GlobeScan Dialogue: Recognizing Leaders | Janet Voûte, Nestlé

Janet Voûte, Global Head of Public Affairs, Nestlé, took over responsibility for the world’s biggest food and drinks company’s public affairs in 2011 where she helps create value both for Nestlé’s shareholders and for the communities in which the company operates.
GlobeScan co-CEO Christophe Guibeleguiet recently interviewed Janet to gain insight on the value Nestlé puts on stakeholder intelligence to help build recognized leadership in an uncertain world.

Business leaders and experts all emphasize that the world in which business operates becomes more complex and ambiguous, with higher expectation from society. What are the driving forces behind this shift?

The first driving force is the digital revolution and what this means in terms of societal expectations of companies’ transparency. All local is now global.  Social media has led to requirements of far higher levels of transparency for any business – that is a good thing.
Another concurrent force is the daunting level of economic and societal challenges that we face. Since 2008, the challenging economic environment has led to changing roles of different players in society. In the past you had governments who took care of society, NGOs who complemented them and business who did business. We don’t live in that world any more.
If you go back when the millennium development  goals were first established, it was a government and NGO process exclusively. Today that is no longer the case, there needs to be collective action to address societal challenges. A more inter-connected world and difficult economical and societal challenges require collective action and changes in the roles of business, government and NGOs.

In that context what do you think business needs to do to be successful?

If you are going to address societal challenges in a sustainable way, it has to be integrated with the business strategy. At Nestlé we believe businesses have to create shared value. Each individual business can create shared value in a unique way; it is not a standard framework or set of KPIs. So we believe that to create value for shareholders, a company must create value for society. We do everything we can to implement this effectively via a series of commitments that are shared transparently – so that we are clear with our stakeholders and investors what contribution we can make to society at the same time as we deliver our business results.

What role can leadership play in that context and how do you define it at Nestlé?

Today’s leaders have to do far more than before. They must not only master business issues, revenue growth and market share, profitability, sales, operations, quality, they must also understand the societal needs as they relate to their business. Corporations need to identify how to address these and measure progress just like you do for financial issues. So the financial and non-financial become very important. Today you cannot run a business that does not create value for society because it will eventually collapse underneath you. I think management has understood over the last five years the fundamental importance of addressing real societal needs within their business which over the longer term will start to change the way financial markets and main stream investors look at companies.
Over time you will see a clear development of standards in societal management as you have in financial management and that will reflect itself in reporting. Non-financial factors will increasingly be integrated into the way you manage companies internally and the way they report externally. You already see this happening with Richard Branson and his B Team, Puma, Unilever, Nestlé, Novo Nordisk taking different but complementary approaches with similar goals in mind. You are seeing real changes in management approaches to leadership as reflected in how they manage and disclose their societal engagement.

Does a strong corporate purpose contribute to leadership?

It is essential. The shift at Nestlé from being a food and beverage company to being a nutrition, health and wellness company is all about purpose. It is not only a clear business strategy it addresses obvious societal needs. You will see other companies making this kind of shift. You need clarity of purpose to address business and societal needs in a targeted fashion. No company can solve all societal issues at once. They have to choose and it has to be closely related to their corporate purpose be it the Novo Nordisk in the area of diabetes, Novartis for access to medicine in poorer communities, and ourselves in our shift from food and beverage to nutrition, health and wellness. You need to align all forces within a company and external partners.

How much are stakeholder’s expectations changing the way businesses operate?

There is a revolution under way. The old model was that stakeholders were “purely external and their job was to criticize or to campaign and in so doing make change happen”. There is a sea change particularly in the NGO community where they still want to campaign and raise issues (as so they should) but their understanding that the greatest leverage they have for making the change they want is by engaging the business. The expectations of businesses affect societal change – it is changing dramatically – and their willingness to roll up their sleeves and make that change happen is also changing. This is very new.
It is becoming clearer to a lot of government leaders that you cannot implement unless you have an effective dialogue with the private sector. We do increasingly become an implementation partner – sometimes at arm’s length.  If you want to make change happen, there has to be an engagement and dialogue with business –  it doesn’t have to be a partnership – I see limits to the use of that terminology – but you are  seeing more engagement, certainly in multi-lateral agencies, with the private sector and that is a good thing.

How can a company create more value from stakeholder engagement?

At Nestlé we have given a lot of thought about Stakeholder engagement. There are three obvious areas. It helps a company reduce risk. If stakeholders say you have a problem in the area of palm oil and responsible sourcing and you discover you do, then you can set a policy and mechanism for monitoring the effective implementation of that policy, thanks to stakeholder engagement.
The second area is reputation. Clearly stakeholder engagement can improve the corporate reputation. In a digital world if you engage with stakeholders in an honest and open fashion and react and act upon their advice then that builds reputational value that goes far beyond NGOs and traditional stakeholders.
Finally, stakeholder engagement can help you improve your corporate strategy. If like Nestlé you set out on a certain path to become a leader on nutrition, health and wellness, you cannot do that alone. You can provide better products, reduce salt, fat and sugar, invest in R&D but there is so much that needs to be done collectively to really have an impact on consumers; for instance, the need to increase nutrition education or physical activity particularly in young children. You absolutely need to work with governments, NGOs, academia. Engage with the leading thinkers in the nutrition science is necessary if you work on micro-nutrients and fortification, and make sure it meets consumer needs. That is core to corporate strategy and becomes an extension of it. It helps grow your revenues, target your societal investments as well as reduce your costs. It is not just about reputation.

How does Nestlé work with stakeholders to drive this corporate agenda and ensure that it is aligned with strategy?

We do work on world communities and on sustainable agriculture in the Ivory Coast in the cocoa supply chain where we partner with organisations such as the Fair Labour Association to give us really clear assessment of the challenges of child labour in the cocoa supply chain and how we can work better to address those. We work with the International Federation of the Red Cross on supplying access to clean water, we sign up to the women’s empowerment principles to understand how we can better help women in the agriculture supply chain. Stakeholder engagement takes place all the way down to community level; that’s where you really do the implementation.
Nestlé also engages annually on creating shared value and the changing role of businesses and society. We do it in engagement forums where we invite government, academia, other businesses, NGOs. Annually we survey our key stakeholders and do stakeholder convening – getting 40 to 50 NGOs in the room meeting with our top leadership to share their thoughts in areas related to our business e.g. nutrition, water, world development, environmental sustainability, human rights.

Is corporate reputation a useful construct in today’s world?

It’s a double-edged sword. When you use the term corporate reputation, it would indicate to stakeholders that you are doing all this just for reputation. That is a dangerous interpretation. For a company like Nestlé which aims to create shared value, we need to make progress on the ground and meet a series of very concrete commitments that should be measured and reported back on.  It has a benefit for corporate reputation but corporate reputation is a terminology that is too narrow and it leaves one to think that if we just communicate better we can solve reputational issues.
As our Head of Operations recently said in a CNN interview “we talk the walk” in other words you have to be doing first what you say you are going to do and then you talk.
Creating shared value and engaging with stakeholders help us refine our strategy for nutrition, health and wellness. It goes so far beyond corporate reputation. If you want to build credibility with your stakeholders then they must firmly believe that you have real commitment to your societal agenda and that the purpose is not uniquely reputation management.