Moving towards carbon neutrality is a huge task for enterprises. As businesses look to address their contribution to global warming, they are facing a great deal of complexity in not just addressing direct emissions, but emissions related to their indirect energy usage and value chain.
In April 2021, beer maker HEINEKEN announced its commitment to become carbon neutral in its own production by 2030 and its full value chain by 2040. A key aspect within the company’s ‘Brew a Better World 2030 #Raise the Bar’ programme, these announcements made it the first global brewer to commit to a carbon neutrality target by 2040. The company has also signed itself up to a number of campaigns, including Business Ambition for 1.5c, the Race to Zero, and RE100.
Achieving these objectives requires collaboration with a wide range of partners. The company calculated that just 10% of their carbon footprint is made up of Scope 1 and 2 emissions, direct emissions and those from the generation of purchased energy respectively, with 90% represented by Scope 3, emissions in the upstream and downstream value chain.
To begin tackling its emissions across all three scopes, HEINEKEN has embarked on a programme involving energy efficiency, renewable energy generation and a commitment to supplier collaboration.
Managing the programme
Given the span across the end-to-end value chain, the carbon reduction workstreams were initially sponsored collectively by the functional chiefs of Corporate Affairs, Commerce, Supply Chain and Procurement. The team looked to build cross-functional business traction, which involved onboarding the executive team through regional specific briefings and gaining sign off from the Supervisory Board. Through these efforts, the team successfully changed their internal project financial evaluation, by adding internal carbon pricing as an equal and complementary element to Growth, Profitability and Capital return to help shape the transformation roadmap.
As carbon reduction is only one stream of HEINEKEN’s Brew a Better World strategy, this programme was then centralised within an over-arching Sustainability Governance in Corporate Affairs during 2019. This provides the central focus point within the business to orchestrate the programme, with functions working together collaboratively on delivery. Cross-functional teams, working under the coordination of this central body, developed an integrated roadmap of projects which address sustainability opportunities, whilst also addressing the needs of employees, customers and consumers.
Reducing Scope 1 and 2 emissions
To tackle emissions arising from its own operations, HEINEKEN focused on the high carbon intensity areas of on-site energy generation. This involved radical efficiency programmes and investments, starting with their breweries:
- Installation of solar panels and sustainable biomass source boilers
- On-site water treatment facilities to generate biogas from wastewater.
This initiative has led to the company operating 5 of the world’s 10 largest on-site solar-powered breweries, and sustainably fuelling boilers through agricultural waste in Indonesia and rice husks from local farming in Vietnam.
When power cannot be generated on-site, HEINEKEN has taken steps to ensure that their energy comes from renewable sources. Working in collaboration with partners, the company has invested in solar and wind farms through long term purchasing commitments and consortia, including a ten year contract with a facility under construction in Finland. These investments have led to two zero emissions breweries being established in Spain and Austria.
Addressing Scope 3 emissions
Key areas of focus for HEINEKEN in reducing emissions from the rest of the value chain include agriculture, packaging, distribution and cooling. Partnerships with suppliers for these items are critical to the company, with HEINEKEN’s dedicated cross-functional sustainability teams engaging with supplier R&D teams to explore shared opportunities. When identified, these are often investigated through ‘proof of concepts’, which are tested and scaled up if effective.
Supplier partnership opportunities have included:
- Agriculture: To address agricultural emissions, HEINEKEN developed 23 pilot farms across France and Brazil, with a further 156 sites planted for 2021. These pilot farms work with low carbon bailey and maize crops, better optimised fertiliser usage and land agronomy.
- Packaging: Packaging suppliers have been encouraged to innovate on their existing offering, with partnerships to trial low carbon bottles in the UK, bottles made from recycled glass cullet in New Zealand and a new, award-winning concept of ‘Green Grip’; a card based can multipack to replace plastic materials.
- Distribution: The company has increased the size of its electric fleet in France, Portugal and the Netherlands, with the electric fleet expected to double in size over 2021.
- Cooling: An asset refurbishment programme has been established for fridges, with HEINEKEN ensuring that fridges are aligned to the correct outlet to maximise efficiency.
In addition, working in close partnership with their suppliers, HEINEKEN are investigating low carbon technologies and investing in the ecosystems of suppliers to reduce levels of waste. These partnerships include a number of long term projects, such as the use of hydrogen technology for long haul distribution and biofuel for sea freight.
The success of the programme is assessed through a central tracker, HeiCF. Some data is automatically populated into the system, and then supplemented with users inputting additional data, such as details for supplier operations and emissions factors, and then the outputs are then visualized using Power BI. ESG indicators are also tracked through the Carbon Disclosure Project and the Dow Jones Sustainability Indices (DJSI).
Despite HEINEKEN increasing their actual sales in 2019 by 3%, the company reduced their actual annual emissions by 2%. This is split between the investments made in renewable energy, as well as with their first of the Scope 3 initiatives coming online for agriculture, packaging, distribution and cooling.
A key focus for the teams at the moment is building the supplier roadmaps for each stream, to allow a clear vision into how a zero carbon supply chain can be achieved. Further digitisation of reporting is also underway – to speed up reporting in the short term, as well as leading to the introduction of predictive carbon footprints for each country, to help with future decision making
Advice for others
By having dedicated owners for each of the workstreams, the teams at HEINEKEN are able to focus on their own area of expertise. However, it is also critical to have the over-arching governance and collaboration moments, so that learnings can be shared and leveraged across the different workstreams as appropriate.