SUSTAINABILITY REPORT 2020 ENVIRONMENT, Carlsberg Group
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CARLSBERG GROUP SUSTAINABILITY REPORT 2020 2 INTRODUCTION Welcome to the INTRODUCTION......................................... 3 FIND OUT MORE Carlsberg Group’s TOGETHER TOWARDS ZERO ................. 9 SUSTAINABILITY REPORT + SUMMARY Sustainability ZERO This full Sustainability Report provides detailed information on our strategy, Report for 2020 CARBON FOOTPRINT ...................................... 10 governance, partnerships and performance. The Summary includes extracts from this report to provide an ZERO overview of our approach and progress. Here we present an update on WATER progress on our Together Towards WASTE ............................................... 20 ZERO programme as we work with ZERO our people and partners to achieve IRRESPONSIBLE Annual Report ZERO carbon footprint, ZERO water DRINKING ......................................... 27 Our Annual Report focuses on our waste, ZERO irresponsible drinking and financial performance. It includes ZERO information on sustainability that is a ZERO accidents culture. We explain ACCIDENTS most pertinent to investors. how we do business responsibly to CULTURE .......................................... 35 support these goals and our business strategy. And we provide information RESPONSIBLE BUSINESS ...................... 41 on sustainability governance. GOVERNANCE AND TRANSPARENCY ..................................... 51 Website Carlsberggroup.com hosts our reports and policies, as well as showcasing stories on our biggest sustainability achievements. Social media We share our latest sustainability carlsberggroup.com @carlsberggroup stories on social media throughout the year. @carlsberggroup Carlsberg Group
Introduction CARLSBERG GROUP SUSTAINABILITY REPORT 2020 INTRODUCTION 3 MESSAGE FROM OUR CEO 2020 has been an incredibly organic decline in operating profit to DKK 956m to support research, arts, challenging year for our 3.1%. We ended the year with culture and civil society, including reported revenue of DKK 58.5bn, DKK 109m specifically for COVID-19 business, our customers and operating profit of DKK 9.7bn and relief efforts. our people all around the free cash flow of DKK 5.1bn. world. Our purpose is brewing for a better Despite the challenges posed by today and tomorrow. Despite the Through it all, we have remained COVID-19, our strategic priorities immense and immediate threat to resilient, buoyed by our strong and ambitions remain intact, and we human health, I am encouraged to performance over the past few years. have continued to invest in our see that the global pandemic has brands. While volumes sold have sharpened the world’s focus on the I would like to thank each and every declined overall, we have seen long-term sustainability of the one of our people for their role in growth of 1% in our craft & speciality planet too. We must not lose sight of continuing to support our business brews and 11% in our alcohol-free this overriding objective and I joined and our customers through these brews. other leading CEOs in urging tough times. governments to ensure their recovery Our financial performance and efforts support the Paris Agreement’s During the year, our top priority was SAIL’22 business strategy are 1.5˚C climate goal. the health and wellbeing of our underpinned by our ongoing employees, while at the same time commitment to responsibility and At Carlsberg, we have our own taking the actions required to protect sustainability. ambitious targets to cut carbon the financial health of our business emissions and water waste, and we this year and capture long-term This year, we increased our support will not let COVID-19 throw us off We are on track growth opportunities for the future. for local communities – including the course. We are on track to meet our to meet our ambitious hard-hit hospitality industry – and 2022 targets, and since 2015 we sustainability targets for The market decline and prolonged transformed production lines to help have reduced our brewery emissions 2022 and we will not let on-trade closures in many markets meet unprecedented demand for by 39% and our water use by 18% for COVID-19 throw us off course. led to an 8.4% organic decline in hand sanitiser. The Carlsberg every hectolitre of beer produced. revenue, but our relentless focus on Foundation, together with the New From 2015 to 2019, we cut our Cees ’t Hart, CEO, Carlsberg Group cost efficiencies and early Carlsberg Foundation and the beer-in-hand emissions by 7%. intervention enabled us to limit the Tuborg Foundation, also donated
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 INTRODUCTION 4 Achieving these targets as we work accidents culture. Our efforts steadfast in our commitment to ABOUT THIS REPORT Together Towards ZERO will help us towards achieving all four ambitions uphold the principles of the UN Our annual reporting suite comprises three mitigate risks to our business that play a critical role in the success of Global Compact. With the creation of reports: our Annual Report, this Sustainability will be amplified by climate change our business now and in the future – the Carlsberg Sustainability Advisory Report and a Remuneration Report. Each in the future. I am pleased to see the not only by addressing risks but by Board, we are inviting external includes content tailored to its specific audience increased focus on ESG risks and creating opportunities for growth. experts to provide an “outside in” and cross-references to the other reports opportunities by our stakeholders, view to help us stay true to the where relevant. Download all the reports at including investors, which will Our burgeoning range of alcohol- values of our founder, challenging carlsberggroup.com. contribute to creating progress at the free brews has delivered 11% growth ourselves to constantly strive for pace and scale needed. in sales volumes this year as more better as we work towards our This Sustainability Report describes our people embrace healthy balanced ambitious targets. approach and performance on our most This year, for the first time, we are lifestyles in the wake of the material social, environmental and ethical reporting in line with the pandemic. We also want consumers I am convinced that driving progress issues for the financial year 1 January to recommendations of the Task Force to enjoy our alcoholic products Together Towards ZERO will help 31 December 2020. on Climate-related Financial responsibly and reached our target Carlsberg keep brewing for a better Disclosures to better understand and to include messaging about today and tomorrow as the world It covers all Carlsberg Group subsidiaries in act on climate-related risks and responsible drinking on all packaging recovers from COVID-19. which we have a controlling stake and possess opportunities for our business. two years early. more than 50% of the voting rights, across 31 countries, including 86 breweries and soft Climate change is also increasing The success of our business depends Cees ’t Hart drinks production sites (together referred to as water risks and our ground-breaking on our people, and their health and CEO, Carlsberg Group “breweries” in this report) and two malting water risk scenario analysis with safety remains our top priority. As plants. See page 74 for more on our reporting WWF