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Brewing a Better Future

Author(s):

Mark Gross
Mark Gross is chief supply chain officer for Heineken in Zoeterwoude, The Netherlands.

November 2012, Inside Supply Management^® Vol. 23, No. 9, page 38

Sustainability: Responsible Supply Management
Supply management is a vital ingredient in Heineken's strategy to reduce energy consumption, add renewables to its energy mix and cut back on water consumption.

As one of the largest brewers in the world, Heineken's efforts to deliver better energy and water use and reduce CO₂ emissions have had a significant impact on its breweries, warehouses and offices around the globe. Heineken recently announced new sustainability targets, stating that it aims to reduce the amount of water used in the brewing process to 3.7 hectoliters (hl) of water per hectoliters of beer produced by 2020, compared to 5.1 hl in 2008 (approximately 98 gallons by 2020, compared to approximately 135 gallons in 2008).

Our ambition is to create a blueprint for a CO₂-neutral brewery and achieve water neutrality for all our breweries in water-stressed areas. We aim to reduce the direct and indirect CO₂ emissions from fossil fuels in our breweries from 10.4 kg/hl in 2008 to 6.4 kg/hl in 2020. Our long-term aspiration is to be the world's greenest brewer — an aspiration that we view as a continuous journey that we will continue to measure as we progress.

In April 2010, as a result of extensive discussions with key stakeholders around the globe, Heineken launched a new strategic initiative, Brewing a Better Future. This has provided a clear roadmap for the company, reflecting Heineken's long-term objectives. The initiative is focused on three pillars: 1) continuously improve the environmental impact of our brands and business, 2) empower our people and the communities in which we operate, and 3) positively impact the role of beer in society. Supply management is a vital aspect of this strategy, with the clear objective to reduce energy consumption, adding renewables to the energy mix and reducing water consumption in 2012 and in the years that follow.

Extending Our Impact

Working with our worldwide suppliers is an essential part of our sustainability strategy. Following the Brewing a Better Future initiative, and considering that much of our impact is outside our direct oversight, we implemented a worldwide supplier code of conduct in July 2010. This code lays out the expectations we have for our suppliers in the areas of integrity, human rights, the environment, communication and compliance. It requires compliance with the relevant International Labour Organization standards.

In signing the new document, suppliers agree to perform actions to minimize their own impact on the environment and develop environmental technologies. Specifically, the environment section in our supplier code requires suppliers to have production and supply chain processes designed to make efficient use of available resources while minimizing environmental impacts. Heineken also asks suppliers to promote greater environmental responsibility, especially in developing and diffusing environmentally friendly technologies. By the end of 2011, 98 percent of Heineken's global suppliers and nearly 12,000 local suppliers had signed the new supplier code.

Building Local Stability

In Africa, Heineken has a goal of boosting the level of locally sourced materials to 60 percent in 2020, which will reduce our carbon footprint and help the local economy. Our local sourcing initiatives in Africa, in particular, play a key role in helping build economic and social stability. Local sourcing creates jobs and helps improve the livelihoods of rural households over time. It also eliminates import duties, secures a sustainable supply of raw materials for beer and reduces our transport-related environmental footprint.

Greener Cooling and Distribution

Refrigeration and cooling are essential to serving our customers a refreshing product. We were among the first brewers to commit to the global introduction of eco-friendly refrigerators that were developed in close cooperation with our suppliers. In 2011, 85 percent of our new refrigerators had one or more green measures, resulting in an estimated 30 percent energy savings. In April 2011, Heineken started rolling out the "David Green," the world's first environmentally green draught-beer system. This innovative system uses 75 percent less energy than traditional tap systems, in part because the 20-liter kegs are stored in a highly efficient refrigerator cabinet directly under the tap.

In 2011, we began measuring and reporting the carbon footprint of our distribution activities within 25 of our largest operating companies. Heineken also became a lead participant in both the Clean Cargo Working Group and Green Freight Europe. Our participation in the Clean Cargo Working Group is focused on promoting more sustainable container transport. For the first time, sustainability was consistently included in our global tenders for transportation in both ocean and road freight, and a green distribution policy was developed. In addition, we began developing a good-practice handbook on distribution equipment efficiency for the benefit of all our operating companies and logistics service providers.

Measuring Our Water Footprint

Water is clearly a critical ingredient for Heineken, but we realize it is also a scarce and finite resource. To establish our water strategy, we conducted four extensive water footprint studies over the last two years. The results determine the sources and amounts of water used in all products and goods required to produce our beer, from barley to the bottle. Our new approach looks not only at Heineken's operations but also the whole value chain: from growing barley, through its conversion to malt, to the quantity of water required to make beer from the malt.

The findings of these water footprint studies show that 90 percent of our water footprint is related to cultivating crops. We discovered that measures to reduce the water footprint should be highly focused on agriculture, and we will integrate this into our plans over the coming years.

With the introduction of Brewing a Better Future, we have begun to deliver an integrated and embedded approach that extends far beyond the brewery, through the supply chain and into the communities where we operate, and the societies in which we live. If we can act as a catalyst for other suppliers, companies, communities and individuals to think and act more sustainably, through our engagement at a global policy and practice level, Heineken will be doing its part to make brewing — and hopefully, the world — more sustainable.

For more information, send an e-mail to author@ism.ws.

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