Supply Chain

Supply Chain

Supply chain overview

We produce and distribute more than 2 billion unit-cases of our products annually across our territories. Our supply chain therefore plays a central role in our business and is responsible for the company’s procurement, planning, manufacturing, engineering and sustainability. In all our processes we minimise our environmental impact and consider sustainability in our value chain - from sourcing raw materials and manufacturing the end product to distributing it to our customers.

Our success lies with our people's expertise, our absolute focus on quality and our continuous investment in advanced technologies.


ELT-Ivo-Bjeils

Our mission is to become the leading supply chain function in our industry in terms of customer service and cost efficiency. To achieve this, we focus our efforts on keeping our people engaged, excelling in sustainability, reducing our costs and building best-in-class customer service and responsiveness.

Ivo Bjelis Chief Supply Chain Officer

PRODUCTION

To produce our products, we use water, sweeteners, sugar, beverage concentrate and glass, aluminium, PET resin or carton packaging plus energy for the overall manufacturing process. We source these using sustainable practices and seek to use them efficiently. In 2022, we achieved 78% certification of agricultural ingredients on average across all CCH related crops under the Coca-Cola System framework of the Principles for Sustainable Agriculture (PSA) and we are working towards 100% certification by 2025. More details on Sustainable Agriculture are included in the Section "Sustainable Sourcing" below.


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plants

279

production lines

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distribution centres



top in class quality assurance top in class quality assurance

Top-in-class quality assurance

Quality and food safety are a must for us. We have built a quality and food safety culture in our organisation over many years, highlighting the importance of maintaining consumer trust.

This approach extends to our suppliers, too. We aspire Tier 1 suppliers to gain certification to the following standards: ISO 9001 (quality), ISO 14001 (environment) and ISO 45000 (health and safety). Ingredient and packaging suppliers must also achieve certification to FSSC 22000 for food safety and the Global Food Safety Initiative (GFSI).

We have re-stated our zero tolerance for failure to meet standards and deployed a maturity continuum measurement, with stringent processes in place to minimise the occurrence of quality issues. However, when they do arise, we have robust processes and systems in place so we can deal with them quickly and efficiently, ensuring that our customers and consumers retain confidence in our products. As the result of best-in-class industry benchmarking, each of our markets has developed tailored plans to support and further develop our quality and food safety culture.

Quality and food safety remain our top priorities, to make sure we meet customer and consumer expectations while delivering against our cost leadership commitments. This is why we commit to it publicly in our Quality & Food Safety policy.

Health & Safety

The health and safety of our people and partners always comes first. It is managed as a principal risk, emphasising the critical importance of ensuring the wellbeing of everyone in our workplaces.

We conduct annual health and safety weeks in all our countries to build knowledge and capabilities and strengthen the awareness about health and safety among our employees. As an example, in 2019 our internal health and safety campaigns provided helpful information addressing stress at work, machine safeguarding, ergonomics and warehouse traffic safety.  

Transforming, innovating and digitalising our supply chain

To ensure our business is fit for the future, we are investing in advanced technologies and transforming and digitalising many of our supply chain processes.

Operating in 29 diverse markets, our aim is to build a borderless supply chain that operates effectively, efficiently and enables us to imbed innovative technologies, fast. We are applying innovation within our supply chain to expand our technical capabilities while ensuring productivity and cost, energy and water savings.

To do that, we’re investing in advanced technology that will optimize our infrastructure and transform our existing plants into efficient mega-plants that can effectively serve a country or an entire region. This requires us to utilize new and different technologies and processes. 

about-us-supply-chain-Transforming-innovating about-us-supply-chain-Transforming-innovating

We are committed to developing our business sustainably and to respecting the environment. This means we support sustainable plants and warehouses and focus on developing innovative processes and solutions for our products and processes.

In October 2021 we made a commitment to achieve net zero emissions across our entire value chain by 2040. To do so, we will reduce our direct emissions to an absolute minimum, and work in partnership with our suppliers to eliminate the 90% of our carbon footprint that results from third parties. Wherever we can’t eliminate emissions entirely, we will mitigate or remove those by investing in other climate protection measures.  But our primary goal continues to be the systematic reduction of emissions. Via an existing, approved science-based target, by 2030 we will reduce our value chain emissions in scopes 1, 2 and 3 by 25%, with a further 50% reduction in the following decade. Read more about our commitment here.