is helping us target action to well as supporting them through the scope and methodology. Selected data on key sustain essential water supplies – challenges of the pandemic, we have performance indicators is subject to limited both for our breweries and for the stepped up our efforts to embed safe assurance by PwC (see page 90). communities whose water resources behaviour and continued to drive we share. Our innovative partnership down accident rates by a further 19% This report serves as our annual with Desolenator will use renewable across the business in 2020. But this communication on progress to the UN Global energy from the sun to create access progress was overshadowed by the Compact and as our statutory statement on to clean water for thousands of death of a contractor during corporate social responsibility in accordance people in an area of India stricken by dismantling work at a former with section 99a of the Danish Financial the effects of both climate change production site. Any accident is one Statements Act. and COVID-19. too many and this tragedy strengthens our resolve to get to Our actions to contribute to the UN Sustainable ZERO carbon footprint and ZERO ZERO. Development Goals are signposted in relevant water waste are key ambitions in our sections and summarised in the Governance Together Towards ZERO Carlsberg was founded over 170 and transparency section (see pages 59-65). programme, alongside ZERO years ago on a strong sense of social irresponsible drinking and a ZERO responsibility – and we remain
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 INTRODUCTION 5 EXTERNAL PERSPECTIVES The Carlsberg Sustainability Advisory Board (CSAB) was established and I am pleased to be part of It has been my utmost Since 1847, Carlsberg and held its first meetings in 2020 to the CSAB and have the opportunity pleasure and privilege to be a its people have remained true to the provide additional “outside in” to follow – and influence – the part of the CSAB, which has allowed founder’s heritage, aspirations and perspectives directly to our CEO and Carlsberg sustainability journey. me to contribute my consumer responsible way of working. The senior executives. We invited the trends expertise for a higher cause. decade leading to 2030 will three external members to provide From my perspective it is a genuine be dynamic and challenging. feedback on our sustainability improvement journey that seeks to It’s heartening to see how the approach and performance. continuously raise the bar, focusing Together Towards ZERO initiative To transform itself whilst securing on the material issues. Much has is more than just a CSR campaign; business continuity and success will See page 53 to find out more about been done in recent years, which but a well-crafted strategic plan not be an easy task. Well-supported the CSAB, their feedback and our allows us to set high ambitions. to lead Carlsberg towards a more by a bold company purpose, with its response. All companies are today truly at an sustainable future. ambitious Together Towards ZERO inflection point with regard to ESG sustainability programme and strong We also completed an update of our and sustainability, and it is clear to Looking ahead, I’m hopeful that the commitment from its leadership and materiality assessment, analysing me that Carlsberg is stepping up to executive leadership of Carlsberg staff, Carlsberg is ready for the job. the greatest risks and opportunities this challenge. will be able to set new standards for our business. This included an for how business success will be The CSAB will play its part, acting as Knut Haanaes, measured – not just by financial a sparring partner for the leadership internal survey across a range of Professor of Strategy, functions and geographies, as well Lundin Sustainability Chair, metrics and shareholder value, but team and helping to stay in sync with as a series of interviews with external IMD Business School by the organization’s impact on expectations of the outside world. stakeholders. people and planet. Companies must adapt to survive, and we will challenge the speed and Acacia Leroy, scale of sustainability implementation, See page 57 for more about our Greenhouse Labs Manager, materiality assessment and our most Deloitte SEA advising on the tough dilemmas and material issues. trade-offs on the way Towards ZERO. Frank van Ooijen, Independent Sustainability Consultant
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 INTRODUCTION 6 OUR BUSINESS Carlsberg is one of the world’s by 1% and alcohol-free brews by through domestic sales, exports and together with the New Carlsberg largest brewery groups. In 11%, although the overall volumes of licensing agreements. Foundation and the Tuborg beer we sold declined due to the Foundation, granted DKK 956m to 2020, we produced almost impact of various COVID-19 We deliver value to our shareholders support scientific research, arts, 117 million hectolitres (hl) of restrictions. and society, and support sustainable culture and civil society, including quality beers and beverages. development, through the over DKK 109m towards COVID-19 More than 40,000 employees help contribution we make to economies relief efforts. Our 100+ consumer brands include us produce, transport and sell our around the world (see graphic). international premium brands such beer. We have 88 sites in Western See our Annual Report for more as Carlsberg, Grimbergen, 1664 and Europe, Eastern Europe and Asia. Our majority shareholder, the information on our business and Tuborg, as well as strong local Our products reach consumers in Carlsberg Foundation, uses its financials at carlsberggroup.com/ brands. In 2020, we increased sales over 100 countries around the world dividends for wide societal benefit. In reports-downloads. volumes of craft & speciality brews 2020, the Carlsberg Foundation,
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 INTRODUCTION 7 TOGETHER TOWARDS ZERO At Carlsberg, we are brewing brewing for many more years to issues. It also enables us to capture irresponsible drinking and ZERO Development Goals (SDGs) where for a better today and come. See our Annual Report for opportunities by meeting growing accidents culture. Identified through we can have the greatest impact. more on our SAIL’22 strategy. consumer demand for more a materiality process (see page 57), tomorrow. That is our purpose. sustainable products and healthier these are the areas where we can We partner with suppliers, NGOs and Our Together Towards ZERO choisces. have the biggest impact on others in our industry to make We have been brewing for over 170 programme helps us mitigate long- sustainable development through our progress Together Towards ZERO. years. Doing business responsibly term risks and make our business The programme sets out business and our partnerships. We Our steadfast commitment to doing and sustainably will help us stay on more resilient by tackling global transformative targets to drive action have aligned our ambitions and business responsibly underpins course to achieve our SAIL’22 challenges such as climate change, in four priority areas: ZERO carbon targets to the UN Sustainable progress in all four priority areas. strategy, deliver value for water scarcity and public health footprint, ZERO water waste, ZERO shareholders and society, and keep 1 Beer-in-hand data for 2015-2019. See page 88.
