Nestlé/Nespresso

Some corporate sustainability reports are underwhelming. The JM Smucker Co. (owner of Folgers, among other brands) is a great example. Not much to it, and whole swaths are repeated word-for-word from year to year.

Food mega-giant Nestlé, on the other hand, produces phone-book sized sustainability reports. Granted, Nestlé is a larger company with more products. Still, their 2013 Creating Shared Value report is a whopping 404 pages, overwhelming in its scope. Any reader would get lost in its facts, figures, and examples. Let’s call it the everything-including-the-kitchen-sink approach.

I know I’m cynical, but as I grudgingly sat down to read over Nestlé’s latest report, I couldn’t help but wonder if this was an intentional effort to swamp people with data or just impress them with size, all to obscure a so-so sustainability record.  I will restrict my critique here to just what pertains to coffee.

There are two things to note about Nestlé’s coffee business. First, there are at least two coffee supply chains in the company. Nespresso is responsible for its own supply chain, separate from the rest of Nestlé’s green coffee purchasing¹. The rest goes to Nestlé’s other brands, primarily instant under the Nescafé label.

Second, on page 150, Nestlé states it buys 10% of the world’s coffee production; thus, in 2013 Nestlé bought 870,000 tons of green coffee². It’s unclear if this includes Nespresso, but since the figure right in line with previous estimates of Nestlé purchases, we will assume that it does.

How Nestlé’s defines sustainable coffee

In their Responsible Sourcing Guideline (PDF), Nestlé defines responsibly sourced green coffee as that which is verified against the 4C Code of Conduct or standards such as their own Nespresso AAA Sustainable Quality Program.

What does this mean? 4C compliant coffee is not certified, but indicates meeting a basic, entry-level standard. There are no meaningful, quantifiable eco-criteria, and the 4C Code addresses only the most egregious, illegal, unsustainable practices in the industry. The Nespresso AAA program uses criteria that are based on the Sustainable Agriculture Network (SAN) standards used for Rainforest Alliance certification, but which criteria and how they are scored or evaluated is not publicly disclosed. [Update 2015: here is a post on the environmental and social requirements for producers in the AAA program. Note the low bar for entrance into the program.]

So how much of Nestlé’s coffee is “responsibly sourced”?

The majority of Nestlé’s coffee goes to their non-Nespresso brands. Of this, the company states (page 152) that 71,493 tons, or 8.2% of their annual purchases, was 4C compliant, reaching just the most basic level of “sustainability” standards.

Meanwhile, 84% of their Nespresso purchases were made under their AAA program. Nestlé considers volume data proprietary, but in 2010 Nespresso stated³ it purchased 49,020 tons of coffee (5.6% of Nestlé’s total purchases). Nespresso has experienced considerable growth. If we guess that it purchased 60,000 tons, then 84% of that would be 50,400 tons under their AAA program, or 5.7% of Nestlé’s annual purchases. It’s probably safe to say that around 6-7% of Nestlé’s total purchases were sourced under the Nespresso AAA program.

So, less than 135,000 tons is sourced under some sort of standard, leaving nearly three-quarters of a million tons of coffee not meeting any sort of basic sustainability requirements at all!

Even less than meets the eye?

On page 125, Nestlé states a goal to source 90,000 tons of coffee that complies with the Sustainable Agriculture Standard by 2020.  That sounds like a volume that would be around 10% of Nestlé’s annual purchases. However, a footnote explains that this is an “aggregate figure from 2010 to 2020”. In other words, 90,000 tons over 10 years, or 1% of Nestlé’s total green coffee purchases.

A similar footnote is not given for their goal of sourcing 180,000 tons of 4C-compliant coffee by 2015, but later in the report when these figures are provided, the language seems to indicate that this is also a cumulative amount. For instance, on page 152, the report says (my emphasis added) “By 2015, we aim to source 180,000 tonnes…” and “By the end of 2013, we had sourced 148,198 tonnes…” On page 157, it says “…we will have bought 180,000 tonnes…by 2015…” If this were an annual amount, wouldn’t the wording be, for example, “In 2013, we sourced…”?

Other tidbits:

• They tout that an independent study found that Colombian farms in their Nespresso AAA program had “52% better environmental conditions” than non-AAA farms. Examining the actual report (link here) shows that this figure included farms with Rainforest Alliance certification. It did not say how many of the farms had the certification, or how the conditions on these certified farms drove up the environmental index.
• The percentage of their suppliers that comply with the company’s supplier code has declined from 96% in 2011, to 74% in 2013.

In a similar vein, the company’s strategy for biodiversity impacts of coffee states: “Biodiversity issues are managed primarily through the use of the 4C Coffee Code, the Nespresso AAA Sustainability Quality Program and the Nescafé Plan, which, in partnership with Rainforest Action Network, has developed better farming practices.”

