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Like most big companies with a complex multinational footprint, Anheuser-Busch InBev’s sales slipped in the first quarter and the beer maker is embracing new financial discipline amid the coronavirus pandemic. But the company also has acted quickly to prop up key members of its value chain — from small liquor stores to farmers to restaurants — and the situation has galvanized its long-term corporate sustainability plans, according to Ezgi Barcenas, vice president of global sustainability for AB InBev.
“We really cannot lose these learnings and agility, and I think that’s been a great learning and contribution of the pandemic — helping us to be more agile and to be more collaborative,” she told GreenBiz during an interview in early May.
The beermaker’s 2025 goals pledge bold advances in water strategy, returnable or recyclable packaging, renewable energy procurement (its U.S. division in 2019 signed the beer industry’s largest power purchase agreement to date) and support for farmers adopting regenerative agriculture practices.
Barcenas, the executive responsible for managing that plan and part of the GreenBiz 2020 Badass Women in Sustainability list, joined the company seven years ago. She’s also in charge of the 100+ Sustainability Accelerator, dedicated to startups that can bring technology-enabled innovation to AB InBev’s operations.
Below is a transcript of our interview about how the company’s sustainability team is focusing amid the pandemic. The Q&A was lightly edited for length and clarity.
Heather Clancy: How has the pandemic changed the immediate focus of the AB InBev sustainability team?
Ezgi Barcenas: I really feel like this global situation is a stress test for sustainable development, compelling all of us to think about it more holistically, more collaboratively, and to be more flexible and continue to work together to create value for our entire value chain.
So, I would say when we think about the changes on the immediate focus of our team, I think it’s important to remember that beer is an actual product, and for centuries we’ve really relied on healthy environments and thriving communities. And most of our operations are local, so our sustainability strategy is really deeply connected to the communities and the business … What it’s doing is, it’s, in fact, galvanizing us and our partners to continue to work together and make really impact where it matters the most.
Clancy: What happens to long-term plans? Are they still going on alongside that?
Barcenas: As you can imagine, we had to pivot some of our focus towards short-term mitigation plans but continue to power through towards our mid-to-longer-term plans as well. And our commitment in sustainability, our 2025 goals, they remain the same.
I think what I’m really seeing now is the agility and the sense of community that our teams are bringing around the world. And not just sustainability, right? So, sustainability at AB InBev is housed under procurement, so we have a great relationship with our procurement colleagues who are really delivering that impact and executing against those long-term commitments of our supply chain.
But also, our operations teams, logistic teams, our corporate affairs teams, we’re really working hard in creating that local impact today from the donation of masks and emergency relief water to providing hand sanitizers. We’ve figured out how to make them and donate them to our supply chain partners — to launching digital platforms to support bars and restaurants.
Those are some of the immediate efforts that the teams have taken on. But at the same time, we’re really full speed ahead on those long-term commitments.
Our commitment in sustainability, our 2025 goals, they remain the same.
As we’re seeing signs of recovery around the world, our team is energized about continuing to work towards those longer-term commitments, towards the [United Nations Sustainable Development Goals]. One thing for sure: We really cannot lose these learnings and agility, and I think that’s been a great learning and contribution of the pandemic — helping us to be more agile and to be more collaborative.
Clancy: You already referenced supply chains. This situation has made the vulnerability of certain types of supply chains very visible to the world. How have you worked to ensure the safety and sustainability of your partners within the supply chain?
Barcenas: Supply chain resilience is being tested with this — all the COVID-19 disruptions around the world, forcing countries and companies like ours to rethink our sourcing strategy, refocus our efforts. I would say we’re fortunate in that our operations — with operations in nearly 50 countries around the world our supply chain is much shorter and less complex than you’d think. We have historically invested heavily: We have been investing heavily in local sourcing and creating those local supply chains wherever possible. In fact, we always like to give this number out: We buy, make and sell over 90 percent of our products locally. So, you can think of us as a global company, but our local footprint is really deeply rooted in our operations. That connection hasn’t really changed.