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 INTRODUCTION 8 SUPPORTING PEOPLE THROUGH THE COVID-19 CRISIS The COVID-19 pandemic has research, arts, culture and civil impacted lives and livelihoods society. worldwide, with far-reaching health and economic consequences. CALLING FOR A LOW-CARBON RECOVERY During these unprecedented and As we work to respond to COVID-19 challenging times, we prioritised the challenges and reset our business for health and wellbeing of our people the future, we know society must (see page 39) and stepped up efforts also do the same and we are to support our customers and determined to play our part in communities. supporting a low-carbon recovery. HELPING COMMUNITIES STAY Together with the Science Based STRONG Targets initiative and 150 other We transformed brewery production leading businesses, we called on lines to produce alcohol for hand governments around the world to sanitiser. We donated equipment and align their COVID-19 recovery alcohol-free beverages to support efforts with the latest climate healthcare workers. And we ran science. We also joined business campaigns to support the hard-hit leaders and investors in urging the hospitality sector. See map for local European Union to put the European examples. Green Deal at the core of its recovery package. We made corporate contributions and Carlsberg teams around the world raised funds for local organisations. In addition, the Carlsberg Foundation, together with the New Carlsberg Foundation and the Tuborg foundation, donated DKK 109m during the crisis to support
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 INTRODUCTION 9 TOGETHER TOWARDS ZERO Our ambition is to achieve ZERO carbon footprint, ZERO water waste, ZERO irresponsible drinking and a ZERO accidents culture. We are making good progress towards our targets by working in partnership Towards ZERO. IN THIS SECTION ZERO carbon footprint ..................................... 10 ZERO water waste ............................................. 20 ZERO irresponsible drinking ........................... 27 ZERO accidents culture .................................... 35 MAKING OUR BEER MORE SUSTAINABLE Watch our video to find out how our Together Towards ZERO programme helps us produce our beer more sustainably, enables consumers to enjoy it responsibly and keeps our people safe.
ZERO Carbon Footprint CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO CARBON FOOTPRINT 10 ZERO CARBON FOOTPRINT The world is facing a climate glass – what we call beer-in-hand emissions – by 30% by 2030 (from emergency that threatens 2015 levels). people, the environment and our business. Beyond our own operations, we work with partners who supply our Governments, businesses and ingredients, packaging, logistics and individuals must take action now to refrigeration. Together, we are help prevent the worst effects of supporting sustainable agriculture, climate change. We are determined making the transition to lower- to do our part by cutting the carbon carbon transport and cooling, and footprint of our operations and our creating packaging solutions like our entire value chain. Snap Pack and Green Fibre Bottle. Our ambitious targets, approved by Extreme weather and shifting rainfall the Science Based Targets initiative patterns as a result of climate in 2017, are in line with the latest change pose a direct risk to our climate science to limit global brewing operations and to the crops warming to 1.5˚C. In 2020, we and water we need to make our joined other leading companies in products. This year, we signed up to urging governments to ensure their the Task Force on Climate-related COVID-19 recovery efforts align with Financial Disclosures and are the Paris Agreement’s 1.5˚C goal and applying its recommendations to calling for European Union leaders to better understand and report on embrace a 55% carbon emissions these risks. We were also included in reduction target by 2030. the CDP A List of global corporate leaders for transparency and action We are making strong progress on on climate risks and opportunities. our 2022 targets to switch to 100% renewable electricity, eliminate use of coal and halve carbon emissions at our breweries as we drive progress towards ZERO carbon brewing by 2030. Eliminating emissions from our breweries will help us cut our 7.2 & 7.3 13.1 & 13.3 17.16 & 17.17 12.2, 12.5, value chain footprint from field to 12.6 & 12.9 See SDG index, page 59. 1 Emissions from driving a car 20,000 km a year at We have discontinued our target specifying 30 supplier partnerships as collaboration a rate of 130 g CO2/km = 2.6 tonnes CO2/year with suppliers has become such an integrated part of our approach. See page 16.
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO CARBON FOOTPRINT 11 Our farm is one of the leading farms in the Yaroslavl region and has grown brewing barley for several years. Thanks to the Carlsberg Group, our experience turned out to be a success: the harvest almost tripled within three years. The barley must meet specifications and grows under regular monitoring that allows it to reach high quality. Carlsberg Group specialists provide consultations and always assist us with expert advice.” FEATURE: ZERO CARBON FOOTPRINT IN ACTION Nikolay Minakin, Head of Kurdumovskoye farm, Yaroslavl, Russia PROMOTING SUSTAINABLE AGRICULTURE THROUGH CROP INNOVATION Scientists at the Carlsberg Research ground-breaking research into resilient traits such as greater integrate those varieties into our beer current elite varieties. Their yield is Laboratory in Copenhagen have climate-tolerant crops. In the last tolerance to drought and heat supply chain. approximately 10% higher than been exploring the boundaries of decade, we have invested more than waves, deeper roots and the ability varieties developed locally in Russia. crop science and perfecting the art of DKK 50m in research on breeding to grow in saline soils. Barley bred to produce higher yields brewing since 1876. Today, they are new sustainable and climate- also has a lower climate impact We set requirements for these turning their attention to sustainable tolerant raw materials, as well as We are now partnering with local because the same amount can be farmers on fertiliser use and hold agriculture to reduce climate risks in advances in hop, yeast and brewing breeders in Australia to see how the grown using less fertiliser, which field days to prepare them to harvest our supply chain. processes. new crop varieties cope in extreme takes a lot of carbon to produce. In the benefits of future innovations drought and adverse soil conditions. Russia, the 70 farmers who supply from our lab. Barley is an essential ingredient for Our scientists have isolated more The varieties that grow best will form our Baltika breweries are using our beer – and the focus of the lab’s than 40 candidates for barley a pipeline for barley breeding, and barley varieties developed by our lab varieties that display climate- we will work with partners to rapidly that are more sustainable than
