Ethical Corporation is now Reuters Events - LEARN MORE
The Danish brewer’s sustainability chief Simon Hoffmeyer Boas tells Terry Slavin why collaboration is key to achieving its new strategy of achieving zero CO2 emissions, water waste and accidents by 2030
The need to collaborate may be a well-rehearsed mantra by companies when they announce ambitious new sustainability strategies, but for Carlsberg the title says it all: together towards zero.
Simon Hoffmeyer Boas, the Danish beer company’s director of sustainability, sees working with other companies, governments and NGOs as key to success in meeting Carlsberg’s four stretching targets to cut its carbon footprint, water waste, irresponsible drinking and workplace accidents all to zero by 2030.
Not only is Carlsberg one of over 300 companies to have signed up to Science-Based Targets, the methodology developed by CDP, WRI, WWF and the UN Global Compact to help companies align their emissions reduction plans with the Paris Agreement’s goal to limit global warming below 2C.
We want to be part of starting a virtuous circle of making a race to the top instead of race to the bottom when it comes to carbon emissions
Carlsberg, along with Tesco and BT, decided to go one step further and align their climate action with keeping global temperature rises to 1.5C. (See 10 steps firms can take towards a 1.5 degree world)
The urgent need for such leadership from business was made clear by UN Environment ahead of the COP23 climate talks in November, when it highlighted that the commitments to cut greenhouse gases made by countries in Paris, even if fully met, would go only a third of the way towards the emissions cuts required by 2020 to keep global temperature rises to well below 2C.
Boas pointed out that if Carlsberg had targeted being compliant with a 2C rise in global temperatures, it could have meant a 36% cut in the breweries’ emissions by 2030. The group’s management, under new CEO Cees ‘t Hart, believed the company could – and should – do more. “Our management had seen our projections on risks and opportunities by 2030, such as from carbon pricing and more erratic weather, and interruptions of supply, and thought a 36% reduction was not enough. They challenged us to make a roadmap to zero emissions from our breweries and outline what investment would be needed,” Boas said.
“Even though it will be highly difficult to achieve it, they said that’s the one to go for. We don’t know certain things, like how fast technology will evolve until 2030 to help us improve the carbon footprint. But by taking a chance and showing leadership, we will be part of starting a virtuous circle of making a race to the top instead of race to the bottom when it comes to carbon emissions.”
Now that we have taken that decision, he said, “it is more likely that suppliers and solutions will pop up to help us do it.”
That was the experience of US carpet company Interface after it adopted its Net Positive sustainability strategy without knowing how it would achieve it. (See Proof positive that people and planet equals profit)
But companies can’t simply set a goal without a game plan. So what is Carlsberg’s strategy for get its carbon footprint to zero by 2030? Job number one, Boas said, is a “relentless focus on energy efficiency across our breweries, replicating good practice from one to the other”.
Like the other companies that are aiming for 1.5C, Carlsberg is being advised by the UK’s Carbon Trust, which recommended that the immediate cost savings can be reinvested in solutions, such as renewable energy, that have a longer payback.
The RE100 is an amazing initiative that shows the power of companies coming together and making clear, concise commitments to change the world we are living in
Carlsberg, whose 500 brands include Tuborg and Kronenbourg, is exiting coal power and targeting 2022 for all its operations to be powered with 100% renewable energy. In November it announced the first brewery to make the switch: its brewery in Falkenberg, Sweden is now fuelled 100% on biogas and green electricity after energy supplier Ørsted (formerly Dong), replaced natural gas with biogas.
Boas said the 86 breweries will use all available solutions, from onsite installations, power purchase agreements to buying renewable energy certificates with guarantees of origin. It already has the world’s fourth-biggest brewery solar installation in China, with 8,000 solar panels generating 21% of the site’s electricity.
Carlsberg signed up to RE100 platform, which is organised by the Climate Group, on 13 June, the same day – he describes it as “the proudest day in my career” – as the Danish drinks company unveiled its new strategy. This was no coincidence; Boas sees membership of the RE100 as important to Carlsberg’s carbon-cutting success.
He points out that the total amount of commitments pledged by RE100 companies is equivalent to the carbon footprint of Poland or the state of New York.
“The RE100 is an amazing initiative that shows the power of companies coming together and making clear, concise commitments to change the world we are living in.”
Besides setting targets, the initiative involves knowledge-sharing, and could potentially serve as a platform for companies to jointly source renewable energy. “We haven’t done it yet as we joined in July, but it’s realistic that we will reach out to other RE100 companies to jointly create renewable energy. If you have a joint goal that goes outside the industry and competition, it is much easier to cooperate.”
Such collaboration will be crucial if Carlsberg is to meet its even more ambitious goal of reducing CO2 emissions through its entire supply chain, what it calls its “beer in hand” footprint, by 30% by 2030, against a testing 2015 baseline.
Boas explains that the 30% reduction in its total emissions was not a result of its 1.5C science-based target. The methodology is exacting about scope one and two (direct) emissions but stipulates only that companies with more than 40% of their emissions falling outside these should set targets for reducing shared emissions, without setting out what these should be.
The Carlsberg Circular Community has spurred innovations such as the world’s first bio-based beer bottle
With packaging accounting for 40% of Carlsberg’s total carbon footprint, compared to 14% from its 86 breweries, a big focus is on reducing the environmental impact of aluminium, glass and cardboard, Boas says.
