Sustainability pervades the Dutch brewer’s first integrated report from cover to cover but it could use its global presence to be a greater advocate for action to tackle climate change, says Peter Statham
Fierce competition among brewers has transformed the global beer market. Just four brewers now control almost half of it, down from 10 in 2004. And now that AB InBev, the world’s largest brewer, has swallowed SAB Miller, the second largest, it controls almost a third of the market. That makes Heineken, now the world’s number two, just a little appetiser.
Even so, Heineken produced 200.1 million hectolitres of booze last year. By my calculations, that’s enough for everyone in the world to have almost five pints. The company’s impact is significant. And it’s serious about sustainability.
For the first time, Heineken has integrated sustainability information in its annual report and no longer publishes a separate sustainability report. In general, the integrated report is impressive. In contrast to some attempts to integrate reporting, Heineken does a good job, including sustainability references almost from cover to cover. The front cover even suggests that you reuse it as a beer coaster (warning to the inebriated: print it first).
The CEO notes that efficiency and productivity targets, a key focus of the business, are closely linked with the sustainability strategy. And the brewer has saved €13.5m (£11.5m) through water efficiency projects since 2009, a clear business benefit. A graphic details the value chain and shows Heineken’s contribution to the UN’s Sustainable Development Goals (SDGs) at each stage. Sustainability progress is highlighted throughout the summaries of business priorities and regions.
‘Without water Heineken wouldn’t exist’
The Sustainability Review, a section within the report, provides an overview of progress against Brewing a Better World, Heineken’s sustainability strategy, consisting of six areas: water, CO2, sourcing, responsible consumption, health and safety, and communities. Case studies and videos, along with more information, data and the GRI index, are hosted on the corporate website, an effective use of different communications channels.
“Without water,” we are reminded, “Heineken wouldn’t exist.” This is a material issue for the brewing industry, since beer is 95% water. In 2016, Heineken reduced its global water consumption by 0.1hl/hl of production, the equivalent of 1,011 Olympic-sized swimming pools.
But this bald statement poses two questions. First, how did Heineken achieve this reduction. There’s mention of individual projects and the development of a governance standard around wastewater, but there’s no explanation of a guiding strategy. Second, is the size of reduction good or bad? There’s no help provided in the report. On further research, it appears below par compared with peers. Heineken uses 3.6 hl/hl, Carlsberg 3.2 hl/hl and AB InBev 3.14 hl/hl. Perhaps it’s time for absolute water targets, or, even better, science-based water targets that will contribute to avoiding a global water crisis.
Climate change may also leave us without a Heineken to quench our thirst. This is highlighted in the strategic risks, alongside water scarcity. And here, Heineken has made strong progress, cutting absolute emissions since 2008 by 5% despite a 52% increase in production volumes.
In 2016, 17% of the main materials came from sustainable sources, on track for 50% by 2020. To the external audience this seems low, especially since there’s no room in the report for any explanation of factors such as the challenges in increasing sustainable sources; the percentage for each different crop; or even what sources are considered sustainable.
Heineken ‘should raise its voice’
Considering the potential impact of climate change and water scarcity on Heineken’s business, I’d like to see more about how it’s using its influence, and presence in 190 countries, to advocate for climate action while it is “brewing a better world”. Other companies, such as IKEA and Unilever, are out there advocating for better policies. I’m sure the policy wonks will always appreciate sharing a cold green bottle or two with Heineken lobbyists.
It’s bold to stop publishing a separate sustainability report. But this approach, combined with an effective use of the corporate website, has paid off. In a consolidated industry, could Heineken lead the way in sustainability reporting for others? And more importantly, could its strong, integrated approach drive the sustainability agenda in brewing?
Until then, at least we can enjoy a refreshing pint safe in the knowledge that we’re supporting a worthy business to brew a better world. Cheers!
Pete Statham is senior consultant for Context Europe. email@example.com
See also: Heineken shows its bottle on climateHeineken sustainability report beer Integrated reporting SDGs water management