As the leading wine producer in Latin America and the fifth largest winery worldwide in terms of volume traded, Vi\u00f1a Concha y Toro (CyT) is certainly exposed to the climatic phenomena, which can impact its vineyard\u2019s production yields, further affecting supply volumes and prices.<\/p>\n
Climate is one of the main determinants of the environmental conditions in which living organisms develop; and human\u2019s social and economic activities are not alienated to this rule. Precisely, agriculture represents one of the sectors that are particularly sensitive to the problem of Climate Change. In fact, the essence of these activities is the capture of carbon dioxide and its transformation, in conjunction with other elements that act as nutrients, to more complex organic products, such as wine.[1]<\/a> In addition, we should consider Concha y Toro\u2019s substantial dependency on water to carry out its business, in light of studies which confirm that \u201cover the next decades, it is predicted that billions of people, particularly those in developing countries, would face shortages of water and food and greater risks to health and life as a result of climate change\u201d.[2]<\/a> Actually, according to 2006 data, in Chile, 83 percent of water is used for agriculture (46 percent for crop irrigation) and another 13 percent is for industry.[3]<\/a><\/p>\n The problem in this particular case is that, in turn, global warming is partly being caused by human emissions of greenhouse gases (GHGs), and one of the primary sources of same GHGs emissions is agriculture, forestry and other land uses, contributing nearly 24% of total GHGs global emissions[4]<\/a>; meaning that CyT is both affected by and contributing to Climate Change. Therefore, CyT has showed actively commitment to the Sustainable Development Goals raised by United Nations in 2015.<\/p>\n The company has addressed this matter very seriously, becoming a pioneer in the industry in relation to the sustainability of its operations. In terms of resource management, CyT\u2019s whole area of vineyards uses drip irrigation systems, which results in significant savings in water consumption. Currently, the winery\u2019s water footprint is 36% lower than the industry average; however, the company has set the goal of further reducing total water consumption by 10% per glass of wine by 2020[5]<\/a>. Another initiative designed to adapt the operations management in the face of Climate Change is the \u201cDefoliation Project\u201d, which consists in \u201cremoving the foliage leaves from the grape bunches to artificially adjust their solar exposure to minimize the damage produced by the sun\u2019s rays and maximize the productive and qualitative potential of the vineyard\u201d[6]<\/a>. Regarding externalities management, the long-term initiatives developed by Concha y Toro can be summarized in the implementation of measurement tools such as the Carbon Footprint, which allows it to better manage not only its direct emissions (mainly coming from agricultural activities, land use and fuel consumption), but also its indirect emissions (electric energy consumption as well as transport and packaging related activities). Furthermore, CyT has created an owned Carbon Fund, a global initiative that internally taxes CO2<\/sub> emissions, internalizing its own cost of pollution[7]<\/a>. Simultaneously, the company has been measuring its Water Footprint, becoming the first winery in the world to make this measurement and a leader in responsible water management[8]<\/a>.<\/p>\n In my opinion, I would say that Concha y Toro has basically one main area of improvement in relation to how it could alleviate its contribution to Climate Change: leverage its position to increase awareness among suppliers, business partners, competitors and customers towards Climate Change effects, encouraging them to act accordingly and help making all their business a more sustainable activity. For instance, I would recommend CyT to gradually enforce their packaging suppliers to meet certain compliance standards with respect to their GHGs emissions and recycling practices. Another initiative could aim to transport business partners (mainly maritime shipping companies and truck transporters), which could begin by measuring their carbon footprint, commit to reduce it, and eventually, take part of Concha y Toro\u2019s Carbon Fund Project.<\/p>\n While Concha y Toro continues its growth plan, it becomes clear that sustainability is one of their top priorities. However, is it enough to be responsible only for the environmental effects of your own business, or should Concha y Toro go further and take responsibility for the impact of the whole supply chain? Besides, will these initiatives be sustainable on the long term run as competitive landscape and shareholders will continue to push for profitability?<\/p>\n (Word Count: 733)<\/p>\n <\/p>\n <\/p>\n <\/p>\n [1]<\/a> Luis A. Cifuentes, Francisco Meza, \u201cCambio Climatico: Consecuencias y Desafios para Chile\u201d. Pontificia Universidad Catolica de Chile, Centro Interdisciplinario de Cambio Global (CICG-UC), August 2008, p. 8.<\/p>\n [2]<\/a> Climate Change Secretariat, \u201cClimate Change: Impacts, Vulnerabilities and Adaptation in Developing Countries\u201d. United Nations Framework Convention on Climate Change (UNFCC), 2007, p. 5.<\/p>\n [3]<\/a> Food and Agricultural Organization for the United Nations (FAO), 2016. AQUASTAT website. http:\/\/www.fao.org\/nr\/water\/aquastat\/countries_regions\/CHL\/index.stm<\/a>. ABI\/INFORM via ProQuest, website accessed on November 2017.<\/p>\n [4]<\/a> Rebecca M. Henderson, Sophus A. Reinert, Polina Dekhtyar, Amram Migdal, \u201cClimate Change in 2017: Implications for Business\u201d. HBS No. 9-317-032 (Boston: 性视界 Business School Publishing, 2017), p. 1-2.<\/p>\n [5]<\/a> Vina Concha y Toro, Sustainability Report 2016, p. 45. https:\/\/www.conchaytoro.com\/wp-content\/uploads\/2017\/08\/Sustainability-Report-2016.pdf<\/a>. Accessed on November 2017.<\/p>\n [6]<\/a> Concha y Toro\u2019s Center for Research and Innovation, 2016. http:\/\/www.cii.conchaytoro.com\/r-d-i-projects<\/a>. Accessed on November 2017.<\/p>\n [7]<\/a> Vina Concha y Toro, Sustainability Report 2016, p. 50. https:\/\/www.conchaytoro.com\/wp-content\/uploads\/2017\/08\/Sustainability-Report-2016.pdf<\/a>. Accessed on November 2017.<\/p>\n