Brewing giant SABMiller is making natural refrigerants a key component of its sustainability strategy – and demonstrating how nat refs are a winning recipe for corporate success as well as the environment.
Headquartered in London, SABMiller plc. is the world’s second-largest brewer by revenue, with global annual sales of over €23.5 billion. Among SABMiller’s portfolio are premium international brands such as Peroni, Nastro Azzurro, Miller Genuine Draft, Foster’s and Grolsch alongside leading local names such as Pilsner Urquell, Castle, Tyskie and Lech.
André Fourie, the company’s Head of Water Security and Environmental Value, is acutely aware of the responsibility that global multinationals like SABMiller share to help put the world on a more sustainable development path.
This is what underpins its ‘Prosper’ sustainability ambitions. “When our business does well, so do the local communities, economies, and environment around us. When they prosper, so do we,” Fourie told Accelerate Europe at his base in Woking, Surrey.
With refrigeration representing between 18-20% of the company’s carbon footprint, natural refrigerants are playing a central role in helping to deliver on the firm’s commitment to reduce carbon emissions by 25% across its whole value chain by 2020 (compared to 2010 levels).
Measuring the impact of refrigeration is particularly challenging for a global brewing giant, with SABMiller operating different fridge models in different parts of the world. “Many of the retail sites are not under the direct control of the company on a day-to-day basis, but we think it is important to factor in the emissions from the cooling of our beers. We can’t realistically say, ‘we made the beer, we distributed the beer, but the fact that you’re now cooling it is none of our business,” he argues.
Energy efficiency plays a vital role in improving the company’s carbon footprint. Unlike most retailers, the bulk of the environmental impact from refrigeration for a brewer actually comes from electricity consumption. The fridges tend to consume electricity on a 24/7 basis, each day of the year. An estimated 90% of the environmental impact of the cooling of SABMiller’s products over their full lifetime comes from electricity, rather than the choice of refrigerant.
Getting ahead of the game: towards 100% natural refrigerants
Natural refrigerants are a central pillar of SABMiller’s strategy for reducing the environmental impact of refrigeration. The company is committed to using natural refrigerants in 100% of new fridges procured by 2020.
Delve deeper and the scale of this commitment becomes clear. The brewing giant owns some 900,000 fridges, making the strategic decision by such a large multinational company to adopt natural refrigerants a potential landmark moment.
The annual purchase rate of new fridges across the markets in which it is active is around 10,000. Procurement on such a massive scale plays a vitally important role in growing the market for natural refrigerant technology worldwide.
As concerns mount over the contribution of HFCs to global warming, Fourie warns that companies that fail to reduce consumption could find their operating environments constrained over the next decade.
Fridges tend to have a 10-15 year lifecycle. “If the world changes and you don’t either change with it or get ahead of the curve, you’ll end up with assets which the world values differently then than ten years previously,” he warns.
“It was important for us to try and get ahead of that game, in terms of moving in the direction we thought would be the most appropriate, which is to phase out HFCs and to phase in natural refrigerants,” he says.
Having taken the decision to switch to nat refs, Fourie stresses the importance of keeping up the momentum. “Despite some challenges, we are pleased that we’re currently on track to meet our commitments,” he insists.
“Once the curve bends, it goes quite quickly. Once the suppliers have one or two models, all of a sudden their competitors are under pressure to have similar models, they have more confidence, and their maintenance suppliers quickly make the shift to support the industry,” he says.
SABMiller is keen to make the financial case for adopting natural refrigerants for fridges. Fourie himself is confident that fridges using natural refrigerants are cheaper to run. The company is currently collecting data from its suppliers and retailers to help demonstrate this. “We’ve had very encouraging data. There are definitely financial savings for the retailer, and at the same time, CO2 savings.”
Customers want the best fridges, at the best price, at the best energy performance. “It’s about getting to a critical mass – once you see that it’s the either the same cost or cheaper, that it’s better for the environment, and that the customer is happy,” he says. “It’s about how we get the market to a place where you’re being rewarded for the right things.”
