Inside the sustainable procurement strategy of Coca-Cola HBC
Environmental and social issues have taken centre stage and corporate responsibility stands as a cornerstone for brand prosperity.
Nowhere is this more evident than at Coca-Cola Hellenic Bottling Company (HBC), where environmental, social and governance (ESG) considerations are not just a checkbox, but a cornerstone of operations.
From reputation management to risk mitigation, financial performance, stakeholder expectations and long-term growth, ESG factors play a pivotal role in shaping the company's trajectory. With international reach, Coca-Cola HBC recognises the significance of integrating sustainability into every facet of its business.
From reducing carbon emissions to promoting responsible sourcing practices and fostering diverse and inclusive workplaces, the company's commitment to ESG principles underscores its dedication to not only driving profits but also making a positive impact on the planet and society.
Marinela Paida, Head of Procurement Corporate, Digital & Sustainability at Coca-Cola HBC, delves into the sustainable strategies driving Coca-Cola's global impact and uncover why ESG isn't just a buzzword, but a guiding principle for the company.
Responsibility and strategy
Coca-Cola HBC is a growth-focused consumer packaged goods (CPG) business and strategic bottling partner of The Coca-Cola Company. It also partners with other beverage businesses such as Monster Energy, Costa Coffee, Edrington and Brown-Forman to sell their products. The company serves 740 million consumers across a broad geographic footprint of 29 countries.
Headquartered in Switzerland, Coca-Cola HBC has long been at the forefront of sustainability efforts. Since its inaugural social responsibility report in 2003 and the establishment of sustainability commitments in 2011, the company has cemented its position as a trailblazer in sustainable beverage practices.
Coca-Cola HBC emphasises sustainability as a core component of its strategy, integrating it into decision-making processes for more than a decade. The company's sustainability strategy covers climate, packaging, water, ingredients, nutrition, people and communities and biodiversity, all supported by Mission 2025 and targets for a net-zero carbon footprint and net positive biodiversity by 2040.
“Our success and reputation in sustainability is an opportunity — and to a certain extent, an obligation — to partner with suppliers, competitors, society and governments to
drive transformational change that each of us could not drive alone,” Marinela says.
“We drive positive action in sustainability by inspiring and guiding others around us.”
Recent achievements
Sustainability has been at the heart of Coca-Cola HBC’s mission, setting its first target in 2006 and being among the first companies to adopt Science-Based targets in 2016.
In 2023, the business integrated Egypt into the sustainability strategy – after acquiring the Coca-Cola Bottling Company of Egypt in 2022 – and developed specific plans for the market.
Coca-Cola HBC has been recognised for its sustainability efforts as a global leader. Last year, for a seventh time, the company was ranked as the world’s most sustainable beverage company by the Dow Jones Sustainability Indices.
This year Coca-Cola HBC also scored a double-A ranking for its commitment to transparency on climate and water from CDP. Meanwhile, its Procurement Team was named as a CDP Supplier Engagement Leader, constituting strong recognition of its commitment to environmental action and due diligence across the supply chain.
“These achievements are the result of our clear vision and targets in sustainability, our bold and entrepreneurial mindset and continuing investment in technology and innovation,” Marinela adds.
“Strong collaboration with our suppliers and partners, as well as highly-skilled and committed colleagues working across our markets, have also been crucial to this success. We know we still have work to do and remain committed to being part of the solution to global sustainability challenges.”
Supplier collaboration
Coca-Cola HBC isn’t just interested in its own sustainability credentials, but those of its partners as well. The business actively integrates sustainability criteria into tenders and contracts, starting with the Supplier Guiding Principles (SGPs) adding sustainability criteria and contractual terms to secure compliance, and the Annual Supplier Review process.
The firm also uses ESG audits and tools like EcoVadis to assess suppliers, focusing on supply risk, ethical risk and financial stability, leveraging Resilinc EventWatch, Exiger and Moody’s Analytics respectively. The core of the Supplier Sustainable Engagement programme moves well beyond risk screening and assessment activities.
“As member of The Coca-Cola System, we invest a lot of resources and place great effort to
actively collaborate with our strategic suppliers across the board,” Marinela continues.
“Since the launch of the programme, we have scaled fast to cover multiple areas of sustainable collaboration: for agricultural ingredients we actively recruit ingredients suppliers under the Principles of Sustainable Agriculture (PSA) with the support and collaboration of established institutions such as Bonsucro, SAI/FSA and Viva, to name a few.