In a nutshell

Remember, Nestlé has no interest in investing in or marketing third-party certified coffee, so it’s worth repeating we get from Nestlé:

• around 50,000 tons of coffee sourced under their Nespresso AAA guidelines, with a low bar for inclusion
• plus 71,493 tons sourced under the dubiously-meaningful 4C code of conduct,
• leaving more than 740,000 tons of coffee sourced from farms following no sustainability standards, or at least none known or being disclosed to the public.

Footnotes:

¹Alvarez, G., C. Pilbeam, and R. Wilding. 2010.Nestlé Nespresso AAA sustainable quality program: an investigation into the governance dynamics in a multi-stakeholder supply chain network. Supply Chain Management 15(2):165 – 182. DOI: 10.1108/13598541011028769

²Data converted from world production statistics, International Coffee Organization. 

³Nestlé Nespresso Ecolaboration Progress Report, June 2011.

(Revised and updated throughout as of January 2022)

Nespresso, the single-serve espresso machine/pod division of giant conglomerate Nestlé, has received accolades for its “Ecolaboration” sustainability project. Nespresso accounts for only 5% of Nestlé’s sales, but Ecolaboration provides the majority of the company’s public green image. I’ve written about the coffee sourcing aspect of this project in the past, revealing what a tiny fraction of Nestlé’s coffee is to be sourced sustainably under this initiative. Here, we’ll take a look at Nespresso’s coffee capsule/pod recycling efforts, which are frequently misrepresented in the media — unfortunately, in Nespresso’s favor.

Nespresso will put in place the capacity to recycle 75% of its capsules. They never claim this many will be recycled, and don’t reveal how many have been recycled in the past. Nespresso’s proprietary coffee capsules, used in their single-serve espresso machines, are made of aluminum, a metal that is entirely recyclable. But just because the capsules are made of a recyclable material doesn’t mean they are being recycled.

What Nespresso is actually doing – increasing capacity

Nespresso encourages recycling by establishing “collection points” (big bins) for the capsules in their boutiques and local communities; in a few areas Nespresso Club customers can return them via courier when new capsules are delivered. Nespresso has never set actual recycling goals, they have only claimed they would increase capacity to recycle the capsules. The current goal is 75% by 2013, up from the current 60%. This means establishing enough collection systems to collect 75% of the capsules — it says absolutely nothing about how many capsules are actually recycled.

What Nespresso is not doing – revealing recycling rates

In their June 2011 progress report, Nespresso repeats their capacity goals, and despite listing all kinds of metrics, never once mentions the true recycling rate for the capsules, only the number of collection points in various countries.

I don’t care if Nespresso’s capacity is 200% of the capsules sold. It means nothing unless the capacity is being used. Nespresso states that 12,300 capsules are used PER MINUTE. That’s 6.4 billion a year*. Even if half are being recycled that means over 3200 metric tons of aluminum is being sent to landfills annually. This is just another example of convenience and profit (the coffee works out to $60/pound, generating an estimated 30% profit margin) trumping environmental responsibility.

As of 2020, it was estimated that *14 billion capsules are sold per year, but as the linked article notes, as the criticism of the company’s environmental impact has increased, the less they’ve reported regarding sales and recycling rates. Experts have said the rate is as low as 5%, with Nespresso claiming about 30%. Even at 30%, the remaining capsules represent 12,600 tons of aluminum being landfilled annually (enough to create 60 Statues of Liberty, according to the article in the Guardian).

What the media is doing – ignoring the above

What is really discouraging is that the media frequently overlooks that Nespresso is talking about capacity and not actual recycling rates. Examples of articles that mistakenly say Nespresso will be recycling 75% of its capsules are here, here, and here, just to show a few. Careless media outlets either miss the distinction, or are unmotivated or don’t care to question the effectiveness and results. As a result is that consumers are left thinking Nespresso is recycling large numbers of capsules instead of distributing tons of waste.

Barriers to recycling Nespresso capsules

I’m not sure if people who already find preparing a cup of coffee from whole beans too much effort are the best candidates to recycle the capsules.  For the most part, they’ll have to collect the capsules at home and schlep them into a Nespresso retail outlet. In the U.S., as I noted in my post about Keurig’s K-Cup recovery program, American consumers don’t always recycle even when it’s easy for them; voluntary residential curbside recycling without incentives in the U.S. averages around 68%.

And why can’t Nespresso capsules just be tossed in recycling bin, like other aluminum? As with K-Cups, the coffee grounds have to be separated from the capsules by the consumer. This leads to the second problem: many recycling programs cannot process items as small as the Nespresso capsule because they fall through the holes used for weeding out debris, or jam the sorting machines. Therefore, well-meaning consumers may very well just be sending them to someone else to toss in the garbage.