In Poland, for example, where SABMiller has deployed the highest number of natural refrigerant-based equipment, the market is already reaching a point where the best performing and best value fridges on the market use nat refs.
Cooperation with partners holds key to making business case for nat refs
Recently, SABMiller became the 5th member of Refrigerants, Naturally! – an initiative of international companies taking action against global warming and ozone layer depletion by replacing harmful greenhouse gases in point-of-sales cooling and freezing units with climate-friendly natural refrigerants.
The goal of the group – which sees SABMiller, Red Bull, PepsiCo, the Coca-Cola Company and Unilever join forces with supporting partners Greenpeace and UNEP – is to make natural refrigerants the preferred cooling technology in a safe, reliable and cost-effective manner.
Fourie is keen to stress the importance of working together with global partners to tackle the challenges facing our planet. “It’s part of our understanding that in just about all the areas in which we invest in terms of sustainable development, the challenges and the solutions are bigger than us as a company,” he explains.
He cites carbon emissions, sustainable agriculture, and water among the main areas of activity in which SAB Miller as a global brewing company can help to make a difference to the environment. “In none of those areas can we solve the problem on our own. It’s much bigger than us. We need partners. We need policy. We need regulation. We need innovation. We need NGOs. We need commercial partners,” he says.
It is this understanding that drove SABMiller to get involved with groups like Refrigerants, Naturally! and the Consumer Goods Forum.
Fourie says it was particularly helpful to see other major multinational brands like Red Bull, Unilever and the Cola-Cola Company commit to sustainable business practices under the Refrigerants, Naturally! umbrella – both in terms of seeing how other companies have overcome some of the obstacles involved in wider uptake of natural refrigerant solutions, and in raising awareness of SAB Miller’s sustainability initiatives among its own workforce.
“It brings credibility. It was as much about us recognising our internal progress for our internal audiences, for people to see that we’re now part of that group and that we’re being recognised for what we’ve done, in order to encourage the journey.”
The company also plays an active role in pushing for stronger government policies on phasing down HFCs. “We understand that regulation is critical,” Fourie says.
This is where the Consumer Goods Forum (CGF) comes to the fore. In 2010, the CGF – which brings together over 400 manufacturers and retailers of consumer goods seeking to pursue more sustainable, safer and consumer-friendly business practices – adopted a resolution recognising that the HFCs used in the majority of refrigeration systems are powerful greenhouse gases and pledging to start the process of replacing them with nat refs.
Fourie recently assumed the chairmanship of the CGF’s Refrigeration Working Group. “There is a clearer policy logic for this group to explore how it can improve the environment for more sustainable refrigeration of their products,” he says.
The 2010 resolution saw some of the world’s biggest companies pledge “to begin phasing out HFC refrigerants as of 2015 and replace them with non-HFC refrigerants (natural refrigerant alternatives) where these are legally allowed and available for new purchases of point-of-sale units and large refrigeration installations”.
Natural refrigerants gaining ground…
Fast-forward to this year, and CGF members have installed low-carbon refrigeration systems in over 4,000 supermarkets and four million ice cream and drinks chiller units worldwide. The majority of these systems use natural refrigerants. And in January, they agreed to consider increasing their use of nat refs as an alternative to climate-damaging HFCs.
SABMiller is working with partners in both bodies to ascertain which policy processes would be most helpful to promote. Think about how helpful it would be for a business voice to speak out in favour of the F-Gas Regulation in Europe, Fourie enthuses.
Not everyone may agree on exact formulations, dates, or targets. “But to say, ‘this is the type of regulation that we want in the rest of the world,’ whatever the appropriate timeline – I think that would be possible. It could be powerful,” he argues.
