{"id":21848,"date":"2017-11-13T16:53:42","date_gmt":"2017-11-13T21:53:42","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/anheuser-busch-inbev\/"},"modified":"2017-11-13T16:58:54","modified_gmt":"2017-11-13T21:58:54","slug":"anheuser-busch-inbevs-contribution-to-and-solutions-for-climate-change","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/anheuser-busch-inbevs-contribution-to-and-solutions-for-climate-change\/","title":{"rendered":"Anheuser-Busch InBev\u2019s Contribution to \u2013 and Solutions for \u2013 Climate Change"},"content":{"rendered":"

Due to its significant reliance on water, the beer industry is perhaps as directly affected by the potential impacts of climate change as any industry. \u00a0Current projections maintain greenhouse gases could cause a 27% increase in global land surface affected by severe drought within the century, and that the demand for water may surpass global supply by 2030.[1]<\/a><\/p>\n

As the largest beer company in the world, Anheuser-Busch InBev (AB InBev) is sensitive to any impacts to their raw materials and supply chain.\u00a0 Water is of particular concern. Their reliance on clean and abundant water is best illustrated by the fact that seven barrels of water are needed to produce one barrel of beer.[2]<\/a> Outside of the brewery, the net water footprint – which is the amount of water required to produce one liter of beer \u2013 reveals scale of the issue.\u00a0 Roughly 90% of the water footprint of beer production can be attributed to the agricultural supply chain that produces these raw materials.\u00a0 Additionally, the agriculture supply chain accounts for 33% of the carbon emissions in a North American produced beer.[3]<\/a> Consequently, AB InBev is not only affected by the impacts of climate change, but also contributes to its causes.<\/p>\n

AB InBev\u2019s<\/strong> Response to Climate Change<\/strong><\/p>\n

AB InBev readily acknowledges the long-term impact that climate change will have on their supply chain.\u00a0 In their 2016 Annual Report, the company identified that decreased water quality and quantity would cause increased production costs and lower capacity.[4]<\/a><\/p>\n

Short Term Plans<\/strong><\/p>\n

AB InBev has several projects ongoing that that will contribute to water sustainability and a decreased carbon footprint from energy use.\u00a0 Refrigeration is a contributor to the company\u2019s carbon footprint, and this past year 96% of their refrigeration purchases were eco-friendly units.[5]<\/a><\/p>\n

AB InBev will also continue to reduce is carbon footprint through efficiencies in packaging.\u00a0 They have reduced packaging weights by 126,800 tons since 2012.\u00a0 A specific illustration of this is demonstrated by the innovative reduction of Stella Artois bottle weight by 7%.\u00a0 In addition to packaging improvements, AB InBev has lowered waste through recycling initiatives that reduced waste sent to landfills by 26% this past year.[6]<\/a><\/p>\n

These short-term efficiencies will continue to be improved to further reduce the carbon footprint.<\/p>\n

Long Term Plans<\/strong><\/p>\n

AB InBev\u2019s plans to reduce its water footprint has two areas of focus.\u00a0 One, they plan to increase their plants\u2019 efficiencies.\u00a0 This has been a coordinated effort for several years, and they reduced their global usage to 3.17 hectoliters of water per hectoliter of production during this past year.[7]<\/a> Two, they have partnered with non-governmental organizations, such as The Nature Conservatory, to launch initiatives to improve water quality and availability in the communities where AB InBev is located.[8]<\/a><\/p>\n

Last March AB InBev announced that it would obtain all its electricity from renewable sources by 2025.\u00a0 Two months ago, this commitment began to come to fruition as AB InBev signed a Power Purchasing Agreement with Enel Green Power to supply 50% of AB InBev\u2019s electricity needs.\u00a0 This is enough to produce 20 billion cans of beer annually, and will substantially decrease their carbon footprint.\u00a0 Only 2% of the company\u2019s electricity is currently supplied by renewable sources.[9]<\/a><\/p>\n

Recommendations for the Future<\/strong><\/p>\n

There are two areas in which AB InBev can help mitigate the effects of climate change on their supply chain and the planet. \u00a0First, the company should continue to pursue regulatory and tax breaks for efforts that reduce their carbon footprint and water usage. This is especially relevant given the high number of countries in which they operate.\u00a0 Second, they should continue funding research not only on improved equipment technologies, but also on plant microbiome technology to make their crops more drought resistant.<\/p>\n

Questions Going Forward<\/strong><\/p>\n

The main question going forward is how profitable can these climate change initiatives be for a publicly traded company. \u00a0Will shareholders have a more short-term view and care less about charitable efforts to local communities if sales and profits drop?<\/p>\n

(792 Words)<\/p>\n

Citations<\/strong><\/p>\n

[1]<\/a> Rebecca Henderson, Sophus Reinert, Polina Dekhytyar, Amram Migdal, \u201cClimate Change in 2017: Implications for Business,\u201d HBS No. 9-317-032 (Boston: 性视界 Business School Publishing, 2017), p. 4.<\/p>\n

[2]<\/a> David Edmunds, \u201cBefore the Taps Run Dry: Incentivizing Water Sustainability in America\u2019s Craft Breweries,\u201d George Washington Journal of Energy & Environmental Law <\/em>(Spring 2016): 164. ABI\/INFORM via ProQuest, accessed November 2017.<\/p>\n

[3]<\/a> Ben Cooper. \u201cSustainability in Beer: Part I – Looking Beyond the Brewery,\u201d Just Drinks \u2013 Global News<\/em>, February 18, 2013. ABI\/INFORM via ProQuest, accessed November 2017.<\/p>\n

[4]<\/a> Anheuser-Busch InBev, 2016 Annual Report, p. 15, http:\/\/www.ab-inbev.com\/content\/dam\/universaltemplate\/ab-inbev\/investors\/reports-and-filings\/annual-and-hy-reports\/2017\/03\/AB%20InBev%20Annual%20Report%202016%20-%20Financial%20report.pdf, accessed November 2017.<\/p>\n

[5]<\/a> Anheuser-Busch InBev, \u201c2016 Better World Report,\u201d p. 19, http:\/\/www.ab-inbev.com\/content\/dam\/universaltemplate\/ab-inbev\/BetterWorld2\/reporting\/better_world_report\/ABInBev_2016BWR.pdf, accessed November 2017.<\/p>\n

[6]<\/a> Ibid., p. 19.<\/p>\n

[7]<\/a> Ibid., p. 15.<\/p>\n

[8]<\/a> Ibid., p. 15.<\/p>\n

[9]<\/a> \u201cAnheuser-Busch and Enel Green Power Announce Renewable Energy Partnership\u201d, Energy and Ecology Business<\/em>, September 17, 2017, ABI\/INFORM via ProQuest, accessed November 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"

Anheuser-Busch uses a lot of water in the production of beer. 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