Sustainability Report 2012 Overview Improve Empower Impact Appendices Brewing a better future for our Improving the environmental Empowering our people and Positively impacting the role of Additional information, tables, stakeholders and communities impact of our business communities beer in society and backgrounds Overview CEO Foreword Jean-François van Boxmeer, Chairman of the Executive Board/CEO ‘Embracing Change’ Every day consumers in 178 countries around the world choose to enjoy one of our more than 250 beer, cider and soft drink brands. In each glass or bottle is a refreshing product of the highest quality. Beer is at the heart of our business and the art of brewing beer is similar today to when Gerard Adriaan Heineken started this great company 149 years ago. He was driven by the desire to create a successful, sustainable business that wasn’t just financially successful but which also made a positive contribution to society as a whole. The simple blueprint he established was to hire passionate people, use the freshest ingredients, constantly innovate, never compromise on quality and then to reinvest in society and the communities where we operate. In the last 149 years, this approach has served us well. It continues to do so today and it will remain our approach into the future. However, what is changing is the world in which we operate. Mega-trends The world is facing significant environmental and sustainability related challenges. Mega-trends such as climate change, population growth, increasing demand for energy, food security and water scarcity are real issues that are forcing society as a whole to think and act differently. As our business grows and our geographic footprint expands, we have consistently to evolve what we do and how we do it. That is why we are forcing ourselves to find new ways to lessen the negative impact of our operations and, in the process, reduce our use of scarce resources such as energy and water. Overview © 2013 Copyright HEINEKEN International. All Rights Reserved. 1 Sustainability Report 2012 Overview Improve Empower Impact Appendices Brewing a better future for our Improving the environmental Empowering our people and Positively impacting the role of Additional information, tables, stakeholders and communities impact of our business communities beer in society and backgrounds Overview CEO Foreword continued Value creation – from barley to bar Internal and external expectations of HEINEKEN are high. We are a significant global company whose actions can have a positive impact on the lives of many people. This responsibility is one we have embraced and each and every year we learn more about the shared value we can create from the moment the barley seed is planted to the second the empty glass is set down on the bar. Great beer begins with great ingredients. So sharing value means increasing considerably the level of barley, corn, sorghum, rice and hops that we source locally. This approach empowers the local population, stimulates the economy, and guarantees quality materials with a lower distribution cost and a lower carbon footprint. Everybody wins. Much of our company’s impact, though, lies outside our direct control and with our suppliers and distributors. In 2012 our Supplier Code was signed by 528 global and more than 34,000 local suppliers so spreading the influence, impact and value of our actions and thinking. We are also increasing the impact of our actions in the area of alcohol-related harm by working closely with our industry. We recognise the need as responsible brewers, marketers and sellers to help reduce misuse of our product. That is why, in October 2012, we joined forces with other prominent international alcohol companies to back new global initiatives to reduce the harmful use of alcohol. HEINEKEN will continue to play a leadership role, through working with industry, governments, NGOs and our business partners. It remains a matter of deep regret and sadness that we continue to experience fatalities within our business. In 2012, ten people lost their lives working with or for our company. Whilst this is a significant reduction compared with 2011 and whilst five were again due to the high levels of violence in Mexico, we will continue to focus our energies on doing whatever we possibly can to prevent any and every type of fatality. The next three years We are on an exciting journey. Brewing a Better Future has united more than 85,000 employees in the quest to build a sustainable company that future generations will want to be part of. Since 2010 the foundations have been put in place. The need for change is well understood and progress has been made. We have shown we are prepared to take responsibility and to lead. Now it is time to move onto the next phase. Outlined in this report are the four focus areas for the coming three years: Water, Sourcing, CO2 and Responsible Consumption. These have been agreed in consultation with our stakeholders and reflect the areas within which we can have the greatest impact. Overview © 2013 Copyright HEINEKEN International. All Rights Reserved. 2 Sustainability Report 2012 Overview Improve Empower Impact Appendices Brewing a better future for our Improving the environmental Empowering our people and Positively impacting the role of Additional information, tables, stakeholders and communities impact of our business communities beer in society and backgrounds Overview CEO Foreword continued Once again we have set ambitious targets. We don’t have all the answers on how we will meet them. But that does not worry me. Having seen what was achieved in the first three years of Brewing a Better Future I have little doubt that our employees and our business partners will once again rise to the challenge that has been set and deliver what is needed. HEINEKEN has a responsibility to lead on the difficult issues that we face as a business and as a member of society. This is what we will continue to do. Enjoy the Report and, as always, I encourage you to share your opinions on where you think we are performing well and where we need to do more. Jean-François van Boxmeer Chairman of the Executive Board/CEO Amsterdam, 10 April 2013 Overview © 2013 Copyright HEINEKEN International. All Rights Reserved. 3 Sustainability Report 2012 Overview Improve Empower Impact Appendices Brewing a better future for our Improving the environmental Empowering our people and Positively impacting the role of Additional information, tables, stakeholders and communities impact of our business communities beer in society and backgrounds Overview Balancing Business with Sustainability “It has been an incredibly complex, often difficult, but entirely rewarding journey” An overview from Sean O’Neill, Chief Corporate Relations Officer Three years into Brewing a Better Future, how are you progressing? The simple answer is that we are doing well but we recognise there remains much for us to do before we achieve our long-term ambition to become a genuinely sustainable business. In just three years we have delivered the vast majority of what we promised and have re-shaped or strengthened our approach to employee and human rights, healthcare, health and safety, refrigeration, distribution, carbon footprint, water, packaging, business conduct, supplier expectations, responsible commercial communication, reporting and transparency and communication. It has been an incredibly complex, often difficult, but entirely rewarding journey. In 2012, we achieved our highest ever scores in the Dow Jones Sustainability Indeces, Carbon Disclosure Project and Dutch government ‘Transparantie Benchmark’ and retained our membership of the FTSE4Good sustainable investment group. I don’t believe it is a coincidence that these indicators come at a time when we are starting to truly embed sustainability within our organisation. It is our success in building this strong platform that enables us now to contemplate a more focused and deeper agenda for the future that is linked even more to our business priorities and to the needs of society and the planet. What is the link between Brewing a Better Future and your new business priorities? Brewing a Better Future is integral to our business and ultimately to our success in becoming a consumer-inspired, customer-oriented and brand-led organisation. That’s why in 2012 we have recognised sustainability as an integral part of our strategy alongside our other commercial and business imperatives. Leveraging our Scale We are, by a considerable distance, the world’s most international brewer so it is natural that we leverage this global scale to drive cost benefit and – at the same time – to increase the impact of our actions. A great example of this is the work we are doing to have every one of our business partners and suppliers sign up to our Supplier Code. We now have almost 100 per cent of our global Overview © 2013 Copyright HEINEKEN International. All Rights Reserved. 4 Sustainability Report 2012 Overview Improve Empower Impact Appendices Brewing a better future for our Improving the environmental Empowering our people and Positively impacting the role of Additional information, tables, stakeholders and communities impact of our business communities beer in society and backgrounds Overview Balancing Business with Sustainability continued suppliers and more than 34,000 local suppliers that have signed the Code, extending the impact of our approach. Growing the Heineken®Brand Growing the Heineken®brand is core to our business and fundamental to our future but we know that this cannot be done without reference to and regard for society. Building brand equity is critical for growth and in this regard, the responsible consumption element of Brewing a Better Future is a critical enabler for our global business priorities. Our leading work on Heineken®has shown us that, when positioned correctly, the concept of responsibility can be a consumer aspiration and a positive contributor to brand equity.