Relevant Issues (6 of 26)
- GHG Emissions
- Air Quality
- Energy Management The category addresses environmental impacts associated with energy consumption. It addresses the company’s management of energy in manufacturing and/or for provision of products and services derived from utility providers (grid energy) not owned or controlled by the company. More specifically, it includes management of energy efficiency and intensity, energy mix, as well as grid reliance. Upstream (e.g., suppliers) and downstream (e.g., product use) energy use is not included in the scope.
- Water & Wastewater Management The category addresses a company’s water use, water consumption, wastewater generation, and other impacts of operations on water resources, which may be influenced by regional differences in the availability and quality of and competition for water resources. More specifically, it addresses management strategies including, but not limited to, water efficiency, intensity, and recycling. Lastly, the category also addresses management of wastewater treatment and discharge, including groundwater and aquifer pollution.
- Waste & Hazardous Materials Management
- Ecological Impacts
- Human Rights & Community Relations
- Customer Privacy
- Data Security
- Access & Affordability
- Product Quality & Safety
- Customer Welfare
- Selling Practices & Product Labeling The category addresses social issues that may arise from a failure to manage the transparency, accuracy, and comprehensibility of marketing statements, advertising, and labeling of products and services. It includes, but is not limited to, advertising standards and regulations, ethical and responsible marketing practices, misleading or deceptive labeling, as well as discriminatory or predatory selling and lending practices. This may include deceptive or aggressive selling practices in which incentive structures for employees could encourage the sale of products or services that are not in the best interest of customers or clients.
- Labor Practices
- Employee Health & Safety
- Employee Engagement, Diversity & Inclusion
Business Model & Innovation
- Product Design & Lifecycle Management The category addresses incorporation of environmental, social, and governance (ESG) considerations in characteristics of products and services provided or sold by the company. It includes, but is not limited to, managing the lifecycle impacts of products and services, such as those related to packaging, distribution, use-phase resource intensity, and other environmental and social externalities that may occur during their use-phase or at the end of life. The category captures a company’s ability to address customer and societal demand for more sustainable products and services as well as to meet evolving environmental and social regulation. It does not address direct environmental or social impacts of the company’s operations nor does it address health and safety risks to consumers from product use, which are covered in other categories.
- Business Model Resilience
- Supply Chain Management The category addresses management of environmental, social, and governance (ESG) risks within a company’s supply chain. It addresses issues associated with environmental and social externalities created by suppliers through their operational activities. Such issues include, but are not limited to, environmental responsibility, human rights, labor practices, and ethics and corruption. Management may involve screening, selection, monitoring, and engagement with suppliers on their environmental and social impacts. The category does not address the impacts of external factors – such as climate change and other environmental and social factors – on suppliers’ operations and/or on the availability and pricing of key resources, which is covered in a separate category.
- Materials Sourcing & Efficiency The category addresses issues related to the resilience of materials supply chains to impacts of climate change and other external environmental and social factors. It captures the impacts of such external factors on operational activity of suppliers, which can further affect availability and pricing of key resources. It addresses a company’s ability to manage these risks through product design, manufacturing, and end-of-life management, such as by using of recycled and renewable materials, reducing the use of key materials (dematerialization), maximizing resource efficiency in manufacturing, and making R&D investments in substitute materials. Additionally, companies can manage these issues by screening, selection, monitoring, and engagement with suppliers to ensure their resilience to external risks. It does not address issues associated with environmental and social externalities created by operational activity of individual suppliers, which is covered in a separate category.
- Physical Impacts of Climate Change
Leadership & Governance
- Business Ethics
- Competitive Behavior
- Management of the Legal & Regulatory Environment
- Critical Incident Risk Management
- Systemic Risk Management
Disclosure Topics (Industry specific) for:
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Companies in the Alcoholic Beverages industry rely on both purchased electricity and fuel as critical inputs for value creation. Fossil fuel and electrical energy consumption can contribute to environmental impacts, including climate change and pollution. These impacts have the potential to affect the value of companies in this industry as regulations of greenhouse gas (GHG) emissions and new incentives for energy efficiency and renewable energy could lead to increased price volatility for fossil fuels and conventional electricity while making alternative sources cost-competitive. Companies that manage their overall energy use through increased efficiency and use of alternative energy sources can increase profitability by lowering expenses and reducing risk.
