How Coca-Cola Assists Suppliers in Improving Sustainability
Coca-Cola HBC AG
Coca-Cola has committed to strengthening its suppliers' credentials by providing them with access to a sustainability-linked finance scheme that rewards them for becoming more environmentally friendly.
The scheme, described as "one of the first of its kind in the global beverage sector," is offered to suppliers of Coca-Cola Europacific Partners (CCEP) and will be expanded to those in Europe, Australia, and New Zealand after a successful trial in Germany.
It will offer green finance managed by Rabobank, a Dutch banking and financial services company, and will further incentivize suppliers by delivering extra incremental discounts against the original funding rate if their sustainability KPIs are achieved.
The programme aims to address the fact that 90% of CCEP's emissions may be traced back to its supply chain.
The scheme expands on existing supplier KPIs outlined in the company's science-based objectives effort, such as encouraging suppliers to use 100% renewable electricity and report their carbon footprint data by 2023.
Hannah Rizo, head of sustainability communications at Coca-Cola Europacific, said:
“This supply chain finance programme offers suppliers the ability to access their funds earlier than agreed payment terms, via a facility offered by the bank.
"CCEP and Rabobank will offer discounts on this funding rate, linked to the supplier’s sustainability performance against three criteria: their EcoVadis score (the qualifying baseline for ESG Enhanced discounts); delivery of 100% of energy purchased from renewable sources and published and validated science-based targets to reduce carbon emissions."
“Suppliers can update their ESG performance twice per year and, once verified, the lower marginal funding rates will be applied to that supplier by Rabobank," she said.
The initiative was originally launched in Germany in June, and the majority of CCEP's supplier base there has now joined.
The programme is already live in all of CCEP's other European regions and will be available in Australia and New Zealand later this year.
The statement on sustainable finance came the same week that the CCEP unveiled a project to reduce CO2 supply chain emissions by developing methods to absorb and convert CO2 into sugar.
CCEP Ventures has teamed with the University of California, Berkeley to investigate how CO2 capture and conversion on an industrial scale might be achieved.
Craig Twyford, head of CCEP Ventures, said:
“We're excited to be involved in this project that could lead the industry in the development of transformational technology capable of converting CO2 into more complex, usable goods.”
Coca-Cola has pledged to achieve net zero emissions by 2040, ten years before the Paris Climate Agreement, and to reduce absolute greenhouse gas emissions across its value chain by 30% by 2030, compared to 2019 levels.
Source: Supply Management