2011 EditionA Creating Shared Value Report of Nestlé Philippines, Inc.

CREATING SHARED VALUE REPORT

Chairman & CEO’s Message 2Nutrition 3 - 18Water and Environment 19 -30Rural Development 31 -62CSV Forum 63 - 64CSV Council 65 - 66Contact Us 67

CONTENTS

1

JOHN M. MILLERChairman & CEO

Chairman’s MessageMaking a Positive Lasting Differencein the Lives of Filipino Families

In the next few pages, you will be introduced to farmers who have restored their faith in the abundance of their land planting coffee the Nestlé way; unemployed barangay women who have found purpose and livelihood sewing for Nestlé factories; tricycle drivers who have become mini-entrepreneurs selling Nestlé products; calamity victims who have found new homes and are building new lives in Nestlé GK villages; shoeless children who now dream of becoming athletes after receiving shoes from MILO.

This 2011 CSV Report highlights the major CSV programs that we have sustained over the last few years, particularly in the areas of nutri-tion, rural development, and water and the environment. While these programmes do not claim to address all of the enormous social

problems that the country faces, we believe that they create big enough ripples to make a real and positive difference in society as we continue to nurture generations of Filipino families in another 100 years.

It is our hope that through this report, we will be able to share our programmes and develop further partnerships to usher in an era of multi-stakeholder collaboration for the betterment of the Philippine society.

We take pride and joy knowing that our Company has touched the lives of thousands of Filipino families in the last 100 years. We have done this through Creating Shared Value (CSV) for our business and for society.

As we celebrate our 100th year in the country, Nestlé Philippines is more committed than ever to embed Creating Shared Value (CSV) in our operational activities and weave it seamlessly into the fabric of our corporate being. More and more, we see CSV as a source of opportunity, ingenuity, and a competitive advantage for our Com-pany. It challenges us to creatively craft strategies that not only make a profit for our business but also create a meaningful and lasting social impact as well. It makes us constantly look for oppor-tunities in the value chain where we can create shared value – from agriculture and sourcing of raw materials, through manufacturing to the distribution of our products, all the way to our communica-tion to our consumers.

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Nutrition

3

Improve NutritionalUnderstanding

Impact on Nutrition

Encourage Healthy Habits/Behaviors

Access to Nutritious Food

Promoting an Active Lifestyle

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Laki sa Gatas:Putting Milk at the Heart of GoodNutrition forGrowing Children

Inside the glass is a piece of paper that bears the uneven but distinct lines of an airplane, drawn by an 8-year-old who dreams of becoming a pilot some day. The glass, typically used for drinking milk, is called the Ambition Glass as it now encases a child’s dream.

This glass is just one of the many that have served as vessel to similar drawings by grade school pupils who have attended the BEAR BRAND Laki sa Gatas nutrition education advocacy. By translating their ambitions to such drawings, both the glass and the drawing serve as reminders of how proper nourishment and drinking milk can help them achieve their dreams.

Such has been the Laki sa Gatas experience since its launch in 2006. The half-day nutrition education session includes the use of colorful flipcharts and fun games led by “Kuya Benjie.” These sessions help the children learn about the importance of milk and good nutrition.

The Laki sa Gatas experience is not just for the children but extends to the children’s parents and their teachers. Mothers have gone to their children’s schools to attend the half-day event, where they are given a lecture by aregistered nutritionist-dietician on nutrition, health and wellness, practical tips on how to ensure proper nutrition for their kids, plus a meal planner to help them prepare balanced meals for their families. Thousands of teachers have taken part in the program, getting briefed on how to monitor the health conditions of their students and develop action plans to help malnourished ones.

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Post-activity research results show that children who attended the Laki sa Gatas event increased their daily consumption of milk as their mothers also increased the number of glasses of milk served daily in the weeks right after Laki sa Gatas. This behavioral change can do much to alter the dismal nutrition profile of Filipino children in the lower-income families, who comprise 70% of the entire population. According to the 2008 National Nutrition Survey conducted by the Food and Nutrition Research Institute, a number of children do not have milk in their diet with only 13% of children ages 6 to 12 only meeting 13% of their recommended milk intake/day. This figure gets worse as the children’s ages go up, their mothers equating nutrition with noodles and fruit juice under the misperception that children outgrow their need of milk.

Laki sa Gatas continues to visit public elementary schools throughout the country year after year, bringing the same nutrition education experience and message to thousands more children, moth-ers, and teachers. BEAR BRAND’s Laki sa Gatas remains steadfast in its mission: To educate Filipino families on the value of providing children with proper nutrition including milk and thus give them a good head start toward the future as envisioned in their Ambition Glass.

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Turning Consumers intoNutrition Smart Shoppers

Does nutrition come at a higher price? Not always. That’s what Nestlé tells consumers with the Check the Label campaign of NIDO 3+, urging them to study the label when buying nutrition-sensitive products such as milk to determine their real nutritional value instead of simply assuming that higher-priced brands are more nutritious.

Lauded in 2009 by the Department of Science andTechnology as an “innovative way of promoting correct information to consumers” and cited by the Department of Trade and Industry as “well aligned to our mission of developing well-informed and vigilant Filipino consumers,” the Check the Label campaign is helping transform more and more Filipino consumers into nutrition-smart shoppers.

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Health & Wellness Tips

NutritionalInformation

For Moreinformation

Nearly 70% of consumers who have been exposed to the campaign see the worth of its message and are likely to adopt the practice.* This simple practice should enable them to get the best nutritional value for their money.

When checking labels of Nestlé products, consumers get more than a listing of contents. Each Nestlé product comes with a Nutritional Compass on its packaging, an easy-to-follow graphic tool to different points of interest about the product— nutritional information, health and wellness tips, and where to call should they need more information. It enables consumers to make informed choices when buying food and beverage products, while giving some friendly reminders on how to achieve wellness. That’s the power of the label being harnessed by Nestlé to empower consumers with the right nutrition information to make the right shopping decisions.

*source based on post-evaluation of R&D deployment

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They meet every Sunday 5:30 a.m. at the Makati Park — at least 200 of them of different ages and occupations with little in common except the desire to get fit and achieve wellness the Nestlé way. A fitness instructor gets them on their feet to form an orderly assembly, some music is played, and they all move to the groove — stretching, bending, jumping, dancing, and sweating it out. Once a month, a seminar on relevant health and nutrition topics follows the hour-long exercise, after which they get to consult one-on-one with a nutritionist for practical advice on how to achieve their ideal weight and improve their physical fitness.

These weekly and monthly routines are repeated in 18 other places from up north in Baguio to down south in Davao, where the Nestlé “I Choose Wellness” Advocacy for the Community is currently on the run. Nearly 50,000 of participants have chosen to stick to the program every week, signing up for the “I Choose Wellness” Passport program, where their health indicators such as weight, body mass index, and blood pressure are recorded and tracked every month, and where they get reward items in exchange for points earned from engaging in wellness activities. This Well-ness activity is a real, sustained, and monitored experience for Filipinos at no cost to them.

