life#33 Putting purpose into practice Bank of America - March 2022 Agenda Advance regenerative food systems at scale Focus Beyond sustainability: protect, renew and restore The business case Future-proof the business by enhancing consumer relevance and supply chain resilience Nestle Good food, Good life#4Child labor in West Africa's cocoa supply chains: A complex challenge with interrelated root causes 1 2 Education Children don't have an alternative Labour Adults not available to do tasks 4 Bank of America - March 2022 3 4 5 Income Communities Basic services for child Not enough income for decent lives -> Women and communities not survival absent empowered Nestle Good food, Good life#5Due diligence systems have helped drive industry action Pioneered community-based Child Labour Monitoring & Remediation System to trace, assess, address & report on issue 5 Bank of America - March 2022 Step 3: database This information isentered into our database via a mobile app Step 4: follow-up The situation is discussed be- tween the family and the CLP, who explains what children are not allowed to do and why. Nestle WORKING TOGETHER - International COCOA initiative Step 1: ***** home visits Community Liaison People (CLP) visit the households and farms of all the coop members to raise awareness of child labor and conduct surveys SCHOOL Step 2: identification A CLP identifies the children at risk of doing hazard- ous work Step 6: measurement We measure effectiveness, i.e. how many children have been prevented from entering child labor or have stopped doing hazardous work. Step 5: remediation Help is provided to the child, family or community as appropriate. The CLP visits the family on a regular basis to see if the child has stopped doing hazardous work Nestle Good food, Good life#6From mitigating to redressing risks: "Cocoa-farming families rewarded not only for the quantity and quality of cocoa beans they produce but also for the benefits they provide to the environment and local communities". 017911 regeneration 10 6 Bank of America - March 2022 Nestle Good food, Good life#7Incentivizing & enabling change Working towards a living income Earning incentives Generating diversified incomes Increasing cocoa production CHF 100* CHF 100* CHF 100* + CHF 100* CHF 100* SCHOOL ENROLLMENT Reducing child labor risks by assisting school attendance and monitoring GOOD AGRICULTURAL PRACTICES Helping farmers improve cocoa production by training and subsidizing pruning groups AGROFORESTRY ACTIVITIES Improving farm resilience by providing forest and fruit trees DIVERSIFIED INCOMES Becoming less dependent on cocoa by supporting families to grow other crops or raise livestock CHF 100 for each target-based practice and a CHF 100 bonus for engaging in all four Mobile payments Payments delivered via a secure mobile transfer to ensure traceability directly from Nestlé suppliers to the intended recipient Baseline annual net income4 Visualization not to scale; for illustrative purposes only Incentivizing families to engage in these practices, to earn up to CHF 500 annually for the first two years* and CHF 250 per year thereafter Payment calendar Managing cash flow throughout the year is often a challenge. Incentives will be distributed when they are needed most DIRECT CASH TRANSFERS Incentives paid directly to the cocoa-farming family via mobile, improving traceability. EMPOWERING WOMEN Payments are divided evenly between the male and female heads of household. Set up of Village Savings and Loans Associations further empower women to save, invest and share financial responsibilities. Leaving no farm behind Fixed incentive not paid on the volume of cocoa sold in order to provide smaller farmers meaningful support 7 Bank of America - March 2022 Nestle Good food, Good life#8Aiming to reach a living income Estimated annual net income for a cocoa-farming family in Côte d'Ivoire (CHF) 7000 Living Income Benchmark 8 6000 5000 4000 3000 2000 1000 0 2,3 Baseline Baseline data assumes average productivity (620 kg/hectare) and farm size (3.5 hectares) Net cocoa income Premium Acceleration period Projected after two years, the initial increase in income from greater yields and additional sources, further supported by incentives Diversified income Ambition Doubling baseline net income and reaching Living Income Benchmark, adjusted by KIT using OECD factor for household size¹.2 Incentive = Net income Bank of America - March 2022 Average cost of living for a cocoa-farming family in Côte d'Ivoire (CHF)1 7000 UNEXPECTED EVENTS 6000 HOUSING 5% 11% 5000 EDUCATION & HEALTH 36% 4000 .✈ Living Income Benchmark Living income benchmark, adjusted by KIT using OECD factor for household size of 3.82 adults and 2.96 children 2 3000 2000 FOOD 48% 1000 0 Nestle Good food, Good life#9Phased expansion to cover entire cocoa supply by 2030 • CHF 1.3 billion invested over 10 years 2020 End goal is to transform value chain and reach 100% segregated supply • · Approach enables Nestlé and partners to continuously assess progress and learnings idh € the sustainable trade initiative KIT Royal Tropical Institute ALLIAN AINFOREST RAIN PEOPLE& NATURE 9 Bank of America - March 2022 1000 families 2022 1000 families 2024 2030 Côte d'Ivoire > Pilot > Test at scale > Scale up International COCOA Initiative and local cooperatives, cocoa farmers, including the Governments of Côte d'Ivoire and Ghana. Ghana > Extension Global > Rollout 160 000 families* * Estimation Nestle Good food, Good life#10Due diligence at the heart of our Human Rights Framework Regulatory changes mean all companies need to build effective due diligence systems to address environmental and human rights impacts along their value chains Salient issues • Child labor and access to education • Forced labor and responsible recruitment • • • Living income and living wage • Safety and health at work Freedom of association and collective bargaining • Gender equity, non-discrimination and non-harassment . . • Right to water and sanitation • Indigenous peoples and local communities' land rights. ENABLER 1 AND INCENTIVES ENABLER 2 POLICIES AND TROL SYSTEMS DUE DILIGENCE SALIENT ISSUE ACTION PLANS ASSESS ENABLER 3 ENGAGEMENT AND ADVOCACY ADDRESS PA REPORT ENABLER 4 GIC PRATEN . • Data protection and privacy • • Right to food and access to nutritious, affordable and adequate diets TRANSPARENCY AND REPORTING ENA BLER 5 10 Bank of America - March 2022 Nestle Good food, Good life#11Key takeaways • Pioneering a holistic approach to supply chain resilience • Providing conditional incentives, delinked from production, to close living income gap • Tailoring program to benefit smallholders and directly address child labor risks • Moving industry beyond due diligence to focus on positive impact 11 Bank of America - March 2022 Nestle Good food, Good life#12Discussion 12 Bank of America - March 2022 Nestle Good food, Good life#13Appendix 13 Bank of America - March 2022 Nestle Good food, Good life#14Child labor definitions In Ivory Coast and Ghana, we estimate that >95% of child labor occurs within the family context Light work Child Labor Children between the ages of 13 and 15 years old may do light work, as long as it does not threaten their health and safety, or hinder their education or vocational orientation and training. Any light work done for such a long period or in such conditions that it deprives children of their childhood, their education, their potential and their dignity, and that is harmful to physical and mental development. Conditional worst forms of child labor (hazardous work) Work which, by its nature or the circumstances in which it is carried out, is likely to harm the health, safety or morals of children. List of hazardous work defined by States. A child is any individual below the age of 18 years Unconditional worst forms of child labor Slavery, trafficking, forced labor and recruitment of children in armed conflict. 14 Bank of America - March 2022 Nestle Good food, Good life#15Nestlé: cocoa supply chain 15 Bank of America - March 2022 Farmer Co-op/ Farmer Group Strategic up country supplier Trader Nestlé Processor Nestle Good food, Good life