Maybe one example. If you think about agriculture, right? Beer is made of natural materials. Raw material sourcing is really fundamental to the quality of our products. We take great pride in the quality of our raw materials that in turn can help us create some of the most admired brands in the world. And in doing that, in working closely with the farmers, we help contribute towards their livelihoods. And we work with tens of thousands of smallholder farmers around the world.
During the pandemic, one example I can give is how our agronomists are continuing to support our farmers remotely, even if they cannot do field visits, which usually that’s their way of working. They will go out onto the field and visit them in person, talk through their challenges, provide better management and technology tools for them. Right now, they’re doing all of that remotely.
We’re also working to ensure that there is proper sanitation and safety measures, for example, at buying centers. So, keeping those buying centers open — like barley buying centers and other raw materials — and up and running is really huge for farmer cash flow, if you think about it. So, we’re really working to maintain these wherever possible. That’s short-term efforts.
In terms of mid-term, long-term, how are we helping our supply chain, especially on the ag front: We’re doing scenario planning with partners like TechnoServe to better understand the impacts on smallholder supply chains, so that it can better inform our ag support services moving forward, as well as our sourcing.
Clancy: How has the situation affected your packaging commitments and recycling strategy, if at all?
Barcenas: I want to highlight how our packaging sustainability journey has really accelerated — in 2012, when we came out with a commitment to remove 100,000 metric tons of packaging materials globally to when you fast forward to 2018, when we came out with our new public commitments to protect and promote a circular economy.
Today, as part of our 2025 goal, our focus is to make sure all of our products are in packaging that is returnable or made from a majority of recycled content. So, that’s our vision and our commitment.
You can think of us as a global company, but our local footprint is really deeply rooted in our operations.
It is a sad reality that around the world we’re seeing waste management services and recycling programs being impacted. In some markets, they’re deemed essential and in others they’re not. And yes, we are seeing impacts of this, too. What we do in those cases is continue to partner with the recycling cooperatives to mitigate the impact and to ensure the livelihoods of our partners, as well. And to achieve that circular packaging vision, there are a number of things we do. Reuse, reduce, recycle, rethink is how we think about that, and we try to identify gaps in our current ways of working, or technological gaps so that we can identify scalable solutions.
One pilot that is actually currently underway that we kicked off about a month and a half ago is with this startup called Nomo Waste [Spanish]. It’s a startup in Colombia that is part of 100+ Sustainability Accelerator. We are working with them now on collecting the bottles that get lost in the supply chain, ”lost” in the supply chain … to bring them back to the breweries or back to the suppliers, so that bottles can be reused to continue to reduce waste in the supply chain.
We’re also working with another accelerator startup from our first cohort called BanQu … It’s this blockchain technology that we used in our smallholder farm supply chain. Now we’re implementing the same technology with our recycling supply chain — trying to improve the traceability of that bottle and therefore improve the financial inclusion of our recyclers or the waste pickers in the city of Bogota.
Clancy: I wanted to ask about the 100+ program. So, can you offer a status report?
Barcenas: We had our first cohort applications back in 2018. We received over 600 applications in our first year, and we were really proud of it. It was born because when we set our 2025 sustainability goals, if you look at it, the language is 100 percent of direct farmers, 100 percent of communities in high-risk watersheds, et cetera.
When we were going through the strategy-setting or the goal-setting process we asked ourselves — we had a candid conversation in the company and with our partners: How sure are we that we’re going to hit these goals by 2025 based on existing solutions and ways of working, partnerships out there? We noticed that there was a clear gap in ensuring, for example, that 100 percent of our farmers will be financially empowered.
The 100+ Accelerator was born out of that to try and identify solutions for problems that we can’t solve today alone. It’s an open platform. We’re hoping any company can come and join us. In its first year, we had [21] startups in our cohort, and they’ve been hugely successful. Some of them we’ve extended them into multiyear commercial contracts. We’ve taken them to different markets. After the initial success of the pilots, we’re scaling them up. We just had our second round of applications wrap up late last year and had our kickoff meetings earlier in February in New York. We received over 1,200 applications from 30-plus countries, and we narrowed it down to 17 companies.
