CORPORATE RESPONSIBILITY

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HIGHLIGHTS
In the year ended 29 February 2012 the Group has:

  • REDUCED TOTAL USAGE OF ELECTRICITY BY 3.4% AND TOTAL USAGE OF NATURAL GAS BY 2.7%.

  • REDUCED THE TOTAL NUMBER OF HGV DELIVERIES IN IRELAND AND IN THE UK RESULTING IN A CARBON REDUCTION OF APPROXIMATELY 133 TONNES.

  • REDUCED ROAD MILEAGE FROM SUPPLIERS IN SCOTLAND BY ALMOST 21% THROUGH INCREASED LOCAL SOURCING OF THE BARLEY USED IN OUR BREWING PROCESSES.

  • SIGNIFICANTLY REDUCED THE AMOUNT OF WASTE THAT WE SEND TO LANDFILL.

  • REDUCED TOTAL WATER CONSUMPTION BY 8%.

  • REDUCED WATER CONSUMPTION TO 3.43 HECTOLITRES OF WATER USED PER HECTOLITRE (HL/HL) OF PRODUCT PRODUCED, SIGNIFICANTLY BELOW THE RECOGNISED GLOBAL BREWING BENCHMARK OF 4 HL/HL.

  • PUBLICLY SUPPORTED PROPOSALS FOR THE INTRODUCTION OF MINIMUM UNIT PRICING OF ALCOHOL.


SUSTAINABILITY PROGRAMME
Carrying out our business in a sustainable way benefits us, our stakeholders, the community and the environment. Sustainability not only reduces our costs but also reduces the impact that our business has on the environment.



INTRODUCTION

We operate a Group-wide corporate responsibility and sustainability strategy. A Director of Corporate Affairs has been appointed to oversee the development and implementation of this strategy.

ENVIRONMENTAL IMPACT & ENERGY

At each of the Group’s manufacturing facilities we have set up energy reduction teams who seek to reduce our impact on the environment, looking at ways of reducing energy and raw material consumption, waste going to landfill, and emissions, and ways of increasing transport efficiency and packaging optimisation. Each team reports monthly to the Group Manufacturing Director, who reports through the Group Chief Executive to the Board.

We continue to target the impact that our manufacturing operations have on the environment. Annual targets are established across all manufacturing sites to monitor and direct energy usage, water consumption and effluent discharge.

Compared with FY 2011, we have reduced our electricity usage from 40.44 million kWh to 39.07 million kWh, and we have reduced our natural gas usage from 94.93 million kWh to 92.34 million kWh. We are committed to further reducing our electricity and natural gas usage and have developed a reduction target of 11% by the end of FY 2015, against FY 2012 as a base year.

Sustainable management of our logistics operations has led to savings in the numbers of deliveries we make by road to our customers. During FY 2012 we have worked closely with our delivery contractors to increase loadfill efficiencies.

On deliveries from our facility at Clonmel in ROI to our national distribution centre (NDC) in Bristol, we increased the average number of pallets on each load from 24 to 26; on deliveries to customers within ROI we improved from 19 to 22 pallets and on deliveries from our facility at Shepton Mallet and the NDC to customers within the UK we went from 19.5 to 22 pallets. Together with other measures this reduced the distances travelled by around 200,000 km with a carbon reduction of approximately 133 tonnes. In addition in Scotland, through increased local sourcing of the barley used in our brewing processes, we have reduced the number of miles travelled by our suppliers by 21%, resulting in a further carbon reduction of approximately 60 tonnes.

Our manufacturing sites comply with local emission permits and are inspected by national enforcing agencies to assess compliance. Each site has an approved Environmental Aspects Register and a risk assessment model. Following a technical breach of the Greenhouse Gas Emissions Trading Scheme Regulations 2005, in December 2011 a C&C subsidiary received a civil penalty of £30,390 from SEPA (the Scottish Environment Protection Agency). This related to minor under-reporting of emissions from three small boilers at the Wellpark brewery, which, together, constituted less than 2% of the brewery’s overall emissions. The emissions and the failure to report them occurred in 2008 and 2009, and were reported to SEPA as soon as they were discovered following our acquisition of the brewery in September 2009. This issue has now been resolved fully to SEPA’s satisfaction.

