Ethos regrets the lack of information from Nestlé concerning the Buitoni pizza scandal which led to the death of two people in France in 2022. Ethos has taken due note of the agreement between Nestlé and the families of the victims announced on 17 April but considers that the information contained in the annual report regarding this affair is very insufficient. Ethos also considers that the transparency of the remuneration report remains well below market prac-tice. Finally, Ethos is disappointed by the decision of the board of directors not to submit the climate report to the vote of the shareholders in a proactive way.
Ethos recommends to oppose the discharge of the members of the board of directors and management (item 2 of the agenda) at the general assembly which is being held today in Lausanne due to the lack information provided by the company in connection with the Buitoni affair in France. While an agreement was announced Monday between Nestlé and the families of the victims thus suspending the civil procedure, the criminal procedure is still in progress. For this reason, Ethos believes that the board of directors must remain responsible and therefore cannot be discharged for the year 2022.
As a reminder, around 50 people, most of them children, fell ill in March 2022 in France after eating pizzas from the Buitoni brand, owned by Nestlé since 1988. Two children died due to the presence of the bacterium Escherichia coli. Ethos particularly regrets the lack of information provided by Nestlé in its 2022 annual report and accounts regarding this mat-ter. The exact provisions made for this litigation are not specifically indicated in the ac-counts, which do not even mention this case.
Lack of transparency of the remuneration report
Ethos also recommends that shareholders oppose the advisory vote on the remuneration report (item 1.2) as well as the vote on the remuneration of the general management (item 5.2). Ethos considers that the transparency of the report remains insufficient, especially in comparison with other large companies listed in Switzerland.
Nestlé does not retrospectively present the performance objectives that apply to the annual bonus, which does not allow shareholders to assess correctly the pay-for-performance connection. In addition, although Nestlé indicates that sustainability criteria are now taken into account in the calculation of bonuses, the company does not specify the performance that must be achieved for each of these indicators.
Ethos calls for a regular “Say on Climate” vote
Furthermore, Ethos regrets that Nestlé has decided not to submit its climate report to the vote of its shareholders during this 2023 general meeting. Good practice dictates that companies which have set Net Zero greenhouse gas emissions (GHG) targets for 2050 submit their climate report for regular approval by their shareholders. The latter can thus decide on the effectiveness of the strategy put in place and, if necessary, demand that the board of directors do more to fight against global warming.
However, Nestlé, which is the second listed company in Switzerland in terms of GHG emissions, did not submit its climate roadmap ("net-zero roadmap") to the vote of its shareholders until the 2021 general meeting, after Ethos and other shareholders have made a request to that effect. Since then, the company has chosen not to repeat the exercise, claiming that from 2024 a vote on the sustainability report will be required by Swiss law.
For Ethos, however, it is essential that Nestlé specifically and regularly submits its climate report to the vote of its shareholders. “This is to allow shareholders to measure the progress made or not by the company against its climate roadmap published in 2020 and to ensure that the board of directors is accountable for these commitments related to the 'Net Zero' objective", emphasises Vincent Kaufmann, CEO of Ethos.
Progress in transparency on the nutritional value of foods
Finally, Ethos is pleased that Nestlé has agreed to publish the nutritional value of its global product portfolio in its 2022 annual report using the Health Star Rating system, a recognised and independently calculated nutritional score. In addition, Nestlé mentions in its 2022 sustainability report the nutritional value of its portfolios in thirteen countries thanks to front-of-package labelling systems approved by local authorities.
This decision followed a shareholder engagement campaign of several investors (including Ethos) and led by ShareAction, which asked Nestlé for more transparency on the nutritional value of the products in its portfolio. Although this decision represents a step in the right direction, Nestlé still needs to set clear objectives and accompanying measures to increase the share of its sales linked to healthy products, as well as to improve transparency to-wards its end consumers. The company has committed to setting a goal for the volume of products with a rating greater than 3.5 out of 5 stars in calendar year 2023.