Wednesday, July 27, 2011

Heineken reporting: the parts it doesn't reach

Heineken commercials just have to be the funniest and most creative. Take this one:

(If you want more, see the top ten funniest Heineken commercials here).

While the Heineken Sustainability Report for 2010 doesn't quite reach these levels of creativity and humor, it is a good and thoughtful report, which I reviewed for You can find the full review here. Here are some of the review highlights:

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 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.

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 UK 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, Heineken's Polish branch 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.

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).

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.

And I can't resist leaving you with one more responsible drinking commercial from Heineken:

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices   Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

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