A Manufacturers Response To Five Megatrends
Author: Andre Fourie - Head of Sustainable Development - - The South African Breweries (SAB)
( Article Type: Sustainable Development )
Manufacturing companies around the world are increasingly taking responsibility for the impact of their operations on the environment and communities within which they operate. This is both necessary and right.
Concerns about the future of the planet are well founded:there are physical limits to the impact of the consumption habits of six billion people on the availability of food to eat, water to drink and clean air to breathe. Scientists are confirming our fears about issues such as climate change, declining biodiversity and the shrinking of rain forests and polar ice caps.
This reality underpins the efforts of many global and South African companies over the past decade to demonstrate more responsible corporate citizenship. The annual reports of most leading corporations show they are concerned about their impact on local communities, are working hard to reduce the energy they consume and the CO2 they emit into the atmosphere, and are taking care about environmental damage.
Further, businesses are playing a critical role in building economic growth, particularly around job creation. A well managed and growing business is good for wider economic development, leading to greater employment, more taxes paid and greater investment in local economies and communities.
A careful reading of the sustainability reports of companies and media articles over the past decade shows that the bulk of corporate actions have been based on risk management. It didn’t take much insight by corporations for them to understand the potential impact of an environmental scandal on brand reputation. But more arsighted companies appreciated the changing demands of customers and regulators. That is why many corporations took voluntary steps to measure and reduce their carbon emissions.
The reality is that major corporations simply have to take responsibility for the impact of their activities on society and the environment. But increasingly, leading corporations realise that more sustainable behaviour does not only mean reducing risk and adding cost. A more strategic approach can actually reduce cost, open new opportunities and enhance competitiveness.
Globally there are five megatrends:
1. There is a dynamic interplay between the reality of climate change and the future of energy markets. Many countries and companies realise that the only way to reduce carbon emissions will be to invest massively in renewable and alternative energy and new technologies.
2. There is a growing recognition of water shortages. The growth in world population, accelerated urbanisation and the pollution of water sources will combine to become a major threat to the quality and quantity of water available to companies and people.
3. The boundaries between what is regarded as public and private are becoming increasingly blurred. Corporations are now expected to be more transparent in their decision-making and more open with information. At the same time, NGO’s and the media regularly expect private companies to take responsibility for issues that were previously deemed as being in the domain of public governance.
4. There is growing recognition of the importance of agriculture and biodiversity. The increasing demands for food will place pressure on the agricultural sector to expand activity but also to respect biodiversity. This can only be achieved through more productivity on existing land exploring the frontiers of bio-sciences.
5. Finally, the sustainability agenda is increasingly recognised as a part of the corporate radar of innovation and differentiation. By looking at communities and the environment with new lenses, companies are developing new products, reaching new customers and uncovering new market trends before their competitors.
All the above Megatrends are also playing out in South Africa. In addition to these, there are particular local challenges of doing business in South Africa including how to create real and sustained value through black economic empowerment, how to contribute to a better system of schooling and skills development and managing the impact of HIV/Aids on the workforce and communities. From an environmental point of view, all interest groups including government, business, communities and nongovernmental organisations, will need to work together if we are to tackle the challenges facing us.
So how does a manufacturing-based company deal with all these challenges? The South African Breweries (SAB) has a legacy of being deeply rooted in the realities of the country. It has a track record of social responsibility but also recognises the need to keep track of the rapidly evolving sustainability agenda.
Manufacturers in South Africa have made a long-standing contribution to South African society and the economy. A recent study by the Bureau for Economic Research (BER) showed that in 2005, the taxes derived directly from the production and sale of SAB’s products alone amounted to R8,5-billion, and that 362 000 full time jobs (or 3% of total employment in SA at the time), could be directly or indirectly traced to back to the production and sale of SAB’s products.
Social responsibility is an important dimension of sustainability and one of the ways in which SAB has responded to this is in pro-actively addressed the issue of the abuse of the company’s products. Discouraging irresponsible drinking is a top global priority of the company’s sustainability agenda. In addition to educating and empowering our own staff to aspire to responsible personal conduct, we are also reaching out to policy makers to become a reliable partner in promoting responsible alcohol use. The prominent and hard hitting ‘Reality Check’ campaign demonstrated SAB’s commitment to dealing with drunk driving and Foetal Alcohol Syndrome.
Sustainable water resource utilisation is another important dimension of a manufacturer’s responsibility. As a significant water user, SAB has addressed this issue with determination and innovation. As a result SAB now ranks highly on water efficiency during the brewing process and adheres to strict standards regarding discharging water at the end of the production cycle. At SAB Ltd’s iBhayi Brewery in Port Elizabeth, a pilot project was launched to explore the potential for natural systems to treat brewery waste water using an environmentally sustainable approach. The groundbreaking research project, known as Project Eden, is a first in the global brewing industry. Water is recovered using high-rate algae ponds built within a greenhouse and a constructed wetland on site – downstream of the brewery’s anaerobic digestive system. To test the quality of the treated effluent, it is used in the production of hydroponic lettuce and fish in the greenhouse.
Enterprise development is another critical component of a manufacturer’s responsibility, and is a key contributor to the country’s economic growth. SAB has therefore focused on skills development to offer people a platform which empowers them and improves lives. One such example is SAB KickStart, a programme designed to inculcate a culture of entrepreneurship amongst South African youth. Launched in 1995, the programme has empowered more than 22 696 young entrepreneurs and enabled the stablishment of over 3 200 small businesses. The Taung Barley Farmers project in the Northern Cape is another such example. Established in the early 1990’s to encourage local barley production and reduce our reliance on imports, today the project spans 1,800 ha of land, and helps around 104 smallholder farmers generate an income from barley and maize in the Taung region.
As a proudly South African manufacturing company, SAB is working hard to demonstrate the sort of societal leadership that will ensure that the company is a trusted corporate citizen. We are also aware that the country will only succeed through the efforts of all South Africans. SAB therefore aims to be a reliable partner to government, civil society and other corporations during this journey to a more sustainable future.