Responsible and Sustainable Sourcing
Our focus on sustainable and responsible sourcing is all about delivering excellent results.
Sustainable and responsible sourcing is a priority for our business.
Coca‑Cola HBC is the world sustainability leader in the beverage industry, topping the Dow Jones World and Europe Sustainability Indexes for beverage companies for four years in a row - 2014, 2015, 2016 and 2017. In 2018, we remained listed among the top companies. We’ve been included in the DJSI every year since 2008 – recognition of our focus on continuously improving our sustainability performance. Launched in 1999, the DJSI is considered a global benchmark in corporate sustainability.
At Coca‑Cola HBC, we work together as a System with The Coca‑Cola Company to meet the expectations of our consumers, customers, other stakeholders and enable the continued growth of The Coca‑Cola System. To do so, it is imperative we maintain a secure, sustainable supply of the agricultural ingredients that are essential to our brands. To this end, The Coca‑Cola Company has developed a set of Sustainable Agriculture Guiding Principles (SAGP), which set expectations of our suppliers of key agricultural ingredients (sugar, fructose and key fruit juices), to sustainably address challenges specific to agriculture. We believe the SAGP provide a mutually beneficial foundation for The Coca‑Cola System and its partners in the agricultural supply chain. Currently, suppliers to Тhe Coca‑Cola System, are required to meet our Supplier Guiding Principles (SGP), which communicate our values and expectations of compliance with all applicable laws and emphasize the importance of responsible workplace practices that respect human rights. The SAGP expand on the SGPs and provide guidance to our suppliers of key agricultural ingredients. We expect our suppliers to conduct business in ways that protect and preserve the environment. At a minimum, we expect our suppliers to meet applicable environmental laws, rules and regulations in their countries of operation and in all their facilities. Our SAGP set requirements and lead our suppliers of agricultural ingredients in the areas of environment & management systems like water and energy management, climate, conservation of natural habitats and ecosystems, soil management, crop protection, responsible agro-chemical use, biodiversity, harvest and post-harvest handling, reproductive material identity, selection and handling, record keeping and transparency and business integrity. We encourage our suppliers to use organic farming techniques wherever possible.
These Principles establish the framework for defining our commitment to sustainable sourcing and are integrated into internal governance routines and procurement processes.
For a full compliance with our SAGP, we require our suppliers to be assessed and certified against third-party standards as SAI FSA, ISCC Plus, BONSUCRO, REDcert2, Rainforest Alliance, FairTrade International, Global GAP+GRASP, Global GAP+FSA Add-On, UNILEVER SAC etc.
Coca‑Cola HBC have recently set out new 2025 sustainability targets that cover our range of activities across the value chain and support our purpose to inspire a better future. Among those, we commit by 2025 to certify 100% of key agricultural ingredients against our Sustainable Agricultural Guiding Principles.
To do so, we will continue working closely with The Coca‑Cola Company and our key ingredients suppliers through established routines and targeted workshops, while we will continue leveraging our participation in international sustainable agriculture organizations (SAI, Bonsucro etc.) together with The Coca‑Cola Company.
2016 -2017 Progress:
Through collaboration with our suppliers we sourced c. 170,000 tons of sustainable sugar in 2016. This achievement positioned Coca‑Cola HBC at an estimated 25% toward our target to sustainably source 100% of ingredients by 2025.
To stress the importance of Country Critical and Tactical ingredients (sweeteners, key juices) suppliers’ commitment to our SAGPs and discipline in execution of their roadmaps we hosted first Sustainable Agriculture workshop in Athens.
By 31 December 2017, we achieved to source sustainably 33% of our key agricultural ingredients.
2018 – 2019 Targets:
Coca‑Cola HBC increased the percentage of sustainably sourced sweeteners to 65% and juices to 35% by the end of 2018. This way, we reached 64% overall SAGP compliance for key agricultural ingredients sourced by Coca‑Cola HBC. In 2019 we expect to increase SAGP compliance to 80 % through continued work with our suppliers and conducting individual supplier’s sessions as a follow up of our Sustainable Agriculture workshop with the focus on juice suppliers. The objective of these sessions is to monitor progress on SAGPs implementation.
Enhancing local sourcing across our territories
Local sourcing is the cornerstone of our Joint Value Creation programs with ingredient suppliers. In 2018, 98% of our total spend was local in our countries of operations, or within the European Union, which we regard as one geographic area for sourcing. Good examples are the local sourcing for all sugar used in Russia, Poland, Serbia, Ukraine, Belarus, Switzerland, Romania, Hungary and Austria.
Local sourcing helps us control quality and costs. This practice helps to manage foreign exchange exposure and reduce transportation expenses and emissions. It also involves a significant contribution to the economies of countries where we conduct business.
In 2018, we made significant progress in sourcing packaging materials from local markets, for example:
- Cans - 100 % of metal can needs for our Nigerian operation are sourced from local manufacturers
- Glass Bottles - 100% of glass bottle requirements for Nigeria and Russia are sourced locally
- PET resin and preforms – 100% of our volume requirements in Russia and Nigeria are locally sourced
In 2018 we achieved above 97% local sourcing in Established Markets, almost 100 % for Developing Markets and 98% for Emerging Markets.
Coca‑Cola HBC 2018 Spend by local suppliers - Markets
Sustainability Key Performance Indicators (KPIs) and Targets
Key Performance Indicator 1: Key agricultural ingredients to be compliant against our Sustainable Agricultural Guiding Principles by 2025.
Target: Ensure that 100% of our key agricultural ingredients are certified by utilizing third party standards.
For a full compliance with our SAGP, we will require our agricultural suppliers to be assessed and certified against third-party standards as SAI FSA, ISCC Plus, BONSUCRO, REDcert2, Rainforest Alliance, FairTrade International, Global GAP+GRASP, Global GAP+FSA Add-On, UNILEVER SAC etc.
Key Performance Indicator 2: Supplier Performance Assessment for Critical Suppliers.
Target: The Annual Performance Assessment of our Suppliers to cover min 90% of total Procurement Spend.
At Coca‑Cola HBC, we are committed to high standards of performance and our suppliers and partners play a critical role in ensuring that we deliver against these standards. As an important part of our value chain, the performance of our Critical Suppliers directly impacts the business and sustainability performance of Coca‑Cola HBC. Through the evaluation and comparison of Critical Supplier performance, we can ensure and maintain the best service and eliminate suppliers who fail to comply with our requirements. We assess all Coca‑Cola HBC Critical Suppliers on an annual basis while covering > 90% of total procurement spend.
Key Performance Indicator 3: Proportion of spend on local suppliers at significant locations of operation.
Target: Total Coca‑Cola HBC procurement spend with suppliers was more than Eur 3.2 bn in 2018. Our practice is to source locally, provided that goods and services are available to meet our requirements and quality standards in an economically viable way. We target over 95% of our spending to be with local suppliers in our countries of operation.
Key Performance Indicator 4: Suppliers to accept our Supplier Guiding Principles (SGP).
Target: We require all suppliers to adhere to the ethical standards, employment and human rights practices, environmental and work safety requirements prescribed in our Supplier Guiding Principles (SGP). We aim to achieve 100% of our suppliers to adopt our SGP utilizing our "SGP Coverage Triangle" with three checkpoints throughout the procure-to-pay process, available on our website at https://coca-colahellenic.com/en/operations/supply-chain/our-suppliers/