Making Wellness the Lifestyle Choice of Filipinos

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Among them is Elenita Reyes, 45 years old, who has lost 8 unhealthy kilos since stumbling upon the weekly activity and getting hooked on it. “I feel and look much better now that I have learned to be more physically active and more knowledgeable about the food I eat.I used to get easily tired. I feel healthier now.” she says. Millions of Filipinos continue to learn more about nutrition, health, and wellness through the other components of the Nestlé “I Choose Wellness” campaign:

• “Choose Wellness, Choose Nestlé” at the Trade. The Company deploys registered nutritionists to trade outlets and public markets to educate shoppers on nutrition and wellness to help them make purchase decisions attuned to their wellness needs. Shoppers may also consult the nutritionists on their personal health and nutrition concerns, during which their relevant body measurements are taken for a proper assessment of their needs. Over 5 million people have sought counseling from Nestlé-deployed nutritionists since 2005.

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Wellness Begins at HomeSix years since its launch to Company employees, the Nestlé Wellness program continues to spread through every activity within the Nestlé organization, as employees are constantly encouraged to adopt a healthy lifestyle through proper nutrition and physical activity. Nutrition education training, regular physical exercises, year-round sports and recreation activities, incorporation of wellness in internal communication materials, a well-equipped gym at every site, and a dedicated nutritionist per site — these are what make wellness palpable in the Neslté culture.

• Wellness in the Workplace. Nestlé spreads its wellness advocacy with business companies, government agencies,hospitals, and schools by conducting its Wellness in the Workplace Workshop for representatives of these institutions. This program is designed to give participants a solid background on nutrition, health and wellness, and help them develop wellness programs for their respective organizations. More than 200 companies,represented by HR practitioners, teachers, and medical staff, have attended the workshop. Some of them have launched their own wellness programs as an offshoot of attending the Nestléworkshop.

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NutritionOnlineTogether with the Food and Nutrition Research Institute which develops relevant content for an online nutrition resource called nutritionschool.ph, both FNRI and Nestlé provide visitors with valuable information about good nutrition, health and wellness.

• Wellness Expo. Nestlé highlights its nutrition, health, and wellness advocacy by holding an annual two-day Wellness Expo in celebration of the Nutrition Month of July. Open to the public, the wellness fair features standard Nestlé wellness activities — nutrition counseling, seminars on nutrition and health, physical measurement of participants for health assessment purposes, plus an array of engaging wellness activities by the Company’s major brands. More than 20,000 consumers trooped to the 2010 Wellness Expo, of which more than 18,000 people took part in at least one of the wellness activities, around 7,000 availed of nutrition counseling, and more than 5,000 signed up for theI Choose Wellness Passport program.

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BringingNutrient-EnrichedFood within Reach

Aling Nene goes to the sari-sari store to buy baon for her son. She gets him one pack of BEAR BRAND Busog Lusog family cereal drink. While at the store, she decides to get MAGGI Sinigang, a NESTEA Litro Pack, and 20g pack of MILO. She gets all these for around PhP 23, well within her limited budget. She may not realize it, but that amount has also bought for her family a dose of zinc, iron, calcium, vitamins and minerals, and iodine.

Like Aling Nene, millions of Filipinos in the lower-income brackets buy food products in small packs from small stores. These are everyday foodnecessities that Nestlé has fortified with the very nutrients that the Food and Nutrition Research Institute found to be lacking in the average Filipino household, and makes these affordable and accessible to them. The Company makes use of Nestlé’s global superior nutrition science research to constantly innovate its products with nutrient combinations that address known deficiencies among Filipinos while keeping the costs low and developing routes that bring these within easy reach, so Aling Nene and millions more like her can get the nutrients they need from good-tasting and budget-fitting Nestlé goods.

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The range includes: • BEAR BRAND Powdered Milk Drink with zinc, vitamin C, and iron• BEAR BRAND Ready-to-Drink with zinc and vitamin A• BEAR BRAND Busog Lusog Family cereal drink with zinc and iron• MILO ACTIGEN-E (combination of B vitamins and micronutrients -- a good source of niacin, iron and calcium

with enriched levels of vitamins B1, B2, B6, B5, B8, Magnesium and Vitamin C) and malt extract PROTOMALT (mixture of different types of carbohydrates)

• NESTEA Litro Pack with Vitamin C• KOKO KRUNCH Breakfast Cereals with B Vitamins, iron and Vitamin C• CERELAC Rice & Soya with Protect Plus (Bifidus BL, Immunonutrients: DHA, Iron, Zinc, Vitamin A and C)• MAGGI Sinigang with Vitamin C

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Promoting aHealthy LifestyleThrough SportsThe sight of a 10-year-old running in the country’s biggest marathon event with a big smile on his face as he approaches the finish line is enough inspiration for Nestlé to have its many MILO sports develop-ment programs touch the lives of as many Filipino youngsters as possible. The sight of this same boy running barefoot, is more than enough to stir the Company to provide this child and many others like him with the most basic of sports gear — shoes.

And so, some 4,000 public elementary school students nationwide are walking to school in new shoes this year — shoes given to them by MILO through a million-peso grant matched with a million-peso fund raised from a portion of registration fees from the 200,000 or so runners in the 2010 National MILO Marathon. By gearing them up with running shoes, the Company puts them on track to becoming champions in life through the values of discipline, teamwork, competitiveness, sportsmanship, and perseverance learned in sports.

Nothing beats the MILO Marathon when it comes to the scope of reach of a sporting event, having sent millions of Filipinos running since its pilot run in 1976. Held in key cities nationwide, the country’s biggest marathon event offers people of all ages and walks of life an enjoyable venue to experience the natural high from running. And with its new advocacy of helping provide shoes to the shoeless, the MILO Marathon has become even more relevant to young Filipinos aspiring to become tomorrow’s champions.

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At the heart of Nestlé’s champion-building program is the MILO Summer Sports Clinics, hailed by the Philippine Sports-writers Association as the longest-running grassroots sports development program in the country. The Clinics, which started out in 1983, provide youngsters as early as 7 years old, with professional and scientific training on various sports, including badminton, basketball, bowling, chess, football, gymnastics, ice skating, karatedo, lawn tennis, squash, swimming, table tennis, and taekwondo.

Millions of Filipinos have undergone at least one MILO Sports Clinic in their lifetime. Among them are some of the country’s champion athletes such as Chris Tiu (2008 UAAP Basketball Champion), Japoy Lizardo (2007 SEA Games Medalist) and Nica Calapatan (2005 SEA Games Gold Medalist).

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Recognizing the all-important role of schools in the over-all formation of young people, Nestlé consistently partners with the educational sector in advancing its sports programs. For over two decades now, the Company has been the driving force behind inter-school sports competitions for elementary and high school students through MILO Little Olympics. Starting out as a city-wide competition in 1988, the event has evolved into a national athletic meet where represented schools compete in several events, and the winning schools receive cash prizes to be used to purchase sports equipment. In 2009, over 946 schools nationwide took part in the first ever National MILO Little Olympics.

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To get more youngsters to actually experience the thrill of engaging in sports, Nestlé has launched the MILO Champ Camp. This is a half-day program that Nestlé brings to elementary schools nationwide, gathering pupils ages 7-12 and teaching them the rudiments of basketball, baseball, and soccer through 15-minute drills per game supervised by professional trainers. The activity is meant to supplement the school’s P.E. instruction for the day, and includes a lecture on sports principles.

Champ Camp involves the students’ parents as well, inviting them to a session where they are taught about nutritional benefits of MILO, the values learned from sports, and the importance of an active and healthy lifestyle for kids to avoid lifestyle-induced diseases such as diabetes and hypertension later in life. The recipe for a perfect MILO drink is also shared with the parents.