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO CARBON FOOTPRINT 12 ZERO CARBON FOOTPRINT ELIMINATING sites to track progress. In 2020, carbon emissions totalled 563,000 SWITCHING TO RENEWABLE ENERGY BREWERY tonnes. We are well over halfway towards our WHAT WE EMISSIONS goal to source 100% of electricity for MEAN BY ZERO We are switching to 100% renewable our breweries from renewable sources Our global Environmental Policy supports our progress towards ZERO electricity, eliminating use of coal and like the sun and wind by 2022. To CARBON adopting best practices and advanced ensure a robust approach to the carbon emissions from our breweries. technologies in production processes. measurement and use of renewable FOOTPRINT It sets out our commitment to robust electricity, we are members of the Brewery emissions: We aim to environmental standards with In 2020, we reduced relative emissions RE100, and apply their technical eliminate carbon emissions from our particular focus on energy and at our breweries by 12% to 4.3 kg CO2 criteria when working with renewable 88 sites – including breweries and emissions as well as water, waste and per hl from 4.9 kg CO2 per hl in 2019. electricity – see overview of approved malting sites – by 2030. To help us packaging. That is a 39% reduction since 2015, renewable electricity types below. In drive progress towards this absolute well on the way to our target of 50% 2020, we reached 64% (up from 56% target and improve production We manage our 86 breweries and two by 2022. Overall, across our breweries in 2019). Our breweries in China efficiency on the way, we aim to malting sites as part of our integrated and malting sites we have cut our achieved 100% this year, joining all our halve emissions per hectolitre (hl) of supply chain, using best practice absolute emissions by 33% since 2015. breweries in Western Europe, which production from our 86 breweries – environmental management systems This is a saving of 283,000 tonnes of achieved this target several years ago. including breweries, soft drink and to drive continuous improvement. CO2, equivalent to taking 109,000 water plants, but excluding malting These systems are certified to the ISO cars off the road for a year1. Most of our renewable electricity sites – between 2015 and 2022. 14001:2015 standard at 79 of our comes from the grid through the breweries, and energy management We are on course to eliminate purchase of renewable electricity Both targets include Scope 1 and 2 systems at 19 sites are also certified emissions from our breweries and certificates, totalling 570,077 MWh emissions and exclude owned to ISO 50001. malting sites by 2030. in 2020. At eight of our sites, we logistics and distribution, which are generate renewable power from on- included in our beer-in-hand target. We collect environmental data from site solar panels. We are also across all our breweries and malting exploring options to buy renewable Beer-in-hand emissions: We aim to reduce our value chain (beer-in- RE100 OPTIONS FOR RENEWABLE ELECTRICITY hand) emissions per hl of beer To achieve 100% renewable electricity, a company produced by 15% by 2022 and 30% may choose from the following options: by 2030 from our 2015 baseline. Self-generated electricity These reductions cover Scope 1, 2 1. Generation from installations owned by the company and 3 emissions from: growing and Purchased electricity malting raw materials; brewing, 2. Purchase from on-site installations owned by a supplier packaging, distributing, and chilling 3. Direct line to an off-site generator with no grid transfers 4. Direct procurement from offsite grid-connected generators our products; and handling our 5. Contract with suppliers (green electricity products) packaging waste after use. 6. Unbundled energy attribute certificate purchase 7. Other options 1 Emissions from driving a car 20,000 km a year at a rate of 130 g CO2/km = 2.6 tonnes CO2/year. * 2020 data within PwC's assurance scope. 2015-2019 data assured in prior years (see previous sustainability reports).
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO CARBON FOOTPRINT 13 electricity directly from wind and solar certificates. In Switzerland, 52% of all producers through power purchase heat generation came from renewable agreements. fuels, including 27% from ethanol extracted while producing our alcohol- Our site at Farris in Norway achieved free beer. zero carbon emissions in 2020, switching from fuel oil to renewable TRANSFORMING BREWING electricity. Globally, eight of our EFFICIENCY breweries are now carbon-neutral, Our breweries continued to break new powered by 100% renewable electricity boundaries for efficiency and and thermal energy. innovation in 2020. By targeting 100% renewable In Asia, we cut the amount of heat our electricity for brewing, and through breweries use by 13% from 2019 our membership of the RE100, we through investments in bottle washing aim to encourage our industry peers and energy recovery systems. and suppliers to make the same switch to renewables. In Western Europe, we installed new brewhouse heat recovery systems in ELIMINATING COAL Estonia and Lithuania that cut heat In 2020, we converted a coal-fired use by over 10%. CASE STUDY boiler at our Okocim brewery in Poland to run on biogas generated on In Eastern Europe, we added OUR SCIENTISTS PURSUE site and, if necessary, natural gas. That leaves just one site where we still recuperative heat exchange units in Ukraine and reduced brewhouse TOMORROW’S ZERO CARBON use coal, our Aurangabad brewery in India. Plans to convert the coal-fired evaporation in Russia. SOLUTIONS boiler at this site to run on biomass Climate and water risks to our Post-doctoral researchers at the Carlsberg energy-saving solutions at our breweries have been delayed due to an extended business are connected and so are Research Laboratory are using next-generation without disrupting current production. The COVID-19 lockdown in India, but we many of the solutions. For example, technology to bring us a step closer to a ZERO scientists are already trialling interventions aim to complete this in 2021. the new advanced water-recycling carbon future. that could help our brewery in Ukraine cut plant at the Fredericia brewery in energy use by up to 15%. Many of our breweries have replaced Denmark, operational in 2021, will In 2020, the talented members of our Young coal and natural gas with innovative halve water consumption, and biogas Scientists Community created a “digital twin” They are also evaluating early-stage technology to harness carbon-neutral generated from the wastewater brewery in close collaboration with colleagues technologies with the potential to save energy thermal energy. In 2020, 28 breweries treatment process will replace around from our integrated supply chain and Baltika in and carbon at our breweries globally, including made use of biomass, biogas 10% of the site’s natural gas Russia. This unique virtual tool will enable us to solar-assisted brewing, heat pump integration extracted from on-site wastewater, consumption. simulate new ideas, brewing techniques and and energy from spent grain. renewable district heating or biogas
