Sustainable development

Despite the difficult economic conditions we will not compromise our commitment to sustainable development. It is a core part of our business. It underpins our ability to grow and our licence to operate. We understand that our long-term profitability depends on being part of successful economies where jobs are created, incomes grow and quality of life improves.

Integrating sustainable development into business planning

Our 10 sustainable development priorities focus us on the risks and opportunities that the company faces from environmental, social and economic issues. These priorities were developed through extensive internal and external dialogue. Our approach reflects our decentralised corporate structure and style of management, allowing operations to function within a global framework while giving them the flexibility to implement programmes that best meet their local circumstances. The Overview of progress table details our 10 priorities, our progress against them in the last financial year, and our targets for the coming year.

Sustainable development is integrated into business strategy and planning at local, regional and group executive committees and reviewed by regional and group Corporate Accountability and Risk Assurance Committees (CARACs).

In 2008 we undertook further internal dialogue and analysis to understand which of the 10 priorities were most material to our businesses around the world. The exercise highlighted alcohol responsibility, water and enterprise development as the top three. Focusing our resources in this way enables us to pioneer new approaches, form productive partnerships and make a meaningful difference on issues material to our business and our stakeholders. In the last 12 months, for example, we’ve developed new models for managing our water resources and enterprise development and have continued to embed our new Alcohol Framework across the business.

A new water strategy

Water is a key raw material for beer. Our analysis suggests that 12 markets across all continents will face water scarcity by 2025. During the year we announced a new water strategy which takes a comprehensive approach to managing water risks within our value chain.

At the core of the strategy is a target to improve our own water efficiency by 25% per litre of lager produced, reducing consumption from 4.6 hectolitres of water per hectolitre of lager produced (hl/hl) to 3.5 hl/hl by 2015. We have also made commitments to engage with agricultural suppliers to understand the water risks they face and to work with local communities to provide clean water where we can. In addition, we are building partnerships with NGOs such as WWF and The Nature Conservancy to reduce water risk in some of the agricultural areas and watersheds where we operate.

We have also developed a robust strategy in response to the critical issue of climate change. At the heart of this strategy is a new target to reduce fossil fuel emissions from energy use on our sites by 50% per hectolitre of lager produced by 2020. We aim to achieve this through greater energy efficiency and by utilising renewable energy opportunities such as spent grains from the brewing process.

Enterprise development

Our value chains can have a major impact on national economies. As we reported last year, independent research showed that while we employed around 9,000 people directly in South Africa, nearly 380,000 depended on our value chains for their jobs – a multiple of nearly 1:40 or 3% of employment in South Africa. This year, Professor Ethan Kapstein of INSEAD Business School researched the impact of our business in Uganda. Here he found that while we employ around 430 people directly, some 44,000 depend on the value chain for employment – a factor of around 1:100. The challenge now is how we can enhance this contribution.

During the year we engaged PricewaterhouseCoopers to review our smallholder farming projects around the world. Typically, smallholder farmers own small plots of land, often less than four hectares, on which they grow crops such as barley or sorghum for use in our breweries. Our aim was to understand how these projects could best be structured, both to deliver business value and to improve their socio-economic impact. Covering five markets in Africa and India, the review concluded that the most successful projects were those based on genuine partnerships in which governments, local NGOs and international agencies played different and appropriate roles.

Our business in Africa is creating new lower cost beers for consumers who currently buy alcohol produced in the informal sector with all its associated risks of lack of regulation and dangers to health. We are striving to use locally sourced crops in our products, creating employment for both smallholder farmers and distributors. In Africa we have plans to buy crops from up to 44,000 local farmers by 2012.

Discouraging irresponsible drinking

Following the launch of our Alcohol Framework last year, we have developed a comprehensive internal alcohol education programme, which is currently being rolled out across our business. The programme provides a common platform for all our employees to further understand, debate and embrace their role in promoting alcohol responsibility in the workplace, at home and in the community. It also has a module for employees who work in marketing, trade marketing and sales to ensure that we continue to market and advertise our beers responsibly.

We launched the TalkingAlcohol.com website last year. The site provides accurate and balanced information to parents, retailers, medical and health experts, policy makers and consumers. It has been translated into six languages – Czech, Hungarian, Italian, Polish, Russian and Spanish. All of these sites have now been launched with the exception of the Italian version which will go online in the next year.

For further details refer to the principal risks table in the Chief Executive’s review.

Partnerships for sustainable growth

Any business that wants to succeed over the long term knows that flourishing, sustainable communities are at the heart of development. We support the principles of the United Nations Global Compact (UNGC) and we were a founding signatory of the UNGC CEO Water Mandate. As part of our support of the Millennium Development Goals (MDGs), we’re seeking partners from civil society and government to help improve the development impact of our business activities. Through our engagement with the Business Call to Action on the MDGs, as a member of Business Action for Africa and as a partner company of the World Economic Forum, we are learning from civil society and other businesses and sharing our own insights.

Valuing and empowering our people

We attract, develop and reward people who are passionate about the growth of the business and want to make a significant contribution. We recognise our employees’ desire to make a difference and seek to provide a culture of accountability, challenge and opportunity that will enable them to do so. We reward employees for their contribution and aim to provide a safe, fair and rewarding working environment.

We invest in training and development in many forms including structured courses and management and executive learning programmes delivered through the latest e-learning technologies or facilitated by leading educational institutions.

Our employees cover a vast mix of cultures, beliefs and backgrounds. We value and respect this diversity and seek to create an inclusive culture where variety is positively encouraged. We recognise that diversity is applied differently according to local norms and regulations, but we require all operations to establish policies and processes covering ethnicity, gender and disability.

Health and safety

During the year we recorded 1,310 industrial injuries, down from the 1,446 reported last year. Overall days lost through injury are down to 11,728 from 12,809 in 2008.

It is with regret that we report three employee fatalities in our business during the year. The first involved one of our sales representatives in Honduras who was killed during a robbery. In response we have established a mini-depot to reduce the number of smaller customer visits that we have to make in the area. In Malawi an employee, together with a contractor, were both killed during a robbery when returning from a sales visit. The third occurred in Angola and related to an accident at one of our operations.

Transparency and Ethics

During the year we introduced a new Code of Business Conduct and Ethics which applies to all employees. We also expect all third parties acting on our behalf to comply with this code in all their interactions. We have a whistleblowing system to alert senior management to any cases where individuals may fall short of legislation and our internal codes and standards. For further details refer to the corporate governance report.

The Sustainable Development Report is available on our website and contains a detailed overview of our activities across each of the 10 sustainable development priorities.

Reviewing progress on our 10 sustainable development priorities

Download Sustainable Development report PDF (1.72mb)

 

25% reduction

Our target for reduction in our average water use per hectolitre of lager by 2015

50% reduction

Our target for fossil fuel emissions from our on-site energy use per hectolitre of lager produced by 2020

 

Protecting the watershed that supplies our brewery in Bogotá

 

 

Colombia: Working in partnership to protect a river basin

Our Colombian business, Bavaria, is working with The Nature Conservancy and Bogotá Water Company to protect the basin that provides water to Bogotá. The basin is being seriously deforested, particularly by cattle breeders wanting to create grazing land to produce milk. Deforestation affects the local ecosystems and, while it doesn’t reduce the capacity of the basin to produce water, it means that more sediment is washed into the supply. This in turn means higher costs for the water company and ultimately its customers.

Bavaria has invested US$145,000 in the project. This money will be used to develop partnerships with the cattle breeders to improve their production methods and reduce sedimentation in the river.