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.
For the fourth consecutive year we have received the maximum industry score against Dow Jones Sustainability Indices in the beverage sector. Sustainable sourcing and expanded risk assessment played a vital role in this achievement.
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 fruits), 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 emphasise the importance of responsible workplace practices that respect human rights. The Sustainable Agriculture Guiding Principles expand on the SGPs and provide guidance to our suppliers of key agricultural ingredients. These Principles establish the framework for defining our commitment to sustainable sourcing and are integrated into internal governance routines and procurement processes.
Coca‑Cola HBC have recently set out seven new 2020 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 2020 to certify over 95% of key agricultural ingredients against the Coca‑Cola System’s Sustainable Agricultural Guiding Principles.
To do so, we will continue working very 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 organisations (SAI, Bonsucro etc.) together with The Coca‑Cola Company.
Through collaboration with our suppliers we sourced c. 170,000 tons of sustainable sugar in 2016. This achievement will position Coca‑Cola HBC at an estimated 25% toward our target to sustainably source more than 95% of ingredients by 2020.
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.
As at 31 December 2017 we have achieved 33% of our key agricultural ingredients sourced sustainably.
Coca‑Cola HBC expects to increase the percentage of sustainably sourced sweeteners to estimated 65% and juices to 35% by the end of 2018. Having achieved this, we will reach 64% overall SAGP compliance for key agricultural ingredients managed by Coca‑Cola HBC. We continue working with our suppliers on sustainability effort and plan to conduct 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 2017, more than 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 and Belarus. Local sourcing helps us control quality and costs. This practice can be helpful in managing foreign exchange exposure, and reducing transportation expenses. It also involves a significant contribution to the economies of countries where we conduct business. (IAR 2017).
In 2017, we have made significant progress in sourcing packaging from local markets, for example:
- Cans - 100 % of metal cans for our Nigerian operation needs are sourced from local manufacturers;
- Glass Bottles - our glass bottle requirements for Nigeria and Russia are sourced locally;
- PET resin and preforms - all our volumes in Russia, Italy, Nigeria, Austria are locally sourced.
Coca‑Cola HBC - 2017 spend by local suppliers - Regions
Coca‑Cola HBC - 2017 spend by local suppliers - Markets
Sustainability Key Performance Indicators (KPIs) and Targets
Key Performance Indicator 1: Certify over 95% of our key agricultural ingredients against the Coca‑Cola System’s Sustainable Agricultural Guiding Principles by 2020.
Target: The sourcing of our raw materials accounts for a large portion of our economic, operational and environmental footprint and our spend with suppliers. We depend on sustainable supplies of sugar and juice bases made of fruits and vegetables to produce a number of our products. As an integral part of our business model, the performance of our suppliers directly impacts the sustainability performance and commitments of Coca‑Cola HBC, encompassing a wide range of economic, environmental and social impacts. We are committed to working with The Coca‑Cola Company and our suppliers to ensure that we source our key agricultural ingredients sustainably.
Key Performance Indicator 2: 100% of our 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 http://coca-colahellenic.com/en/operations/supply-chain/our-suppliers/.
We maintain transparency throughout our critical supply base through The Coca‑Cola Company Supplier Guiding Principles compliance audits, SEDEX membership and the utilisation of the EcoVadis CSR Platform as of 2017.
Key Performance Indicator 3: Proportion of spending on local suppliers at significant locations of operation.
Target: Total CCHBC procurement spend with suppliers is more than Eur 4.4bn. 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.