Can you tell us about your progress towards your company’s NetZeroby40 commitment?
It has been three years since we committed to achieving net zero emissions across our entire value chain by 2040. We knew it was a bold and ambitious target when we set it. We knew that we would always have to balance meeting this target on time with the knowledge that our volumes would continue to grow over time. And we knew that we did not yet have all the solutions to make it happen.
The evidence shows that we are making strong progress towards our target. We can see that every year we are reducing our emissions in line with our roadmap to being net zero by 2040. We have halved direct emissions and reduced our end-to-end absolute total value chain emissions in scopes 1, 2 and 3 by a third from 2010 to the end of 2023, while growing volume. With this mindset and momentum, we are focused on achieving net zero emissions across our entire value chain by 2040.
Along the way we have carved our path as global leaders in sustainability with top scores and rankings in ten of the most-recognised ESG ratings.
At the heart of our ambition is a fundamental belief that we can operate as a successful and profitable business and reduce our carbon emissions and the impact we have on the environment around us. We know these can live side by side.
To help us do this, we incentivise our senior leaders through our Long-Term Incentive Plan (LTIP) to prioritise and support initiatives that contribute to reducing carbon emissions. We continuously educate our people through internal events and channels and at all our key leadership events. For example, at our annual leadership conference this year we had a fully dedicated learning booth on our NetZeroby40 commitment.
In this way, we at Coca-Cola HBC are steadily reducing our carbon emissions while growing our volumes and we are working hard to make strong progress towards our 2040 commitment.
Of course, we know there is still much work to do. But our belief in our target never waivers. As I reflect on our progress so far, it is clear our big successes have come from investing in the right places and understanding the power of innovation, investment and partnership and being willing to take a leap of faith when we need to.
How are you decarbonising the value chain?
Reducing scope 1 and 2 emissions are in our direct control. With about 90% of our emissions coming from scope 3, this is where partnerships, collaboration and innovation become especially important.
For us, being leaders in sustainability comes with very real responsibilities, such as educating and guiding our suppliers as they reduce their own emissions. This, in turn, will help us reduce our scope 3 emissions and take another step towards our goal.
Our work with suppliers is recognised externally – we are on CDP’s 2023 Supplier Engagement Leaderboard. When we started on our own path to reduce emissions in 2021, fewer than ten suppliers were in CDP to disclose their emissions.
By the end of 2023, 189 of our significant suppliers disclosed their emissions through CDP and bought – on average – 26% of their energy from renewable sources. Additionally, 117 of our suppliers have now set, or are committed to setting, science-based targets on emissions reduction.
To make the difference we want to make, we must be clear on the goals, measure our progress and work together to deliver real change. By working with respected organisations such as CDP and the Science-Based Targets Initiative, we can progress and make a difference collectively.
What role does packaging circularity play in your NetZeroby40 journey?
With packaging accounting for 36% of our scope 1, 2 and 3 emissions, it has a vital part to play in our success.
Each year I can see that we’re being more innovative in packaging circularity. So let me focus first on the two main types of primary packaging we produce – recyclable and reusable – and then talk about what we are doing to ensure this packaging does not end up as waste.
Since 2022, all our primary packaging: plastic bottles, glass, aluminium and aseptic cartons – have been recyclable by design. This simply means that consumers can enjoy our drinks, and then recycle the container so the material can be used again.
Five of our markets now use 100% recycled PET (rPET) for locally produced plastic bottles and we have almost doubled the percentage of rPET in EU markets and Switzerland from 22.3% rPET in 2022 to 42% rPET by the end of 2023. These recycled PET flakes that we use in our production process have an 80% lower carbon footprint than virgin resin.
Our team in Austria is leading the way on returnable glass bottles. In 2023, for the first time in Coca-Cola HBC, we started producing 400ml returnable and resealable glass bottles so consumers can enjoy our drinks when they are on the go or at home. Our €12 million investment was co-funded by the European Union NextGenerationEU* and is another great example of how jointly investing and working in partnership can help to reach shared environmental goals.