Our cider manufacturing facilities at Clonmel and Shepton Mallet have been accredited with the Environmental Management Standard ISO 14001, and the facility at Clonmel continues to be accredited to the Irish Energy Standard IS EN 16001:2009. In order to obtain accreditation to these Standards, we have had to demonstrate that we have put in place systems and processes to provide significant energy usage reductions that result in an associated decline in costs and greenhouse gas (GHG) emissions through the systematic management of energy. The brewery at Wellpark continues to meet its regulatory targets, operating within the European Union Emissions Trading Scheme.

As members of the British Beer and Pub Association (BB PA), we participate in energy reduction initiatives, surveys and seminars. Our cider manufacturing facility at Clonmel works closely with the Sustainable Energy Authority of Ireland (SEAI). Awareness training ensures that all personnel are familiar with our environmental policy and our business’s environmental impact and the relevance of the Environmental Management Systems on each manufacturing site.

PACKAGING

We continue to look for ways to reduce the weight of our packaging. Measures this year include increasing the size of delivery of raw materials, consolidating the ordering of packaging materials across our manufacturing facilities, decreasing our stretchwrap usage on pallets, light-weighting PET Bottles, light-weighting bottle crowns at Clonmel, continuing further light-weighting of other packaging items and moving all glass bottles to ‘Load Hog’ layer pads.

CARBON CONSUMPTION

The Group continuously monitors the impact of its operations on the climate and we look to reduce our emissions. We assess and manage climate change related risks and opportunities, including the impact on the availability and security of our sources of raw materials, such as aquifers, orchards and maltings.

Whilst there is a risk that climate change may affect the availability and price of apples and other natural ingredients, we do not expect this risk to increase materially in the short term. Fossil fuel prices are likely to increase but to offset this we will seek increasing energy efficiency.

We measure our Scope 1 emissions (direct GHG emissions from fuel combustion), Scope 2 emissions (indirect GHG emissions from consumption of purchased electricity etc.) and Scope 3 emissions (other indirect emissions, such as purchased materials and supply chain emissions) in respect of all of our manufacturing sites and corporate offices. This is done in accordance with the Greenhouse Gas Protocol (GHG Protocol), the international accounting tool to quantify and manage GHG emissions.

The Wellpark brewery has been in the Climate Change Levy (CCL) Scheme for many years, and all our operations in the UK continue to be registered for the CRC Energy Efficiency Scheme. The CRC scheme features a range of reputational, behavioural and financial drivers to develop energy management strategies.

We actively target areas for reduction of our Scope 1 and 2 emissions. We have also measured the carbon footprint of key cider products over the entire product lifecycle, and used this to progress further carbon reductions in our external emissions. We seek to build on the success of the weight reduction of our packaging and the optimisation of our logistics operations. In ROI, we recovered approximately 3,300 tonnes of CO2 produced by the cider fermentation process and used it to carbonate our products.

In addition, we have capped the amount of g/Km of CO2 on all new company cars which will result in a reduction of 100 tonnes of CO2 emitted by our fleet each year.

We also participate each year in the Carbon Disclosure Project (CDP) Supply Chain Programme across the whole Group. GHG emissions for the Group are evaluated annually and posted on the CDP website. Further information on the CDP, including a copy of the CDP Ireland Report 2011, is available at www.cdproject.net.

WASTE

We have systems in place to maximise the recycling of the waste that we produce and minimise what we send to landfill. Our ultimate goal is to recycle or recover for reuse 100% of our waste products. In FY 2012, our manufacturing sites reduced the overall amount of waste sent to landfill by over 60%.

At Clonmel, we maintained our recovery and recycling rate of 99.2%. The amount of waste sent to landfill dropped from 38 tonnes in FY 2011 to 19 tonnes in FY 2012, a 50% reduction. At Shepton, our recovery and recycling rate was 84.2%. The amount of waste sent to landfill dropped from 92 tonnes in FY 2011 to 57 tonnes in FY 2012, a 38% reduction.

At Wellpark, we have been taking measures to ensure preparedness for the new Zero Waste Regulations announced by the Scottish Government, and no waste is sent directly to landfill. In FY 2012 just under 60% of the waste produced at Wellpark was segregated at source for recycling. The remainder was sent to a third party waste management provider for source segregation and recycling and disposal. We have not been able to obtain accurate data for how much of this is recycled and are therefore working closely with our waste management provider to obtain accurate data for this coming year. In order to ensure that our products comply with relevant packaging waste regulations, our UK manufacturing facilities are members of Valpak and our facility in Clonmel is a member of Repak. Annual submissions of our total sales are made to these organisations and these submissions are available for external audit.