Launched in 2009, Champ Camp has visited around 680 schools nationwide and engaged nearly half a million students in the camp’s mini-sports training. It was also held at trade outlets in April and May during the summer school break, enabling thousands of shoppers and their kids to experience the camp activities.

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Water and Environment

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Impact on Water and the Environment

Water Conservation Energy

Waste ManagementSharing Best

Practice

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ConservingWater

Optimizing Water Consumption

Nestlé Philippines is keenly aware that water is a life-giving resource that is finite and getting scarcer by the minute. The Company takes water conservation to heart, leaving no stone unturned in finding ways to minimize and optimize consumption, treat wastewater, and protect water sources.

All Nestlé worksites employ various means to use water efficiently, ever pressed to reduce consumption while increasing production. Workers are greatly involved not only in implementing water-conservation practices but more so in thinking of ways to conserve water at their level, since they are the ones who know best the conditions within which they do their job. Water-conserving ideas are thus aplenty in the worksites — mostly simple practices that cost little spending but cause a lot of savings.

Reve

rse

Osm

osis

Plan

ts

Among these are:• Reuse of sealing water from vacuum pumps, where the water is recircu-

lated and used all over again as sealing water for the same vacuum pumps • Recirculation of cooling water instead of being immediately discharged to

waste • Reuse of water from Reverse Osmosis plants for such purposes as flushing

of toilets• Reuse of the final rinsing water during cleaning-in-place (CIP) of process

equipment as initial rinsing water for the next CIP• Reuse of effluent for irrigation of plants and grass inside factory premises • Use of automatic washer for the cleaning dryer, which regulates volume

of water used to clean the dryer • Insulation of steam valves and leak management• Use of sensor-operated faucets, which ensures automatic stoppage of

water flow as soon as faucet use is done• Throttling of supply valve to regulate water flow• Installation of cistern tanks to collect rainwater • Use of waterless urinals

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CONTINUOUS REDUCTION OF ENVIRONMENTAL IMPACTS since 200060.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%

-10.00%

-20.00%

-30.00%

-40.00%

-50.00%

55.01%

-35.87%

Prod.Volume Total Water Withdrawal Rate Total Water Discharge Rate

-35.59%

Cha

nge

, %

2000 2007 2008 2009 2010

All these water-saving initiatives have reduced water consumption throughout Nestlé Philippines by 41% since 2006, or an average of 170,000 cubic meters of water every year. In 2010, water consumption further dropped by 20%. Water dropped to 7.21 m3/t from 9.01 in 2009.

Treating WastewaterNestlé operates world-class wastewater treatment plants in all its factories and distribution centers to make sure that every drop of water used is cleansed of impurities before being released to natural waterways. Industrial wastewater is treated separately from domestic waste to produce cleaner effluent and ensure absence of the bacte-ria that characterize the domestic kind.

Treated water from Nestlé sites is constantly tested and known to meet, and often exceed, strict government standards. Nestlé-treated water is clean enough to sustain marine life, as evidenced in koi or tilapia fishponds in all factories, which get water solely from the treatment plants.

Nestlé keeps a caring eye for rivers and creeks that run through the communities where it operates. Through community outreach programs, the sites organize regular clean-up activities in areassurrounding the water sources and waterways.

The Cagayan de Oro Factory, in particular, makes it a point to clean the Umalag River of algae, cut grasses near the river, and rid the area of scattered trash. The factory has hired a contractor to do this every month. Employees and barangay residents of Tablon do their share in cleaning up the river environs every quarter. Cagayan Distribution Center has mobilized employ-ees, local residents and students to clean up the coastal area in Barangay Casinglot.

Preserving WaterSources

Waste Waste Treatment Plants

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Another natural resource that Nestlé takes extra care to use responsibly and optimally is energy, fully aware not only of the cost of power generation but more so of its climate change impact and the dwindling supply of fuel, which is the world’s primary source of energy.

Nestlé has also joined hands with Department of Education, DENR-EMB, and CEAE in conducting the Project Water Education for Teachers (WET) in various communities throughout the country. Project WET is a curriculum-activity-based training on water and related environmental concerns.

Spreading Water Awareness

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Using Energy Efficiently

CONTINUOUS REDUCTION OF ENVIRONMENTAL IMPACTS since 200060.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%

-10.00%

-20.00%

-30.00%

-40.00%

-50.00%

55.01%

-35.87%

Prod.Volume Energy Utization Greenhouse Gas Discharge Rate

-35.59%

Cha

nge

, %

2000 2007 2008 2009 2010

The Company invests heavily in technologies that reduce consumption, convert byproducts into energy, and tap the use of alternative energy sources. Some of the more notable ones are:

Serving as a strong foundation to the Company’s energy-efficiency efforts is a well-developed energy-consciousness among employees, which has been achieved through continuous training. Such mindset is what drives every department in all worksites to keep looking for ways to avoid wasteful use of energy and develop energy-efficient practices, and monitor their respective energy consumption rates. These practices range from something as basic as turning off lights when not in use to something as technical as reducing steam pressure.

Energy management in every work site is continually audited to ensure that work practices and processes are constantly reviewed to determine where energy usage can be further optimized.

• the use of Solatube lighting, which captures solar energy to provide lighting inside factory buildings and warehouses

• Conversion in CDO Factory of spent coffee grounds into 24 MT of steam per hour through the Atmospheric Fluidized Bed Boiler (AFBB)

• Recovery of exhaust heat or gas from power plants in Lipa and Cabuyao Factories to produce secondary steam that serves as fuel

• Recovery of exhaust heat from air heaters in Cabuyao to pre-heat incoming fresh air before final air heating

• Recovery of heat from air compressors in CDO Factory

• Use of Thermax Chiller condensate in Cabuyao to reheat water

• Arrest of steam leakages in all factories by installing insulation steam valves and through other leak management means

• Use of Variable Frequency Drive (VFD) Motors to control air blowers and cooling fans

• Use of high-pressure gas discharge lamps for outdoor lighting in Lipa

• Use of solar-powered air conditioners in the Cagayan DC main warehouse and offices

• Use of glass skylight windows also in Cagayan DC to minimize use of lighting inside the warehouse during daytime

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The role of packaging in the sustainability agenda is to prevent food waste by providing adequate protection to the product from manufacture to consumption. Aside from minimizing food loss, packaging contributes to environmental preservation by ensuring that fewer resources are used to produce it while meeting the demands of the market.

Packaging source reduction is an important part of Nestlé’s environmental policy. This program is aimed at reducing the amount of packaging used withoutcompromising product quality and safety. In 2009 alongside growth in product volume, Nestlé Philippines ranked 5th among Nestlé markets that contributed to this program. Through initiatives such as use of thinner gauges, optimized dimensions and materialreplacements, the company saved 2,046 MT ofpackaging usage in that year alone.

Nestlé promotes that reducing the environmental footprint of a product or service requires ‘life-cycle thinking’. This approach may be applied in packaging design to show the impact of a material in all phases of its life, i.e. from raw material extraction up to recovery and disposal.

Comparative impacts of two materials may be assessed using an eco-design tool called PIQET which stands for Packaging Impact Quick Evaluation Tool. Developed in partnership with Strategic Packaging Alliance (SPA) of Australia, the web-based tool generates a spider graph summarizing the influence of a given packaging material on eight predefined indicators such as the one shown in figure below. Shorter distance from the center means lower impact for a given indicator. The chart compares the former rigid plastic container to the new shaped box made of laminated paper for the product Nestlé Pops.

