Managing Sustainability
We are committed to conducting our business in a sustainable, responsible and ethical way.
Royal Unibrew is a strong regional beverage company founded on locally anchored facilities, employees and sourcing of materials and services. We aim to provide successful, sustainable brands that people trust. Therefore, we have always been committed to contributing positively to the development in the areas in which we operate, to limit our environmental impact, to establish safe and good working conditions for our employees and to deliver high quality products to our consumers.
We realize that being regional, yet with global presence necessitate that we continuously work hard to improve our efforts and have a sustainability scope that encompasses the entire value chain across our markets.
Our sustainability approach is underpinned by Royal Unibrew’s purpose and strategy, our continued commitment to support the principles of the UN Global Compact (UNGC), the UN Sustainable Development Goals (SDGs) as well as our endorsement of the TCFD recommendations with balanced disclosure of climate risks and climate opportunities.
A strong company culture is crucial for our ongoing progress – a culture in which decisions are made with respect to our consumers’, customers’, suppliers’ and other key stakeholders’ views and priorities, and a culture that encourages people to take responsibility for their own actions. We believe that this approach constitutes a strong foundation to integrate sustainability deeper into our organization and to realize our ambitious targets.
During 2022, we continued to work on implementation plans and activities for each strategic pillar in all markets to ensure that Royal Unibrew is progressing and delivers results on both our short-term and long-term targets. We mapped and assessed our entire scope 3 contribution and submitted our decarbonization targets for approval by the Science Based Target initiative (SBTi). This also entailed a finetuning of some of our sub-targets as a result of our acquisitions. We are confident that our targets will be approved.
Furthermore, Royal Unibrew has integrated the five acquisitions completed in 2021, and the integration of the acquired companies in 2022 is well under way. The new companies, their business models and competencies encourage us to reconsider some of our programs and approaches, such as our responsible sourcing and supplier management procedures, as they challenge a number of our KPIs.
Tax
Creating jobs and delivering prosperity in the communities in which Royal Unibrew operates are our tangible contributions to society. Providing transparent disclosures also for tax is anchored in our business integrity.
Royal Unibrew operates in a number of predominately European countries and is therefore subject to both national and international tax rules. Royal Unibrew follows the OECD principles for transfer pricing disclosures and documentation and use external advisors to prepare the documentation. We always enter an open and constructive dialog with the tax authorities, and we are pleased to report that we were not involved in any instances of non-compliance with tax legislation in 2022.
In 2022, Royal Unibrew paid DKK 7.4 billion (2021: DKK 5.4 billion) in taxes, excise duties and VAT. Excise duties, VAT and some taxes are collected on behalf of the tax authorities in countries where we operate.
Total tax contribution (country-by-country)
Royal Unibrew seeks to comply with all tax legislation to its business operations, and we have prepared the country-by-country tax disclosure based on the GRI 207 tax guideline.
Our policies and systems
Royal Unibrew is working in accordance with international and national legislation as well as international guidelines, conventions, and standards for corporate social responsibility (CSR/ESG) and sustainability. Our policies and systems ensure compliance.
The implementation of processes and procedures to disclose in accordance with the six objectives of the EU Taxonomy (classification of environmentally sustainable economic activities), KPIs and assessment of eligibility and alignment were in focus in 2022 and will continue to be so in 2023.
Furthermore, getting ready for the transition from soft law to hard law on ESG reporting, as required by the Corporate Social Reporting Directive, was initiated in 2022. We do believe that common disclosure standards will serve well for maximum transparency toward our stakeholders just as the existing standards including GRI, the UN Guiding Principles and OECD guidelines have provided historically. Although Royal Unibrew has been disclosing ESG performance KPIs for many years, the extensive and not always business relevant disclosure and documentation requirements trigger a need for substantial headcount increase to provide data and documentation. We are monitoring other upcoming EU legislation closely such as the proposed corporate sustainable due diligence, packaging and packaging waste, climate labeling etc.
In 2022, we continued codification of several of our internal guidelines and procedures, and the Board of Directors adopted our Tax Policy.
