AB InBev Brochure 2019

Sustainability as a business

Driving sustainability and growth together WRITTEN BY

MARCUS LAWRENCE PRODUCED BY

JUSTIN BRAND

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MONTH 2019

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ANHEUSER-BUSCH INBEV

Matthew Frost, Global VP for Raw Materials Procurement and Sustainability at Anheuser-Busch InBev, discusses the company’s Sustainability 2025 goals, the four pillars that define its aims, and the positive impact they have had on its supply chain and sales

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C

ompanies worldwide are finding that manoeuvring towards sustainability driven operations is not only boosting profits but

is also enriching the lives of communities along their supply chains and mitigating their impact on the environment. One such firm to experience this is Anheuser-Busch InBev (AB InBev), the largest beer manufacturer in the world, which has accelerated its historic commitment to sustainability with its ambitious 2025 Sustainability Goals. Broken down into four pillars – Smart Agriculture, Water Stewardship, Circular Packaging and Climate Action – the sustainability drive is seeing a revolution of AB InBev’s supply chain operations. Matthew Frost, Global VP Raw Materials Procurement and Sustainability, is passionate about the multifarious, intersectional benefits of this transformative initiative, and firmly believes that strong sustainability practices are intrinsically linked with improved

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CREATING BUSINESS VALUE THROUGH SUSTAINABLE ENERGY Ensuring you have the best partner at your side.

Follow us

enelgreenpower.com

ENEL GREEN POWER GLOBAL PARTNERSHIP AB InBev joined the RE100 initiative in early 2017, committing to procure 100% renewable energy by 2025.

This is a progressive commitment and companies, like AB InBev, can meet their renewable energy needs in several ways, including purchasing Energy Attribute Certificates (EAC), entering into a long-term Power Purchase Agreement (PPA) or signing up for a Green Tariff. The ways an organization can purchase renewable energy is constantly changing and the contract structures are becoming more complex and innovative each day, including financial hedges and weather derivatives. At Enel Green Power, we work with our partners to help

USA

them understand these different structures and what options are available in each country where they operate.

We spend time understanding the goals and challenges of each organization and walk through the different options available, providing the right solution that meets their goals, delivers cost certainty and minimizes risk. We have worked with AB InBev to find customized solutions in the United States and in Chile. In the US, the contract is a Virtual PPA, which is a long term commitment also known as a Contract for Differences (CfD). In Chile, a Green Tariff provided by Enel Distribution Chile is supplied by an Enel Green Power Solar PV plant.

VIRTUAL (OR FINANCIAL) PPA FOR A RE100 CLIENT

PROJECT

OFF-TAKER

THE BUDWEISER WIND FARM AT THUNDER RANCH OKLAHOMA 298 MW $ 435 MILLION INVESTMENT 1,100 GWH ANNUAL GENERATION

CHILE

AB INBEV NEEDED TO PROCURE RENEWABLE ENERGY TO SUPPLY THEIR BUDWEISER BREWERIES IN THE US

SOLUTION VIRTUAL POWER PURCHASE AGREEMENT (VPPA) ENEL GREEN POWER IS SELLING THE ELECTRICITY GENERATED BY A 152.5 MW PORTION OF THE WIND PROJECT TO AB INBEV THE RENEWABLE ENERGY PURCHASED IS ENOUGH TO BREW MORE THAN 20 BILLION 12 OZ SERVINGS OF BEER EACH YEAR 30% CO2 FOOTPRINT REDUCTION

GREEN TARIFF WITH VOLUNTARY RENEWABLE CERTIFICATION

NEED

SOLUTION

BENEFITS

AB INBEV NEEDED TO IMPROVE SUSTAINABILITY WITH RENEWABLE ENERGY THAT COULD CERTIFY THEIR PRODUCTION PLANT IN THE CAPITAL CITY, SANTIAGO

IMPLEMENTATION OF ENEL CHILE CLEAN ENERGY SUPPLY PROVIDED BY THE ENEL GREEN POWER SOLAR PV PLANT DIEGO DE ALMAGRO, LOCATED IN THE ATACAMA DESERT

19 GWH/Y OF CLEAN ENERGY SUPPLY WITH CONSIDERABLE REDUCTION OF THEIR CARBON FOOTPRINT FIRST BREWERY IN CHILE WITH RENEWABLE SUPPLY CERTIFICATION

ANHEUSER-BUSCH INBEV

CO M PAN Y FACT S business operations and innovation.

“I think the organisation as a whole is learning more and more that sustainability really is our business now,” he says.

