Due to its significant reliance on water, the beer industry is perhaps as directly affected by the potential impacts of climate change as any industry. Current projections maintain greenhouse gases could cause a 27% increase in global land surface affected by severe drought within the century, and that the demand for water may surpass global supply by 2030.
As the largest beer company in the world, Anheuser-Busch InBev (AB InBev) is sensitive to any impacts to their raw materials and supply chain. Water is of particular concern. Their reliance on clean and abundant water is best illustrated by the fact that seven barrels of water are needed to produce one barrel of beer. Outside of the brewery, the net water footprint – which is the amount of water required to produce one liter of beer – reveals scale of the issue. Roughly 90% of the water footprint of beer production can be attributed to the agricultural supply chain that produces these raw materials. Additionally, the agriculture supply chain accounts for 33% of the carbon emissions in a North American produced beer. Consequently, AB InBev is not only affected by the impacts of climate change, but also contributes to its causes.
AB InBev’s Response to Climate Change
AB InBev readily acknowledges the long-term impact that climate change will have on their supply chain. In their 2016 Annual Report, the company identified that decreased water quality and quantity would cause increased production costs and lower capacity.
Short Term Plans
AB InBev has several projects ongoing that that will contribute to water sustainability and a decreased carbon footprint from energy use. Refrigeration is a contributor to the company’s carbon footprint, and this past year 96% of their refrigeration purchases were eco-friendly units.
AB InBev will also continue to reduce is carbon footprint through efficiencies in packaging. They have reduced packaging weights by 126,800 tons since 2012. A specific illustration of this is demonstrated by the innovative reduction of Stella Artois bottle weight by 7%. In addition to packaging improvements, AB InBev has lowered waste through recycling initiatives that reduced waste sent to landfills by 26% this past year.
These short-term efficiencies will continue to be improved to further reduce the carbon footprint.
Long Term Plans
AB InBev’s plans to reduce its water footprint has two areas of focus. One, they plan to increase their plants’ efficiencies. This has been a coordinated effort for several years, and they reduced their global usage to 3.17 hectoliters of water per hectoliter of production during this past year. Two, they have partnered with non-governmental organizations, such as The Nature Conservatory, to launch initiatives to improve water quality and availability in the communities where AB InBev is located.
Last March AB InBev announced that it would obtain all its electricity from renewable sources by 2025. Two months ago, this commitment began to come to fruition as AB InBev signed a Power Purchasing Agreement with Enel Green Power to supply 50% of AB InBev’s electricity needs. This is enough to produce 20 billion cans of beer annually, and will substantially decrease their carbon footprint. Only 2% of the company’s electricity is currently supplied by renewable sources.
Recommendations for the Future
There are two areas in which AB InBev can help mitigate the effects of climate change on their supply chain and the planet. First, the company should continue to pursue regulatory and tax breaks for efforts that reduce their carbon footprint and water usage. This is especially relevant given the high number of countries in which they operate. Second, they should continue funding research not only on improved equipment technologies, but also on plant microbiome technology to make their crops more drought resistant.
Questions Going Forward
The main question going forward is how profitable can these climate change initiatives be for a publicly traded company. Will shareholders have a more short-term view and care less about charitable efforts to local communities if sales and profits drop?
 Rebecca Henderson, Sophus Reinert, Polina Dekhytyar, Amram Migdal, “Climate Change in 2017: Implications for Business,” HBS No. 9-317-032 (Boston: Harvard Business School Publishing, 2017), p. 4.
 David Edmunds, “Before the Taps Run Dry: Incentivizing Water Sustainability in America’s Craft Breweries,” George Washington Journal of Energy & Environmental Law (Spring 2016): 164. ABI/INFORM via ProQuest, accessed November 2017.
 Ben Cooper. “Sustainability in Beer: Part I – Looking Beyond the Brewery,” Just Drinks – Global News, February 18, 2013. ABI/INFORM via ProQuest, accessed November 2017.
 Anheuser-Busch InBev, 2016 Annual Report, p. 15, http://www.ab-inbev.com/content/dam/universaltemplate/ab-inbev/investors/reports-and-filings/annual-and-hy-reports/2017/03/AB%20InBev%20Annual%20Report%202016%20-%20Financial%20report.pdf, accessed November 2017.
 Anheuser-Busch InBev, “2016 Better World Report,” p. 19, http://www.ab-inbev.com/content/dam/universaltemplate/ab-inbev/BetterWorld2/reporting/better_world_report/ABInBev_2016BWR.pdf, accessed November 2017.
 Ibid., p. 19.
 Ibid., p. 15.
 Ibid., p. 15.
 “Anheuser-Busch and Enel Green Power Announce Renewable Energy Partnership”, Energy and Ecology Business, September 17, 2017, ABI/INFORM via ProQuest, accessed November 2017.