Clancy: Can you give me some examples?
Barcenas: I glazed over BanQu, just a quick plug there. BanQu is a non-crypto blockchain technology that uses an SMS service to record purchasing and sales data. We’re using this now with farmers across Uganda, Zambia and India. We were able to scale this partnership to offer farmers a digital financial aid entity.
What used to happen is that these farmers did not really formally exist in our supply chain. They couldn’t go and open a bank account. They couldn’t get crop insurance. They couldn’t get a loan. By giving them a digital record of the transaction, they are able to prove that they are part of our supply chain. And we’re helping them with the digital capabilities as well. We’re offering digital payments, which in turn reduces their cash transactions and therefore lowers their risk for themselves and their families. So, we’re really proud of this. And now, this BanQu technology that we piloted in the ag supply chain we’re bringing to our recycling supply chains as well in Colombia, for example.
Another one, maybe just a quick one: EWTech [Spanish] is another startup that we piloted in Colombia as part of our first cohort, a great example of how innovation can continue to drive efficiencies in our operational processes. What EWTech does is they offer a green replacement for caustic soda, which we use in the industrial cleaning process. In the pilot test in Bucaramanga, we found out that EWTech’s more sustainable solution, the green solution that they offered, actually showed a 70 percent reduction in water usage versus traditional disinfecting chemicals, 60 percent reduction in cleaning cycle time, which resulted in savings on energy, in freeing up time on bottling lines. So, this was a huge success for us, both from a financial and from an environmental point of view. We are now in the process of figuring out how we can roll this out across many more breweries in the middle Americas — so, Colombia, Peru, Mexico, Honduras and El Salvador. Of course, with the pandemic things are getting a little bit delayed, but it is our mission to, again, scale this innovation that we identified that is delivering great results for the business and also for the world.
Clancy: Can you offer a progress report on the fleet electrification strategy?
Barcenas: Transportation is about 9 percent of our global carbon emissions, and our ambition is to reduce our global emissions by 25 percent across the whole value chain by 2025. Most of this lies in Scope 3, and logistics is a piece of that. We are currently piloting a range of different solutions around the world, looking specifically to fleet electrification but also other things — routing efficiencies, other ways to reduce carbon emissions in our logistics operations. We currently have a pilot in each one of our six operating zones around the world …
As you can imagine, COVID-19 has caused some delays to the delivery of additional fleet, and that’s slowing down somewhat the pilots. But we are very ambitious in this area and very keen to identify new solutions and confident that we’ll be able to identify and champion these new innovations and continue to electrify our fleet.
Clancy: What do you feel is your most important priority as a chief sustainability officer and strategist right now?
Barcenas: We always say sustainability is our business, and I think the biggest learning out of this is that we must not lose the momentum, the learnings and the agility that we’ve built up over the last couple of months to really tackle these problems. We’re a global company. We’re learning a lot along the way as the pandemic has spread around the world. We’re becoming more prepared. And we can’t pause now. Right? So, I think that’s another big learning.
In fact, we’re working really hard to ensure and restore the resilience of the communities and the supply chains. That’s our No. 1 priority. And not just supply chain, our entire value chain. As I mentioned, we’re working with our key accounts — bars, restaurants, et cetera — to make sure that they can return to their businesses as well as recovery happens. And we’re really thinking, we’re really spending a lot of time thinking about — not just about how to recover or bounce back but also how to come back even stronger than before, how to retain that agility and focus to continue to create that local impact.
Today’s and tomorrow’s toughest challenges, I think, will require us to continue to be agile and learn new ways of working and continue to innovate. At AB InBev, we’re committed to just that: continuously innovating to future-proof our business and our communities, and inspiring our people in the meantime, right? Inspiring our consumers through our brands as well.