An update in 2019, verifes that 1) most recycling systems cannot handle these little pods and 2) only 33% of U.S. Nespresso customers send back their pods to the company, even though it’s free. Yes, the company has spent some money in New York City so that the pods (as well as similar metal items) can be recycled at their facilities. But that’s one city in the entire country. Piffle.

A final insult

For years, Nespresso produced many billions of capsules made entirely of new aluminum. This even though they repeatedly touted the recyclability of aluminum on their websites and promotional materials, as if they utilized it themselves. It wasn’t until 2021 that Nespresso introduced (some) recycled aluminum content in (some) of their capsules. The company’s use of new aluminum contributes to the environmental hazards of mining the raw products and producing aluminum. And for the icing on the cake, Nespresso states that their aluminum supplier is the mining giant Rio Tinto, a company with an incredibly long list of environmental degradation, cultural desecration, human and labor rights abuses, and corporate corruption, the linked examples just to name a few!

Greenwash

Strictly speaking, greenwashing is the use of marketing to imply that a company’s products are environmentally friendly. Nestlé’s  statements are clear in what they are (and are not) doing when it comes to their Nespresso capsule recycling, and even their green coffee sourcing. They can’t be entirely blamed for the lack of critical examination of their efforts. However, Nespresso’s very heavily promoted Ecolaboration campaign says nothing about the sustainability of the rest of Nestlé’s coffee division — the other 94% of the coffee they buy.  Or about the lack of genuine corporate citizenship by the entire company itself. I think it’s fair to categorize Nespresso’s capsule recycling initiative, and Ecolaboration itself, as a greenwashing tool for Nestlé, don’t you?

P.S. As they have with Keurig K-Cups, enterprising people have come up with refillable replacement pods for some Nespresso machines. As of 2021, several have gone out of business. The three most popular still available are Sealpod, Capmesso, and RECAPS.

Nespresso capsule photos by Sarah Deforche and Jean-Yves Romanetti.

In response to a Greenpeace campaign, mega-giant food conglomerate Nestlé has reportedly pledged to rid its products of deforestation. A closer read of Nestlé’s own press releases reveals apparently narrower goals, and there is no mention of eliminating deforestation in its coffee supply chain. In fact, other recent Nestlé coffee initiatives point to increased deforestation.

Nestlé responds to public pressure

Originally, the Greenpeace campaign demanded Nestlé quit sourcing palm oil for its products from companies that engaged in (sometimes illegal) deforestation in Indonesia. Public pressure was so intense that Nestlé not only suspended purchasing palm oil from a supplier with a particularly egregious record, the chairman called for a moratorium on deforestation, a few months later announced a partnership with the non-profit The Forest Trust (TFT), and “committed to ensuring that its products do not have a deforestation footprint.”

Reports of corporate responsibility may be premature

That sounds great, but don’t expect substantive action anytime soon. Nestlé is initially only working toward identifying bad players in its palm oil supply chain. Their goal is to source all their palm oil from “sustainable” sources by 2015. Unhappily, palm oil certification schemes have been marred by fraud allegations; the criteria, even if followed, contain loopholes; and some organizations contend that palm oil monocultures are simply inherently unsustainable.

Nestlé talks a lot about adherence to their Supplier Code. This lightweight document contains a single paragraph on sustainability (“supporting” and “encouraging”, but not requiring, sustainable practices) and one paragraph on the environment (in its entirety: “The Supplier must operate with care for the environment and ensure compliance with all applicable laws and regulations in the country where products or services are manufactured or delivered.”).

By the way, Nestlé declared that the biofuel industry is really responsible for forest destruction. This is a favorite tactic of misbehavers: pointing out that there are worse offenders, as if we must focus attention on causative agents only in rank order. Liver cancer causes fewer deaths than lung cancer, but we look for cures for both simultaneously.

Nestlé’s coffee plans: 220 million trees

Coffee has not been mentioned in any of these discussions. Nestlé buys upwards of 907,000 tons of green coffee annually, fueling the largest market share of packaged coffee in the world. In August (after all the anti-deforestation hoopla), Nestlé announced it was investing US$487 million in its global coffee supply chain. This follows their big robusta expansion push in Mexico that I wrote about in May.

A centerpiece of the current plan is the global distribution of 220 million high-yield coffee plants over the next 10 years. The plants will be free, and the farmers will not be obligated to sell to Nestlé. In other words, the farmers are taking on all the risk of increasing their commitment to coffee, without any guarantees it will be purchased.