Our Net Zero commitment is the ultimate destination of a journey that we have already started many years ago. Since 2010, we have consistently reduced our carbon emissions and water consumption per litre of soft drink produced. As we look to reduce our carbon emissions further, we are exploring all available green energy technologies. In 2019 alone, we invested around €6m in energy saving projects at our operations and we have reduced our energy consumption (measured per litre of produced beverage) by 31%, and water use by 22% since 2010. 

Our Mission 2025 sustainability targets include goals for reducing energy consumption and associated emissions. Through a set of projects and innovative solutions implemented across our value chain, we saved 262,038 tonnes of CO2 in 2019 compared to 2018 and increased the use of renewable electricity by 7.7% across our markets:

• In Austria and Switzerland, we are using more power from the sun. In 2019 we installed one of the largest photovoltaic systems in Austria on the roof of our production and logistics centre in Edelstal. This will save around 725 tonnes of CO2 per year compared with conventional energy production, equivalent to the annual emissions of 400 mid-size cars. The photovoltaic system on the roof of our Swiss mineral water warehouse was originally installed for the benefit of the community, supplying energy for 64 households.

• We have installed photovoltaic power (solar energy) in our plants at Oricola, Nogara and Marcianise in Italy.

• We use energy from 14 CHP (Combine Heat and Power) plants which produce energy in an efficient way and thus optimise our combined heat, cooling and power consumption in our plants. 

• We tackle emission reductions throughout our value chain, including Company vehicles. For example, our 180 pool vehicles in Switzerland are powered by compressed natural gas, forming the country’s largest biogas vehicle fleet. In comparison to similar vehicles using diesel, biogas-powered vehicles emit 15% less CO2. 

• All initiatives run at our operations and distribution helped to reduce scope 1&2 emissions rate (measured per litre of produce beverage) by 51% compare to 2010. Our emissions targets are approved Science Based Targets.

New, automatic line changeovers reduce idle production time and free up volume capacity, effectively expanding our production line capacity by nearly 1% per year. These lines support smaller runs of new products, helping us supply niche market segments and respond to rapidly changing consumer preferences. 

Thanks to the introduction of augmented-reality smart glasses in our production plants and warehouses, we’ve been able to provide remote expert support to our people. One recent example of this was in Moscow, where we started our new PET line using this technology.

Smart glasses XAssist technology has also enabled remote virtual quality, health, safety and environment visits at our plants across the business, which has proved invaluable during COVID-19 lockdowns. 

New augmented reality technology helps us manage the complexity of our expanded 24/7 portfolio. The technology aids our warehouse colleagues in pulling inventory from stock and packing it for customer delivery, enhancing the speed and accuracy of our service.

We implemented augmented reality vision picking in seven warehouses in 2019, leading to around 10% increase in productivity and a 99.9% picking accuracy for customer deliveries. This successful implementation encouraged us to expand its use during 2020 in 8 more sites located in Bosnia Herzegovina, Croatia, Ukraine, Czech Republic, Italy, Hungary, Poland and Russia. In 3 of these locations (Zagreb, Kiev and Moscow) we switched from paper picking to vision picking directly. 10 more locations are planned to be rolled out in 2021.

We have identical advanced planning systems across all markets allowing real time information, cross-country coordination, optimisation and remote work from any location. Digital cockpits allow online performance reviews, measurements and monitoring of key trends in the supply chain area.

We have also invested and fully implemented an advanced multi-echelon inventory optimisation tool. It supports to manage increasing supply chain risks due to economic uncertainty, customer expectations and demand volatility. Enhancing inventory in multiple stages allows to reinforce service levels while optimising working capital.

In the area of demand forecasting we will introduce machine learning algorithms to enhance the commercial planning processes. The level of accuracy, transparency and replicability of this technology is improving continuously, and we plan to expand our capabilities and tools in this area in order to advance our end to end planning optimisation from supplier to consumer.


supply-chain-fullwidth-teaser supply-chain-fullwidth-teaser


Optimising infrastructure to support a 24/7 portfolio

Optimising and developing our infrastructure also supports our expanding 24/7 portfolio. By centralising our production planning system for the whole Group, with each plant serving regional needs, we have been able to meet market demand with speed and agility. This is supported by expanding production capacity in targeted markets, including Nigeria and Russia, where we anticipate strong future growth.

We have also upgraded production lines to support product innovation. For example, we invested in a new premium glass packaging line for FUZETEA in the Czech Republic and Romania and for Coca-Cola Energy in Hungary, as well as investments to support the production of Cappy Lemonade and Coca-Cola signature mixers in Romania.

