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SABMiller plc Annual Report 2007

Sustainable development

Making a difference through beer

Managing sustainable development issues is an integral part of a successful global business. Our progress in this area is overseen by the Corporate Accountability and Risk Assurance Committee (CARAC).

Sustainability and business

With a heritage rooted in Africa – a continent with 66% of the world’s poor and 315 million people living on less than a dollar a day – we are very conscious of our responsibilities to society. In itself, business activity serves a social purpose – to provide the goods and services that society wants. As long as markets are competitive and free, companies will succeed and make profits only when they manage relationships effectively, use resources efficiently and meet society’s needs.

Business is also part of society with a comprehensive set of relationships with all the many individuals involved in its activities. Business is at one and the same time an employer, a customer, a supplier and a taxpayer and the interests of business and the wider community are inextricably linked. This is perhaps truer for our business than for many multinational companies as beer is typically a local product: brewed locally, sold locally and consumed locally.

Accordingly, the health and prosperity of the communities in which we operate is intimately linked to our ability to grow profitably. But this only holds true if we operate in a responsible and accountable way. Behaving responsibly towards all our stakeholders is part of our beliefs and fundamental to building sustainable markets.

Making a difference through beer

The main way in which we add value to the economies, communities and environments in which we operate is by being a responsible and profitable business. Through employment, taxation and the purchasing of goods and services, we make a significant contribution to local economic development.

One example of our influence on the economy comes from South Africa where, during the year, we recalculated our impact using the government’s economic data. Here we directly employ more than 9,000 permanent employees, creating an estimated 48,000 jobs among direct suppliers and as many as 378,000 full-time jobs (3% of total employment) in South Africa as a whole. Total household income directly and indirectly related to SAB’s operations, amounts to just over US$1 billion.

US $5,291m

paid in direct and excise taxes

But the picture is broader than providing jobs or income. For example, the United Nations has estimated that a lack of access to basic water and sanitation services alone deprives sub-Saharan Africa of a further 5% of GDP. Programmes linked to our sustainable development priorities – in particular, engaging with communities in responsible water management, HIV/Aids testing and treatment, enterprise development through supply chain management and corporate social investment – also contribute indirectly to economic development.

Through running a successful business and taking these issues seriously, we are contributing to development and to meeting the United Nations Millennium Development Goals (MDGs). In 2007, we underlined our commitment by becoming a signatory to the Declaration on the Millennium Development Goals. This recognised the role business has to play in meeting the MDGs and acknowledged that while progress has been made, the international community must accelerate its efforts if they are to be met by 2015.

We also remain committed to the 10 principles of the United Nations Global Compact. During the year we identified opportunities for leadership where we will focus our global efforts: discouraging irresponsible drinking, making more beer but using less water and enterprise development.

Discouraging irresponsible drinking

In the last year we have established a comprehensive Alcohol Framework. This builds on our previous Alcohol Manifesto and provides a globally consistent understanding of our beliefs on alcohol to ensure a consistent philosophy that underpins our work and guides our everyday decisions. In June we joined more than 40 other businesses and non-governmental organisations (NGOs) to become a charter member of the European Alcohol and Health Forum. This focuses on concrete actions to reduce harmful drinking in the European Union, including the prevention of under-age drinking. Through our involvement in the International Center for Alcohol Policies, we have also contributed to the advancement of responsible marketing practices around the world. In Africa we are working with several governments, NGOs and public health organisations to develop national alcohol policies to reduce alcohol-related harm. As a result of these efforts, Lesotho adopted its first national policy in October 2007. Policies are nearing completion in Swaziland, Uganda, Zambia, Malawi and Ghana.

Enterprise development

One of the dilemmas of a globalising world is the increasing dependence on global supply chains which offer economies of scale through a smaller number of higher volume suppliers. While this has its advantages, it also has a downside for smaller, national suppliers of goods and services.

