Part two of this month's briefing sees Ben Cooper consider the role water plays when it comes to the raw materials for brewers.

Introduction

As outlined in the preceding section, water efficiency in the brewery has been an important focus for the large global brewers both for practical and reputational reasons

However, by dint of the far larger use of water in the agricultural production of beer's primary ingredients, improving water efficiency in agricultural supply chains is becoming an increasingly critical aspect of brewers' environmental sustainability strategies.

Expanding the measurement and mitigation of environmental impacts beyond production units to the entire value chain has been one of the key trends in corporate sustainability in recent years, and beverage companies have been no exception.

While there are many critical water, energy and waste issues further down the supply chain from the brewery, one of the most pertinent and challenging value chain issues for global brewers is the upstream environmental impact of their agricultural supply chains, and water once again is nearly always the dominant issue.

Water footprinting and impact mitigation across agricultural supply chains has been an increasing priority for global brewers, most notably for those working in African countries and other regions where water stress is a particularly acute. Major beer producers are engaged in many initiatives in supply chains, often in collaboration with other partners, inter-government agencies, NGOs and governments, to increase water efficiency, for example by improving agricultural techniques and in some cases switching crops.

While not the only driver, the sensitivity and criticality of the water efficiency issue in supply chains is a key reason why the brewers' water strategies tend to be integrated with a significant proportion of their community investment activity.

Water use in the agricultural supply chain

While all the major brewers engage in sustainability issues with their agricultural suppliers to some degree, there is a significant variation between the level and style of engagement on the issue. In some instances, this may simply be attributed to choice of priorities on the part of the brewer, and is also a function of the profile of the businesses concerned. It is no surprise, for example, that those brewers with a larger footprint in Africa and South America can be seen to be more active in this area.

Anheuser-Busch InBev

A-B InBev states that it has made maximising water efficiency in its own operations is its first priority. "Once you reach into the supply chain, it becomes much more complex. So, our approach is, we start with what we have most control over," says Bert Share, senior director for Beer & Better World.

A-B InBev is not alone in taking this pragmatic view but as with the other major brewers improving water efficiency in the agricultural supply chain is becoming a more prominent focus. It is also an area where an increasing amount of attention is now being expected of companies.

While stressing that the company has a "very long history of working with our barley growers all around the world", Share says working in agricultural supply chains will become a more prominent aspect of the company's sustainability strategy going forward.

In its environmental sustainability report, the company states that it is actively engaged in barley seed research to develop higher-quality varieties with better yields which use less water and are more drought-tolerant.

The company has established barley farmer programmes in the US, Brazil, Uruguay, Argentina, China and Russia, involving around 10,000 farmers. It employs a group of agronomists in each of its regions to support the farmers with technical assistance during the barley season.

Carlsberg

While environmental issues are mentioned as part of Carlsberg's Responsible Sourcing Policy, there is no mention of any specific water-related initiatives in the brewer's agricultural supply chains, in contrast to the higher profile the brewer gives water efficiency in its breweries.

Carlsberg does refer to a pilot project in Mukundapur, Nepal, begun in 2008, encouraging local farmers to plant barley for export to India for malting and buy it back for beer production in Nepal, where barley is usually imported from Europe and Australia. Cultivation and use of fallow land during cold and dry seasons produces a valuable industrial crop for the community, Carlsberg states.

Diageo

Diageo's Sustainable Agriculture Sourcing Guidelines have been commended by the Rainforest Alliance as "a practical mix of minimum standards and aspirational direction". In addition to social criteria, the guidelines are aimed at encouraging commitment to good environmental practices.

Last year, Diageo consolidated its water activities into what it has called the Blueprint Water Framework, which is based on three platforms: operations, community involvement and collective action and advocacy. Within the operations pillar, one element of the strategy is to "engage directly with suppliers in water-stressed countries where we operate, to encourage more sustainable strategies for agriculture".

As Michael Alexander, head of environment communications and policy at Diageo, states: "If you look at the embedded water of a litre of whisky or a litre of beer, the agricultural supply chain part of the whole life cycle of that product is by far the biggest user of water. Therefore, water in particular is very important in the supply chain."

Among the agricultural initiatives highlighted by Alexander is the encouragement of farmers to switch from barley to sorghum production. "We have worked in West Africa and East Africa in particular on sorghum which is a much less water-intensive crop; it's a more drought-resistant crop that we can use in our breweries to make our beer, as a substitute for barley." As well as using less water to grow, sorghum has the added benefit of being a food staple, and also requires less water when used in the brewing process.

