HomeMore
Your Membership
Home
Your Membership
Reviews   About

Expert Reviews

Search   Tags   Author   Everything

Heineken: Doesn't quite reach the parts that other reports reach

By Elaine Cohen (BeyondBusiness) on July 26, 2011 at 3:16pm.

Content:

Heineken is a Dutch Beer Company, with 250 brands, 140 breweries in 70 countries, employing 55,000 people and delivering a turnover of Euro 16 billion in 2010. The Heineken 2010 Sustainability Report report starts out with a great introduction from the Chairman/CEO which is nicely balanced and gets to the key issues for Heineken.  It's almost apologetic, referring respectfully to 14 fatalities in Heineken’s newly acquired Mexican business and other countries and loss of stardom in the Dow Jones Sustainability Index. However, it does set expectations with the Heineken "Brewing a Better Future" initiative, which is a "comprehensive and integrated sustainability strategy for the next decade. It increases the scope and scale of our work on sustainability and gives substance to our long-term ambition to be the world’s greenest brewer. It also allows us to balance our need for financial sustainability with the role we play in society."  Clearly, deep thinking has been going on at Heineken, and a new model with 23 programs grouped into six initiatives: Green Brewer, Green Commerce, Engaging Employees, Heineken cares, Responsible Consumption and Partnerships for Progress lends a structure and a certain credibility to Heineken's way forward. The CEO statement is followed by an executive summary of the report content by the "Chief Corporate Relations Officer". This is an outstanding overview, including frank comments on shortcomings, for example the fact that a 3.84 score out of 5 in a reputation survey for responsibility and sustainability is not good enough and needs work. So far, so good.

A summary of 2010 milestones gives a good idea of Heineken's sustainability actions for the last 12 months, followed by details of Heineken’s activities during 2010 versus commitments made against all of the six initiatives mentioned above. None of these initiatives cover Heineken's approach to human rights, and reporting in this area is lacking. However, there are some impressive examples of innovation in Heineken's approach. These include the opening of an inland container shipping terminal close to the Heineken brewery in Amsterdam to use barges on Holland's canals instead of road transport, reducing carbon emissions by 35%.  Another new measure is the use of eco-fridges with natural refrigerants on a global scale which consume up to 50% less energy.

When thinking about beer production, you don't automatically think about agriculture. But key ingredients in beer production are barley, corn starch, hops and for cider, cider apples, and agricultural practices are a critical element of any brewery's overall impacts. Heineken owns half a million apple trees in the US for example. I wonder how many they own worldwide?  Heineken reports on initiatives to advance reduction of chemicals in agriculture and local sourcing wherever possible. Heineken also refers to several Economic Impact Assessments that the company has conducted in Sierra Leone, Rwanda and Burundi, with new assessments in 2010 for Egypt, Croatia and the Bahamas. Heineken maintain that in Croatia, 8,800 jobs are in some way related to Heineken while in Egypt, local sourcing of barley has resulted in up to 6,000 jobs. These are important numbers. It's a shame that the Economic Assessment Reports are not available to the general public (I couldn't find them on the Heineken website). 

An interesting example of how sustainability has benefited Heineken is at the Elblag brewery, where the amount of non-segregated waste was reduced from 793 tons in 2006 to 55 tons in 2010. In 2010, Grupa Żywiec  (Poland) sold its waste at a profit of EUR3 million.  That's a huge figure, demonstrating once again that sustainability practices make good business sense.

Finally, with regard to responsible drinking, Heineken tells a nice story of the management team visiting a hostel for drink dependency victims and as a result, decided to delist Strongbow Black cider, a higher strength cider with an increased risk of irresponsible use.


Communication: 

Navigation of the online report website is slick but requires lots of clicks to open up condensed sections which make it hard to see an overall picture on the online site. The printed report (PDF download) is much easier to work with.

You can't fault Heineken on reporting commitment however, as 21 Heineken businesses published local sustainability reports in 2010. I downloaded a few and they are individualised, short but respectable publications with a measure of consistency across the range. Instilling the reporting discipline at local level for global companies is not an easy task and this is a good move by Heineken, highlighting local performance and relevance.

As an aside, to enter the Heineken website you have to key in your date of birth. The next thing you see is "Visit Heineken on Facebook" (where you don't have to key in your date of birth).

Credibility: 

Heineken's report is easy to read and projects strong credibility, reflecting good thinking about sustainability. It's well structured, comprehensive in scope and explanations, case studies and descriptions of issues are clear, easy to understand and balanced (including areas of challenge and sensitivity). It is assured by a third party to a limited level by the Standard 3410N of the Royal Netherlands Institute of Registered Accountants, a standard which is popular with Dutch companies. ‘Limited’ in this context means comparison of information with documents but not verification that the data is correct. 

The real issue with this report is that it focuses on responsible practices but not on sustainability opportunities. Heineken's "Brewing a Better Future" is all about doing what Heineken does now more responsibly. I would have liked to see some progression toward a sustainable value creation type of model where sustainability is embedded in Heineken's core business rather than managed as a set of distinct initiatives.  Notably absent is a description of material issues and an analysis and prioritization of those issues, which begs the question of how the 6 core initiatives were developed and using what stakeholder input. In this sense, Heineken's report doesn’t quite reach the parts that other reports reach (Heinken's advertising tagline for years has been that Heineken reaches the parts that other beers cannot reach), but it does do a basically good job of reporting key direct impacts in a nicely presented way.

Recommendations:


1. Provide more detail about stakeholder feedback key themes and publish a materiality analysis.
2. Provide more detail about human rights policies and practices.
3. Include verification of data not just limited review.

elaine cohen is the Joint CEO of BeyondBusiness Ltd, www.b-yond.biz/en , a leading CSR reporting and consulting firm in Israel,  specializing in a wide range of consulting services for the development of social and environmental responsibility of businesses.