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO CARBON FOOTPRINT 14 CUTTING OUR In 2020, we conducted our most extensive analysis yet of our global BEER-IN-HAND value chain carbon footprint, based We have worked closely with Carlsberg REPORTING ON EMISSIONS on the European Commission on their supply chain emission CLIMATE- guidelines and with support from the calculation model since 2016, and the We look beyond the brewery gates to understand and reduce the climate Carbon Trust. Suppliers representing work we did this year sets new RELATED more than 60% of our spend provided impact of our products across the in-depth product-level data on the standards for Scope 3 emissions FINANCIAL RISKS value chain – from growing and emissions they generated to provide accounting and measurement. The AND malting grain to brewing, packaging, model we have developed together transporting and cooling our ingredients, packaging and transport for our beer. OPPORTUNITIES products. We call this our beer-in- uses very granular data for each value hand emissions. chain step. This enables Carlsberg to Recognising the increasing risk of climate The results showed that our value chain emissions in 2019 totalled 6.8 track, measure and reduce its Scope 3 change to businesses and communities MEASURING OUR VALUE CHAIN million tonnes of CO2-equivalents emissions on a market, regional and across our regions, in 2020 we FOOTPRINT global level with great precision, which broadened our analysis and reporting in (CO2e). For every hectolitre of our We cannot manage what we do not this area by aligning with the beer that consumers enjoyed, it took puts the company at the forefront of recommendations of the Task Force on measure. We conduct in-depth 56.4 kg of CO2e to do everything assessments of our carbon emissions Scope 3 accounting.” Climate-related Financial Disclosures needed to put the beer in their hand. across the value chain every three Myles McCarthy (TCFD). That is 7% less than in 2015, putting years, using leading best practices us almost halfway towards our 2022 Director Implementation, The Carbon Trust and the Greenhouse Gas Protocol. Using the TCFD reporting framework, we goal of 15%. We will use the data to will continue to improve our help identify and implement the understanding and disclosure of the actions needed to achieve our target. medium- and long-term impact of climate change on our business. Our first disclosure according to the TCFD reporting framework is included in our 2020 Annual Report (page 36), available at carlsberggroup.com/ reports-downloads. It provides a brief summary of our governance, strategy, risks, metrics and targets in relation to climate change with links out to more information in this Sustainability Report and elsewhere.
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO CARBON FOOTPRINT 15 The graphic illustrates our progress across each stage of the journey from field to glass. It shows that we have significantly cut carbon from our brewing and cooling, and made some progress on packaging and transport. However, emissions generated from agriculture – over which we have least control – have risen slightly. Methodologies for value chain footprinting continue to develop, and in our latest analysis we updated our 2015 baseline to reflect the improved methodology, greater availability of primary data, and additional sector guidance on both calculations and emissions factors from the Product Environmental Footprint Category Rules (PEFCR) and the Beverage Industry Environmental Roundtable (BIER). This resulted in a 12% increase in our 2015 baseline. THE SCIENCE BEHIND OUR CARBON Industry GHG Emissions Sector Guidance We were early adopters of the product reduction target – exceeding the 67% required ACCOUNTING (Version 4.1), developed by the Beverage environmental footprint guidelines, developed by the Science Based Targets initiative. We conduct a comprehensive analysis of our Industry Environmental Round Table (BIER). by the European Commission for measuring a Adopting globally recognised best-practice global beer-in-hand carbon footprint every product’s environmental footprint. And we Detailed data from our suppliers enables us to standards gives us confidence that we are few years, using stringent processes that apply the relevant parts of these specific track emissions by market down to product gathering science-based information to inform enable us to identify and conduct reduction product rules for beer to measure our group level. In total, we collect primary data our efforts to reduce our carbon footprint and activities specific to each market. corporate value chain footprint. for more than 60% of our spend, covering our mitigate climate-related risks to our business. We adhere to the rigorous GHG Protocol for wide-reaching value chain from raw materials Seventy-five percent of our Scope 3 emissions Read more about the methodology on page 88. Scope 1, 2 and 3 emissions and the Beverage to point of sale. are covered by our 2030 beer-in-hand carbon
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO CARBON FOOTPRINT 16 PARTNERING TO SHRINK OUR Together with O-I Glass, a supplier of Our own packaging – including glass that can make them last three times SHARED FOOTPRINT our Western European markets, we and plastic bottles, cans, kegs, as long. With 87% of our value chain carbon localised production of our Grimbergen plastic wrap and cardboard boxes – footprint outside our operations and bottles in France at an energy- generates 41% of our beer-in-hand Many of our breweries support local direct control, partnering is key to efficient plant. The bottles are made emissions. This is by far the largest initiatives to boost recycling rates for reducing our beer-in-hand emissions. using almost 80% recycled broken part of our value chain carbon packaging. In 2019, Baltika launched glass and delivered to our nearby footprint. 19 partnerships to operate 10,000 We collaborate with partners who Kronenbourg brewery by train, a recycling containers in 50 supply our ingredients, packaging, lower-carbon emission alternative to To cut the climate impacts of municipalities across Russia. And in transport and refrigeration on trucks. packaging, we invest in innovation 2020, the powerhouse brand efficiencies and innovation that drive and promote reuse and recycling. We expanded its trial with retailer down their carbon footprint and ours. Some of our key suppliers have are also developing industry-leading VkusVill to install vending machines For example, partnerships are helping adopted their own carbon-cutting solutions to reduce our plastic in St. Petersburg and Moscow stores us drive progress in areas such as roadmaps that support our 2022 and packaging, which can have a wider where consumers can drop off used sustainable packaging and switching 2030 targets to reduce our beer-in- environmental impact, particularly if cans and plastic bottles – the first to renewable energy. hand footprint. Examples include two it ends up in the world’s oceans (see initiative of its kind in the country. major beverage can suppliers, Ball and feature on next page). Originally, we set a fixed target to Crown. We are also experimenting with enter into 30 partnerships with Aluminium cans are the containers product packaging to reduce our suppliers to reduce our shared carbon In 2020, Ball completed two long- we use most for our products and carbon footprint. With our supplier footprint by 2022. Partnerships have term renewable energy agreements account for the biggest share of our DS Smith, we are testing stronger, now become such an integral part of for 93.4 MW of new wind energy emissions from packaging. This year, thinner cardboard boxes that could our approach that we have decided to and secured additional Guarantees of we partnered with suppliers to cut raw material use and related stop tracking the number of Origin to address 100% of its energy continue reducing their weight, use emissions from a multipack by partnerships and focus on their impact. load in Western Europe moving more recycled content and improve around 20%. In 2020, we started forward. Meanwhile, Crown has recycling rates after use. Our beer- trialling the boxes at our brewery in This year, we were able to obtain launched new goals to halve its in-hand analysis showed we cut Falkenberg, Sweden. primary data input on greenhouse gas operational emissions and source emissions from cans by around 17% emissions from suppliers representing 60% of its electricity from renewables from 2015 to 2019 – a testament to more than 60% of our spend to inform by 2030. the impact we and our suppliers can our beer-in-hand carbon footprint have when we work together. analysis. RETHINKING PACKAGING High-profile campaigns and new Around the world, we support well- More than 98 companies in our supply regulations have put the established and efficient bottle return chain have joined the Science Based environmental impacts of packaging, systems for consumers with high Targets initiative, 12 of which account and particularly plastics, in the collection rates. In some markets we for more than 13% of our total carbon spotlight. wash and refill returnable glass footprint and have a significant direct bottles. And in Malaysia we impact on our beer-in-hand targets. implemented a protective coating