Frost notes that, from a commercial perspective, the gradual shift in consumer interests means that this initiative is not only driven by a sense of responsibility, but is also simply good business sense. “Consumers are very much aligned to the message of sustainability, so we find that consumers are seeking out products from com08

panies which are doing something to positively influence the planet through their supply chains. More and more, that’s actually helping us to sell beer,” he adds. “The past two sets of sustainability goals were certainly achieved, but they weren’t as far reaching as our new 2025 ones. They’re helping us to drive growth in the business, innovation, supply security and cost reduction.

The more we get into it, the more we realise how beneficial it is for the business overall.”

SMART AGRICULTURE AB InBev aims to ensure that 100% of its direct farmers, from which the firm

• AB InBev directly sources 3mn tonnes of barley each year • AB InBev’s electricity will be 100% renewably sourced by 2025

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ANHEUSER-BUSCH INBEV

directly sources 3mn tonnes of barley

they benefit much more from having

each year, are skill connected and

training and direct access to agronomi-

financially empowered by 2025. Frost

cal advice on how to grow crops more

notes that this means different things

effectively.”

in different territories across the supply

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As one of the largest users of

chain, highlighting the fact that the

malting barley worldwide, AB InBev

skills of its farmers in the US are largely

has established its own Barley

well-established, efficient, and less

Research Centre in Fort Collins,

likely to benefit from AB InBev’s direct

Colorado, to ensure that barley

input. The biggest impact to be made is

remains a competitive crop for their

with its smallholder farmers in less

farmers to grow. “We are constantly

affluent countries and regions. “When

working on breeding new varieties of

it comes to farmers growing cassava in

barley that are more disease-resistant,

Mozambique, for example, these are

capable of surviving droughts and

smallholders, family operations, so

flooding, and able to produce more in

“ Consumers are very much aligned to the message of sustainability” — Matthew Frost, Global VP Raw Materials Procurement and Sustainability

CLICK TO WATCH : ‘HOW AB INBEV IS EMPOWERING BARLEY FARMERS IN UGANDA’ 13

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the field depending on the climatic and

in developing countries such as

soil conditions. Therefore, they are

Uganda and Zambia. “Blockchain gives

able to yield more,” explains Frost. “All

smallholders a digital identity, making

of this makes barley less risky for our

them credit-worthy and bankable,”

farmers to plant, whether they’re in the

says Frost. “They can then take out

Ugandan highlands or in Argentina with

loans, grow their business and become

a fully automated farm.” The unifying

more successful. With farmers in more

element between its farmers, whether

developed countries, like the US or

they are smallholders or large agricul-

Argentina, AB InBev’s focus is on

tural cooperatives, is the digital

providing cost effective crop insurance

platforms that AB InBev provides.

and facilitating access to credit.”

These platforms enable the company’s goal of financially empowering its

WATER STEWARDSHIP

farmers, with one example being a

In addition to ensuring that clean water

blockchain-enabled platform deployed

is available to communities surround-

E X E CU T I VE PRO FI LE

Matthew Frost A British National and trained Chemical Engineer, Frost has 30 years of End2End Blue Chip FMCG Supply Chain experience acquired through roles in Research and Development, Engineering, Manufacturing, Logistics and Procurement. Having worked in the UK, Germany, Russia, Switzerland and Africa, Frost has developed a holistic knowledge of procurement across a range of markets. Having served as Chief Procurement Officer at SABMiller, Frost was appointed as AB InBev’s VP Global Raw Materials Procurement and Sustainability when it acquired the firm in 2016.

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ANHEUSER-BUSCH INBEV

ing its breweries, AB InBev is working

“Saving a few gallons of water in our

to create long-standing change in

breweries isn’t going to change the

water consumption across its supply

world,” he says. “We have to get stuck

chain. “A lot of manufacturers look at

into managing the watersheds in those

their water consumption in their

areas in a literal sense.” In different

manufacturing processes and attempt

countries, water rights vary not only

to drive it down. We’ve got ours down

in entitlement but delivery, limiting the

to a low level already, but that’s kind of

efficiency with which farmers can

the wrong focus,” Frost says, adding

make use of their water.

that 37 of AB InBev’s breweries around

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In the Bajío region of Mexico,

the world are located in high water

farmers have the right to a certain

stress areas and, with the increasing

volume of water for irrigation. When

impact of climate change, it is expect-

the opportunity to have it arises, they

ed that this will rise to 50 by 2030.

must take all of it at once or risk having

“ I think the organisation as a whole is learning more and more that sustainability really is our business now”

— Matthew Frost, Global VP Raw Materials Procurement and Sustainability

CLICK TO WATCH : ‘HOP SUMMIT 2018’ 17 their entitlement cut. “Because of this, they use what we call flood irrigation, which is very costly and inefficient. You saturate the place with water and only so much of it is used by crops while the rest is -wasted,” explains Frost. The challenge here is that, while AB InBev can advise on the best time and volume with which to irrigate crops, the water regulations throw up a barrier to optimising the process. “This is an area where we’re getting involved by emphasising the issue, demonstrating what can be done to resolve it, and trying to use our corporate affairs w w w.a b- i nb ev. com