Reducing the EnvironmentalFootprint of Packaging

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Climate Change

Solid Waste

4.718e-1 kg

Water Use

8.287e-2 kL H20

Land Use

5.574e-5 Ha aEutrophication

Cumulative Energy Demand

5.029e+1 MJ LHV

2.197e+0 kg CO2 eq

Minerals & Fuel

3.542e+0 MJ surplus

Photochemical Oxidation

1.835e-3 kg C2H4 eq

1.342e-3 kg PO4 3- eq

POPS in Plastic Tub &... POPS in Hexagonal Box

PIQET results can be translated into equivalent units for easier comprehension, allowing the packaging designer to have a clear idea of the impacts of the packaging choice over one year of sales. Based on 1.5 million retail units of Nestlé Pops per year, the environmental gains of moving to the shaped box are expressed as follows:

Completely embedded in our Nestlé Packaging Environmental Sustainability Policy, PIQET is systemati-cally applied during the packaging innovation and renovation process. It serves as an internal decision support tool allowing the user to design a packaging material that is not only the most suitable for the product, but the one with the least possible negative impact to the environment.

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On climate change - 223 trees saved

On comulative energy demand - 24,414 households worth of energy usesaved

On photochemical oxidation - 102,000 passenger car kilometers notdriven

On water use - 579,800 household buckets of water saved

On solid waste - 58 wheely bins of trash not generated

Nestlé Philippines values water and the environment. Water conservation and environment protection are inherent in its corporate culture. Recognizing that water and environment are universal concerns, the Company goes beyond the confines of its operations in upholding these values. Through structured programs, Nestlé shares its best practices and initiatives with business partners and encourages them to develop a similar commitment to water conservation and environment protection.

Nestlé helps business partners develop their own environmental management system (EMS) through the Greening the Supply Chain (GSC) program. The Company provides business partners with training on EMS as a tool for improving environmental performance and visits them on-site to guide them in developing their own environment programs.

To sustain the initiatives, Nestlé invites all GSC business partners to a day-long forum every four months. The fora serve as a venue for business partners to learn more about the environment, get updated on relevant issues and regulations, network and share best practices with other companies, and collaborate in addressing common issues such as water and climate change.

Greening the Supply Chain

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Going Beyond Nestle

Here are some fruits of GSC:

• A co-manufacturer reduced water usage by 30% after setting up a re-use system and saved 25% on LPG cost by simply switching to bulk container system.

• Another co-manufacturer reduced total waste generation by 40% by strictly implementing the 3Rs (Reduce, Reuse, Recycle).

• A laminate packaging supplier now saves 30% on major chemical usage through a recycling scheme and 5% on energy consumption through a power management system. It was also able to put up a low-cost wastewater treatment facility through collaborative studies with the DOST-MIRDC.

• A plastics supplier was able to save 60% on major packaging materials after launching a solid waste reduction program.

• A primary packaging supplier cut down its energy bill by 5% soon after installing capacitor banks. It also achieved 10% savings on cost of water through regular collection of rainwater.

• The GSC partners committed to a water pledge and expected water savings from this pledge is around 179,085.67 cubic meters which is roughly 895,428 drums of water.

In 2010, GSC business partners made a formal pledge to conserve water, stating their respective water consumption reduction targets. These targets are now being monitored within given timelines.

Now on its 10th year, GSC has helped over 170 business partners improve their environmental performance through EMS, enabling them to put up their own wastewater treatment plants, materials recovery facilities, waste segregation systems, and water and energy conservation programs, among others.

Water Pledge

Total 2011 Pledge 137,825.55Actual 2010 water saved 41,233.12

179,085.67Cubic meters projected savings

*estimated representation

Which is equivalent to:

895,428 DRUMS

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*

Nestlé transport operations mainly involve more than 1,100 trucks that carry Nestlé products between its manufacturing facilities and distribution centers nationwide. These trucks are owned and operated by 19 third-party truckers with a total of 3,500 trucking personnel in their employ. To reduce the environmental impact of its transport operations, the Company has initiated projects aimed at maximizing the use of transport resources, notably:

• Balik Baterya, a joint project between Nestlé and its truckers and the Philippine Business for Social Progress (PBSP) where truckers donate sales proceeds from its used lead acid batteries to PBSP. Nestlé collects these batteries from the truckers and turns them over to Motolite, which in turn passes the batteries to the Philippine Recyclers, Inc. for proper recycling. Motolite pays for these batteries directly to PBSP, which uses the proceeds to finance its social projects.

Greening theTransport Operations

29

In 2010 to 2011, three rounds of collection yielded a total of 710 batteries from Nestlé truckers, which fetched Php 440,000 for PBSP. In 2009, the used tires donated by Nestlé truckers netted PhP 195,000, which PBSP used to provide free textbooks to students in two public elementary schools in South Cotabato.

• Bantay Langis, a joint project with the ABS-CBN Foundation, under which Nestlé truckers turn over their used oil for purchase by an oil-recycling company. Proceeds are then donated to ABS-CBN Foundation to finance its Bantay Kalikasan program.

• Dedicated Return Trip (DRT), a program that ensures every return trip of a truck from a delivery destination to its point of origin performs a delivery function as well. Previously, Truck A would deliver from factory to

distribution center (DC) and make an empty return trip while Truck B delivers from DC to factory and likewise return empty. Under the DRT program, Truck A assumes the function of Truck B delivering from DC to factory on its return trip. This effectively halves the number of trips between the two points.

To ensure that Nestlé’s co-manufacturers, truckers, and other partners comply with government requirements as well as Nestlé and international standards, the Company has rolled out the Nestlé compliance assessment program to key co-manufacturers and transport partners. Called CARE (Compliance Assessment of Human Resources, Safety, Health & Environment), the program verifies, through external independent auditors, that operations of co-manufacturers and truckers are aligned with relevant standards, laws, and regulations pertaining to labor, business integrity, safety, health, and environment practices. CARE participants are given ample time to correct audit findings and implement recommendations, after which a second audit is done to check progress and ensure complete compliance is achieved.

Raw and Packaging Material

Factory

Finished Goods

Distribution Centers

Supplier

Co-Manufacturing Sites

Caring with Partners

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Rural Development

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Impact on Rural Developmentdirect employment

indirect employment(contractors,collection agents)

direct purchasing of locally grown commodities

energy-efficient equipment and practices

procurement of local services

contribution to local education facilities

employment volunteering and charitabledonations

Nestlé products for sale and consumption

investment in local transportinfrastructure

employee training and apprenticeship

clean drinking water and hygienic projects

Nestlé-built waste water treatment plants

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Micro-distributorship Program Turns Underemployed Pinoys to Entrepreneurs

A husband who used to depend on his Dubai-based wife’s earnings has asked his wife to come home as he now earns enough for their family. An odd-job worker who could barely make both ends meet six years ago now earns enough to send his children to school, afford medical service for his epileptic child, and construct an extension to his house.

A school teacher who earned P6,500 a month three years ago now generates as much as P50,000 monthly income and has just recently bought a brand new car. Lotto winners? No. But they all feel like they hit some kind of jackpot to have their lives turned dramatically around — the jackpot being the opportunity to run their own business under the micro-distributorship program of Nestlé Philippines.