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO CARBON FOOTPRINT 17 FEATURE SPOTLIGHT ON PLASTICS We are continuing our efforts to packs of cans together. It is now in The Green Fibre Bottle, made from launched a trial in Sweden and savings will total 200 tonnes of CO2e reduce, recycle and avoid plastics. use in Denmark, Estonia, France, sustainably sourced wood fibre, has the UK. a year. Meanwhile, in 2020, Bon Germany, Latvia, Lithuania and the the potential to offer a more Aqua in Finland launched 100% In 2020, we partnered with suppliers UK. sustainable alternative not only for We are also innovating in our use of recycled PET bottles, joining our to extend our revolutionary Snap Pack beer, but for other drinks and liquid recycled plastics for product Imsdal brand in Norway, which technology to three more markets. We are getting closer to a “paper” products. We were joined by other packaging. We now use shrink film moved away from virgin plastic in Launched in the UK in 2019, Snap beer bottle that can be launched leading companies in the project, all made of 100% recycled plastic in 2019. And we launched the first PET Pack cuts plastic by up to 76% per commercially, with a trial planned for of which have made good progress Denmark, Finland, France, Norway, bottle-recycling machine in Belarus multipack by replacing plastic shrink 2021 pending regulatory approval this year: Coca-Cola has launched its Poland and Sweden. For the Karhu together with supermarket and waste wrap or rings with glue dots that hold with our technology partner, Paboco. first prototype and Absolut has brand in Finland alone, carbon collection partners.
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO CARBON FOOTPRINT 18 PROMOTING SUSTAINABLE The energy used to malt grain for making up around 70% of the fleet Russia, Sweden, Switzerland and From 2021, we will introduce energy AGRICULTURE our beers – by our suppliers and at globally. Ukraine. management systems in all The second biggest share of our our own malting plants in Russia – replacement fridges, where feasible, value chain climate impact – 25% of accounts for around 3% of our total Outsourcing most of our outbound CUTTING IMPACTS FROM to reduce electricity use and related emissions – comes from growing, value chain emissions. Between logistics enables us to make COOLING carbon emissions. This will require malting and processing ingredients 2015 and 2019, we reduced carbon efficiency gains, including higher fill Most of our products are best additional investment from us, but it for our beers and other beverages. emissions from malting processes by rates, by transporting our products enjoyed chilled. The fridges and beer will save our customers energy and 19% for every hectolitre of beer alongside others. We set clear coolers used for our beer and money – and help us reach our 2022 Our business depends on a long- produced. This was achieved through sustainability requirements in our beverages in bars, restaurants and and 2030 targets. term, sustainable supply of crops, decarbonising efforts at our own contracts with logistics providers. For retail stores account for 9% of our mainly barley and rice. We generally plants and by our supplier Viking, example, they must train drivers to beer-in-hand footprint. purchase barley as a commodity. which has converted a large part of maximise fuel efficiency, and track While we only work directly with its heat generation to sustainable fuel use and emissions. We work closely with two major farmers in one country, Russia, we biomass. suppliers, Frigoglass and Klimasan, support sustainable agriculture more In some markets, where we operate to adopt the latest market broadly in several ways. MAKING OUR LOGISTICS our own fleets, we use telematics technologies and solutions, switching SMARTER programmes to monitor and improve to more energy efficient fridges and We invest in next-generation crops The logistics of getting our beer from our drivers’ awareness on the road. refrigerants that have a lower through the work of scientists at the breweries to warehouses and on to These have helped to cut emissions climate impact. This proactive Carlsberg Research Laboratory. Their bars, restaurants and retailers by by improving fuel efficiency, as well approach, combined with more ground-breaking efforts, highlighted road, rail and sea account for 12% of as reducing accidents and vehicle electricity from renewable sources in on page 11, include developing beer-in-hand emissions. wear and tear. In 2021, new route national grids, reduced our climate-tolerant and high-yield planning software will reduce our refrigeration emissions by 21% from varieties of barley. Emissions from transport decreased road mileage, further cutting 2015 to 2019. by 12% between 2015 and 2019. We emissions. In 2020, we took delivery Our beer-in-hand analysis enables plan to take advantage of improving of the first of our fleet of 26-tonne The fridges and beer coolers we us to identify drivers of emissions, technology to make our fleet more electric trucks in Switzerland – the provide to our retail customers last which we will work on factoring into sustainable. first of their kind manufactured by around eight years on average. To our purchasing decisions in the Renault Trucks. minimise their carbon footprint, all future. For example, higher-yield At our warehouses, whenever we new models we buy must use LED crops can significantly reduce carbon replace machinery such as forklift Even at its most efficient, transport lighting and refrigerants such as emissions from agriculture. This trucks we aim to switch from natural by road is a relatively high-carbon hydrocarbons that have a lower means we may buy grain from gas and diesel to electric models, solution. We therefore look for climate impact than regions that produce higher yields and from lead acid batteries to more opportunities to transport products hydrofluorocarbons. In 2020, 97% of even if this involves transporting our efficient lithium ion batteries. To do by train wherever national rail fridges and beer dispense equipment raw ingredients over longer this, we also need to invest in networks allow. In 2020, we purchased through our central distances, since it reduces overall suitable infrastructure for charging continued to use rail in Denmark, procurement team used low- carbon emissions. electric vehicles. We now have over France, Kazakhstan, Norway, climate-impact hydrocarbons & LED 1,550 electric powered forklifts, lightning.