Furthermore, we simplified requirements for our suppliers on the basis of our Business Ethics Policy. We have sharpened the requirements on CO2 reduction and renewable energy targets for all categories, and we have made specific requirements for agricultural raw materials such as biodiversity, consumption of water and use of pesticides. Additionally, we have made circularity the core for packaging material.
Our Data Ethics Policy adopted by the Board of Directors specifies requirements for topics such as legality, ethical design, security, transparency and respect for human rights.
For further information see Data Ethics Statement 2022
The majority of our production sites are operating in accordance with internationally recognized quality standards and have food safety certification in accordance with standards recognized by GFSI (Global Food Safety Initiative). In addition, we have a systematic approach to environment, health and safety where several production sites are certified.
Royal Unibrew’s policies and our Supplier Code of Conduct provide guidance for our employees, third parties acting on behalf of the company and suppliers regarding anti-corruption, environment, human rights and labor standards, including occupational health and safety but also quality and food safety, GDPR (General Data Protection Regulation), competition, responsible marketing and responsible products. The basic requirement for Royal Unibrew is being in legal compliance, i.e., having the right mechanisms, systems and programs to ensure that we have no violations.
Internal controls and the whistle-blower scheme are important means for controlling and reporting potential irregularities also by external stakeholders. Regular training is among our tools to ensure compliance internally; thus, employees are trained in relevant aspects depending on their functions inside and outside of Royal Unibrew.
Our governance structure
Our sustainability activities are anchored at the Board of Directors that has the oversight of our strategy, targets, risks, opportunities and group policies together with the Executive Management.
Our targets are implemented through the Growth Leadership Team, consisting of SVPs and VPs from our main markets and group functions, including Group Director CSR. To ensure focus on sustainability, the Group CSR Director reports directly to the CEO. Thereby, sustainability/ESG adheres to the very same principles as other business critical decisions (see page 43 in annual report).
Signing up to the UN Global Compact in 2019 was the starting point for further formalization of our sustainability efforts followed by endorsement of TCFD and submission of our emissions reduction targets for SBTi approval, including further improvement of transparency in our sustainability policies, systems and due diligence processes. We aim to continuously improve these fundamentals.
Establishing clear accounting policies for sustainability data and thus establishing a basis for transparency and external assurance has been an integral part of this process. Group CSR and Finance are responsible for measuring our results, including good practice guidelines for risks and controls. Based on the accounting policies, a control framework is established to ensure consistent quality in our reports and documentation. The ESG data governance responsibility lies at the Audit Committee, whereas the Board of Directors oversees all sustainability aspects.
We have implemented policies and procedures to minimize risks from our activities and to ensure our freedom to operate. Compliance with legal and other requirements, including our Business Ethics Policy, is fundamental.
Materiality (country-by-country)
We engage with our stakeholders in a regular dialog to understand their needs and concerns by means of various approaches and tools. Our key stakeholders are defined in our purpose and strategy of being the PREFERRED CHOICE for our consumers, customers, shareholders, employees and the future. In addition, our business partners, suppliers, legislators, local communities and NGOs are among our stakeholders.
We strive to work with a balanced approach toward our stakeholders by disclosing potential risks to our business and how we control these as well as by expressing the opportunities for Royal Unibrew: commercially as a sustainable beverage company and locally as a sustainable partner and not least as a preferred workplace.
During 2022, Royal Unibrew conducted a thorough materiality assessment to determine if our strategy still addresses relevant ESG issues. We identified global trends, standards and benchmarks, and we engaged with stakeholders to understand their views. In addition, we analysed and defined material topics. The materiality assessment was reviewed and validated by the Growth Leadership Team and hereafter reviewed and approved by the Board of Directors.
One of the outcomes of the process is to integrate the materiality assessment in the Enterprise Risk Management (ERM) framework to ensure that the wider ESG issues are integrated in the financial risk and opportunity management and evaluation. We will implement this change in 2023. We found that biodiversity, sustainable farming and deforestation are becoming even more material for the beverage sector. Therefore, Royal Unibrew aims to formulate targets and commence initiatives for regenerative agriculture in 2023.