Management Briefing

Sustainability in Beer - Part III: Company by Company - Anheuser-Busch InBev, Carlsberg, Diageo

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In the third part of this month's management briefing, Ben Cooper reviews the environmental sustainability of three of the world's biggest brewers: Anheuser-Busch InBev, Carlsberg and Diageo.

Anheuser-Busch InBev

Last year was a significant one for Anheuser-Busch InBev as the company unveiled a new set of five-year environmental goals.

Three of the seven goals pertain to water, underlining its significance to beverage companies. The company has committed to reducing its water usage globally to 3.2 hectolitres per 1 hectolitre of beer by 2017. In addition, A-B InBev has committed to reducing water risks and improving water management in all its key barley-growing regions in partnership with local stakeholders, and engaging in watershed protection measures in all facilities in areas that its assessments have shown to be high risk.

"Water is a critical element in our strategy," says Carol Clark, global VP of 'Beer & Better World'. 

While continuing to improve water efficiency in its own breweries, like other major multinationals A-B InBev recognises the importance of addressing efficiency in the agricultural supply chain which accounts for a large majority of total water use in beer production.

A-B InBev is pursuing two approaches to improve water use in its barley supply chains, namely improving water management through disseminating best cropping practices and increasing the use of high-yielding drought tolerant varieties. The company deploys agronomists and specialists across key regions where it directly contracts barley, including the US, Mexico, Brazil, Uruguay, Argentina, Russia and China.

Crucially, emphasis is being placed on water-stressed regions. "Where water risk is a growing concern amongst our growers and their communities, we are leveraging our experience and expertise in crop management and breeding to work collaboratively to improve water-use efficiency." 

Last year, the company completed "a robust water assessment" of its key barley regions, Clark continues, "identifying local water availability and water quality concerns, mapping relevant stakeholders for potential partnerships, and developing locally-tailored pilot initiatives that improve water management". 

These pilots, Clark explains, are defined by two key criteria, namely that they are undertaken in collaboration with growers and other local stakeholders and that they are scalable. Four such pilot projects have been launched in 2014.

Last year, A-B InBev piloted a benchmarking tool enabling growers to compare their barley production to other growers within their region and globally using productivity and environmental key performance indicators. "This tool allows our growers to see where their productivity lags that of their peers and, in collaboration with our agronomists and field specialists, work to improve their crop management practices to increase productivity and reduce their environmental footprint," Clark says. The programme, called SmartBarley, is being expanded in 2014 to cover more than 1,900 growers across the US, Canada, Mexico, Argentina, Uruguay, Brazil, Russia and China.

With regard to energy, A-B InBev has made a specific commitment regarding GHG emissions in China. While pledging to reduce emissions per hectolitre of production globally by 10% by 2017, A-B InBev is targeting a 15% reduction in China. "There is a regulatory trend toward cleaner fuels, which we can support by switching from coal to natural gas where feasible,” says Clark. “We feel the opportunities for having an impact vis-à-vis GHG emissions are particularly strong in China.”

Like other prominent multinational companies, A-B InBev increasingly stresses the importance of embedding sustainability in its operations, engaging staff on the ground with responsibility for attaining the various goals. 

The company's barley goal, Clark explains, "is owned by procurement team and our barley experts across the company", while the watershed protection goal is owned by A-B InBev's supply team, the packaging by its packaging experts and eco-fridge goal by the commercial team. "We've linked compensation to goal achievement, which is aligned with our company culture. We're very pleased with how we’ve been able to integrate environmental sustainability across the company – from the C-suite to brewery floor and barley field."

Carlsberg

Transparency is a critical component in sustainability strategy and particularly in sustainability reporting. In its CSR Report 2013, published in February, Carlsberg had to record that it had not met its water efficiency target in 2013.

Attaining water efficiency of 3.3 hl/hl represented a flat performance in 2013, short of its target of 3.2 hl/hl. In the report the company said the result was "not satisfying". 