ANHEUSER-BUSCH INBEV

$54.6bn+ Approximate revenue (2018)

2008

Year founded

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182,915+

Approximate number of employees

CLICK TO WATCH : ‘100+ 2025 SUSTAINABILITY GOALS’ 19 muscle to get things to change for the

returnable bottle fleet, as we call it,”

common good.”

says Frost. “This is by far the most sustainable packaging; you just send

CIRCULAR PACKAGING

the bottle back to us. In some countries,

As part of its Circular Packaging pillar,

we can get 40 turns out of that return-

AB InBev has set the target of ensur-

able bottle. There are some costs

ing that by 2025 100% of its packaging

associated with transporting the

will be either returnable or made from

empty bottles back and cleaning them

majority recycled materials. Drinks

so they can be reused but, ultimately,

bottles have traditionally had the

that’s massively outweighed by the

propensity for being single use, and AB

fact you’re not remanufacturing those

InBev has been working tirelessly to

bottles 40 times over.”

both enable and incentivise recycling

In markets where there is less of

of its bottles. “We use returnable

a social impetus to recycle, AB InBev

bottles in a lot of our geographies – our

deploys ‘one-way glass’ that it anticiw w w.a b- i nb ev. com

ANHEUSER-BUSCH INBEV

We are a global leader in the sourcing, handling, processing and marketing of agricultural commodities and products.

We carry out wide-ranging food safety and quality management procedures so customers can be confident our food and feed products meet the highest international standards.

As a preferred global supplier to AB InBev we use our whole supply chain to ensure our products meet their specific requirements of consistency, reliability and high quality.

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CLICK TO WATCH : ‘BREWERS ON TAP | EXPLORING THREE BREWERY FOUNDERS’ UNABASHED PASSION FOR BEER’ 21 pates will be smashed or otherwise damaged, aiming to reclaim as much of this glass as possible for remanufacturing. These efforts are mirrored by its commitment to recycling aluminium and PET, with AB InBev setting targets for its third-party suppliers to increase their use of recycled materials alongside the optimisation of recycling at its own vertical plants. Its endeavours in this area are given a boost by shifting moods on a generational level. “We are finding that young, legal drinking age

“ We gave those startups some additional seed capital and inserted them along our supply chain” — Matthew Frost, Global VP Raw Materials Procurement and Sustainability

adults are becoming ever more aware of the environmental impact of manuw w w.a b- i nb ev. com

ANHEUSER-BUSCH INBEV

“ It’s really a win-win-win: a win for us, a win for the environment and a win for the local grid” — Matthew Frost, Global VP Raw Materials Procurement and Sustainability

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facturing and the products they

by another significant commitment:

consume,” notes Frost. “People are

ensuring that the company’s energy

more attuned to it, and we’re definitely

consumption is 100% renewable by

trying to push that agenda and

2025. This aim goes deeper than

continuously explain why returnable

simply purchasing green energy

bottles are the better option.”

contracts, however, as AB InBev has invested in purchase power agree-

CLIMATE ACTION

ments (PPAs) that generate additional

All of these factors tie into the overall

renewable electricity for the local grid.

mitigation of AB InBev’s environmental

“Because the unit cost of wind and

impact. They are joined, however,

solar power has been coming down

InBev worked with a carbon disclosure project in 2017 to set a baseline for its supply bases’ CO2 emissions and subsequently set goals for those suppliers to cut their emissions.

Frost adds that realisation of its ambitious goals across each of AB InBev’s pillars has been driven in part by its sustainability accelerator, set up to define the challenges the supply chain transformation poses in relation to those goals and inviting startups to solve them. “We gave those startups some additional seed capital and inserted them along our supply chain, enabling them to grow faster by working directly with the people in it,” says Frost, citing its blockchain platform as an example of the success the accelerator substantially in the past few years, we

has produced. “That’s been extremely

have found that every deal we do leads

successful, so we have a number of

to a guaranteed lower cost of power

startups which are growing very quickly

versus grid-available in each of our

as a result of having that involvement in

locations,” Frost explains. “It’s really

our supply chain.”

a win-win-win: a win for us, a win for the environment, and a win for the local grid.” In addition, the company’s Climate Action pledge includes a commitment to reduce carbon emissions across its value chain by 25%. To tackle this, AB w w w.a b- i nb ev. com

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Anheuser-Busch InBev Brouwerijplein 1 3000 Leuven Belgium T +32 16 27 61 11 www.ab-inbev.com