“On emissions, we leveraged the expert knowledge of CDP and the World Economic Forum teams to run educational sessions and started enrolling suppliers under the Supplier Leadership Transition Collaborative (sLoCT) to help them build technical knowledge on emissions and how to manage efficiently and build SBTi.
“Sharing best practice, collaborating with market experts for educational purposes and
promoting cross-industry joined activities with non-profit organisations does not simply
ensure we reach the aspired standards, but also promotes the way we do business beyond
doing the right thing.”
Encouraging suppliers to adopt energy-saving measures and transition to renewable energy sources is pivotal in achieving the company’s NetZeroby40 goals. In 2023, its Supplier Conference centred on forging a sustainable future, drawing participation from approximately 200 supply partners. During this event, inspiration and resources were provided for initiating or advancing sustainability initiatives, while acknowledging and celebrating those already making strides in emission reduction. Expert insights from CDP and the World Economic Forum further enriched the discussions.
Over the last few years, ongoing dialogues have been engaged with suppliers at Tier 1 and, in some instances, Tier 2 levels. These conversations traverse industries and geographies, aiming to craft joint action plans to address imminent challenges. Top-to-top meetings are organised between Coca-Cola HBC and Tier 1 suppliers' sustainability teams to understand their readiness and agree what actions they will take to improve or accelerate ESG on specific topics of interest, such as emissions or sustainable agriculture. It also asks them to develop action plans on identified high risks. In certain cases, Coca-Cola HBC works with suppliers of the suppliers (Tier 2) directly on accelerating ESG initiatives.
Key challenges here are the ramifications of climate change on agricultural commodities and water availability, escalating prices, emission reduction strategies and achieving traceability throughout the value chain, particularly concerning emissions, human rights and biodiversity among Tier 2 and Tier 3 suppliers.
While larger strategic suppliers demonstrate proficiency in addressing ESG aspects, smaller, localised suppliers at Tier 2 and Tier 3 levels face hurdles in meeting sustainability requirements.
“They currently feel overwhelmed with the sustainability requirements and are not equipped
with knowledge and tools to help them navigate through this complex environment of climate
and other ESG targets and regulations,” Marinela reveals.
“At Coca-Cola HBC we recognise the value of enabling our own people and suppliers’ teams to
develop and strengthen skills and abilities and support them to effectively navigate across
the ESG spectrum.”
Recognising the importance of empowering both personnel and supplier teams, capability-building programmes have been instituted. These initiatives equip teams with the necessary skills, fostering good governance and contributing to organisational growth.
By integrating sustainability into procurement practices and comprehending its ESG impact, the buyer community and vendor partners gain enhanced control over future performance trajectories. Through comprehensive training programmes, a nuanced understanding of ESG matters is cultivated, complemented by collaborations with specialised organisations delivering technical expertise where needed.
Balancing sustainability and costs
Coca-Cola HBC demonstrates that sustainable practices can coexist with cost savings.
For example, transitioning to certified green energy resulted in cost reductions by working consistently with its engineering department to introduce new processes in production and next-generation machinery and innovations that reduce the amount of energy being consumed in manufacturing. Reducing energy consumption helps the company contain energy costs and, equally, positively contributes to Scope 2 emissions performance.
Coca-Cola HBC continually innovates and collaborates to manage input costs while maintaining sustainability, reflecting these efforts in their cost of goods sold.
“We follow the same approach across the board with packaging and agricultural
commodities,” says Marinela.
“This is not to say we always end up with a positive cost impact; it’s a combination of activities on multiple levels that means we’re able to balance and contain our costs and this is well reflected in our cost of goods sold (COGS) results.
“Nonetheless, it’s important to point out that it takes collective thinking and the introduction of innovation together with our internal stakeholders and our suppliers to manage input costs, with procurement in the drivers’ seat coordinating the efforts.”
Future focus
Coca-Cola HBC's sustainability strategy, anchored in external commitments like Mission 2025, with its focus on climate, packaging, water, ingredients, nutrition, people, communities and biodiversity, allows the company to continuously improve.
“We’ll continue investing, innovating and collaborating to meet our sustainability targets,” Marinela concludes.
“We take pride in our achievements so far while remaining focused on opening up a
more sustainable future together with our partners and we know there’s still work to do.”
To read the full story in the magazine click HERE
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