In Italy we recently invested in new production capabilities for different package sizes, a new aseptic PET line at our Nogara plant to accommodate Adez in our expanded 24/7 portfolio and new TriBlock technology in a PET line in our Marcianise plant. TriBlock technology helps us use production space more efficiently and reduce water and energy consumption.

To manage the increased output from our mega plants and the complexity of our expanded 24/7 portfolio, we continued investing in automation for our high-capacity warehouses. Automated warehouses, and automatic guided vehicles, improve both efficiency and service quality.


Our suppliers

We consider our suppliers as critical partners, contributing to the ongoing and sustainable success of our business.

As a critical part of our value chain, the performance of our suppliers directly impacts the sustainability performance and commitments of Coca‑Cola HBC.

Under a unified procurement framework, we segment our supply base universe of around 15,000 parent level supplier organisations (16,876 supplier code) into direct and indirect spend suppliers (actively used for purchasing transactions in 2022.

  • Direct spend suppliers include ingredients and packaging suppliers.
  • Indirect spend suppliers include categories such as IT, production equipment, spare parts, maintenance services, secondary packaging, logistics providers, fleet vehicles, utilities, real estate, facilities management, professional and other consultancy services, personnel and temporary labour.

Direct Categories 2022 Spend

INDIRECT CATEGORIES 2022 SPEND

Total Suppliers Spend 2022- Small image - 01.08 Total Suppliers Spend 2022- Small image - 01.08
Indirect categories-small image-01.08 Indirect categories-small image-01.08

Coca-Cola HBC Total Supplier 2022 Spend

Coca-Cola Direct Categories 2022 Spend-large image Coca-Cola Direct Categories 2022 Spend-large image

Supplier Segmentation

In Coca-Cola HBC we segment suppliers into the following categories based on criticality and potential opportunities:

Group Critical Suppliers are those that fulfil any of the following criteria: high percentage of spend, critical components (including but limited to Sweeteners, Juices, Resin, Cans, Glass, Preforms, Closures, Aseptic Packaging, Secondary Packaging, Cold Drink Equipment etc.), limited alternatives and partnership supporting our business strategies.

Country Strategic Suppliers are those which have strategic importance at a local or regional level.

Both Group Critical & Country Strategic suppliers are considered Critical to the overall competitiveness and success of Coca‑Cola HBC.

Tactical Suppliers represent low-volume and/or low-spend suppliers, supplying goods or services where there are many alternative sources available, enabling a flexible supply base.

Both Group Critical & Country Strategic suppliers as well as The Coca-Cola Company (TCCC) Concentrate supply, have significant business relevance to the company and are considered to be of great substance in terms of potential ESG or financial impact. To this respect these suppliers are defined to be Significant Suppliers to the overall competitiveness and success of Coca-Cola HBC. TCCC Concentrate supply is not considered to be procurement addressable spend. However, TCCC and Coca-Cola HBC we share the same ESG standards and policies and as members of The Coca-Cola System we share to a great extent common supply base that we jointly manage, negotiate, innovate and support improvements in their ESG performance. Finished Goods suppliers are considered essential to the financial success of our business.

Finished Goods are inspected and tracked for risk assessment and sustainability performance by TCCC, the Quality Safety & Environmental (QSE) Department and Commercial Department before they are accepted for market distribution. In such cases our Company is acting as Distributor and not Direct Manufacturer. Finished Goods are not considered procurement addressable spend.

2022 Supply Base Screening Summary

Tier - 1 Suppliers with Spend in 2022
 
 Supplier Segmentation in Tier 1 (T1)
Total # of Suppliers
screened per Segment
% of Screened Suppliers on
Total Suppliers     

% of Screened
Spend on Total
Spend      

Group Critical Suppliers             978  5.8% 72.9%
Country Strategic Suppliers 3,715 22.0%
TCCC 14 0.1% 23.2%
Total # of Significant Suppliers in Tier 1 4,707 27.9% 96.1%
Tactical Suppliers 11,555 68.5% 2.9%
Finished Goods (FG) 259 1.5% 0.8%
Other non-Procurement Addressable Suppliers 355 2.1% 0.1%
Total # of Tier 1 Suppliers 16,876 100% 100%
Total number of Significant non-Tier 1 Suppliers 70,269 N/A N/A

Note: Risk Screening considers Industry Sector, Country, Spend Levels and ESG Risks

 

      Total Tier 1         T1 Significant & Tactical (Abs. #)        Other* (Abs. #)   
Suppliers
16,876 16,262 614
Spend
€6,63 bn €6,57 bn €0.06 bn
Procurement Addressable Spend: € 5,03 bn

Note: Other represents FG & sponsorships that are not included in procurement reporting as they have been wrongly registered in SAP under procurement codes.