10,500

farmers engaged in our smallholder programmes

We believe that genuinely free trade benefits all, especially the developing world. However, there are factors which strengthen the case for local sourcing models, such as improved access to quality raw materials. We manage our supply chains with a view to the long- term benefits to our operations. These encompass the availability of key brewing inputs such as malted barley and the stimulus such purchasing gives to local economic growth. On this basis, we have invested extensively in small-scale supplier relationships where these are possible, particularly with smallholder farmers in Africa, India and, increasingly, Latin America, in order to build local agricultural capacity and secure supplies of critical raw materials. As result we have created, or improved, 10,500 jobs for farmers working in these regions.

Our efforts on corporate social investment also contribute to economic development, For example our operations in South Africa have been supporting entrepreneurs for over 10 years. KickStart is a project that promotes business awareness and entrepreneurship among young people by providing training, grants, mentorship and assistance during the setup phase of a new business. Since its inception, SAB Ltd has invested over US$5 million in KickStart, equipping almost 22,700 young adults with business skills and helping them to start up nearly 3,300 businesses. This approach is now being applied elsewhere – in Botswana for over four years and, more recently, Colombia.

Making more beer but using less water

In July 2007 we signed the CEO Water Mandate, an initiative of the United Nations Global Compact, which committed SABMiller to leadership in water management. The principles of the Mandate fit well with our own approach to water management and we look forward to working further with other companies to make progress in this area.

4.6

hectolitres of water per hectolitre of beer produced

Current water consumption for our brewing operations is 4.6 hectolitres of water per hectolitre of beer produced. This compares favourably to our competitors, and the industry benchmark of 5.0 hectolitres of water per hectolitre of beer published by the United Nations Environment Programme. However, our performance has remained static for the last few years. In the next year we will be increasing our focus in this area to reduce our water use.

Broader environmental performance

In the last 12 months we have reduced the use of energy in our brewing operations marginally from 151 to 150 megajoules per hectolitre with related carbon emissions of 13.7 kilograms/hectolitre. We are working to increase the amount of renewable energy we produce and during the year this figure increased to 1.5% of total plant energy use, up from 0.9% reported last year, largely through the combustion of biogas from water treatment plants. We continue to achieve high levels of reuse with over half of our beers being sold in reusable packaging and we recycled/reused over 96% of our waste across the group as a whole.

We are committed to high standards of environmental performance in all new capital investments. During the year we established a new set of guidelines for all major capital investments. These state that all new breweries will aim to be within 10% of the current group best in terms of their performance on water, energy and carbon and waste. In this way, we are making sure we consider the long-term sustainability of all new plants.

Valuing and empowering our people

Attracting and retaining good people remains a critical component of supporting our growth and bringing new skills and knowledge to the organisation, and during the year staff each received an average of 3.9 days training. Our employees cover a vast mix of cultures, beliefs and backgrounds and we both value and respect this diversity. While 19% of our total workforce is female, women account for 26% of our management and executive grades, up from 22% reported last year.

Health and safety

During the year we recorded 1,446 industrial injuries, up from 1,091 reported last year while overall days lost through injury is down to 12,809 from 13,720. We have revised last year’s figure for days lost to improve accuracy. It is with regret that we report two fatalities in our business during the year. The first occurred in SABMiller India and related to an accident at our Haryana brewery, and the second was one of our truck drivers in South Africa, the result of gunshot wounds from an attempted hijack.

Sustainable development governance

Using water efficiently within the Kgalagadi brewery in Botswana.

During the year our sustainable development framework has been further embedded into our operations. Our local managing directors are responsible for integrating sustainable development considerations into their business plans, as appropriate for their own markets. In particular, we encourage our local operations to consider how their business can add value to our three global focus areas, namely discouraging irresponsible drinking, managing water responsibly and promoting enterprise development.

In March 2008 we agreed a new Code of Business Conduct and Ethics to which all employees must adhere. This Code represents a clear, conscious and personal commitment to doing what is right. The Code will be introduced across the group in the coming year.

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