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Micro-distributorship, primarily a route-to-market scheme developed by the Company to target bottom-of-the-pyramid accounts, is proving to be one of the Company’s most viable and effective means to help provide livelihood to otherwise unemployed or underemployed Filipinos. It allows any able-bodied individual — who can read, write, compute and drive — to become small-scale entrepreneurs by selling Nestlé products to small accounts in areas that are not covered by Nestlé distributors.

The scheme takes the form of three different programs representing the three major sales units of the Company — Micro Distributor (MD) of Grocery Field Sales, Carrito of Ice Cream Sales, and Business on Wheels (BOW) of Nestlé Professional. In all three programs, the entrepreneurs are trained on the Nestlé way of selling, product knowledge, and the mechanics of the program they are in. They are equipped with Nestlé-branded motorized tricycles and assigned to certainterritories to tap and develop their accounts. They get their stocks of Nestlé products from Nestlé distributors, enjoy a certain discount on distributor rates, and are allowed to mark up their price by a certain percentage. On any regular day, these enterprising peddlers earn a net income higher than the daily minimum wage, with the capacity to earn so much more.

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The MDs of Grocery Field Sales are deployed in densely populated urban areas to sari-sari stores, delivering and selling to these accounts a range of Nestlé products that are known to be in great demand among sari-sari store shoppers. To date, this program has given livelihood to some 392 MDs nationwide, among them being Daniel Gorospe whose wife is now happy to be back from Dubai helping Daniel grow their MD business.

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The Carrito sellers of Ice Cream ply the streets of residential subdivisions and other high-traffic public areas to sell the range of NESTLÉ Ice Cream products categorized as “impulse”, the kind that consumers are known to crave for in a whim. Numbering about 2,000 nationwide, these vendors earn from regular commis-sion and different financial incentive programs such as daily and monthly incentive bonuses.

Among the hardest working carrito vendors is Armando Araja of San Jose, Nueva Ecija, whose earnings from selling NESTLÉ Ice Cream in the streets had sent a daughter to earn a degree in Education and enabled him to provide medical attention to his epileptic child, something he never could afford before he joined the Carrito program in 2004.

Armando Araja

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A promising Street Selling project is also on the rise under Operation Mobile Store (OMS) program of the Chilled Dairy Business Unit, under which small entrepreneurs sell BEAR BRAND Probiotic Drink in high-traffic places such as schools, bus terminals, public markets, and churches. The sellers are equipped with a cooler mounted on a trolley (called “Rambo carrito”), which they lug along with them as they ply their usual route. Piloted last quarter of 2009, the program has provided a steady source of income to more than 60 sellers in Metro Manila and nearby provinces, many of whom are ladies who were formerly unemployed or without livelihood. Aside from earning a commission for every bottle of BEAR BRAND they sell, they receive monthly cash incentives to add to their income. During the rainy months of June to August, considered lean season, they also get kilos of rice as assistance.

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The biggest earners seem to come from the ranks of the BOWers, who sell Nestlé products to small carinderias, kapihans, and small-scale eateries. Around 350 of them are in active operation nationwide, many of whom earn triple the minimum wage. Others have developed their own ways of growing the BOW business, surpassing earnings of white-collar professionals. No wonder Peachy Francisco left her teaching job to concentrate on expanding and closely managing her BOW venture, which has enabled her to send her children to a private school and afforded her to build up their family resources that now include a brand new car.

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Nestlé products reach its consumer through over 640,000 sari-sari stores and market stalls scattered throughout the archipelago. Deriving a portion of its total sales from these small stores, the Company recognizes the decisive role that this channel plays in getting its products sold to the greater mass of Filipino consumers.

To build and nurture partnership with these stores, the Company has developed a dedicated program called Nestlégosyo that provides small store owners with useful information and tools for growing their business: relating with their customers, displaying their merchandise, and developing a mindset of nutrition, health, and wellness. The program involves studying and developing content that is relevant to the channel, such as: best-selling SKUs, proper display, easy-to-recall tips, sanitation and hygiene, as well as nutrition and wellness. Every year, Nestlégosyo reaches around 25,000 tinderas.

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Nestlegosyo:Helping Small Stores Boost Business

“Malaki ang naitulong ng Nestlégosyo sa pamilya ko dahil ito ang pinagkukuhanan namin ng aming ikinabubuhay” “Nestlégosyo has helped me and my family a lot because this is our main source of livelihood.” – Susan Perlata (Owner, Peralta’s Sari-Sari Store)

Nestlégosyo imparts all this information through:• Classroom sessions conducted by Nestlé Sales executives

as well as guest speakers, like Mr. Francis Colayco, as part of trade events for sari-sari storeowners;

• Personal visits to the stores by Nestlé distributors for face-to-face coaching; and

• Production and distribution of leaflets, brochures, comic books, calendars, and other informative materials.

From time to time, Nestlégosyo runs sales promos exclusive to small stores, allowing stores to increase their margin by hitting certain targets or complying with specially developed display guidelines. Stores also receive useful display tools as added incentive.

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With an estimated 11.5 million Filipinos working in foreign shores, OFWs (Overseas Filipino Workers) and their families have become a potent force in the marketplace. This phenomenon has prompted Nestlé to give dedicated attention to this growing sector in Philippine society, catering to their special needs based on two insights gathered from focus discussions with OFWs and dependents:

• OFWs, particularly mothers who are forced to part from their families, are eager to take an active role in nourishing their families in spite of the distance between them.

• OFWs ultimately want to have a business of their own to sustain livelihood, in preparation for the time when they come home for good.

For some years now, the Company has been carrying out special programs that respond to these insights. First is the gift-giving service which allows OFWs anywhere in the world to send various products including nutritious Nestlé products to their families by simply ordering online or through remittance agencies. They may send specially wrapped gift sets on special occasions or simple grocery packs consisting of milk, coffee, breakfast cereals, and other Nestlé products that mothers usually shop for their family. This Nestlé service gives OFWs a chance to convert part of their monetary remittance to grocery items that provide their family with nutrition, health, and wellness. This assures them that their children get their supply of milk, breakfast cereals, and other products they normally buy for their little ones despite their physical absence.

Responding to theNeeds of OFWs

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Second, to help them realize their dream of having their own business, Nestlé has designed for them a sari-sari store start-up package called the Nestlégosyo Bundle which has been availed of by 35 Seafarer families. The package, available in P7,000 and P15,000 bundles, comprises Nestlé SKUs that are known to sell fast in sari-sari stores, along with free store display materials and other business tools such as a calculator and notebook, plus a booklet of guidelines on how to start up a small store business. Going one step further, Nestlé partners work with cooperatives to provide qualified OFWs with low-interest small loans to finance this start-up package.

“ Nakatulong talaga sa amin angNestlégosyo Bundle. Nakadagdag kita sa aming pamilya at natulungan ko pa ang kapatid ko na walang pinagkakakitaan.” (“The Nestlégosyo Bundle has really helped us. It added to our family income and helped my brother who was not earning anything.”)

- May Paceta (Assistant Manager of Magsaysay’s Crew Family Affairs; married to a seafarer)

Nestlé continues to explore ways it can help OFWs and their families by keeping in close touch with organized groups of OFWs, manning agencies, and other establishments that are dedicated to OFWs, linking arms with them inproviding overseas Filipinos the services they need to strengthen their family ties and sustain their livelihood for thelong term.

