Management Briefing

Sustainability in Spirits - Part I: To 2020 and beyond

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Like their counterparts in other food and drinks sectors, the world's major spirits producers have set sustainability targets for 2020, and in some cases beyond. Across the food and drinks arena, many companies are looking to 2020 as a target date for sustainability goals and strategies, and this can also be seen among major players in the spirits sector.

Pernod Ricard already had a tranche of sustainability targets from 2010 to 2015 but has set out a '2015-2020 Environmental Roadmap', which group director of sustainable performance Jean-François Roucou says will have "a broader scope".

No official launch is planned for the Roadmap. Roucou says details were communicated internally at the beginning of 2015. The programme "is being implemented progressively", he adds, and "most of the initiatives are being kicked-off during 2015".

The Pernod Ricard 2015-2020 Environmental Roadmap has four "pillars":

  • Governance - developing engagement, driving improvement and making informed decisions
  • Supply Chain - engaging suppliers and partners on sustainability
  • Resources Stewardship - continuing to improve environmental performance at its production sites, and
  • Brand and Consumers - putting the environment "at the heart" of its brands.

"We will set new targets on the areas linked to our direct operational activity, such as water, energy, carbon emissions or waste," Roucou says, adding that some of these will be publicly disclosed in the company's annual Registration Document, which details its progress on sustainability. The next Registration Document will be published on 24 September.

"Improvement happens in two ways," Roucou continues, "continuous gradual change, which is regular but more subtle, and step change when we have the opportunity to change technologies."

In recent years, the "major opportunities for step change" have come through the impact of new technology in the area of water, energy and carbon efficiency, Roucou says, notably with the construction of the new Jameson distillery in Midleton, Ireland, and "significant investments" in Scotland at Chivas, with the opening of the new Dalmunach distillery.

"For the five coming years, it is likely that improvement at our production sites will be more of a gradual improvement, as our plants have developed a good level of maturity and performance compared to peers," Roucou adds. However, Pernod is projecting accelerated progress in mitigating impacts in its supply chain on the back of the new Environmental Roadmap.

The group will report finally on its 2010-2015 targets in September, but ahead of this Roucou tells just-drinks that, among other achievements, it will report a 14% decrease in water consumption per unit produced, a 16% decrease in energy consumption per unit produced and a 26% drop in carbon emissions from production sites per unit produced. In addition, Pernod will report a 76% reduction in solid waste sent to landfill or incinerated per unit produced.

Diageo, meanwhile, unveiled a new set of sustainability targets for 2020 in December that the company has aligned with the emerging UN Sustainable Development Goals. The new programme comprises 20 targets covering three areas:

  • Leadership in alcohol in society
  • Building thriving communities, and
  • Reducing environmental impact.

Like Pernod, the evolution in Diageo's sustainability strategy over the coming five years demonstrates a growing focus on supply chain impacts. Included in the 20 targets, are goals to source 80% of its agricultural raw materials locally in Africa by 2020, establish partnerships with farmers to develop sustainable agricultural supplies of key raw materials and deliver responsible sourcing commitments with suppliers "to improve labour standards and human rights in our supply chains".

Suntory, which last year acquired US spirits company Beam Inc to create the world's third largest premium spirits producer, has arguably gone further than the sector's two largest players by enshrining an "Environmental Vision toward 2050". This comprises two commitments, namely to halve water consumption at company plants and halve CO2 emissions through its entire value chain by 2050.

The company has also committed to reduce water consumption per unit of production at its plants by 35%, and CO2 emissions per unit of production across the entire Suntory Group value chain by 24% by 2020, against a 2007 baseline. Also included in the company's 2020 environmental goals is a commitment to increase its conservation activities to protect birds, and expand its Natural Water Sanctuaries programme to some 12,000 hectares.

Brown-Forman has also set targets beyond 2020. In fact, its current targets for 2023 in effect superseded previous 2020 goals, set in 2010. The decision in 2013 to set new ten-year targets was taken after "positive progress" on the original goals, the company states. The company aims to reduce greenhouse gas (GHG) emissions in absolute terms by 15% by 2023, against a 2012 baseline, while also reducing water use per unit of product by 30%, also compared with a 2012 baseline. It also has a target to reduce wastewater discharge per unit of product by 30% and achieve zero waste to landfill at all 14 of its facilities.

In its recently-published 2015 Corporate Responsibility Report, Brown-Forman includes performance against the 2023 targets which perhaps underlines that it has set itself tough goals. In particular, setting an absolute target for GHG emissions regardless of business growth represents a particular challenge. The group reports that, so far, GHG emissions have increased by 5.2% against the 2012 baseline which the company attributes to the full-scale operation of new facilities and organic growth outstripping improvements in energy efficiency.

While absolute water use has decreased by 3.5% from 2012, water use per unit of product increased by 5.9% due to lower production volumes at certain facilities. Lower production volumes and changes in product mix also account for a 3.3% rise in wastewater discharge per unit of product from 2012. There was better news on the 2023 waste target, with three of the companies 14 facilities having achieved zero waste to landfill.

When it launched its "Good Spirited" sustainability platform last year, Bacardi set out targets for 2022. The company has committed to eliminate landfill waste at all of its production sites by 2022. Bacardi has committed to obtain 40% of the sugarcane-derived products used in Bacardi rums from certified, sustainable sources by 2017, but has pledged to increase this to 100%, also by 2022.

Mitigating environmental impacts, raising productivity and addressing social issues in agricultural supply chains have been growing areas of focus for spirits companies in recent years and this trend is only expected to accelerate over the coming five years. How spirits companies are engaging in their raw material supply chains and with agricultural suppliers is examined in the second section of this briefing.

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