Brewing a more efficient future

Having grown from African origins, SABMiller has always understood that its success relies on the success of local society, says global vice-president of sustainable development Andy Wales.

“For example, we operate small-holder farm-sourcing programmes because we understand that to ensure growth in the future we need to work with local communities to deal with the shared risk that is water scarcity.”

Wales sets out the company’s overall sustainability with a simple, straightforward statement: “Sustainability at SABMiller is all about how we understand and manage the core risks and opportunities the business faces from environmental and social issues.”

And the drivers behind these growing risks? For Wales, prosperity (while not a bad thing he’s quick to point out) is to blame. He says: “Our biggest driver is the growing middle class in the developing world. We’re going to have three billion more middle class people between now and 2030.

“Now that’s really good because it means a lot more people will have a higher quality of life. But the fact is that providing them with that higher quality of life is going to require a radical step-change in the resource efficiency of our operations. And for SABMiller, that means water.”

As a brewer, water supply and consumption is the most important component of SABMiller’s sustainability strategy, and the company has set challenging internal targets aimed at minimising its exposure to the consequences of shrinking resources, and works in collaboration with local communities, governments and NGOs to conserve and replenish water supplies.

“We have set stretching targets to reduce our own water consumption and have a model for managing and reporting water performance within our own operations,” the company says.

“However, simply acting alone is not enough, which is why we seek to build effective partnerships and collaborate with NGOs, governments, communities and coalitions to address the water challenge in the communities and ecosystems where we operate.”

SABMiller aims to reduce its water consumption by 25% per hectolitre of beer brewed between 2008 and 2015, and progress towards its goal has already been made. Wales says: “We expect by 2030 demand for water around the world will be 40% higher than supply. So we’re working internally towards becoming dramatically more water efficient. In the last 12 months, we’ve reduced the amount of water required to make a litre of beer by 5%.”

The company does not set specific financial targets in relation to its sustainability goals, but Wales says cost savings associated with improving efficiency are an inherent part of the brewer’s activities in the water field.

“A further benefit is the extent to which water efficiency links to energy efficiency,” he says. “The more water-efficient we become as we brew and package beer, the less liquid we have to heat and cool – which means we need less energy, so further efficiencies and savings follow.”

Performance is measured using a bespoke tool, dubbed the Sustainability Assessment Matrix, or SAM. SAM measures the performance of each SABMiller business against the company’s ten priorities for sustainable development, with results updated annually and published online.

A set of criteria has been developed for evaluating capital expenditure relating to water management. Wales says: “We make use of a combination of tools, including an internal benchmarking system to determine how our businesses are performing against our ten priorities, which include water.

“Under the system we have minimum requirements for all our priorities, which all operations are required to meet. In terms of water this would include issues such as water efficiency, wastewater quality and so on. These minimum requirements provide one of the frameworks for determining capital spend.

“Secondly, we’ve developed both water and carbon abatement curve tools based on the marginal abatement curve model, to identify potential water and carbon saving opportunities against investment costs.

“The tools identify all opportunities (including in particular capital expenditure) that can be implemented within our manufacturing facilities. Facilities will create annual site carbon and water reduction plans based on the opportunities contained in their own curves.

“In addition, full cost accounting is used to determine water costs – this ensures costs relating to energy, raw water treatment and wastewater treatment are included to provide a holistic price per cubic metre.”

Specific projects are under way around the world aimed at addressing the issue of water scarcity. At its Rochees brewery in water-stressed Rajasthan, SAB Miller India has initiated programmes to protect water supplies for both the brewery and local farmers.

One has been to fund the construction of four water recharge dams. The company says: “These relatively low-cost structures aim to prevent excessive run-off of water and facilitate natural replenishment of groundwater. It is estimated there has already been a net rise in groundwater levels of around 9.5 metres, representing almost as much water as was extracted last year by the brewery.”

And in 2009, SABMiller’s Bavaria brewery entered into a partnership with the Nature Conservancy and others to improve water quality and ecosystem conditions in Bogotá, Colombia.

Wales says: “By their very nature these projects are always very locally focused. For example, in Colombia we’re working with farmers to help them manage the land differently in order to reduce run-off of soil into rivers.”

Ranching families receive grants to switch to ecologically sustainable farming methods and other support for committing to long-term conservation agreements. The project, which focuses on the city of Bogotá as a whole, costs around $1.5m a year for all the partners involved, but saves about $3.5m a year in water treatment costs.

While these kinds of projects are outside the company’s core skills as a brewer, SABMiller believes they are essential to its future prosperity. Wales has some advice for other firms looking to improve their prospects in the resource-scarce years to come: “Firstly you need to ensure you’re focusing on the material issues facing the business. Action on sustainability offers opportunities for growth, but you need to be creative in the way you think about solutions.

“We look for a payback in the low single digits, but we’re finding that – as well as positive environmental outcomes – our significant water, packaging and energy projects have a positive payback compared to other capital investments we make.”

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