Morten Nielsen, director, group CSR at Carlsberg, explains that beer volumes had risen in some regions with lower water efficiency, while production had decreased in its most water-efficient region. Overall, the company has reduced water consumption by 5.7% (0.2 hl/hl) in the target period 2011-2013. 

"When setting challenging and ambitions targets there is always a risk of not meeting them fully," Nielsen says. "Our overall water consumption is still very low compared to other global breweries."

Nielsen also points to the progress Carlsberg has made in water-stressed locations. As water is a local resource, often what a company is doing specifically where water is scarce will be of greater significance than a global efficiency figure.

For Carlsberg, it is its locations in Asia that have been identified as having the highest water risk exposure. Nielsen states that 13 of the company's 24 breweries in the Asian region managed to reduce water consumption from 2012 to 2013. "In the coming years, we will strengthen our commitment to improve our performance even further," Nielsen adds.

Last year, Carlsberg also carried out an additional water assessment using the Aqueduct tool developed by World Resources Institute, in order to assess detailed water scarcity risks by location. "The results are being used to make sure that future water projects are put in place where most needed."

In its latest report, Carlsberg also set out new three-year targets of a 5% to 10% reduction in relative energy consumption, GHG emissions and relative water consumption against a 2013 baseline.

Carlsberg places considerable emphasis on waste-to-energy initiatives. Indeed, capitalising on opportunities to convert brewery by-products into energy sources is one of the four pillars of its 'Efficient Brewery' programme. Examples include using biogas from waste water treatment plants and converting spent grains into energy sources.

Diageo

Of the six major brewers featured in this report, Diageo is the exception in that it has substantial operations in other sectors so its global company-wide figures on water, energy and waste will not necessarily reflect exactly what is happening in its beer operations. 

However, as its beer business is based principally in Africa, some of its regional figures are informative, while the company also reports some metrics specifically for its beer operations.

Indeed, Michael Alexander, head of environment communications & policy at Diageo, points to the company's achievements in increasing water efficiency in Africa as a notable recent achievement. The company reported that it had improved water efficiency in Africa by 32% since 2007, "so we've achieved our water efficiency target in Africa two years ahead of plan".

Diageo also has a goal to reduce water that is wasted at sites in water-stressed locations - all of these are in Africa and nine of the 12 are beer-related - by 50% by 2015. In its latest report, the company recorded a 21% reduction between 2007 and 2013 and said it was 'on track' to reach the 50% target.

Alexander says the company is making "good progress" towards that goal, and expects progress to "accelerate in the next two years to the end of 2015". He adds: "I think the 50% target has been really helpful in terms of focusing and prioritising our programmes".

Diageo has an overall target of eliminating waste sent to landfill by 2015 that it describes as challenging. So far, this has been achieved at 25 operational sites, while another 50 sites currently send less than one tonne of waste to landfill.

As eliminating waste to landfill is dependent on the presence of relevant infrastructures for reuse and recycling, the company's operations in Africa clearly face a greater challenge in this area than some of its other operations. "There is clearly a better infrastructure in developed markets in terms of recycling facilities and technologies available," says Alexander.

However, Diageo reported last year that it had achieved zero waste to landfill in its first site in Africa, the Achimota brewery in Ghana, where Diageo brews Guinness and other brands. While no other Diageo site in Africa yet sends one tonne or less waste to landfill, the company confirmed to just-drinks that its African brewing sites had reduced waste to landfill by 64% since 2008.

Diageo's target to source 70% of the raw materials used in its African operations from within Africa by 2015 is by definition largely focused on its beer business. By 2013, Diageo had reached 52%, a figure which only includes agricultural raw materials. In its report, Diageo said it is confident that once all raw materials are included it will be on track to achieve the target. Alexander adds the company is "delighted" with the progress it has made on local sourcing.

For the fourth part of this briefing, click here. Full details can be found here.


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