Across Europe, we’re supporting the introduction of well-designed, industry-led Deposit Return Schemes – a vital ingredient in a circular packaging economy. These schemes typically achieve a return rate of 90% and also support high quality recycling. They allow packaging material to be kept in use for much longer and, in turn, contribute to a lower carbon footprint for each pack.
We’re now starting to see how well these schemes are performing and the early figures are encouraging. By the end of August 2024, over 1.8 billion containers were collected in Romania since the scheme was launched at the end of 2023. We expect these kinds of figures to be replicated as other Deposit Return Schemes (DRS) open. For me, it shows that producers like us, governments, the wider industry and consumers all want to play their part in a more sustainable society.
Eight of our markets now have DRS: Croatia, Estonia, Latvia, Lithuania, Romania, Slovakia, the island of Ireland and Hungary.
We are supporting several additional markets to launch DRS from 2025-27 and working in Nigeria and Egypt on a different but effective type of collection model.
What role does innovation play for you?
When we started our sustainability journey, we could not imagine what would happen along the way. It is clear to me that our company has a passion, a real ambition and a resolute determination to innovate to achieve our sustainability goals.
With innovation, you have to test and learn before you can upscale it. So, we know that sometimes we must take slower and smaller steps to get it right.
One pivotal question we are asking ourselves is: how can we bring innovation and excitement for our drinks through packaging while delivering our sustainability goals at the same time?
One new model we are exploring is next generation digital packageless solutions. These offer eco-conscious consumers something new and different while minimising waste. So how do they work? Consumers will directly access a beverage machine and use their own reusable vessel or one they can find by the machine. They can then personalise their favourite drink by mixing with flavours and pay digitally. We are confident this solution will work across large and high-traffic locations like canteens at work or universities, and in smaller breakout areas, too.
I’ve talked about taking a leap of faith to achieve our goals. We are implementing innovative solutions that help to optimise carbon emissions, and bring value to us, our customers and our consumers. We believe drones will play an important role in the future as a last-mile-delivery solution as they're fast, cost effective and powered by electric engines with overall low carbon emissions. We are pleased to have invested – through our Ventures arm – in Manna Aero, an Irish startup leading the way in food and beverage drone deliveries. They currently operate in the island of Ireland and Texas in the US with expansion plans in Europe, starting with Zurich.
If this is what we can achieve now, just imagine what the next 15 years will bring!
Why does partnership matter when you’re aiming for net zero emissions?
Partnership is absolutely crucial for us. We can’t achieve our goals alone, and we’ve always known that.
In the island of Ireland, for example, we are collaborating with a customer and transport supplier on three best-in-class electric Heavy Goods Vehicles (e-HGVs). We expect the e-HGVs to reduce carbon emissions by 229 tonnes each year – the equivalent of charging over 25 million smartphones (US Environmental Protection Agency comparison).
We are always ready to partner with our suppliers, governments, the wider drinks industry and local communities to grow our business in the right way as we open up a more sustainable future.
What does the future hold for Coca-Cola HBC?
For us, like so many other businesses, digitalisation is coming to the forefront more and more in all aspects of our work.
When I visited our Edelstal production plant in Austria, I saw for myself what happens when you combine real partnership with investment and technology. Working with Microsoft, we custom built a ‘Digital Twin’, which is a virtual copy of our production lines. This allows us to see in real time how the lines are operating and analyse multiple complex parameters, such as energy consumption, cleaning efficiency or the time it takes to change parts when we switch production from one drink to another.
As the machine-led algorithms learn more, we learn more and are able to take quick data-driven decisions. As a direct result of the technology, we are now saving energy, water, money and time. We are now starting to transfer all this learning and knowledge to other plants and production lines, so we get real value and impact for our investment and partnership.
In transport, we’re using Shippeo, a digital platform to optimise routes. This helps us cut down on, for example, loading and unloading times, waiting times and ensuring there are fewer trucks on the road – all of which save CO2.
And across our business we are using advanced data analytics, chat bots and AI to increase productivity, measurement and simplify administrative tasks.
We are encouraged by the results so far and will explore what’s next and how it can make us even more efficient. We don’t know what the future holds. What we do know is that our track record stands, and we have proven we can build a sustainable business, so we’re excited for what comes next.
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