WATER

The Group’s manufacturing sites are not located in any region identified as prone to drought, and water scarcity is not considered to be a critical risk for our business. Nevertheless, water preservation and management is an important business consideration for the Group and we continue to monitor the usage of water per hectolitre of finished product from each manufacturing facility and across our supply chain.

The Group is participating in the 2012 CDP Water Disclosure initiative, which will include data on water usage from all of our manufacturing facilities. The results of this year’s report will be posted on the CDP website later in 2012.

In FY 2012, our total water usage was 16.32 million hectolitres, a reduction of 8% on FY 2011. This implies total water consumption of 3.43 hectolitres of water used per hectolitre (hl/hl) of product produced, significantly below the recognised global brewing benchmark of 4 hl/hl.

Our continuing aquifer protection programme in Clonmel has resulted in us retaining our successful accreditation to the Irish IS 432:2005 Spring Water standard. Across the Group, we continue with our projects on brewery condensate recovery, reclaiming pasteuriser, bottle rinse water, fruit processing, and minimising plant and process cleaning systems. At Clonmel, we treat waste water at our anaerobic wastewater treatment plant and we use biogas, a byproduct, to fuel the boilers used on site.

PROCUREMENT

We have a sustainable and ethical procurement policy in place, the implementation of which is regularly monitored by the Board via the Group Manufacturing Director. To demonstrate compliance with this policy, each business unit is required to provide access to its audit and review records, its procedure manuals and its staff training materials for audit purposes.

Our procurement policy states that our purchasing and procurement decisions should consider whole life cost and the associated risks and implications for society and the environment. Appropriate sustainability requirements are specified in initial tender documentation for suppliers. We seek to establish key performance indicators for sustainable procurement and to have compliance monitoring rights. To this end we have joined Sedex (the Supplier Ethical Data Exchange), an organisation dedicated to driving improvements in responsible and ethical business practices in global supply chains. In FY 2013, we are planning to formally audit key suppliers against our procurement standards.

We seek to support our suppliers through entering into long term supply arrangements with our suppliers of apples, barley and malt, our key raw materials.

GREEN PRODUCTION

In FY 2012, we milled a record number of apples – 45,000 tonnes from our orchards and from the orchards of our suppliers in ROI for Clonmel and 36,000 in the UK for Shepton. We are also encouraging apple growers to plant early harvesting varieties to increase the availability of apples in the off season.

We encourage sustainable agricultural practices and the preservation of biodiversity. We are actively involved in the National Association of Cider Makers (NACM) which takes the lead in adopting and working to sustainable principles both in the physical and social environment, and carries out annual climate change assessments.

We have continued the Green Apple Awards, a biennial competition open to all contracted growers who supply apples to the cider mill at Shepton. Growers are encouraged to practise Integrated Pest Management, which involves the use of carefully timed sprays to minimise usage and the impact on beneficial insects. We continue to work closely with the Farming and Wildlife Group at Somerset County Council.

COMMUNITY ENGAGEMENT

Dialogue with customers
Understanding the views of our stakeholders is an important part of our business. We take feedback from our customers very seriously, and our divisional managing directors are partially targeted on the basis of their customer satisfaction results. In the UK, our customers’ organisations are surveyed by Advantage Group, an independent provider of business relationship benchmarking, covering all areas of our interactions with customers from supply chain to marketing support. In ROI, similar “Voice of Customer” surveys of our on-trade and off-trade customers are carried out by Behaviour and Attitudes, an independent research agency.

ROI
In ROI, our Bulmers brand made the community an essential part of its marketing campaign during FY 2012. The ‘Doing Our Bit’ campaign was centred on the desire to engage consumers and our brand in the common goal of helping the community. As part of the ‘Doing Our Bit’ campaign we ran a Golden Apple promotion where winners received €2,500 for themselves and €2,500 for a community cause of their choice. We also engaged in many local community activities.

Northern Ireland
Tennent’s Vital is Northern Ireland’s biggest music festival and in 2011. Through ‘Tennent’s UnTapped’, two unsigned acts were offered the chance to showcase their music by playing onstage at the event.

Scotland
Tennent’s is a founding partner of T in the Park, one of the top music festivals in Europe, which helps bring some of the world’s biggest music stars to Scotland. Since 1996, Tennent’s T Break has enabled the most fresh and exciting unsigned talent in Scotland to showcase their music on the T Break Stage at T in the Park. The T Break team also offers one student a six-month music internship.

