Juan Carlos Pardo
Shared Value Creation and Sustainability Director
Nestlé México
View from the Top

Creating Social and Economic Value Through Cooperation

Mon, 02/25/2019 - 18:27

Q: What is Nestlé’s main contribution to Mexico’s energy transition?
A: Nestlé defines these types of policies at an international level. We normally are one step ahead of every country’s regulation as a result of our internal assessments. In Mexico’s case, this assertive mentality has allowed us to be pioneers and among the first companies to implement renewable energy consumption, not because it is a trend or it is the right thing to do, but because it makes business sense for us, which is the most important consideration.
Q: What is missing from a regulatory standpoint for qualified users such as Nestlé to take full advantage of Mexico’s wholesale electricity market?
A: There are more operational components that need fixing rather than regulatory. When a company is immersed in its operation, it needs to truly assess where in its daily activities it must improve its energy consumption. Companies like CFE or any other energy producer then need to assess how to become more competitive and fix the regulatory and operational components, such as simplifying right of way permitting or which technology can deliver a better cost-benefit to then sell the electricity produced. Mexico has a great deal of potential to generate clean and reliable electricity from natural gas: it is a matter of untapping every opportunity. In general terms, I think that Mexico’s Energy Reform has been evolving at a good pace and we think more opportunities will emerge in the near future.
Q: Why must a global food industry leader like Nestlé be a champion of renewable energy consumption?
A: In my opinion, it has nothing to do with the type of company; it is a question of leadership. Big companies like us have the power to influence and move an entire value chain toward energy efficiency and renewable energy consumption. But again, this is not a matter of trends, but a matter of having a more efficient and competitive business. For example, we have encouraged some ranchers that work with us to use solar technologies or biodigesters to improve their energy consumption efficiency and final costs. Another example is that one of our international policies is to have hybrid or electric vehicle fleets in every country where we operate. If a big company like Nestlé starts to implement these types of internal policies or guidelines, we can encourage and incentivize our supply chain to do the same.
Q: How is Nestlé adapting its energy consumption curves to intermittent energy sources such as wind or solar?
A: In theory, the installed capacity from our wind farm doubles our energy consumption to compensate wind’s intermittency. Having this extra installed capacity allows us to reach, at least, our minimum energy requirements. Another factor that prevents intermittency is electricity transmission. It is one thing to generate renewable energy and another to transport it. Fortunately, CFE has done a marvelous job in this regard and solved every issue we have had in extraordinarily short time frames. Having an extra installed capacity as well as reliable and effective transmission infrastructure has allowed us to prevent energy intermittency and eradicate operational losses.
Q: How did Nestlé encourage its supply chain to implement renewable technologies, such as biodigesters?
A: We were able to do this with ranchers and milk producers that already had the infrastructure or means to invest in technologies like this. With a significant amount of cattle, it is possible to produce a considerable amount of organic waste that can be used in biodigesters to produce energy or as an organic fertilizer. Sometimes, ranchers even export some of this organic fertilizer, which creates an additional income to their core operations. But again, these benefits are only achievable with a considerable amount of livestock and the proper means to invest in the infrastructure that is needed to implement biodigesters or to process organic fertilizers.
Nestlé stopped using fuel oil in our plants and started using natural gas shipped in through pipelines or by trucks and in some locations, we continue to use liquefied petroleum gas (LPG). Regarding the machinery we use, we are investing in efficient motors and are increasing our energy cost reductions and creating greater efficiencies.
To highlight a commendable example, since 2012, Nestlé has consumed 85 percent of its energy requirements through its Bii Nee Stipa II wind farm located in La Ventosa, Oaxaca. Our goal is to run our operations entirely by renewable sources by 2019, mainly by wind technologies. But we also plan to add solar technologies to the equation to achieve this goal.
Another example is the biomass plant installed at our Toluca facility, which represented an investment of US$20 million. We reuse the coffee waste generated nationwide to produce energy to heat the boilers used to toast the coffee we sell.
If we combine all these efforts, Nestlé is then able to reduce its CO2 emissions and reduce its footprint in a sustainable way and with a business-oriented vision. We call this process a circular economy where we take advantage of all the waste generated in our processes. To date, none of our 17 factories in Mexico uses landfills; we reuse and recycle everything, from water to any kind of waste.
Q: How does your Creating Shared Value (CVC) concept permeate your plan to consume 100 percent renewable energy?
A: The core value of our operations is based on a single purpose: to generate a healthier and better future. We focus and divide this vision in three key areas: individuals or families, communities and the planet. Our shared value creation is based on Porter and Kramer’s theory that states, in general terms, that companies need to generate value for their stakeholders, mainly investors, but also for communities. In other words, create win-win scenarios. This is why Nestlé decided to change the name of its social responsibility division to shared value creation. We did this to integrate and coordinate our international commitments and related efforts. To date, Nestlé has 41 international commitments that are divided into our three key areas, which at the same time are aligned with our sustainable development objectives. We did not reinvent the wheel, we just adapted to global conditions and aligned our global efforts to local conditions. Becoming a greener company is just one of the commitments to improve our foothold internationally. As mentioned before, being a big company carries an enormous responsibility to not just perform according to best international practices, but to encourage others to do the same. We always share our knowledge and best practices with our partners, clients and vendors.
Q: After fulfilling its goal to consume 100 percent renewable energy, what is next on Nestlé’s energy agenda?
A: Internationally, and within our planet focus, we have several issues to solve, such as water treatment, waste management, hybrid or electric vehicle fleets and reducing our footprints, be they carbon, hydric or waste-based. Our shared value creation policy has granted us the opportunity to share our knowledge and expertise and to nurture other companies’ best practices. Through different associations, initiatives and chambers in which we take part, we transfer our knowledge and participate in consultative committees to incorporate best practices that can help us to solve specific problems and vice versa. One company alone cannot generate a significant change, which is why we need to collaborate with our peers, supply chain and others to generate a greater value.

Nestlé México is part of the Nestlé global nutrition and wellness group. During the past 10 years, it has introduced several efficiency and renewable energy technologies into its processes to reduce its environmental impact and become more competitive.