2022 Supply Base Assessment Summary

 

Tier 1 Suppliers with Spend in 2022
 
 Supplier Segmentation in Tier 1 
Total # of Suppliers
per Segment
No. of Suppliers
Assessed

% of Assessed Suppliers on
Total Suppliers       

% of Assessed
Spend on Total
Spend   

Group Critical Suppliers
 
            978 811 4.8% 45.6%
Country Strategic Suppliers
 
3,715 1,349 8.0%
TCCC
 
14 14 0.1% 23.2%
Total # of Significant Suppliers in Tier 1
 
4,707 2,174 12.9% 68.9%
Tactical Suppliers
 
11,555 448 2.7% 0.5%
Finished Goods (FG)
 
259 N/A N/A N/A
Other non-Proc. Addressable Suppliers
 
355 N/A N/A N/A
Total # of Tier 1 Suppliers
 
16,876 2,622 15.5% 69.3%
Total number of Significant non-Tier 1 Suppliers
 
70,269 69,495 98.9% N/A

Note: TCCC and Finished Goods (FG) are not Procurement Addressable

Total Tier 1 Assessed
(Abs. #)
Assessed
(%)
Non-Assessed
(Abs. #)
Comments
Suppliers
16,876 2,622 15.5% 14,254

  Assessed in this table includes Tier 1 Significant & Tactical Suppliers 

Spend    €6,63 bn   €4,6 bn 69.3% €2,0 bn

Note: Risk assessment consider Industry Sector, Country, Spend Levels and ESG Risks

Coca-Cola HBC data on ESG supplier screening, assessment, action-plan engagement, and capacity-building programs have been assured by independent 3rd party auditor (densktatt). Please find respective link here: 2022 Supplier ESG Reporting Assurance Statement

We place significant focus on forming partnerships with suppliers that have supply points located within our countries, both multinational and local while also developing strong local suppliers across our territories. These efforts support our strategy for local sourcing and contributing to socio-economic development in the countries where we conduct business. These suppliers significantly contribute to our business; more information is available under the 2022 GRI Content Index Section 2-6 “Activities, value chain and other business relationships”.

Coca-Cola HBC annual spend with suppliers in 2022 reached €5.0 billion of Direct & Indirect spend (Procurement Addressable Spend) and appr. €6.6 billion including TCCC concentrates and Finished Goods. Our practice is to source locally, provided that goods and services are available to meet our requirements and quality standards in an economically viable way. We target over 95% of our spending is local in our countries of operation or from within the European Union, which is considered local for EU countries. In 2022 we had 97.93% sourced locally representing €4.8 billion of Procurement Addressable Spend as this is included in the Sourcing Sustainability KPIs and Targets

At Coca-Cola HBC, we are committed to high standards of performance related to human rights, labour practices, minimizing environmental impact, ensuring health and safety, ethical business and unsurpassed quality in our supply chain. Our supplier partners play a critical role in ensuring that we deliver against these standards.

Given the diversity of countries from which we source, we are well aware that the practices of our suppliers reflect directly on the reputation of the Coca‑Cola System overall and thus we stand committed to maintain high standards of performance across our supply chain.

To ensure proper governance and that our suppliers meet our standards, we have implemented policies including our Coca-Cola HBC Supplier Guiding Principles (SGP) and Coca-Cola HBC Principles for Sustainable Agriculture (PSA). In addition, we have developed an environmental, social and governance supplier pre-assessment process for our strategic buy segment which includes multiple criteria for supplier selection across all main pillars of our guiding principles. We monitor compliance of our critical Suppliers primarily by utilizing Supplier Guiding compliance audits and EcoVadis CSR Platform.

We also recognize supplier certifications as per international standards including ISO 9001, 14001, 45000 and FSSC 22000. For agricultural commodities, we recognize the Rain Forest Alliance, Fairtrade International, Bonsucro (Mass Balance Chain of Custody Standard V 4.1), Sustainable Agriculture Initiative Platform (SAI Platform), Global G.A.P.  & GRASP certifications to name a few.