The commercial case for this is strengthened by reputational risk, and it is an area Carlsberg has been involved in for some time. In 2014 it set up the Carlsberg Circular Community, where it partners with different innovators to rethink the design and production of packaging materials. The aim is to eliminate waste and optimise materials for high-quality reuse and recycling, known as “upcycling”.
Innovations include the green fibre bottle, which will be the world’s first bio-based beer bottle, made from sustainably sourced wood-fibre that is 100% biodegradable, the result of a cooperation between Carlsberg, Danish startup EcoXpac, Innovation Fund Denmark, Swedish forestry company Billerudkorsnäs and the Technical University of Denmark.
In the UK, Carlsberg worked with consumer packaging company Rexam (now Ball Corporation) to develop the first aluminium beverage can to get cradle-to-cradle bronze certification.
In November, Georgia-based WestRock Co also earned bronze cradle-to-cradle certification for the Kronenbourg 1664 six-pack carton, made with 15% recycled content.
“We’ve worked on partnerships in the Carlsberg Circular Economy for three or four years now,” says Boas. “That partnership angle is what we will continue using in the Together Towards Zero programme, because we’ve seen it be so effective. The fact that the suppliers know about the material is much more valuable than just us telling them what to do.”
In Denmark Carlsberg helped advise the government on setting up the national deposit return scheme and recycling legislation
But packaging design is arguably the easy bit. The bigger challenge is collection at the end of life, preventing branded products from ending up in the wrong places, which is where the reputational risk comes in.
In its home market Carlsberg collaborated with competitors, the drinks trade and the Danish government on setting up the national deposit return scheme, similar to the one now planned for Scotland, and in helping draft legislation to enable more recycling.
But the going has been trickier in its 11 Asian markets, where recycling infrastructure is weak. There the company has focused on retrieving its bottles for refilling through incentivising suppliers to collect and return bottles by paying a small price for them. “The biggest challenge is to make the system cost-effective. That involves a lot of hard work.”
In 2016 5.6 billion bottles were refills of returned bottles, though this was lower than in 2015 as Carlsberg divested 10 breweries in China that sold primarily refilled bottles. It also reduced the proportion of refillables in the packaging mix in eastern Europe, according to its 2016 sustainability report. In total around 40% of all that Carlsberg puts out it the market globally are in refillable packaging.
Water is the other big focus area of Together Toward Zero, and with water intrinsically a shared resource, “together” is even more crucial than in energy and recycling. Boas points out that it takes 3.2 hectolitres of water to make 1hl of Carlsberg beer. “Water is absolutely key for us,” says Boas. “No water, no beer. That’s why we set a 50% target on water by 2030, 25% by 2022.”
The targets were set after Carlsberg partnered with WWF to carry out a water risk assessment of all its breweries, looking at physical risks such as scarcity, flooding and droughts and for environmental issues such as water quality. It has prioritised15 high-risk sites in India, Nepal, China and Vietnam.
Carlsberg is actively seeking partnerships in local markets, be they with NGOs, local governments, or coalitions that include competitor companies to help it meet its targets.
Multi-stakeholder approaches to water stewardship have worked well in Africa, where Heineken and SAB Miller are among 33 companies that have signed up to the International Water Stewardship Programme, though Carlsberg is not present in Africa.
“Other companies have done similar actions,” Boas says, “But we are focusing on Asia, where we are. … We need skilled partnerships who will be able to bring these [commitments] to life.”
To borrow the slogan of arch-competitor Heineken, the green fibre bio-bottles could give Carlsberg an edge on reaching the parts other beers cannot touch
Asked whether he thinks going zero carbon will open up new markets, Boas is definitive. “Yes. 100%.”
He points to the green fibre bottle, which Carlsberg went public with three years ago at the 2015 World Economic Forum in order to flush out potential collaborators. A pilot is planned this year.
“When we did the initial concept testing it showed that the younger generation and women had a bigger purchase intent from buying beer in a green fibre bottle.”
The latter, in particular, is a vast, largely untapped market, with only 23% of women ranking beer higher than wine or liquor, according to a 2016 Gallup pool. To borrow the slogan of arch-competitor Heineken, the bio-bottles could give Carlsberg an edge on reaching the parts other beers cannot touch.
“If we can sell a sustainable bio-based bottle and sell more beers, then that’s fantastic,” says Boas. It also helps to win support for the ambitious new green strategy with investors.
Marketing themselves as green to consumers is something that some of the most environmentally conscious companies are reluctant to do, partly for fear of holding themselves up to charges of greenwash if they fail to deliver.
The Carlsberg brand will likely adopt a new slogan “Probably the best beer for the world”, but this will only be used in specific advertising, such as the launch of the new green fibre bottles, and won’t be a rebranding. Boas says that is not because Carlsberg is at risk of greenwash, since he believes the ambitious targets speaks for themselves, but for fear of not connecting with consumers.
“Consumers today are bombarded with messages,” Boas says. “To me a green message is not relevant to the consumer unless he has something he can interact with, such as a new type of packaging …. It has to be relevant. It has to be concrete, and it has to be in line with what they experience from us.”
Main image credit: Carlsbergcarlsberg beer brewery Carbon Trust Together Towards Zero emissions bio-based packaging EcoXpac circular economy Carlsberg Circular Community water efficiency RE100 science-based targets