FMCG brands are increasingly turning sustainability into a strategic advantage, moving beyond compliance towards innovation and long-term value creation. Nestlé Lanka exemplifies this approach, drawing on over a century of experience while creating shared value for communities and stewarding resources for the future.
In this conversation, Bernie Stefan, Chairman and Managing Director at Nestlé Lanka, reflects on the company’s 120th anniversary and its efforts to strengthen local supply chains, support farmers and embed sustainable practices across the organisation.
Nestlé has a large supply chain in Sri Lanka. How have you reduced environmental impact without increasing costs for farmers and suppliers?
Nestlé is committed to achieving net-zero emissions by 2050 across what are known as Scope 1, 2 and 3 emissions, covering the entire value chain. For a food company, most emissions occur upstream, particularly from dairy and agricultural raw materials such as coconut. That is why the focus is on efficiency and productivity gains, rather than passing additional costs on to farmers.
We work closely with local suppliers to adopt regenerative agriculture practices that both increase yields and reduce carbon footprints. In dairy, our training hubs provide hands-on support to smallholder farmers on best practices, including soil and water conservation. We work with farms that have as few as five to ten cows, ensuring that even the smallest producers benefit from these programmes.
In coconut, we partner with the Coconut Cultivation Board and the Coconut Research Institute to deliver training to large growers, home growers and small farmers. These programmes focus on improving productivity and efficiency through shared best practices, helping farmers strengthen their livelihoods while reducing environmental impact.
How has climate risk, such as water scarcity or extreme weather, affected financing or insurance decisions for your operations?
Climate-related disasters, such as last year’s Cyclone Ditwah, are becoming more frequent. At Nestlé, climate risk is assessed through both its financial impact on operations and the environmental footprint across the value chain, with particular focus upstream, where risks such as agricultural vulnerability, water scarcity, deforestation and extreme weather are most material.
These factors are integrated into Nestlé’s Enterprise Risk Management system and reflected in mitigation strategies, business continuity planning and long-term decision-making. This is complemented by preparedness plans designed to protect people and ensure the continuity of critical supplies.
How do you measure whether an environmentally focused product redesign increases margins or market share?
Consumers are at the heart of everything we do, and sustainability is now a core expectation rather than a “nice-to-have.” We measure the commercial impact of environmentally focused product redesigns the same way we track any strategic initiative—through margins, market share and overall value delivered.
Success comes from balancing operational efficiency with consumer priorities such as quality, taste, nutrition and fortified ingredients. By designing products that meet these expectations sustainably, we are able to maintain competitive pricing, manage costs and gain market share.
How do you ensure that sustain ability goals are not just board room rhetoric but actually influence operational decisions?
Sustainability starts with the consumer and flows through product design, sourcing, manufacturing, marketing and investment decisions. A sustainability task force, led by the Chairman and comprising all key business functions, ensures alignment, while a dedicated sustainability team coordinates initiatives across the organisation.
In practice, this includes reducing packaging weight, switching to more sustainable materials and lowering greenhouse gas emissions from dairy and other agricultural supply chains. At the factory level, Nestlé invests in energy and water efficiency. For example, last year the company replaced furnace oil consumption with a biomass boiler to generate steam, significantly cutting emissions while sourcing local rubberwood chips and supporting community suppliers.
How do you ensure local communities benefit meaningfully from initiatives designed to meet global ESG standards?
Global ESG standards are implemented across Nestlé and audited to ensure compliance. In Sri Lanka, however, we place equal emphasis on making these standards tangible and relevant for local communities.
We were the first to assess the carbon footprint of the coconut value chain, which revealed that most emissions originated from coconut mills. In response, we now work closely with mills to adopt renewable energy solutions, install solar panels and improve operational efficiency. Similarly, we invest in farmer training, sustainable technologies and recyclable packaging, and partner with third parties to prevent our packaging waste from ending up in landfills and oceans. This approach supports a circular economy that benefits both communities and business partners.
Every minute, 5,000 of our products are consumed in Sri Lanka. That represents 5,000 opportunities to engage consumers and deliver the right product responsibly.
Which sustainability-driven innovations do you see as the biggest growth and value driver for Nestlé Lanka over the next five years?
Our biggest sustainability-driven growth and value drivers will be responsible raw material sourcing and sustainable packaging that promotes circularity. We work closely with local partners to ensure materials are produced efficiently and sustainably. We also pioneered the shift from plastic to paper straws for Milo cartons and partnered with recyclers to recover and repurpose beverage cartons, a process that is technically challenging but critical to circularity.
This year, we are on track to reach a major milestone: 100% plastic neutrality. For every tonne of plastic packaging we produce, an equivalent amount will be collected and responsibly disposed of through our partners. By combining responsible sourcing, circular packaging and strong local partnerships, we aim to create long-term value for both consumers and communities while driving sustainable business growth.