Water & Wastewater Management
Water management relates to a company’s direct water usage, the exposure of its operations to water-scarce regions, and its management of wastewater. Companies in the Alcoholic Beverages industry use a large amount of water in their operations, as water is a key input to their finished products. Given alcoholic beverage companies’ heavy reliance on large volumes of clean water and the fact that water stress is increasing in different regions globally, companies may be exposed to supply disruptions that could significantly impact operations and add to costs. Companies operating in water-stressed regions that fail to address local water concerns may face further risk of losing their social license to operate. Improving water management through increased efficiency and recycling, particularly in regions with baseline water stress, can lead to lower operating costs, reduced risk, and higher intangible asset value.
Selling Practices & Product Labeling
Responsible Drinking & Marketing
The irresponsible consumption of alcoholic beverages can lead to negative social externalities such as drunk driving, addiction, public health issues, underage drinking, and even death. Every year, irresponsible alcohol consumption contributes to millions of deaths worldwide, a large portion of which includes underage youth and young adults. The harmful use of alcohol is a growing concern, particularly in developing countries that do not have laws to protect against alcohol’s detrimental effects. Alcoholic beverage companies may be forced to internalize the costs of these social externalities through taxes, lawsuits, or reputational harm, which can have a material impact on operations and financial results. Failing to properly manage social externalities may lead to further unfavorable regulation and erode the industry’s social license to operate. Through education, engagement, community partnerships, and responsible marketing, particularly to underage individuals, companies can address and mitigate many of the social externalities associated with alcohol misuse. Companies that effectively manage this issue can reduce the likelihood of extraordinary expenses, improve market share, and decrease liabilities.
Product Design & Lifecycle Management
Packaging Lifecycle Management
Packaging materials represent a significant cost to companies in the Alcoholic Beverages industry. Although many alcoholic beverage companies do not manufacture their own bottles and packaging, they face reputational risks associated with the negative externalities that their products’ containers can create over their lifecycle. Companies are also directly impacted by legislation regarding end-of-life management of beverage containers. Alcoholic beverage companies can work with packaging manufacturers on packaging design to generate cost savings, improve brand reputation, and reduce the environmental impact. Efforts to reduce the amount of materials used in packaging can reduce transportation costs, exposure to supply and price volatility, and the amount of virgin materials extracted. In the end-of-life phase, take-back and recycling programs and partnerships can pre-empt regulation, help achieve cost savings, and reduce environmental impact. Companies that effectively manage this issue can improve profitability and reduce cost of capital.
Supply Chain Management
Environmental & Social Impacts of Ingredient Supply Chain
Companies in the Alcoholic Beverages industry manage global supply chains to source a wide range of ingredient inputs. How companies screen, monitor, and engage with suppliers on environmental and social topics affects companies’ ability to secure supply and manage price fluctuations. Supply chain interruption can cause loss of revenue and negatively impact market share if companies are not able to find alternatives for key suppliers or have to source ingredients at higher cost. Supply chain management issues related to labor practices, environmental responsibility, ethics or corruption may also result in regulatory fines and/or increased long-term operational costs. The consumer-facing nature of the industry increases the reputational risks associated with supplier actions. Managing a company’s exposure to environmental and social risks can lead to improved supply chain resiliency and enhanced reputation. Companies can engage with key suppliers to manage environmental and social risks to improve supply chain resiliency, mitigate reputational risks, and potentially increase consumer demand or capture new market opportunities.
Materials Sourcing & Efficiency
Companies in the Alcoholic Beverages industry source a wide range of ingredients, largely agricultural inputs, from suppliers worldwide. The industry’s ability to source ingredients and at certain price points fluctuates with supply availability, which may be affected by climate change, water scarcity, land management, and other resource scarcity considerations. This exposure can lead to price volatility and can affect company profitability. Ultimately, climate change, water scarcity, and land-use restriction present risks to a company’s long-term ability to source key materials and ingredients. Companies that source ingredients that are more productive, effectively cultivated, and less resource-intensive, or work closely with suppliers to increase their adaptability to climate change and manage exposure to other resource scarcity risks will be better protected from price volatility and/or supply disruptions.
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