Leading food boss suggests investors are not asking about sustainability. Maybe they are just asking about it in a different way. By David Burrows.
Nestlé chief executive Philipp Navratil has told staff that “it’s a bit [of] a pity” that the world’s largest food company isn’t more vocal on sustainability issues.
The FT reported last month that while Navratil took some of the blame for the silence on sustainability, it was “also President Trump’s fault”, according to video footage of an internal event held before Christmas.
“If you think about it in hindsight, five years ago or three years ago, if you go and meet investors you would get plenty of questions about sustainability,” said Navratil. “Somehow in the US it has totally gone off the agenda,” he added. “In all of the investor meetings I have done, nobody asks, not one has asked – I think one maybe – about sustainability.”
The comments have understandably created quite a stir, not least because the report comes in the week that world and business leaders met in Davos, Switzerland where Nestlé is headquartered.
“Credit Navratil for saying the quiet part out loud,” wrote Andrew Winston, a consultant on corporate strategy, specialising in ‘mega-trends’. “The message was aimed at employees, a critical audience for maintaining momentum,” he added. “It was also a signal, especially to the US, where Nestlé employs 36,000 people and generates $38bn in revenue. The point was clear: the company hasn’t backed off. And it shouldn’t,” he added.
Indeed, we are likely passing 1.5°C of warming a decade earlier than expected. Food companies know what that means: more of the extreme weather, supply chain disruptions and geopolitical upheavals that we have seen in recent months. And, in some regions at least, stiffer regulation.
Investors understand this too. So, perhaps the ‘sustainability’ questions are being pitched at a different angle these days.
“Fixed price contracts assume predictable harvests [but] investors know these assumptions are dead. They are calculating whether your procurement strategy services 40 degree summers,” noted Ana Maksimovic at Kindred Consulting, which works with EU food and drink companies on sustainability.
On a recent investor call, Maksimovic said questions about carbon neutrality by 2050 or science-based targets were skipped over. Instead, they wanted to know how the company was pricing climate volatility and where the revenue for the transition to regenerative agriculture was coming from – for example, carbon or nature credits.
Navratil and others are not being asked about net-zero aspirations or how the roll out of fibre-based packaging is going. Instead, they are increasingly being quizzed about water stress maps, the eye-watering cost of everything from cocoa to recycled plastic, what their product portfolio (especially for protein) looks like now, next year and in five years’ time, and whether the millions (in the KitKat maker’s case, CHF1.2bn (£1.13bn)) invested in ‘regen ag’ is securing low-carbon, low input supply and competitive advantage.
In other words, investors want to know about food company resilience in a world that is changing now, rather than corporate social responsibility targets that are off over the horizon.
As Winston explained: “Let’s be clear: multinationals mostly know that sustainability is non-negotiable. The problem was never awareness. It was fear – of backlash, headlines, and short-term investor discomfort. Now a few leaders are cautiously re-emerging. It doesn’t hurt that some world leaders, like Canada’s Mark Carney, are getting bolder and providing cover.”
McDonald’s modelling
Maybe they do not need as much of this cover (through regulatory intervention) as they think.
In their 2024 ‘Unleashing Sustainable Value in Food & Agriculture’ report, Deloitte and NYU Stern concluded: “It’s imperative for players across the food and agriculture value chain to invest in sustainability to address urgent and material issues threatening the industry.”
Indeed, consider this comment by a US-based sustainability lead from McDonald’s – one of the 350 executives interviewed for the research: “Modelling conducted by third-party economists on the cost-benefit ratio of agriculture climate initiatives for McDonald’s US found that every dollar invested in mitigation generated nearly three dollars of benefits resulting in enhanced supply chain resiliency.”
Companies are also having to adapt – and fast. In October 2025, McVities announced that its Penguin and Club bars would no longer be classified as chocolate. Driven by rising cocoa prices and restricted supply, the Pladis-owned brands switched out of cocoa for cheaper alternative ingredients, including chocolate flavouring.
Others are betting big on alternatives, like ‘chocolate’ made from fermented EU sunflower seeds, or new technology like artificial intelligence to find alternatives for ‘at risk’ and high impact ingredients.
Nestlé has had to change the recipe for Toffee Crisp and Blue Riband bars, using fewer cocoa solids and more vegetable oils. “Like every manufacturer, we’ve seen significant increases in the cost of cocoa over the past years, making it much more expensive to manufacture our products,” a Nestlé spokesperson told Ingredients Network. “We continue to be more efficient and absorb increasing costs where possible.”
It is not the only ingredient that has gone up in price: food companies are having to think about reformulation of their recipes and the make-up of their portfolios as climate change bites.
Commodity suppliers may for example need to add seeds that support more diverse crops, or equipment and inputs to support more sustainable farming practices, noted Bain & Company in its report, ‘The visionary CEO’s guide to sustainability’.“Product portfolio reinvention will be a critical element of food systems transformation for upstream and downstream companies alike,” the consultants explained, as manufacturers “face mounting pressure to offer healthy and sustainable products”.
The advisors added: “[…] companies can re-evaluate their portfolio strategy to determine the product mix that will best help them meet those new demands without dismantling a core that has delivered decades of profitable growth. That means identifying and exiting the unfixable parts of the portfolio and spending more time and energy on the brands and products that have the fundamentals that will allow them to satisfy consumers’ needs for delicious, healthy and sustainable foods.”
That is a decent recipe for resilience, and certainly chimes with the conclusions of a Defra report published last month. Titled, ‘National security assessment on global ecosystems’ the document showed how environmental degradation can disrupt food, water, health and supply chains, and trigger wider geopolitical instability.
The 14-page report – which was reportedly blocked from publication last year by ministers – highlighted that food is particularly exposed. “Critical ecosystems that support major global food production areas and impact global climate, water and weather cycles are the most important for UK national security,” it stated.
As the authors (reportedly from the Joint Intelligence Committee, which oversees the security services) noted: “The UK is unable to be food self-sufficient at present, based on current diets and prices. Full self sufficiency would require very substantial price increases for consumers, as well as improvements in efficiency, waste reduction and resilience across the food system, including agricultural production, food processing, distribution and consumption.”
There will also need to be a change in demand, the authors warned: “The UK does not have enough land to feed its population and rear livestock: a wholesale change in consumer diets would be required. It would also require greater investment in the agri-food sector so that it is capable of innovating in sustainable food production.”
Things must change at the other end of the chain, too. As Ali Morpeth, co-founder of food systems consultancy Planeatry Alliance, noted: “Most organisations’ response to nature risks still sit upstream: supply chains, sourcing standards, deforestation exposure, regenerative practices. All necessary and very important, but we need to focus also on the deeper driver of risk: demand.”
The role of Navratil and his counterparts in large food businesses is to ensure the pursuit of short-term revenue gains does not act as an impediment to future resilience.
