Sustainability in Soft Drinks & Water - Part III - Energy & Greenhouse Gas Emissions
In the penultimate part of this month's management briefing, looking at environmental sustainability in the soft drinks and bottled water sectors, Ben Cooper considers efforts to reduce the use of energy, and the greenhouse gasses that certain energy sources emit.
Soft drinks and bottled water companies look at energy consumption and greenhouse gas (GHG) emissions not only in terms of maximising efficiency and minimising emissions in their plants.
Just as there are huge water impacts in the whole value chain, there are energy and GHG emission impacts upstream and downstream. Both sectors have been looking to reduce energy consumption and emissions through packaging innovation while soft drinks producers in particular have been striving to reduce carbon impacts associated with their extensive use of refrigeration and in their agricultural supply chains.
Energy consumption and efficiency in production
Once again, the work begins with maximising energy efficiency in the plant. For example, the Coca-Cola Co's stated aim is to "grow our business but not our system-wide carbon emissions in our manufacturing operations through 2015 compared with our 2004 baseline". However, the company candidly concedes that it is still has "a lot of work to do" to return to 2004 levels.
According to its most recent sustainability report, global manufacturing emissions in 2010 were 2% lower than 2009 but were 9% higher than the 2004 baseline. However, Coca-Cola also reported that greenhouse gas intensity (emissions per litre of product) had improved by 14% since 2004.
PepsiCo, meanwhile, has committed to reduce fuel-use intensity by 25% per unit of production by 2015, against a 2006 baseline, and Dan Bena, senior director of sustainable development at PepsiCo, says the company is "on track" to achieve that goal.
Bena highlights the role renewable forms of energy are now playing. "The increasing use of renewables has been fantastic and it's been really widespread across the business," he says, citing the role its ReCon system, a programme developed to facilitate the transfer of best practices, has played in expanding the use of renewable sources, such as biomass energy generation, within the group.
Danone has also developed an in-house system to help meet its energy consumption and GHG emissions, called DanPrint. Danone committed to reduce CO2 emissions per litre of product by 30% by 2012, against a 2008 baseline, and Jean-Christophe Bligny, environment director at Danone Waters, says it will achieve this goal.
In addition to the benefits provided by the DanPrint system, Bligny says the creation of the role of "carbon master" within production plants has also been positive in terms of maximising engagement in the company's sustainability mission. Danone states in its most recent sustainability report that carbon footprint is included in the variable compensation of some 1,400 managers throughout its business.
Quantifying and minimising energy consumption and carbon emissions along the entire value chain - notably impacts in raw material supply chains, distribution, packaging and packaging waste - is vital for any corporate sustainability strategy and the soft drinks and bottle water sectors are no exception.
In this regard, the major soft drinks companies have a particular mitigation challenge to meet related to their extensive use of refrigeration and the resulting carbon emissions caused by fluorinated gases, known as F-gases, such as CFCs, HCFCs and HFCs. Research cited by the United Nations Environment Program suggests the contribution F-gases will make to global warming will increase to somewhere between 9% and 19% of total GHG emissions by 2050.
Jeff Seabright, vice president for water resources and the environment at Coca-Cola, points out that cold drink equipment - the Coca-Cola system has around 10m cooler and vending units operating globally - contributes more in GHG emissions than either packaging, manufacturing or distribution. "So, the most visible things are probably the trucks running around, but they are actually the least of the challenge," Seabright says.
Seabright says Coca-Cola has invested in excess of US$60m in the development of alternative technology and "we're now in the process of deploying that", while the company has also made a "line-in-the-sand" commitment to phase out the use of HFCs in all new equipment by 2015.
Meanwhile, PepsiCo states that its cooling equipment uses more than twice the amount of electricity annually than all Pepsi plants combined, so it has a two-pronged approach of improving the energy efficiency of refrigeration units while also investing in sustainable refrigerants.
Seabright sees the leadership role Coca-Cola can play in this area as extremely significant. "The leadership that we're providing in moving the entire industry away from HFCs will have a much bigger impact than our entire footprint," he says. "We're helping move and accelerate a market transformation away from f-gases to a much more climate-friendly solution."
For example, along with Unilever and McDonalds, Coca-Cola was a founding member of Refrigerants, Naturally!, a global non-profit initiative launched in 2004 and supported by Greenpeace and the United Nations Environment Programme. PepsiCo is also a member of the initiative through which companies have publicly committed to combat climate change and ozone layer depletion by substituting fluorinated gases with natural refrigerants in their point-of-sale cooling applications.
Seabright also points to the joint commitments on F-gas reductions in refrigeration equipment made by the Consumer Goods Forum (CGF), a coalition of global manufacturers and retailers, as significant collective action.
Agricultural supply chains
Like all food companies, the major soft drinks producers face the daunting challenge of not only addressing carbon and water impacts in their direct operations and their distribution channels but also in their agricultural supply chains. Around 30% of total global GHG emissions can be attributed to agriculture when related impacts such as deforestation are taken into account.
As a major food company, PepsiCo has an even broader range of agricultural inputs to consider but, as Dan Bena points out, its wider and longer experience of agricultural supply chains also gives it an advantage.
Bena explains that in the traditional carbonated soft drinks environment there was less of an onus on agricultural inputs. More recently, both as a result of the increasing priority being given to sustainability and the diversification of both companies from their core CSD brands into products such as juices and smoothies, the focus on agricultural supply chains has increased. PepsiCo's agronomists and agro-scientists have been working with its agricultural suppliers on the food side of the business for "decades", Bena says.
"When we realised that our future growth was moving outside of carbonated beverages into a more diverse product portfolio, we had tremendous agricultural expertise on which to draw," Bena says. In 2010, the company completed the framework of a comprehensive on-farm sustainability verification programme addressing environmental, social and economic impacts. The environmental pillar of that programme was being piloted in 2011 and the beginning of 2012.
Jeff Seabright concedes that Coca-Cola is at a relatively early stage in terms of quantifying impacts in its agricultural supply chains. And, in spite of the fact that it buys only a small percentage of its ingredients directly from farmers, the company has an expanding sustainable agriculture platform.
"We've not cracked the code yet on all the agricultural ingredients," says Seabright. "That's a bit more complex, and we're working on it. In terms of our ability to get a precise fix on the embedded carbon in the agricultural ingredients that we use we're just beginning in the last year or two years to build our database because it's more complex than some of these other pieces."
However, he says that the company, working "very closely" with WWF, has been able to "take a deep dive on the key ingredients around which we have fairly significant purchasing power", notably sugar, citrus and corn. He also points to the "strong leadership" Coca-Cola has given to the creation of the Bonsucro sustainable sugar cane certification programme.
The potential for energy and GHG emissions reductions through packaging innovation is discussed in the final section of this briefing.
Part four of this briefing will run later this week. To read part two, click here.
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