Where and how will all this coffee be grown? High-yield coffee varieties are invariably planted in full sun. The push by multinational corporations for farmers to replace their shade coffee systems with higher-yielding, chemical-dependent hybrids was how this whole sun versus shade coffee dilemma was born! Much of the Nestlé coffee will be robusta, used in instant coffee such as the company’s Nescafé brand. Robusta coffee is also grown in the sun. I don’t see how this will not contribute to deforestation.

Another part of the plan includes increasing the amount of coffee purchased directly from farmers to 180,000 tons over the next five years. Direct buying, rather than purchasing from middlemen, should, theoretically, cut down on instances of the company buying coffee from habitat-destroying and illegal sources. In early 2007, the World Wildlife Fund revealed that Nestlé was among the buyers of robusta coffee illegally grown in a Sumatran national park. Their excuse was that they had no way of knowing where their coffee came from when it went through several buyers.

Nestlé’s direct buying goal, if met, will only cover about 23% of its total purchases. In their publication “Faces of Coffee” (pdf), when their direct purchases were at 14%, Nestlé noted,

“…it is unrealistic to believe that [direct buying] could be applied to a significantly larger portion of a roaster’s purchases…”

Let’s conclude, then, that the majority of Nestlé’s coffee purchases will continue to come from possibly-dubious or at least difficult-to-trace sources.

A small portion of suppliers to meet very minimal standards

Nestlé also aims to bring all of the farms that directly supply the Nescafé factories (not all of their direct-sourced coffee) up to the 4C Association sustainability baseline code by 2015.

This is not a certification; the 4C Code of Conduct outlines baseline requirements for coffee production. Only the most atrocious practices (such as bonded and forced labor) are considered unacceptable. The Code itself is made up of 28 principals, each having three statements categorized like traffic lights (red, yellow, and green) indicating “desired performance.”

The 4C system is considered inclusive.  Thus, coffee may be marketed as 4C compliant even if there are “red” practices (“must be discontinued”) so long as there is an equal number of “green” (“desirable”) practices in the same category (equaling a “yellow” average), at least for some unspecified period of time. So, for instance, a producer can kill endangered species and use the “most hazardous” pesticides so long as soil and water conservation plans are in place.

The 4C code is the lowest rung of the ladder for coffee production. I know we all have to start somewhere, but frankly, I am appalled that any of Nestlé’s coffee suppliers don’t meet these most basic standards of human and environmental decency.

A final aspect of Nestlé’s coffee initiative is to purchase 90,000 tons of Nescafé coffee sourced according to the “Rainforest Alliance and Sustainable Agriculture Network (SAN) principles” by 2020. Remember the math that 90,000 tons of all of their coffee would be about 11% of total purchases. Since this goal only applies to beans for Nescafé, it is an even smaller percentage of the company’s total purchases.

Also, note that this coffee will not be Rainforest Alliance certified, it will only conform to SAN principles. These ten principals simply form the basic framework of the certification criteria. So, for example, the Ecosystem Conservation principal states “Farmers should promote ecosystem conservation and recovery.” Without specific standards and criteria, evaluation of compliance with this or any principal is wide open for interpretation, and therefore lacks real meaning for consumers.

Keep Pushing

Considering the evidence, lauding Nestlé’s conversion to genuinely sustainable practices looks premature.

Certainly, it is a positive move that Nestlé is working with The Forest Trust (TFT), which focuses on products and their responsible supply chains. But it’s not a certification. According to this interview, TFT performs gap analyses on supply chains, identifies where they do not meet sourcing guidelines, and helps create action plans. This sounds like a potentially drawn-out process that allows Nestlé to kick true sustainability down the road.

As for coffee, TFT does not have experience or expertise working with coffee supply chains. Therefore, it’s important that Nestlé is working with Rainforest Alliance. RA’s own press release reiterates that Nescafé will not be using the Rainforest Alliance seal. I think RA is being overly optimistic in saying that this initiative will result in Nestlé “increas[ing] its supply of coffee beans without clearing rainforest.”

That sentence does, however, speak to the true goal: increasing supply. Robusta prices hit amazing highs in 2008 (probably when this plan was hatched) and prices are again climbing. Arabica futures are now at a 13-year high.  Any time coffee prices are high, coffee farmers tend to plant more coffee. In 3 to 5 years when the plants begin to produce, the glut of coffee causes prices to plummet. Nestlé is only adding to this problem by handing out tens of thousands of high-yield coffee plants. Nestlé is looking not for a sustainable coffee supply, but a sustained coffee supply.

The public must keep up the pressure on Nestlé and other similar companies to make meaningful, verifiable, prompt changes in their coffee supply chain to ensure authentic ecological and economic sustainability for all players. Until then, we shouldn’t be drinking a single one of the 4600 cups of Nescafé that the company claims are consumed every second worldwide. I’ve just learned this is International Nestlé-Free Week, so it’s a good time to start.