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Maggi Dedicated Seller Program

Parallel to the Company’s micro-distributorship schemes is a dedicated selling program launched by the Food Business Unit in 2005 to push MAGGI products in the public market, specifically in the market stalls and market stall-x channels. This program has given livelihood to over 160 peoplenationwide, who now make up the MAGGI-exclusive sales force tasked to drive the distribution of MAGGI products in the general trade and oversee the execution ofbrand-initiated activities, in partnership with ourdistributors nationwide.

Many of these sellers attest to the program being key to the marked improvement in their economic conditions. Ancielyn Udarbe and Charima Noche, both of South Luzon 1, say they have been able to build their respective houses and buy motorized vehicles from their earnings. Others say that their earnings from selling MAGGI have enabled them to finance their daily family needs, education and some were able to venture out to other business projects such as sari-sari stores or buco juice stalls.

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Vilma Villareal is a simple housewife who runs a small sari-sari store at their house in Quezon City. As a cook, she says that between her husband and her, she is the less experienced one — a fact that her kids would attest to. So how come she also runs a small carinderia beside her sari-sari store?

What she lacked in experience, Vilma filled with practical and cutting-edge know-how that she gained quickly and easily from culinary-entrepreneurship program organized jointly by the Food BU of Nestlé Philippines and the BAYAN Academy of ABS-CBN Foundation. She applied for this program last August 2010, underwent the screening process, and got accepted as part of Batch 5 of the MAGGI Culinary-Entrepreneurship program.

On September 12, 2010, she opened a carinderia as an extension of her sari-sari store and started serving breakfast dishes. She soon saw that this was an opportunity to generate additional income and now plans to expand her carinderia to a bigger space and start serving lunch, merienda, and dinner. She is optimistic that with her little investment, backed with passion and formal training, she can make life better for her family.

Sharing the MAGICProviding Basic Culinary-Entrepreneurship Education as Means to Better Livelihood

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This training that Vilma attended is one of the customized programs developed by MAGGI to address specific needs of the target participants. Many of the total 209 food enthusiasts who went through the same program have reported similar gains from the training. Housewives like Vilma, who were aspiring to get into the food business, have actually been encouraged to put up their own. Those who have existing businesses expanded their menu offerings and have observed an increase in their daily income. Meanwhile, other graduates have used the training to beef up their qualifications for employ-ment in the food service industry.

The five-day customized culinary-entrepreneurship program was the second phase of Nestlé’s partnership with the BAYAN Academy, a step forward from what used to be a simple product sponsorship deal between the Company and the Academy. Nestlé has linked up with BAYAN, a social and enterprise development institutions that has helped more than 50,000 families establish entrepreneurial ventures nationwide, to advance its own agenda of providing basic culinary and entrepreneurial education to aspiring chefs, small business owners, and caterers in the BCDE income brackets to help them get started in the food business or improve their existing business.

Through lectures, demonstrations, and hands-on exercises held in a kitchen-equipped classroom, the program teaches participants basics in good cooking such as kitchen safety and sanitation, ingredients and ingredient substitution, waste segregation, food plating and presentation, safe and balanced meal preparation, healthier eating habits that promote nutrition, health, and wellness and easy recipes using MAGGI products, among others. A similar program is designed for the entrepreneurs, which includes lessons in purchasing, inventory, culinary math, and sales and marketing. Their learning was put to a test via a simulation of an actual “carinderia” business, wherein the profits generated were donated to the foundation. Graduates of these courses are monitored for one year to track their progress.

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In parallel, Nestlé also launched its train-the-trainer program to the members of the Food BU and BEST team. This was a 10-day basic culinary program that prepared them to be trainers and assistant chefs. Aside from equipping them with basic cooking know-how, it also enabled the team to have a joint learning experience and at the same time allowed them to get more actively involved in the BU’s CSV initiative. From June to December 2010, the BU and BEST team members served as volunteer assistant chefs and touched the lives of BAYAN trainees. As they continuously develop more trainers within the team, they develop a more solid foundation for future runs that MAGGI intends to conduct.

The culinary-entrepreneurship program is in line with MAGGI’s global brand vision, which highlights the role of cooking in influencing the family’s life for the better. This, in essence, is the spirit with which the Food BU creates shared value for its business and for the millions of households where its products serve to enhance cooking.

By educating the many culinary talents among Filipinos who have had little formal training, the MAGGI brand takes an active role as an enabler for the participants to improve the quality of their lives, by uplifting the quality of the food that they prepare and serve not only to their families but to the community; and providing them with some solid means to improve their craft and their liveli-hood.

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Mila Lambio had been unemployed for most of her adult life as she chose to attend fulltime to her daughter. When Nestlé put up a manufacturing plant in Barangay Bagong Barrio, Lipa City — right where she lived, in the early 1990s, Mila and other unemployed housewives in the neighborhood all thought it would be wonderful to be employed in the plant as it was so near their homes they wouldn’t have to part too far from their children.

Much to their delight, Mila and other housewives like her who had basic sewing skills were tapped by Nestlé for a livelihood project in 1997. They were sent to TESDA for formal training on sewing, shouldered cost for training and sustaining capital, and awarded with a Purchase Order for sewing jobs that helped them obtain a start-up business loan from a local bank. Thus the Cut & Sew project was born, and the ladies soon started doing small sewing jobs for the factory. In just two years, Cut & Sew became an organized cottage-industry type of enterprise, with Mila acting as community leader who oversees the operations and represents the group to business transactions with Nestlé.

Cut & Sew: Empowering Women in the Barangays

Ka Mila Lambio

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For several years now, Cut & Sew has been generating at least P1.5 million worth of business every year for the ladies, who now supply the factory’s demand for uniforms (pants and polo jackets) lab gowns, hairnets, shoe covers, and rags. On the average, the Cut & Sew ladies in Lipa earn around 2,500 to 4,000 pesos monthly, with the more productive ones such as Mila netting more.

Mila herself has seen a dramatic economic improvement in her life. Through Cut & Sew and her involvement in other livelihood projects with Lipa Factory, Mila has earned enough to have three houses built for her family. She has also seen her child through college. What gives her the most satisfaction is the recognition she enjoys as a commu-nity leader, which inspires her to share as much as she knows with other women in the hope of encouraging them to become economically produc-tive through livelihood projects such as Cut & Sew.

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Women of Cut & Sew Pulilan

Most recently, Cut & Sew was adopted in Barangay Tibag where the Pulilan Factory was reopened to manufacture ice cream and chilled dairy products. This project was replicated in this factory in partnership with the New Zealand Embassy.

About 25 formerly unemployed women from the barangay were recruited into the project forming the Samahan ng mga Mananahi. They underwent a briefing by Mila Lambio of Lipa on how Cut & Sew could provide them with a steady source of income and also attended TESDA trainings to improve their sewing skills. Today, the 25 ladies supply hairnets, face masks, filters, aprons and service uniform repairs for Pulilan Factory, earning an average of Php 3,700 per month.

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Another noteworthy livelihood activity for Ka Mila and other Bagong Barrio housewives is the Yard and Garden in Lipa Factory. Here the ladies engaged in cut-flower production and organic vegetable farming in a plot of land within the premises of Lipa Factory. The factory provided the start-up financial assis-tance, planting materials, and relevant training, enabling the Yard and Garden members to take full charge of the operation of the garden. They sell all their produce to the factory canteen and employees and rent out the ornamental plants to the factory. They use the earnings to pay for their operational expenses, including remuneration of those involved in the project.