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO CARBON FOOTPRINT 19 ZERO CARBON FOOTPRINT: OUR PROGRESS & TARGETS PLANNED ACTIONS FOR 2020 STATUS PROGRESS IN 2020 PLANNED ACTIONS FOR 2021 2022 TARGETS 1 2030 TARGETS Breweries We converted a coal-fired boiler at Poland’s Okocim Phase out coal at our two remaining coal-fuelled brewery to natural gas. Plans to convert the coal Convert the boiler at our Aurangabad brewery in Zero coal at our sites. boiler in India to biomass were delayed due to India – our last remaining use of coal – to biomass. breweries COVID-19. Explore additional on-site generation and power Increase use of renewable heat and electricity through We increased electricity from renewables to 64% (up purchase agreements to secure renewable electricity sourcing renewable power (such as international 100% electricity from from 56% in 2019) primarily by investing in more for all regions for 2022. Zero carbon emissions at renewable energy certificates and power purchase renewable sources at our renewable energy certificates. 28 breweries now our breweries agreements), biogas generation and on-site solar breweries operate fully or partly on biomass or biogas. Explore increasing use of renewable electricity for projects. heating. Increase use of biogas from wastewater to replace We upgraded equipment at breweries in China, natural gas. 50% reduction in carbon Estonia, Lithuania, Russia and Ukraine, and reduced Explore low-carbon alternatives with heat and gas Upgrade equipment to improve heat recovery. emissions at our heat usage where possible by optimising production suppliers to reduce carbon emissions. breweries processes. Support research on new renewable heat technologies. Beer-in-hand We completed a detailed analysis based on supplier Engage with major packaging and malt suppliers to input in line with the Greenhouse Gas Protocol (and support their transition to renewable electricity. Update beer-in-hand carbon footprint analysis using 15% reduction in beer-in- European Commission guidelines specific to beer). Continue to pursue reductions in carbon emissions 2019 data. hand carbon footprint This showed a 7% emissions reduction per hl from in the areas identified for all steps of the value 2015 to 2019. chain, from growing crops to packaging, transporting and chilling our beer. 30% reduction in beer-in- hand carbon footprint We engaged with refrigeration partners on low- climate-impact cooling, with farmers in Russia to Support local market teams with tracking and Introduce energy management systems in all improve barley yields, with suppliers to extend 100% low-climate- reducing beer-in-hand carbon footprint and engaging replacement fridges, where feasible, to reduce sustainable packaging solutions to more markets, and impact cooling with suppliers to reduce joint carbon footprint. electricity use and related carbon emissions. with logistics partners to improve the efficiency of our product transport. Fully Partially Not achieved achieved achieved 1 We have discontinued our target specifying 30 supplier partnerships as collaboration with suppliers has become such an integrated part of our approach. See page 16.
ZERO Water waste CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO WATER WASTE 20 ZERO WATER WASTE Water shortages directly hectolitre (hundred litres) of beer. affect communities and our We have already achieved an 18% business. reduction through best practice efficiency and water treatment Many parts of the world face upgrades at our breweries. And we increasing water scarcity challenges will accelerate progress with state- as the effects of climate change of-the-art water-recycling trigger droughts and alter rainfall technology. patterns. As soon as 2025, two thirds of people worldwide may be In 2020, we updated our water risk dealing with water shortages. And by assessment for 81 of our 86 2050, almost half of global GDP majority-owned breweries and could come from areas facing high finalised a ground-breaking scenario water risk.1 analysis with WWF to prepare for future risks to our business. The Water is an essential ingredient in findings will help us prioritise actions our products, and other key as we work with partners to protect ingredients, such as grain and hops, and improve water supplies for the need it to grow. Put simply, no water communities whose resources we means no beer. With 17 of our share. We disclose our management breweries located where water risk is of water risks to the CDP and high, our focus on pushing the achieved an A- rating in the latest boundaries of efficiency and assessment. technology is both a business and a sustainability priority. Industries like ours have a big role to play in safeguarding water supplies wherever we operate. That is why we have set ambitious global targets for ZERO water waste. By 2030, we aim to halve the amount of water used to make every 6.1, 6.2, 6.3 17.16 & 17.17 6.4, 6.5, 6.6 1 Source: WWF, October 2020. See SDG index, page 59.
