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SABMiller: Gesondheid! Oogy wawa!

By William D Alessandro on July 30, 2012 at 1:01pm.

Company:

South African Breweries started life by making beer for thirsty gold miners.  Competition as a global player began a hundred years later.  The company moved headquarters to London from Johannesburg in 1999 to chase opportunities in Eastern Europe, Latin America, India, and China.   Today the sun never sets on the SABMiller empire.  The brewer claims to sell 1,400 bottles and cans of beer a second.

With annual group revenue of $31 billion (€25 billion), SABMiller is second behind Anheuser Busch-InBev.  Just like their arch rival, SAB bought a vintage American brand.  But at the time of the purchase in 2002, Miller had long passed out of the hands of the Milwaukee family dynasty.

Comparisons with AB-InBev are unavoidable.  Each owns about 200 beer labels.  SABMiller operates in roughly 75 countries, three times more than AB-InBev, which is virtually absent in Africa.

Besides Miller, some other of the company’s famous brews are Italy’s Peroni Nastro Azzurro, the original Pilsner Urquell in the Czech Republic, and Grolsch.   A recent acquisition is Foster’s in Australia.

Unlike AB-InBev, SABMiller is not a strong believer in the strategy of global brands.  The company seems wedded to the idea that beer is a local business in every respect.

In North America, the group owns a 58% share in MillerCoors.  Coors Lite recently ousted Anheuser’s iconic Budweiser as the second most popular beer in the U.S.  SABMiller is also one of the world’s largest bottlers of Coca-Cola beverages. 

Content:

SABMiller views the 2012 sustainable development report as a synopsis.  The brewer puts much more information online.  Still, the 24-page “Sustainable Development Summary Report 2012” is the place to go first and foremost.   It reads as though it were a full-fledged sustainability disclosure.

The company’s 10 priorities are reviewed in the PDF: responsible drinking; water; energy and carbon; packaging; waste; enterprise development; communities; HIV/Aids; human rights; and transparency and ethics.

The report is compiled in conformance with the Global Reporting Initiative (GRI) guidelines.   The GRI index, however, is only on the web site.  Not visiting it would be a huge mistake.   The table lists every one (84 in all) of the GRI indicators — core and additional.   Each indicator is identified with one of five symbols: fully reported; partially reported; don’t report, will consider; don’t report, not considered to be of material importance; and not applicable.   In a separate column, SABMiller combines the requisite “communication on progress” needed to fulfil the commitments made to the UN Global Compact.

The main attraction in the summary report is a sustainability assessment matrix.  It is the visual representation of SABMiller’s management system.  The chart displays performance — over the past three years — for each of the 10 priority topics.   The matrix has five ascending levels of achievement.  The higher the bars on the graph, the better the performance, all the way up to a 5, which means “genuine global leadership” on the issue.

In 2012 the average achieved across all priorities was 3.2, an increase over the 2011 score of 2.9.  None of SABMiller’s group-wide scores reach four, which is the starting line for best practice in that particular field.  (But fours and fives are achieved in some priority areas in some countries.  That information is available on an interactive map of the globe on the web site.)

SABMiller is still in the process of applying a comprehensive approach toward water conservation, energy use, carbon emission reductions, and enterprise development.  Those four performance criteria fall in the level 2 range.  (Enterprise development means how well SABMiller balances their commercial advantages with support for local suppliers and communities.)

Accompanying the matrix are snippets that elaborate on the scores for each of the 10 priorities.  SABMiller devotes more space to the three areas felt to be the most material for the business: alcohol responsibility; water; and enterprise development.  A chapter in the report also deals with employee relations.

Communication:

The report starts with a nicely designed table of contents as if it were made for a popular magazine.  Though readers may be inclined to skip lightly over it, the page tells succinctly what to expect inside and where to go on the web for more information.  None of the links on the table of contents or elsewhere in the report are live, which is a drawback.

A flowchart illustrates how the brewer generates financial value and benefits for communities and societies.  (To get the full impact, your browser and version of Acrobat has to show the two-page spread correctly, not on an overleaf.)

Readers in search of specific facts need to parse the text a little harder than they might expect in such a comparatively short report.  The performance data is sprinkled around.   (Incidentally, water usage declined to 4.2 hectolitres per hectolitre of beer. That is quite a bit behind AB-InBev’s 3.71 hl/hl.)   

The report stands out when explaining how sustainable development is being integrated into business planning.   The overarching strategy is that of “inclusive growth” - a new description for SABMiller.  The idea is that building value chains to drive economic growth and stimulate social development is the best way to create wealth wherever the brewer operates.   The projects and initiatives written up in the report are variations on that theme.  

How the company in its own words “can become truly sustainable in a resource-constrained world” is explored in more depth on the web.  The intention to meet the challenge appears to be very serious.  The attempt to explain the effort calls for a toast, no matter in what language.
 
Credibility:

The scores made on the performance matrix are self-certified by the local operators.  Regional and corporate accountability and risk assurance committees (shortened to Carac) assure the scores.  The regional Caracs are led by regional managing directors.   The corporate Carac is a subcommittee of the SABMiller board.  The Carac chair is Dambisa Moyo, a non-executive director.  She is an economist and a bestselling author.  

Corporate Citizenship, a specialist consultancy, have provided assurance for SABMiller’s reports since 2003.  They assure the application of the GRI guidelines as B+. 

Corporate Citizenship also assessed the summary report and additional online material against the AA1000AS standard.  The AccountAbility standard is a way of checking an organisation’s management, performance, and reporting on sustainability issues.  Comments relate the principles of inclusivity, materiality, and responsiveness.  The level of assurance is moderate as defined by the standard.

Recommendations:

1. Connect the content for GRI/Global Compact indicators and for references in the report to material on the web with hot links.

2.   What is the basis for tabulating the matrix scores?  What is the difference between 3.5 and 3.6?  What moves the score from 2.9 to 3.1?   

3.  You say new measurements are needed to make the connection among water, food, and energy; and to show how the fruits of growth are being shared.  The 10 priorities, used since 2006, might be revised.  Be sure to explain the changes completely, and to present the targets and performance results clearly and unambiguously.

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.