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Anheuser-Busch InBev: A tall order

By William D Alessandro on June 19, 2012 at 2:58pm.

Company:

By gulping down more beer companies than anyone could dream possible, Anheuser-Busch InBev became the world’s largest brewer.  The conglomerate claims control of, in round numbers, 48% of the American beer market, 12% in China, 69% in Brazil, 17% in Russia, and 21% in the UK. 

Late in 2008 InBev (itself the combination of Belgium’s Interbrew and the Brazilian AmBev) completed a hostile takeover of Anheuser-Busch.  AB-InBev owns not only Budweiser but more than 200 other brands, including Stella Artois and Beck’s.

Despite its corporate name, not much more than a marketing veneer remains of Anheuser Busch’s flag-waving American heritage.  The Busch family, the closest any can get to royalty in the US, has been removed, including the last reigning August Busch, mentioned in the trade press simply as “the Fourth”.   

The CEO is Rio de Janeiro native Carlos Brito.  He is trying to turn Budweiser into the first truly global beer.  Brito’s plan comes despite the fact that Bud’s popularity is declining at home.  He intends to build on the strength of the brand’s name recognition and its identification with American optimism. 

In St. Louis, the city synonymous with Busch, 1,400 employees have been laid off.   Business is run from Leuven, near Brussels, and from offices in New York, and, yes, still from St. Louis.  Even there, though, the Fourth’s right-hand man and last popularly recognised top executive resigned early in 2012.  He was replaced by a Brazilian as head of US operations.  A symbolic end to the painful transition came when Coors Light overtook Budweiser as the No. 2 beer in America.  (Bud Light, the principal sponsor of the National Football League, remains number one.)

Content:

AB-InBev’s sustainability report pales in comparison to the Busch family dramas, which read like Greek tragedies, only sometimes more lurid.  The report is no match at all  in entertainment value for the Bud commercials aired during Super Bowl games or the high-stepping Clydesdale horses that pull a red, white, and gold beer wagon at festivities from coast to coast.  But AB-InBev’s environmental and social report  is decent enough.   It addresses three issues of material concern.

The first is “responsible drinking”.  AB-InBev, like all alcohol businesses, must work to discourage abuse.  The cover of the report depicts Portuguese citizen Miguel Patricio, head of the Asia-Pacific zone, in China promoting the “I do” campaign to encourage designated driving.  (A bit of irony is here since getting behind the wheel in China under any condition is dangerous.)

Six responsible drinking goals are tracked.  For example, by 2014, ID-checking materials should be supplied to at least half-a-million bars and grocery stores to prevent sales to minors.

As for the environment, AB-InBev reports progress on a number of intensity reduction goals set for the end of 2012.  Resource efficiency is standard practice at  Anheuser Busch.  Bill Sugar, who retired in 2001 and died in 2006, helped create the professional position of strategic corporate environmental director.   Sugar was a founding member of the Global Environmental Management Initiative, an organization in the US where multinationals share best practices.

The third material issue is “community” meaning the places where  AB-InBev operates.  The company reports three metrics: wages and salaries; capital investment that generates jobs and economic growth; and taxes paid.  In 2011 the company issued a global volunteer policy and began tracking employees’ contributions.

A fourth section of the report deals with the employees who support the three pillars of materiality.  The discussions cover training, diversity, engagement, and health and safety matters.

Every section of the report is embellished with fuller explanations, feature articles, and highlights of accomplishments of one kind or another.

Communication:

One of AB-InBev’s  10 corporate principles states: “We believe common sense and simplicity are usually better guidelines than unnecessary sophistication and complexity.”  That describes the corporate citizenship report.

Only one of 87 pages has more than 300 words on it.  There are 55 photographs.  Most are at least one-third of a page.  This is not a criticism.  AB-InBev manages to present quite a lot of information.  It all goes down smoothly, except the dearth of graphs and tables — there are just three of each — makes it hard to see exactly what the company’s performance really is.

At the tail end of the report, AB-InBev provides an index to the requirements of the Global Reporting Initiative (GRI) and to the UN Global Compact obligations.  The indices hot link the provisions of the parent documents either to content in the report or to the company’s web site.  No better structural format has been devised to track back to the original environmental and social commitments (but see recommendation #3 below.)

Credibility:

AB-InBev declares that the report meets the requirements of GRI at the B level of disclosure.  The company has no plans for external assurance.

The multinational membership consulting organization Business for Social Responsibility helped AB-InBev with the materiality assessment.  The company says they looked at more than four dozen corporate responsibility initiatives before identifying the three areas with the most impact on business success. 

Managers in each operational zone of the world follow a process to identify and engage stakeholders in each of the three areas of material concern.  Their efforts are audited annually.

All well and good.   But we can learn only so much in a voluntary report from a sprawling corporation with impacts of such magnitude.  Aside from beverage plants and breweries, there are hop farms, container manufacturing plants, warehouses, barley elevators, research centres, sales offices, and more in 23 countries.

AB-InBev reports only a limited number of GRI indicators: eight of 30 on environmental performance; five of 15 labour and work practices; one of 11 dealing with social performance; and so on.   We don’t learn about fines for legal breaches, or non-monetary sanctions, or about advertising and marketing complaints, or brewery closures.  The list of exclusions is long.

We are not always told everything that is germane even when the subject is covered.  Take responsible drinking.  Illegal sales of beer into an Oglala Sioux reservation in South Dakota has become so distressing, the tribe filed a lawsuit against Anheuser Busch and other brewers.  A columnist for the New York Times wrote recently:  “I don’t know how the lawsuit will go, but I’m pretty sure a nationwide boycott of Budweiser would wake the company up.”

In their defence Anheuser Busch has a legitimate case to argue.  Shouldn’t we expect, though, that companies will be out in front of volatile situations like this and address the underlying causes in corporate citizenship reports?

Recommendations:

1. Step up to an A level GRI report.

2. Discuss emerging issues as soon as you see them on the road ahead.  

3. The GRI index should tell whether an indicator is fully reported or not.  Some explanation should also be given for the missing ones.

William D’Alessandro is president of Victor House News Co., an independent agency reporting on law and the environment for trade publications and executive newsletters.  He also edits Crosslands Bulletin http://www.crosslandsbulletin.com covering strategic corporate environmental management and sustainability issues.