After a long three case day, who doesn’t enjoy a nice cold beer? Well if we don’t do anything to stop climate change, you might not be able to enjoy that beer. Global Warming is effecting our clean water supplies in several ways. The rising temperatures are leading to a shrinking snow pack in our mountains which “reduces the amount of water available for irrigation downstream, while earlier spring snowmelt affects the timing” 1. Additionally, sea levels are rising causing “saltwater intrusion [that] may contaminate the supply from groundwater”2. Per a McKinsey report released in 2012, by 2030 overall demand for water may outstrip supply by 40 percent3. With the world’s water supply shrinking, the beer supply could shrink right along with it. To make beer, you need water and lots of it. Water accounts for 90-95% of beer by mass4. Even more shocking is that more than 90% of the water used in the production of beer is used in growing barely and other agricultural inputs5.
Water is the lifeblood of beer and it is disappearing from this earth leaving alcoholic beverage companies “exposed to supply disruptions that could significantly impact operations and add to costs. Companies operating in water-stressed regions that fail to address local water concerns may face further risk of losing their social license to operate. Improving water management through increased efficiency and recycling, particularly in regions with baseline water stress, can lead to lower operating costs, reduced risk, and higher intangible asset value”6. Recognizing this risk early on, AB InBev has been at the forefront of trying to combat the effects climate change for the beer industry. Starting back in 2012, AB InBev had a corporate initiative to help protect our planet’s natural resources. To make sure all lines of business were focused on this new initiative, performance was tied to sustainability measures. Goals were laid out over a five-year period with three of the eight goals tied directly to water protection7. The current results are as follows8:
AB InBev was able to make these strides by focusing on water reduction at every step of the production process. Since most the water used in the production of beer happens in the agricultural phase, they focused on “helping barley growers use enhanced irrigation technology and drought-resistant seeds to grow more barley with less water, increasing water use efficiency inside operations, – providing effluent (repurposed water) for community needs, and working with global and local stakeholders to improve water management and ecosystem conditions at the watershed level.9” AB InBev leveraged an irrigation scheduler program created by The Bureau of Reclamation called AgriMet. This program focuses on applying the right amount of water at the right time10. AB InBev has funded the instillation of these stations at key growers to help reduce water waste. This pilot program was a success with reductions in water use of up to 20% and will now be rolled out across more locations11. Fixing water waste is the first step in helping to ensure the future of beer. Here is a short video about all the ways AB InBev is working to reduce its footprint12:
Clearly AB InBev has realized the importance of combating climate change both from a fiscal and socially responsible point of view. However, there is still room to do more. These programs are currently only in “key” areas but is neglecting China, one of the largest areas of production. Focusing on helping water waste in some of the most constrained parts of the supply chain will have more of an impact on the region than in some of the “key” areas where the technology already exists. AB InBev can also consider other ways to use less water, like finding types of barley that require less water to grow. Water can be saved by the way it is used and the other inputs in the beer, not just solely by focus on waste.
Additionally, Ab InBev should not just focus on saving the water in its production but also making sure there is clean water for the areas around its production for workers and their families. It is not enough in this world to focus only on your bottom line, global warming is about more than profits and as an industry leader they need to set an example for the rest. If people do not have water for their families, they will not support the company that is using up all this precious resource. It is in their best interest not to lose “the social license to operate” as described in the Sustainability Accounting Standard report. Ab InBev needs to save the water, save the beer. Cheers to helping combat global warming.
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1,2 “Global Warming Effects on the Water Supply.” Global Warming Effects on the Water Supply. Union of Concerned Scientists, 2011. http://www.climatehotmap.org/global-warming-effects/water-supply.html. Accessed 02 Nov. 2016.
3 Giulio Boccaletti, Sudeep Maitra, and Martin Stuchtey, “Transforming Water Economies,” McKinsey & Company, 2012, p. 1. https://www.mckinsey.com/~/media/McKinsey/dotcom/client_service/Sustainability/PDFs/McK%20on%20SRP/SRP_09 _Water.ashx accessed November 1 2016.
4 Hepler, Lauren. “From Budweiser to Miller, Greening the Big Beer Supply Chain.” GreenBiz. N.p., 02 July 2015. https://www.greenbiz.com/article/budweiser-miller-greening-big-beer-supply-chain. Accessed 02 Nov. 2016.
5 “Water | AB InBev.” Water | AB InBev. N.p., 2016. http://www.ab-inbev.com/better-world/a-cleaner-world/water.html. Accessed 02 Nov. 2016.
6 Sustainability Accounting Standards Board. “ALCOHOLIC BEVERAGES Sustainability Accounting Standard.” Sustainability Accounting Standards Board. Sustainability Accounting Standards Board, June 2015. http://www.sasb.org/wp-content/uploads/sites/4/2015/07/CN0202_Alcoholic_Beverages_Standard.pdf?__hssc=105637852.1.1478123642522&__hstc=105637852.976404890721bf97a3c25b480a074bd1.1478123642521.1478123642521.1478123642521.1&__hsfp=3202166073&hsCtaTracking=8950e8c8-252f-4a2f-bb80-b23bc8d6547c%7Ca76ea41e-cf29-4fd5-a7ac-043099317a1e. Accessed 01 Nov. 2016.
7,8 AB InBev. Best Beer Company Bringing People Together For a Better World. Investor Presentations. AB InBev, May 2016. http://www.ab-inbev.com/content/dam/universaltemplate/ab-inbev/investors/presentations-pdf-archive/presentations/2016/AB%20InBev%20SRI%20Road%20Show%20May%202016.pdf. Accessed 02 Nov. 2016.
9 “Water | AB InBev.” Water | AB InBev. N.p., 2016. http://www.ab-inbev.com/better-world/a-cleaner-world/water.html. Accessed 02 Nov. 2016.
10 Reclamation, Bureau Of. “Great Plains Region.” AgriMet Stations. N.p., 26 Apr. 2016. http://www.usbr.gov/gp/agrimet/. 03 Nov. 2016.
11 Contributor, 3p. “What We’ve Learned About Collective Action on Water.” Triple Pundit People Planet Profit. N.p., 09 June 2015. http://www.triplepundit.com/2015/06/what-weve-learned-about-collective-action-on-water-stewardship/. 03 Nov. 2016.
12AB Inbev News. “Anheuser-Busch InBev – 2017 Global Environmental Goals.” YouTube. N.p., 13 Sept. 2013. https://www.youtube.com/watch?v=5qfhVbxRvqk. 02 Nov. 2016.