Heineken

The launch of Heineken's new sustainability strategy, Brewing a Better Future, two years ago involved extending its approach to both water and energy efficiency beyond the brewery into the value chain. "In the past we focused on energy and water consumption in the brewery. With this new agenda introduced two years ago we've also said packaging, cooling (refrigeration) and distribution are crucial for improving that impact," says global sustainable development manager Vera Zandbergen.

The majority of specific initiatives and actions detailed in the company's sustainability report relate to improving energy efficiency and driving down carbon emissions downstream in the value chain.

However, in 2010 the company joined the Sustainable Agriculture Initiative (SAI), a coalition of international food producers which seeks to identify best practices, organises conferences and conducts research in the area of sustainable agriculture. Heineken participates in several of SAI's working groups dealing with barley, hops and apples.

Heineken's Sustainable Agriculture programme does not as yet feature water-specific initiatives. There has been a strong focus on increasing local sourcing, notably in Mexico, Brazil and Ireland, with the obvious carbon benefits. In Africa, the company has a publicly stated aim to source an average of 60% of raw materials locally.

However, global sustainable development manager Vera Zandbergen points to the water footprinting the company is doing in the value chain. So far, the company has conducted studies in the Netherlands, Mexico, Egypt, Slovakia and Vietnam.

"What we've done is look at the water footprint of our products, so similar to carbon footprint you don't just look at your own operations, but also in the further value chain, and what we see there is that about 90% of the water consumption is actually used in cultivating the crop." Increasing water efficiency has been on the company's agenda "for years" with significant progress in driving down the water use ratio in its production units, Zandbergen adds, "but of course it's the total water value chain we have to take into account for the future and not just what we do inside our own breweries".

Molson Coors

Molson Coors chief corporate responsibility officer Bart Alexander says the US-Canadian brewer is "a little less advanced" in its work on water impacts in its agricultural and packaging supply chains, despite the fact that "most of the water in our products comes from agricultural use and packaging suppliers".

However, sustainability engagement is always about prioritising engagement according to materiality, and Alexander's contention that "the issues are much more urgent" for companies sourcing agricultural raw materials from in African countries is justified.

However, the company has made water stewardship a priority across its business, including the broader value chain. This was reflected in the first Molson Coors Global Water Summit which took place in April 2011, which brought together teams working in communications, water resources, brewery operations and the supply chain, to develop plans and set targets for the company's Global Water Strategy.

Molson Coors says its Global Procurement team is involved in developing an approach to capture the water impacts, risks and opportunities within its supply chain. Assessments and "hot spot" analyses are to be carried out for the supply chain of each business unit, the company states, and mitigation plans developed. For example, the group has begun to review the sustainability of barley farming in the UK and the US, determining how water is used and identifying areas of risk. The review will look at water availability, water ownership, bio-diversity and how to support farmers.

SABMiller

SABMiller has arguably been the most active among the global brewers in broadening its work on water efficiency from its own operations to its agricultural supply chains. Water is one of the ten priorities of the company's Sustainable Development platform and this goes well beyond maximising efficiencies in its production units.

The company's work on water footprinting is not only of significant value to the company but arguably to the brewing and beverage sectors at large. The company completed its first total water footprint in 2009 and has now undertaken the same process across a range of countries, including South Africa, Peru, Tanzania, Ukraine, Colombia, Honduras, India and the US. The total figures vary enormously, from the Czech Republic for example with a total footprint of around 44 litres per litre of production to Tanzania where the figure is around 180 litres, owing to the amount of irrigation required in the agricultural process.

However, head of sustainable development Andy Wales points out that the figures have to be seen in their geographical context. "The water footprint is different from a carbon footprint. It's not necessarily a bad thing to have a high water footprint. It's all about the context." The critical question to ask, he adds, is whether there is a secure and sustainable water supply for the local community. Wales also points out that global water footprints can vary substantially from year to year simply as a result of variations in rainfall.

Footprint statistics along with mitigation initiatives are included in the company's Water Futures Report, published last year. The Water Futures Partnership is a collaboration between SABMiller, WWF and GIZ, a government-owned organisation which coordinates international development on behalf of the German government. It is now working on water-related projects across eight countries.

The scope of the Water Futures Partnership supports Wales' contention that SABMiller is "already working very hard" on extending its work on water sustainability into its agricultural supply chains. "We are building the capability in our local businesses to understand the sophisticated nature of water risk, to understand watershed by watershed what these risks might be for our breweries or for our farming suppliers."