Tennent’s sponsorship of Celtic and Rangers football clubs also has a strong community element, with the “Could Have Been A Player” programme enabling some of our consumers to live their footballing dream by playing at the clubs’ stadiums. We donated sponsorship rights to Celtic and Rangers U19 and Women’s teams to promote the clubs’ respective Charity Foundations.

The Tennent’s Training Academy, a £1 million centre of training excellence for the pub and hospitality industry, was opened at Wellpark in 2010 and is helping increase skills across the Scottish hospitality industry. Over the last two years the centre has trained over 5,000 academy students across a range of courses. As a result of our new investments in Wellpark since 2009, 50 new jobs have been created both at the bottling line and in other areas of our business. Scotland’s First Minister has praised the leadership role Tennent’s has played in training and employment creation across the Scottish hospitality sector.

We have also strengthened our links to Scottish farmers, and all of our barley for Caledonia Best and Tennent’s Original Export is sourced from Scottish farms. We are donating 5p from every pint of our new Caledonia Best ale during its first six months of sale to support Scottish brewers and farmers.

England
Our Shepton cider mill is a large employer in the west of England, employing approximately 160 people locally. We actively support local and regional community initiatives to build strong relationships with local people and businesses, key stakeholders and media in the West Country. In the past year we have also supported the Irish and British Beekeepers Associations.

Our various subsidiaries support many charities in various ways.

RESPONSIBLE DRINKING

The Portman Group
C&C is a member of The Portman Group, the UK industry body set up to ensure that the marketing and promotion of alcohol is consistent with responsible drinking. The Portman Code of Practice seeks to ensure that alcohol is promoted in a socially responsible manner and only to those over 18 years of age. The Code applies to the naming, packaging and promotional material and activity of all pre-packaged alcoholic drinks which are marketed for sale and consumption in the UK. We include in this all advertising, the brand name, product descriptor, packaging, print media, internet and other new media, sponsorships, promotions (on- and off-trade), labelling and point of sale materials. During 2011, we assisted with The Portman Group’s review of their Code of Practice. An updated code will be implemented over the next 12 months.

Public Health Responsibility Deal
In March 2011, the Group joined with 170 companies to sign up to the UK Coalition Government’s “Public Health Responsibility Deal” with the aim of working in partnership with Government and other organisations to improve public health through their influence over food, alcohol, physical activity and health in the workplace. This long-term programme sees companies commit and report on a series of pledges aimed at tackling alcohol misuse.

In March 2012, the Group joined with the majority of the alcohol industry to pledge a reduction in the period between now and 2015 of one billion units of alcohol consumed in the UK from the 52 billion currently anticipated to be consumed in that period, with 30 million of that reduction coming from the Group’s products. This will be achieved by, amongst other things, improving the choice available of lower strength products and reducing the strength of existing products.

Scottish Government Alcohol Industry Partnership (SGAIP)
Tennent’s was a founding and remains an active member of the SGAIP, which was established in February 2007 with the aim of reducing alcohol misuse in Scotland. The SGAIP has undertaken various initiatives over the last five years towards achieving this objective, the most recent of which was the review and re-launch of the Scottish Alcohol Sponsorship Guidelines in March 2012.

Minimum Unit Pricing
The Scottish Government has begun legislating to introduce minimum pricing for alcohol, and in the rest of the UK and Ireland consultations on minimum unit pricing are anticipated. In each market we support these proposals as long as they are fair, proportionate and reasonably implemented, and are part of an overall programme to reduce the abuse of alcohol. During First Minister Alec Salmond’s visit to Wellpark in March 2012 he commended Tennent’s for the exemplary corporate social responsibility we have demonstrated in Scotland through our support of minimum pricing for alcohol.

Responsible Drinking Initiatives
The Group has continued its commitment to responsible drinking messages throughout the last 12 months and we are an active member of Drinkaware. In April and September 2011, Tennent’s again donated advertising space including the club magazines, match programmes, LED Perimeter Boards, TV interview backdrops and players’ pre match T-shirts to Drinkaware’s “Why Let Good Times Go Bad?” campaign. Drinkaware acknowledged Tennent’s support in Scotland and Northern Ireland of its “Why Let Good Times Go Bad” as examples of “Best Practice” in their review of the 2011 campaign. All of our brands and our marketing activity carry responsible drinking messages.