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO WATER WASTE 21 Since ages a communal well has been our village’s water source. Day in day out, we took buckets of water from that well home for drinking, cooking and personal hygiene. Every day we anticipated the completion date [of the Huda project] to be able to FEATURE: ZERO WATER WASTE IN ACTION access freshwater for our daily life.” Villager, central Vietnam IMPROVING WATER QUALITY AND ACCESS IN VIETNAM Brewed and bottled in central public taps are available, they often First, we identified the communities we accelerated expansion to support Vietnam for 30 years, our popular run dry. most in need, then we collaborated over 14,000 more people as the Huda brand is deeply rooted in its with local people to plan how best to COVID-19 pandemic made the need local communities. The brewery put our commitment to provide clean, reliable fresh water. for reliable clean water even more safeguard shared water resources Projects included installing or urgent. Many people across the region still into action – bringing clean water at repairing water pipelines, reservoirs, get their drinking water from the turn of a tap to almost 20,000 wells, pumping stations, filter tanks, Huda’s highly effective approach unhygienic wells or ponds, store people. We partnered with local water flow meters and a concrete offers a useful template as we rainwater or are forced to buy costly authorities to construct new water dam. partner to extend water projects in bottled water to avoid drinking from infrastructure in five provinces, priority areas across Asia to fulfil our contaminated supplies. Even where including Thua Thien Hue, where the The projects we completed in 2019 2030 target to safeguard shared brewery is based. serve around 5,500 people. In 2020, water resources.
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO WATER WASTE 22 ZERO WATER WASTE ELIMINATING To meet our 2022 target (see box) and reduce our reliance on fresh • India: Our Mysuru brewery was recognised as a noteworthy water- WATER WASTE water, we will combine continued efficient unit in the 2020 WHAT WE FROM BREWING efficiency upgrades with investments Confederation of Indian Industries MEAN BY ZERO OPERATIONS in wastewater recycling and reuse. National Awards for excellence in We are building an advanced water management. WATER WASTE We employ best practices and the wastewater recycling plant in latest technologies to continually Denmark and are assessing the INNOVATING TO REUSE improve the efficiency of our 86 opportunities for other breweries. WASTEWATER Breweries: We aim to progressively breweries and avoid any water being Treating and reusing wastewater eliminate water waste in our wasted. Our focus on efficiency IMPLEMENTING BEST-IN- offers huge potential to shrink our operations by reducing water use at reduces costs and the risks to our CLASS EFFICIENCY MEASURES water footprint, while creating biogas all our majority-owned breweries business, as well as delivering We maintain rigorous environmental for our heat use. We have 58 (including soft drinks and water sustainability benefits. management standards at all our wastewater treatment plants in plants, but excluding malting sites). breweries (see page 12) that support operation at our breweries. All our operations at these sites are In 2020, it took 2.8 hl of water for continuous improvement. To drive covered, including offices, production our breweries to produce 1 hl of progress towards our targets, our At our Fredericia brewery in and warehousing. beer. That represents a 7% breweries invest in making water- Denmark, we are investing in improvement on 2019, saving more intensive cleaning and production advanced recycling technology that Our targets are to reduce relative than 1,100 Olympic swimming pools processes more efficient. Highlights will make it the world’s first brewery water use by 25% by 2022 and by of water. Overall, the water from 2020 include to virtually eliminate water waste. 50% by 2030 compared with the efficiency of our breweries has Once operational, the new water- 2015 baseline performance of 3.4 improved by 18% since 2015. • Vietnam: The Phu Bai brewery recycling plant will halve water hectolitres (hundred litres) of water installed two new bottle washers consumption at the brewery, cutting used to produce 1 hectolitre of our that, combined with best practice the amount of water used to produce beer and beverages (3.4 hl/hl). water management, have helped each hectolitre of beer from 2.9 hl to cut water use from 3.24 to 2.48 1.4 hl. Communities: We will begin hl/hl of beer produced. This will partnering to safeguard shared save the equivalent of 75 Olympic Construction of the plant began in water resources for communities in swimming pools per year. 2020 and the Danish Minister for areas identified as high-risk by 2022 Higher Education and Science and have a partnership in place in all • China: Our Dazhulin brewery is at attended a ceremony at the site (see high-risk areas by 2030. the forefront of implementing quote on next page), along with our Carlsberg operating practices in partners in DRIP – the public-private water management (see feature on partnership behind the project. next page). * 2020 data within PwC's assurance scope. 2015-2019 data assured in prior years (see previous sustainability reports).
CARLSBERG GROUP SUSTAINABILITY REPORT 2020 ZERO WATER WASTE 23 Other significant progress included building a state-of-the-art wastewater treatment plant at our We want to make Shumen brewery in Bulgaria, which Denmark a green and will begin operating in 2021. In sustainable pioneer Eastern Europe we built three country, and one of the wastewater treatment plants, in Novosibirsk, Rostov and St. things that means a lot to Petersburg. In India, our Alwar me is how we make more brewery introduced a rooftop green research work in rainwater harvesting system and society. Here in Fredericia, extended wastewater recycling. A you have done it, across new water-recycling plant planned business, government and for our Kolkata brewery was not installed due to COVID-19 researchers. lockdowns. Ane Halsboe-Jørgensen Danish Minister for Higher Education Looking further into the future, our and Science Young Scientists Community – a team of postdoctoral researchers CASE STUDY based at the Carlsberg Research Laboratory – developed a promising WATER WASTE DETECTIVES prototype that will reduce the water and chemicals needed for brewery cleaning. Our dedicated team at the Dazhulin brewery water. Based on this analysis, the team in China has made it their mission to introduced measures such as reusing water in MEASURING EVERY DROP dramatically reduce water waste. The brewery, cleaning processes and using less water in We source water for our operations one of our priority sites for water risk, is bottle washing and pasteurisation. These have from municipal supplies, boreholes at located within the Yangtze river basin. delivered big results for little additional cost. our own sites and surface water. We continually monitor intake at both The team scrutinised brewing and packing In just four months, the team reduced water site and global level to drive processes, checked all water pipes to detect used in beer production by 18% – from 2.7 to improvements and understand any leaks, inefficiencies or blind spots, and 2.2 hl/hl. Dazhulin’s striking success brings the broader performance trends. In installed more water meters to get a fuller brewery close to achieving our 2022 target to 2020, our total water consumption picture of water use in specific areas of explore going below 2.0 hl/hl at sites in areas decreased by 8% to 33 million m3. production. of high water risk. We are now sharing the team’s approach and lessons learned as best They also asked employees at every level to practice across our breweries. use their experience to share ideas for saving
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