Gardeningin the Factory

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Uplifting the Lives of Coffee Farmers

Nestlé Philippines is the country’s biggest buyer of green coffee beans, purchasing majority of the entire Philippine coffee produce. Relying heavily on local farmers for the supply of raw materials that go into manufacturing of NESCAFE, the Company explores every possible means to help farmers improve the quality and quantity of their yield. Through its long-running agronomy program, Nestlé has enabled thousands of farmers to make a profitable living out of coffee-farming and encouraged thousands more to venture into coffee farming.

The Nestlé agronomy program started way back in the 1960s when the Company opened its first NESCAFE-manufacturing plant. Then as now, the foremost objective is to equip local coffee farmers with the best available technologies and techniques to enable them to increase their harvest per hectare and improve the quality of their coffee. At the core of the Company’s agronomy program is the Nestlé Experimental and Demonstration Farm (NEDF) in Tagum City, Davao Norte, which was built in 1994 to serve as the hub of the Company’s agricultural research and training activities. The agronomy program does this in several ways:

• Providing access to world-class coffee farming technologies.

Nestlé agronomists continually conduct trials and experiments at the NEDF and across the country to discover and develop better techniques of growing coffee. They also cascade research findings from the Nestlé R&D Center in Tours, France to the demo farm to test them for local application. Continuing research allows Nestlé to equip farmers with scientific tools for adapting to changing agricultural conditions or new methods that had been pre-tested and shown to generate positive gains.

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• Training. For effective transfer of technical know-how, the Company offers three kinds of training to farmers;

(1) three-day basic seminar, which is open to any one who wants to learn about coffee-growing; (2) three-week advanced course, for coffee specialists and technicians from government agencies, NGOs, and LGUs that provide assis-tance to farmers; and (3) on-site training for farmers whose coffee farms need to be improved. Training is provided free-of-charge.

In the past three years, NEDF has trained 829 farmers within its facilities and conducted on-farm training to 1,509 farms nationwide.

• Promoting sustainable practices

Nestlé has developed a coffee-based sustainable farming system that allows farmers to plant other crops in between rows of coffee trees and enable them to earn additional income. This is in line with theSustainable Agriculture Initiative of Nestlé (SAIN),a worldwide advocacy for making coffee farming feasible and sustainable.

To cascade this system, Nestlé set up 13 demo farms in coffee-producing regions nationwide that now serve as working laboratory where farmers can observe first-hand how sustainable coffee is done and get first-hand information from farmer-cooperators on the benefits of the system. Two examples of these demo farms have shown to generate good income from crops planted between coffee trees— one in Toril, Davao City, which plants highland lacatan banana alternately with coffee; and another in Sultan Kudarat, which earns additional income from peanuts, upland rice, and white beans planted between coffee.

• Propagating coffee planting materials

Integral to the NEDF is a nursery where Nestlé agronomists propagate high-yielding and high-quality rooted cuttings that become ready-to-plant seedlings. These are made available to farmers at minimal cost. It is estimated that Nestlé provides 80% of all Robusta cuttings in the Philippines. In the last five years alone, the NEDF has distributed 1,215,612 coffee seedlings.

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• Directly buying from farmers

Under its direct procurement policy, theCompany buys coffee beans directly from farmers instead of traders at prevailing market price, for as long as their beans meet the quality standards of the Company. Nestlé is the biggest buyer of green coffee in the country and its demand usually exceeds the supply. Farmers are invariably guaranteed of buyers, and are thus able to concentrate their time and attention to producing the coffee with little worry about the marketing side.

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• Linking arms with government

Nestlé’s ardent support of coffee farmers has not escaped the attention of the Philippine government. In 2009, the Department of Agriculture entered into a Memorandum of Agreement with the Company after expressing desire to partner with Nestlé in further developing the coffee-growing industry. This has led to joint projects between Nestlé and the government involving training of government agronomists in coffee farming technology and increased propagation of coffee planting materials.

Regional officials of the Department of Agriculture from Bicol, Iloilo, Bohol, Mindoro and Cavite have so farparticipated in a two-day seminar at the NEDF, and were set to cascade their newly acquired learnings to farmers in their localities. Among the early beneficiaries of this technology-transfer effort were coffeefarming communities in Bohol and Surigao del Norte.

For more information on Nestlé’s coffee program, contact: coffeegrower@ph.nestle.com

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Unlike most of his neighboring farmers in Silang, Cavite who sold their farm lots to real estate developers, octogenarian Claudio Arandia stuck to his farm and got rewarded for it.

Like most farmers in Cavite, Claudio planted pineapples all his life until he decided to shift to coffee in 1975. He marketed his produce to retailers in the nearby palengke who sold the roasted and ground coffee beans in a can. It was in the 1990s when he decided to sell his green coffee beans to Nestlé that life tasted a little sweeter. His two-hectare farmland grew to nine hectares and the carabao and karitela were replaced by two jeepneys and a pickup. Averaging a harvest of 10,000 kilos of green coffee beans yearly, Claudio hit the jackpot in 1997 when he harvested 12,000 kilos. Part of his earnings went to the purchase of a maroon Honda Civic.

“Nestlé has been a part of my family’s success. I always cherish that every time I drink my coffee in the morning,” he mused.

Octogenarian’sLong-Lasting Affair with Coffee

Claudio Arandia

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Hope and change for the better came to Julio Budlayan and his fellow farmers in Kahayagan , Surigao del Sur in 2007 when they received free on-site training on modern coffee farming from Nestléagronomists Jose Reano and Proceso Cortejos. Although Julio and the farmershad been farming for decades, the lessonsin coffee farm cultivation and maintenance that they gained from the training quickly made an impact on the volume and quality of their harvests.

Coffee Awakens Bayanihan Spirit

Julio Budlayan

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For its first project, the coop bought a de-hulling machine after pooling contributions from members. Before that, the farmers had to rent vehicles to transport their dried coffee beans to the next barangay where there was a de-hulling machine they could use for a fee. Since buying their own de-hulling machine, the farmers have saved a lot in terms of time, energy and money.

For its second project, the coop sent some members to the NEDF in Tagum for further training. “As late as it may seem, farmers in our barangay have realized we are much stronger when we are united. If ever there’s knowledge a farmer ought to know, we must learn it as a group. Walang iwanan sa kape,” said Julio, who became the cooperative’s founding president in 2007.

The training also awakened the sense of community among the Kahayagan farmers. This has spurred them to form their own cooperative, the Kahayagan Coffee Growers’ Associa-tion, through which they can now share in the blessings of the land by working together as a community, in the true spirit of Filipino bayanihan. By pooling resources and sharing knowledge, the benefits they get are multiplied and received by all their families.

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A house to call their own. For years, it was a luxury for Rolando to allow himself to think of such a place. With his daily earnings as a laborer hardly enough to feed their seven children, a roof over their head at night was something they had to beg for, sometimes even fight for. Informal settlers, they were called, with very slim chances of ever hauling themselves out of the rut they were in.

Until Gawad Kalinga, that is. Early last year, they were among the first batch of families who qualified for a house in the newly developed GK Nestlé Eco-village in Lipa, Batangas. They moved in July, and have since embraced a new life anchored on a place they can finally call their own in a community designed for ecologically sustainable living.

