EY's review report on Nestl's environmental and social indicators includes a description of each Key Performance Indicator
Question:
EY's review report on Nestl's environmental and social indicators includes a description of each Key Performance Indicator (KPI) and a reported value.
Environmental
- Greenhouse Gas (GHG) emissions reductions/removals
- Scope 1 GHG emissions
- Scope 2 GHG emissions
- Scope 3 GHG emissions
- Water use reduction in factories
- Percentage of key ingredients produced sustainably
- Percentage of deforestation-free for primary supply chain
- Percentage of plastic packaging designed for recycling
- Percentage of virgin plastic reduction
- Percentage of ingredients sourced through regenerative agricultural methods
Social
- Number of servings of affordable nutrition with micronutrient fortification (MNF)
- Number of young people around the world with access to economic opportunities
- Percentage of women in the top 200+ senior executive positions
EY's review report references the "Reporting Scope and Methodology for ESG Key Performance Indicators" document, which is included in the ICON assignment. This document provides specific detail about how each KPI is measured.
Environmental, Social, and Governance (ESG) information is increasingly demanded by financial statement users in making decisions. A February 9, 2021 Wall Street Journal article titled "Providing Timely ESG Information is Becoming More Crucial for CFOs" emphasized that stock analysts and lenders are demanding ESG information to make their investment decisions. Quotes from the article include:
- "Financial analysts these days often consider companies' ESG performance when recommending whether to buy or sell a stock."
- "Lenders are also taking a closer look at sustainability metrics when they provide loans to companies or underwrite their bonds."
Required
- Suppose you are a stock analyst or a lender who is evaluating Nestl's environmental and social KPIs. What specific KPIs do you believe are most important to assist your decision? Explain your answer.