‘T in the Park’, where Tennent’s is the founding partner, leads the way, working with government and others, in communicating responsible drinking messages. During the festival, Tennent’s donated for free 50% of the contracted advertising space on the large screens by the two main stages and on the outside back cover of the Official Event Programme to Drinkaware. In addition, Tennent’s once again operated ‘Be Chilled’ at ‘T in the Park’, which comprises a facility for consumers camping at the festival to pre-order and collect chilled Tennent’s Lager to encourage trading down; 4-packs were the most popular pack size over the weekend. The initiative was promoted in advance of the weekend, with all communications carrying responsible drinking messages including emphasis on eating (‘Healthy T’) and alternating drinking alcoholic drinks with water. T in the Park provides free drinking water across the festival site via standpipes.

ROI
Bulmers adheres to all of the alcohol marketing, communications and sponsorship codes of practice in place in ROI.

Bulmers is committed to promoting the responsible serving, and consumption of alcohol in ROI, and it is a member of the Alcohol Beverage Federation of Ireland (ABFI ) and the Mature Enjoyment of Alcohol in Society Limited (MEAS). We adhere to the ABFI and MEAS voluntary codes governing both the placement and promotion of alcohol. All brand communications carry the “Enjoy Bulmers Sensibly Visit drinkaware.ie” taglines, and Bulmers contributes, financially and through the provision of marketing resources and expertise, to the production of drinkaware.ie communications and media planning in Ireland.

Export markets
We are working with our distributors to ensure that the marketing and sale of our products in our export markets complies with all relevant local laws and regulations in this regard.

Public policy leadership
The Group seeks to influence public policy in areas relating to the beverage industry through its active membership of numerous trade bodies and associations. We are a member (and currently vicechair) of the National Association of Cider Makers (NACM), and during the next 12 months we hope to take over the chair. The objectives of the NACM are, amongst other things, the promotion of the merits, qualities, heritage and authenticity of cider and the cider-making industry, engagement with taxation, regulatory and opinion-forming bodies having an interest in cider and/or alcohol generally, and leading the broader alcohol industry by example in sustainability, community engagement and alcohol responsibility. The NACM is also the first drinks trade body to work with Business in the Community (BI TC) to address sustainability, and we have undertaken the BI TC’s “Responsible Business Checker”, which ran a comprehensive analysis of our business operations.

In addition, we also look to influence public policy through our active memberships of various other trade and industry bodies.

EMPLOYEES

Developing, engaging and rewarding employees fairly is fundamental to the success of our business and also to the relationships that we have with the local communities in which we work.

We are an equal opportunities employer. We aim to create a working environment in which all individuals are able to make best use of their skills, free from discrimination or harassment, and in which all decisions are based on merit.

We have a formal equal opportunities policy that commits us to promoting equality of opportunity for all our staff and job applicants. For our operations in Northern Ireland this includes adherence to the MacBride Principles.

Our policy states that we do not discriminate on the basis of age, disability, marital status, ethnicity, creed, sex or sexual orientation. The policy also requires our staff to treat customers, suppliers and the wider community in accordance with these principles as well.

Training and development
This year we launched a performance and people review process which facilitates structured discussions between all employees and their line managers and covers their objectives, performance, potential and development.

Employee engagement
We take employee engagement seriously. A confidential employee survey is undertaken annually by an external facilitator. Topics covered include communication, supervision and management, career development, work-life balance, working conditions and engagement. The results are reported to the Board and to senior management. The reasons for any areas of low engagement are analysed and action is taken to address matters of concern. This year 89% of our employees participated in the survey. A range of levels of engagement was found around the Group, to a large extent reflecting the relative business success, investment and level of organisational change experienced by each business unit.

Health & Wellbeing of employees
Last year, we held for the first time a Health & Safety Day at each manufacturing site. This was a day on which no manufacturing took place and during which all employees participated in various safety workshops and training programmes. This will be an annual event to positively reinforce our commitment to reducing workplace risk and improving safety culture. We measured the success of these days as part of the employee survey referred to above.

Last year, we reduced our total accident rate by over 21%. ‘Total accidents’ includes non-lost time, lost time and reportable accidents. Some other measures we have been taken to improve Health and Safety performance in FY 2012 include:

  • An SHE (Safety, Health & Environmental) Manager appointed to coordinate all SHE activities across the entire group as well as having an SHE manager in each manufacturing site and an SHE champion for each commercial office.

  • A group operations committee reviews monthly manufacturing SHE KPIs.

  • Health & safety is now included in the performance evaluations of all operations employees.

  • Six-monthly Health and Safety Reports are reviewed by C&C’s main board.

  • A new group policy for the safe evacuation of restricted mobility persons from our offices.

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