Having business voices commit to including HFCs in the Montreal Protocol would also be a massive step forward. “To positively state this, not just saying that’s something we’d tolerate – rather saying, ‘that’s something we want to encourage’. Having a global, enforceable agreement rolled out across the world would be powerful,” he adds.
Fourie is in no doubt about the vital role that regulatory action can play in forcing businesses to move decisively. In Europe, for example, the EU F-Gas Regulation has helped to focus business minds on the need to phase out HFCs. “There is only one reason why our European business is ahead of the rest – and that’s because regulation has moved faster in Europe.”
In turn, regulation plays a key role by triggering overarching cost structure changes, investment in new suppliers, technological innovation, and new maintenance processes. “So it’s a package. You cannot deny that regulation is a very important part of that,” he states.
Fourie hopes that by sharing SABMiller’s experiences with his counterparts from other companies, he can inspire others to commit to natural refrigerants. “That’s very much part of the journey – to inspire and challenge, but also to learn and to find consensus” he says.
…particularly in Europe
In Europe, Fourie estimates that around 90% of SABMiller’s new fridges are already HFC-free. “From next year, the only equipment which will not be HFC-free are particular models, where our staff have ordered something because they can’t find it in an HFC-free model yet. Europe has been the easy part,” he explains.
In Europe, where hydrocarbons such as propane (R290) are already widely used for refrigeration purposes – particularly in the beverage sector – the company has found it more straightforward to implement the switch to natural refrigerants.
As the European market for hydrocarbons grows, suppliers are growing with it – making it easier for companies like SABMiller to source large numbers of new fridges at the scale needed to make a decisive move away from HFCs.
Other parts of the world, particularly Latin America and Africa, have proven to be more challenging. “It’s a story of Europe, and then the rest! In Europe, we’re over that hump now,” he says. But suppliers in other regions are often wary of initial investment costs, and infrastructure challenges can mean that safety is more of a concern.
‘Make mine a natural’: marketing the advantages of natural refrigerants…
Having chosen to phase out HFCs, did SABMiller plc. consider other options such as synthetic refrigerants before opting for 100% natural refrigerants? No, says Fourie. “Our decision was that when you’re moving, you may as well move out of HFCs. Why repeat what we had with CFCs? Let’s not repeat that. It’s quite clear which way the world is going.”
Customers tend to sell SABMiller’s products in small fridges in small stores, making CO2 (R744) or propane (R290) obvious choices of refrigerant.
Officially, the firm’s policy remains ‘HFC-free’ – meaning free of low-GWP synthetic refrigerants (unsaturated HFCs) too. “But as the language developed over time, we saw the value of talking about natural refrigerants. It’s a marketable term. We also think it’s the right direction, that we want the world to take. So we came to talk about natural refrigerants”.
…and putting them at the heart of SABMiller’s activities
Currently, SABMiller’s policy is to adopt propane as the refrigerant of choice for trade fridges, because they understand its use very well. However, some retailers prefer CO2 – particularly for soft drinks, a sector in which some of the firm’s commercial partners operate – so the company decided against imposing one particular refrigerant on their retailers. “We’re entirely comfortable with CO2. When we buy it ourselves, we prefer to use propane.”
All SABMiller’s breweries use ammonia – another natural refrigerant – for industrial refrigeration purposes.
“We used to operate quite distinct ammonia systems in different parts of the breweries. We’re getting better at managing it more centrally and making sure that they are efficient. But that’s very much at brewery efficiency, layout and operations level,” Fourie says.
Changing times ahead
In November 2015, AnheuserBusch InBev – the world’s largest brewer – agreed a merger with SABMiller in a deal that will combine combine the planet’s two largest beer makers.
Asked what effect the merger would have on SABMiller plc.’s environmental practices, Fourie is keen to stress that it is too early to speculate. Nevertheless, he states that SABMiller will be keen to promote the lessons learned from all its environmental initiatives.
If approved by regulators, the merger is expected to take place in the second half of 2016. The newly created firm would produce about 30% of the world’s beer.