Relevant Issues (8 of 26)
- GHG Emissions The category addresses direct (Scope 1) greenhouse gas (GHG) emissions that a company generates through its operations. This includes GHG emissions from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes), whether a result of combustion of fuel or non-combusted direct releases during activities such as natural resource extraction, power generation, land use, or biogenic processes. The category further includes management of regulatory risks, environmental compliance, and reputational risks and opportunities, as they related to direct GHG emissions. The seven GHGs covered under the Kyoto Protocol are included within the category—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).
- 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 The category addresses customer welfare concerns over issues including, but not limited to, health and nutrition of foods and beverages, antibiotic use in animal production, and management of controlled substances. The category addresses the company’s ability to provide consumers with manufactured products and services that are aligned with societal expectations. It does not include issues directly related to quality and safety malfunctions of manufactured products and services, but instead addresses qualities inherent to the design and delivery of products and services where customer welfare may be in question. The scope of the category also captures companies’ ability to prevent counterfeit products.
- 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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Fleet Fuel Management
Non-alcoholic beverages companies generate direct Scope 1 greenhouse gas (GHG) emissions from large vehicle fleets for distribution and from manufacturing facilities. Specifically, refrigeration used in manufacturing facilities and in transport vehicles contributes to a large portion of overall emissions for the industry. Efficiencies gained in fuel use can reduce costs, mitigate exposure to fossil fuel price volatility, and limit emissions from production, storage, and transportation of products. Short-term capital expenditures in fuel efficient fleets and more energy-efficient technologies may be outweighed by long-term operational savings and mitigation of regulatory risk.
Companies in the Non-Alcoholic Beverages industry use significant energy to operate manufacturing facilities, distribution centers, and warehouses. Companies in the industry generally purchase electricity from the grid. Energy generation contributes to environmental impacts, including climate change and pollution, which have the potential to indirectly, yet materially, impact the operations of non-alcoholic beverages companies. Companies can reduce energy consumption and associated greenhouse gas (GHG) emissions from their operations by implementing more efficient technologies and processes. Decisions regarding the use of alternative fuels, renewable energy, and on-site generation of electricity versus purchasing from the grid, can play an important role in influencing both the costs and reliability of the energy supply.
Water & Wastewater Management
Water management relates to a company’s direct water usage, the exposure of its operations to water-stressed regions, and its management of wastewater. Companies in the Non-Alcoholic Beverages industry use a large amount of water in their operations, as water is a key input to finished products. Given non-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. Additionally, proper wastewater treatment is an important element of managing water issues in operations, because bottling plants release large quantities of effluents. Improving water management through increased efficiency, recycling, and proper disposal, particularly in regions with baseline water stress, can lead to lower operating costs, reduced risks, and higher intangible asset value.
Health & Nutrition
Key nutritional and health concerns such as obesity, ingredient safety, nutritional content, and acute health impacts resulting from the consumption of non-alcoholic beverages are shaping the industry’s competitive landscape. Studies indicate that consuming high-calorie, sugar-sweetened beverages can have adverse health consequences including higher levels of cholesterol, increased risk for heart disease, and obesity. Findings such as these may alter consumer perceptions of the industry’s products, leading to long-term shifts in purchasing decisions. Furthermore, efforts to reduce obesity, in the form of new regulations or taxes on sugar-sweetened beverages, have the ability to influence industry profitability and future demand. The potential for adverse health effects from other commonly used ingredients—such as artificial sweeteners—may pose additional concerns, and companies may face related litigation and/or regulation. Opportunities exist in new segments of the beverage market to address consumer demand for improved nutritional value. Companies that adapt to changing consumer preferences and an evolving regulatory environment by offering more healthful alternatives can capture additional market share and limit their exposure to regulation and litigation.
Selling Practices & Product Labeling
Product Labeling & Marketing
Communication with consumers through product labeling and marketing is an important facet of non-alcoholic beverages companies. The accuracy and depth of information presented on product labels is of importance to regulators and consumers. Labeling regulations require specific and detailed product information to ensure food safety and inform consumers of the nutritional content. Additionally, to help inform purchasing decisions, consumers are increasingly interested in further information about product ingredients, such as genetically modified organism (GMO) content, or other health and nutritional impacts. Another area of public concern is the market practices of non-alcoholic beverages companies, especially those targeted to children or on nutritional claims, and whether they present potentially untruthful or misleading information. Product labeling and marketing issues can affect the competitive landscape of the industry, as companies may be subject to litigation or criticism resulting from making misleading statements or failing to adapt to consumer demand for increased labeling transparency. These factors can have an impact on companies’ brand value and revenue growth. Additionally, regulations on product labeling and marketing present the risk of penalties or litigation.
Product Design & Lifecycle Management
Packaging Lifecycle Management
Packaging materials represent a significant cost to companies in the Non-Alcoholic Beverages industry. Although many non-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. Non-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 of key materials, and the amount of virgin materials extracted. In the end-of-life phase, take-back and recycling programs and partnerships can preempt 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 Non-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 the ability of companies 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 for companies. 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, which provide value to shareholders. 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 Non-Alcoholic Beverages industry source a wide range of ingredients 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 which may affect company profitability. Ultimately, climate change, water scarcity, and land-use restrictions present risks to a company’s long-term ability to source key materials and ingredients. Companies that source ingredients which are more productive and less resource-intensive, or work closely with suppliers to increase their adaptability to climate change and other resource scarcity risks will be better protected from price volatility and/or supply disruptions.
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