Heineken Sustainability Report: one of the better reports this year

Company:

Established in 1864, Heineken has a long history as an independent global brewer. Today, Heineken is the number one brewer in Europe and the number three brewer by volume in the world. With recent acquisitions in Africa, India, Asia and Latin America, Heineken is continuing to increase its presence within emerging markets. Heineken employs over 85,000 people and has operations in over 70 countries. Heineken owns more than 250 beer, cider and soft drink brands. Main (global) brands are: Heineken, Amstel, Desperados, Sol, and Strongbow. Heineken has a long history of reporting on sustainability. Its first environmental report was published in 2000, with external assurance.

 

Content:
Heineken has chosen to publish its sustainability report in an online environment in which it provides numerous direct links to related information (movies, case studies, etc.). I might be a little old-fashioned, but for my analysis of the Heineken report I downloaded the entire report as a PDF file. I ended up with a document of over 300 pages, which reminded me of the old days when bigger was still better.  

 

Heineken has chosen to structure its report in line with its sustainability strategy. Its main objective is ‘brewing a better future’. This ambition spans three strategic imperatives around which Heineken has built its sustainability programs and reporting: improve, empower, impact. Each of these imperatives has been divided into sub-themes. I’m always in favor of the approach in which a report is structured in line with the sustainability strategy, as this helps to bring focus to a report and increases its readability. In conclusion, Heineken has described four focus areas on which it wants to focus the coming years: CO₂, water, sourcing and responsible consumption.

 Furthermore, Heineken has clearly described its value chain and the impact it has in all steps of value creation. This is best of class as it helps readers to assess the impact of the company in all areas in which it operates. Also, the different focus areas (CO₂, water, sourcing and responsible consumption) are plotted on different steps of the value chain, making it clear where the impacts of these focus areas lie.

 

Again, Heineken’s materiality assessment provides one the better examples I’ve seen so far this year. A clear link is made between the stakeholder dialogue, the consequent materiality assessment and the resulting focus areas that Heineken will be focusing on the next few years. A point for improvement would be to further clarify the link between the sustainability strategy and the overall business objectives (‘strategy to win’). Although this link is emphasized in the report, it doesn’t become fully clear how the one supports the other.

 The Heineken report also contains a clear overview of the targets which were set alongside its focus areas (i.e. strategy) and the progress Heineken has made toward these targets. The targets are SMART and long-term based, most of them aiming for considerable reductions by 2020. The performance against targets is nicely depicted in the graphs.

 

Communication:

Again, I might be little old-fashioned, but the PDF version of the report does not contain an index, which makes it quite complex to navigate through the document and get a comprehensive overview of the report’s structure (which is especially needed as the document is over 300 pages long). Heineken might be ‘overdoing’ it by providing too much information, which diverts focus from the key message it wants to convey. A summary report with key information on strategy, objectives and performance is available, but unfortunately not as part of the standard download and microsite.   

 On the other hand, the PDF version contains numerous links to the website, which help link the report to (further) information available on the website. The report is laced with case studies which provide nice background information and real-life examples.

 

Credibility:

Collecting data for a large number of operations all around the globe is a challenge. I’m sure Heineken will agree. In the section ‘reporting basis’ we can find some evidence of this. Heineken doesn’t seem to be very forthcoming in disclosing this information, and there are several paragraphs which highlight this (in a relatively vague manner not used in the remainder of the report). For example, it is stated that for several operating companies no measured data was available and estimates were used. Although this is perfectly normal in sustainability reporting, companies usually provide insight in the proportion of estimated data (for instance in a percentage) to make the impact clear to readers. Heineken does not.

 Furthermore, there is also a paragraph with the baleful header ‘Qualified reliability of safety and environmental data in production’. What is this? This doesn’t sound too good. Again, the text is very vague and doesn’t provide any (real) answers to questions like what is the impact of the perceived qualified reliability? The paragraph reads like text included as a result of serious findings, and by means of which the sustainability accountant wants to limit his or her responsibility. Let’s have a look at the assurance report then…

 Heineken has requested its accountant to provide limited assurance on its full reporting. However, based on the overall excellence of the report, and the importance that Heineken says it places on sustainability, I would have expected reasonable assurance on (at least some) key indicators. Especially since Heineken has received assurance on its reporting since 2000. I know this is a huge challenge for a truly global company with operations all around the globe. However, it would match the ambition I feel in the remainder of the report. Moreover, reasonable assurance is the true test of data accuracy, which is imperative in order to truly monitor, benchmark and manage performance in the area of sustainability. Furthermore, the assurance report does not include recommendations from the accountant, which I always regard as the most insightful part of the assurance report.

  

Recommendations:

§  Increase the level of external assurance.

§  Further integrate the annual reporting in the sustainability report

 

Nick de Ruiter is a partner at Sustainalize (www.sustainalize.nl), a global CSR consulting firm which specializes in CSR, CSR reporting, CSR strategy, performance monitoring and external AA1000 assurance.