“I cannot even begin to describe the feeling of knowing that my family is now assured of safe and permanent shelter,” said Rolando. “Life in this village is good—peaceful, quiet, and clean, the complete opposite of the place we used to live in.”

Building Homes, Rebuilding Lives

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Rolando’s high spirits and optimism are shared by the 19 other families who have so far settled in the 50-house village that Nestlé Philippines committed to develop in Lipa for Gawad Kalinga. Beyond merely providing housing structures to beneficiary families, the village is intended to bring about a community that lives in harmony with nature. It is equipped with a rainwater catchment system that allows recycling of rainwater and is designed to make use of reed bed technology that processes sewage by natural reed system without use of chemicals.

Nestlé’s continuing commitment to build this eco-village for GK sprang from its initial involvement with Gawad Kalinga in 2004, when the Company heeded GK’s call to come to the rescue of families displaced by a huge fire in Baseco, Tondo. Mobilizing 150 volunteers to help reconstruct the houses in Baseco, the Company soon committed its full-blown support to the GK cause, building 50 houses in Baseco and adopting 4 more, for a total 54 houses and households that the Company continues to support to this day.

Rainwater catchment59

The Company’s partnership with Gawad Kalinga has kindled the spirit of volunteerism among Nestlé employees. From time to time, groups of employees visit the Nestlé GK villages to render some form of assistance such as helping paint houses, conducting livelihood workshops, cascading wellness tips, teaching children, and other such activities.

A Venue for Volunteerism

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Two business units have embraced the cause of GK in their respective social development platforms: the Dairy Health and Nutrition Solutions (DHNS) and the Liquid Beverages and Dairy Culinary (LBDC) units.

Expanding the sphere of its BEAR BRAND Laki sa Gatas program, DHNS launched a four-point assistance program called Lakbay Tagumpay specially for the GK Nestlé village in Baseco early this year. The entire program consists of: • Palaruan-repair and sponsorship of a

playground for the village’s children; • Nutri-Patrol - where nutritionists visit the

village every 2nd Saturday of the month to monitor the children’s growth in relation to weight and height and advise parents on proper nutrition;

• Lakbay Tagumpay - tutorial sessions for children and inspirational talks for parents held every 2nd and 4th Saturday of the month; and

• Lakbay Kabuhayan - workshops that teach village residents practical livelihoods skills, conducted every month.

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For its part, LBDC, through NESTLÉ CHUCKIE, as its initiative of providing primary education, turned an empty school building in the GK-Nestlé village into a bright and cheery classroom, furnishing it with books and toys and most importantly,sponsoring its school teachers. The Nestlé Sibol school caters to about 25 school-age children.

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Heading Towardan Era ofCollaboration

Nestlé Philippines, Inc. has taken the lead in promoting the concept of Creating Shared Value in the local businesscommunity, seeking to encourage companies to achieve sustainable business growth while helping boost socialprogress in the country.

The Company took its first significant step in this endeavor by gathering leaders from government agencies, NGOs, business organizations, and the media to a forum on CSV at the New World Hotel in Makati in April 2010. The Company organized the event in cooperation with the Philippine Business for Social Progress (PBSP), the Asian Institute of Management, RVR Center for Corporate Social Responsibility, and the Asian Development Bank (ADB).

With the theme “Creating Shared Value: Beyond CSR”, the event saw some 260 representatives of different stakeholder groups engage in a public discussion of the evolving concept of CSV. In opening the forum, Chairman and CEO John Martin Miller called on the business community and other sectors of society to “form an era of collaboration” and to reinforce the increasing role of the private sector, particularly themultinational companies, in driving social developmentthrough CSV.

No less than the world’s leading CSV proponent Mark Kramer led the cast of speakers at the forum, giving the audience a comprehensive view of CSV as a viable, effective, sustainable, and profitable business philosophy. Kramer is a Senior Fellow of Harvard University and Founder and Managing Director of FSB Social Impact Adviser. He co-wrote the landmark study Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility, which was published in the Harvard Business Review in 2006.

John M. Miller

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In his presentation, Kramer explained that CSV is more expansive, more precise, and more integrated than CSR in its approach toward achieving a mutually beneficial or “symbiotic” relationship between business and society. “You have got to find the points of convergence rather than the points of tension. It’s really providing competitive success and at the same time really making a material difference”, he said. He further illustrated how CSV allows a corporation to integrate social responsibility and social progress within the core of its values, business strategy, and business processes. He cited as an example how Nestlé partners with local farmers in its business operations, resulting in mutual benefits.

The forum featured three other distinguished speakers who expounded on how the CSV philosophy can generate greater gains for both business and society in the areas of nutrition, water resources, and rural development. The speakers shared insights on how corporations can help ensure that a society’s citizens are adequately provided for in terms of their nutritional and water needs, and how rural areas can achieve development in partnership with big business.

Dr. Mario Capanzana, Director of the Food and Nutrition Research Council, spoke on nutrition, emphasizing the need for making affordable but healthy food innovations accessible to the bottom of the pyramid. Arjun Thapan, Special Senior Adviser to the President on Infrastructure and Water of the Asian Development Bank, touched on the urgency of managing today’s water resources to ensure water availability in the future. Antonio Meloto, Chairman of Gawad Kalinga, talked about rural and community development.

Through the forum, Nestlé Philippines hopes to have captured the interest of more business companies to consider adopting the strategy of CSV and thus think of ways they can create partnership with different sectors of society and effectively make a social difference in the years to come.

Mark Kramer

Tony Meloto

Arjun Thapan

Dr. Mario Capanzana

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CSV Council:Championing CSVNestlé Philippines, Inc. has stepped up its CSV campaign with the creation in January 2010 of the CSV Council. The creation of the Council manifests the Company’s intent to further embed and champion CSV in the organization, indicating the prime importance of CSV as a strategy for the Company. Composed of representatives from all Business Units and Shared Services, the CSV Council serves as the one body that consolidates, drives, and directs all CSV initiatives of the Company. With support from top management, the Council is tasked to align CSV activities, measure their success in definite terms, ensure a common understanding of the CSV concept within the Company, and communicate all these to employees, stakeholders, and the general public. The CSV Council meets regularly to share and exchange ideas on how to design and monitor local CSV programs, receive updates on the progress of ongoing programs, cascade learnings, know more about best CSV practices from other countries, and keep up-to-date on global CSV directions and initiatives.

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To date, the Council has had manyaccomplishments. Council members have become more cognizant of the social needs of the country as the CSV team invites experts from time to time to speak about local issues in the fields of nutrition, water and rural development. The Council constantly seeks to meet with NGOs and bilateral aid agencies, and in so doing has formed partnerships with external groups that help maximize the impact, scale and sustainability of the Company’s CSV programs. Close communication between and among members has also paved the way for collaboration and joint programs between business units.

Now on its second year, the CSV Council is shap-ing up to be a fine model for championing and driving Creating Shared Value in the Nestlé milieu. Through the steering of the Council, Nestlé Philippines is confident it is on track to keep doing good for society while doing what’s good for business.

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We would like to hear from you.

For comments or inquiries on Creating Shared Value

Contact us:Creatingsharedvalue@ph.nestle.com

Nestlé Philippines, Inc.©2011, Corporate AffairsNestlé Philippines, Inc.

Nestlé Center, 31 Plaza Drive, Rockwell CenterMakati City, Philippines

www.nestle.com.ph