News & Publications

Sector Reports - 17/01/2019

The Beverage sector displays limited performance in its management of water, despite this being a crucial resource for the industry

With predictions that there will be more plastic than fish in the sea by 2050, reducing the impact of packaging is another key challenge for the sector

The report provides Vigeo Eiris’ exclusive opinion on 52 companies in the Beverage industry, and includes the sector’s strengths, innovations and best practice as well as controversies, vulnerabilities and emerging issues such as obesity, alcoholism and pollution from packaging. Performance scores and advanced indicators are provided on critical issues such as energy transition, business ethics, due diligence on social and environmental risks in the supply chain, human capital and human rights, governance, executive remuneration, transparency on taxes, integrity of lobbying practices, the level of sustainable products & services, and contribution to the UN Sustainable Development Goals.

 

Key Findings:

  • The Beverage sector is divided into two main subsectors: alcohol and non-alcohol producers, and contains brewers, distillers and vintners, soft drink producers and bottlers.
  • Vigeo Eiris awarded an average overall score of 32.2/100 to companies in the Beverage sector, on a scale of 0 to 100. The sector’s performance has improved slightly (+2.87%) since our previous analysis.
  • The sector ranks 14th out of Vigeo Eiris’ 39 sectors, covering a total research universe of 4,500 companies. Previously, the sector ranked 18th.
  • Sector leaders are concentrated in Europe, including Pernod-Ricard (63/100), Coca-Cola HBC (60/100) and Diageo (59/100). Laggards are mostly listed in Asia Pacific with an average overall score of (26/100), which is mainly due to a lack of reporting, particularly on environmental and social issues.
  • The Beverage sector reporting rate is 60%, which is above the universe average (55%). European companies display a higher level of reporting on ESG issues than other regions.
  • ESG risk mitigation scores are limited in relation to reputation (33/100) and operational efficiency (32/100), and weak in relation to human capital (29/100). In terms of managing issues affecting legal security, Beverage companies display a limited average score (36/100).
  • The Beverage sector’s ability to tackle climate change and support the transition to a low-carbon economy remains weak (28/100). European companies lead the sector in efforts to adapt their business model and manage the risks and opportunities associated with energy transition.
  • 27 Beverage companies face controversies, including two currently on Vigeo Eiris’ Warning List that face frequent and highly severe controversies about which they are non-communicative. One company faces a critical controversy and 10 companies face controversies of high severity. Nine companies are non-communicative on the allegations against them. Five companies display a weak performance in terms of controversy risk mitigation. The most recurrent controversies relate to labelling and marketing, social and economic development, anti-competitive practices, societal impacts of products and product safety.

Key Takeaways:

  • Obesity: In the context of more than 30 countries introducing sugar taxes, 21 beverage companies have added healthier products to their portfolio. However, the number of soft drinks companies facing controversies that link their drinks to health problems such as obesity is increasing (9 out of 52 companies).
  • Alcoholism: In response to growing demand for lower alcohol drinks, companies are offering low and no alcohol options. However, the sector’s overall performance remains limited on this issue, with only 6 companies reporting on commitments to reduce the alcohol content of their portfolio and only 10 companies reporting on key performance indicators.
  • Water: Due to the nature of its products, water remains the key input and resource for the Beverage sector during both agricultural and production stages. However, the sector’s average water management performance remains limited (36.7/100) and companies continue to lack reporting on systems to reduce their water consumption during the agricultural stage.
  • Labour rights: The Beverage sector is highly vulnerable to violations of labour rights across its operations and agricultural supply chains. While the sector shows some improvement, with 23 companies reporting on relevant commitments and means to address this topic, only 5 companies disclose quantitative data on the number of corrective measures implemented to address labour rights problems.
  • Packaging: With predictions that there will be more plastic than fish in the sea by 2050, the Beverage industry has a key role to play in reducing the impacts of its packaging. Although most companies identify this issue and include it in their reporting, overall there is a lack of strong commitments and quantified data, resulting in a weak performance for 31 companies within the sector.

Best performing areas:

  • Development of an Environmental Strategy
  • Fair labelling and marketing practices
  • Shareholders’ rights

Worst performing areas:

  • Management of atmospheric emissions
  • Responsible reorganisations
  • Responsible lobbying

Top performing companies:

  • Europe: Pernod-Ricard (63/100)
    North America: Coca-Cola European Partners (45/100)
  • Asia Pacific: Asahi Group Holdings (35/100)
  • Emerging Markets: Coca-Cola Icecek (45/100)

Companies making best progress since 2017:

  • Europe: Diageo (+11)
  • North America: Coca-Cola European Partners (+8)
  • Asia Pacific: Coca-Cola Bottlers Japan (+4)
  • Emerging Markets: No progress

To view an excerpt of our 2018 Beverage sector report, download the document below.
To enquire about accessing our sector reports, please contact the relevant team below:
If you are an investor: investorcustomer.service@ns3046646.ip-46-105-104.eu
If you are a corporate entity: corporatecustomer.service@ns3046646.ip-46-105-104.eu
If you are an NGO or a university: contact.academique@ns3046646.ip-46-105-104.eu
If you are a journalist: news@ns3046646.ip-46-105-104.eu

Download :
icon-download-34x36 Key Findings_Beverage_Oct_2018
Keywords : ESG