Our Suppliers acknowledge our Supplier Guiding Principles and are expected to comply as a minimum with applicable environment and local labour laws and core international conventions. These principles also communicate our values, and our expectations for responsible business practices.

We aspire 100% of our suppliers accepting our SGPs by utilizing our ‘SGP Coverage Triangle’ with three checkpoints throughout the Procure-To-Pay process:

SGP_Coverage_Triangle SGP_Coverage_Triangle

In our own business, we are promoting a 100% quality culture with zero tolerance for failure to meet standards. This approach extends to our Suppliers as well. We monitor compliance of our Significant Suppliers through third party’s compliance audits leveraging multiple credible sources such as  but not limited to, TCCC SGP Audits, SEDEX SMETA 6.0 and EcoVadis CSR assessment platform. Suppliers are required to submit corrective actions to the 3rd party audit bodies when a non-conformance is identified during the audits as a remediation activity.

In 2022 we have identified 162 Suppliers with significant environmental impact findings. Types of findings: missing supporting documentation over declared practices, policies etc. or missing regular formalised environmental reporting for relevant KBIs, expired or lack of supporting documentation (e.g., ISO 14001, measures on energy consumptions & GHG emissions), no endorsement of external CSR initiatives or principles (e.g., UN Global Compact), not adequate reporting on environmental issues, Spillage risks of fuel etc.(locations: Russia, Nigeria, Belarus, Kosovo, Switzerland, Ukraine, UK, USA). All Suppliers were instructed to develop corrective action plans and demonstrated improvement through the year. More detailed info available at 2022 GRI Content Index section 308-2 “Negative Environmental Impacts in the Supply Chain and Actions Taken”.

In 2022 we have identified 70 Suppliers to have labour & human rights critical findings, of which all developed corrective action plans and demonstrated improvement. Types of findings include both Freedom of Association and other Social elements such as: health and safety incidents, wages and benefits corrections needed, workhours and extended overtime, labor contracts, violations in discrimination, Lack of supporting documentation against declared practices, polices etc.

(Locations: Russia, Nigeria, Belarus, Kosovo, Ukraine, Italy, Poland),

More detailed info available at 2022 GRI Content Index section 414-2 “Negative Social Impacts in the Supply Chain and Actions taken”.

For further information on how we screen and assess our Suppliers for Risks in Coca-Cola HBC please refer to section “Supplier Risk Management” below.

Engaging with our suppliers

We collaborate with our suppliers to improve our overall performance and build a responsible and sustainable supply chain.  We actively seek to partner with our suppliers through our joint value creation initiatives, sustainability events, industry associations, workshops on sustainable supply, annual supply chain innovation workshops, materiality survey and CSR platform for ethical and sustainable supply chains. We invest in joint value creation programs, ranging from developing climate-friendly cold drink equipment to increasing local beet sugar production.

Partnering is the only way for businesses and society to find sustainable solutions. In Coca-Cola HBC we held our first Group Supplier Sustainability Event on 14th April 2021: “Doing Good Together”, which was attended by over 300 participants from all over the world. During the virtual event, company and external experts provided context on the international drivers and challenges on environmental, social, and governance (ESG) factors facing the industry as well as examples of best practices and new opportunities arising from sustainability. This included presentations on Coca-Cola HBC’s sustainability goals – Mission 2025, risk management, ensuring a culture of ethics and compliance, human rights, the approach to countering climate change and the journey towards a World Without Waste.

Coca-Cola HBC CEO, Zoran Bogdanovic opened the event, underlining that sustainability is at the top of our agenda. He said: “Sustainability is fundamental for our growth. And it can only happen through partnership, especially with our suppliers. For us, creating value means supporting the socio-economic development of the societies in which we operate as well as building a more positive environmental impact, together with our stakeholders. “90% of our Coca-Cola HBC’s carbon footprint comes from scope 3 emissions, which are emissions that occur in the value chain that are linked to the company’s operations but generated from sources that we do not have full control over.

The next Group event is planned for 2023. Different countries also have programs to engage with local key stakeholders including our Suppliers to openly discuss about ESG challenges and exchange best practices and ideas. 

Supplier Sustainability Events

  • Warsaw, Poland - November 2022
  • Athens, Greece - June 2022
  • Warsaw, Poland - November 2021
  • Athens, Greece - September 2021
  • Virtual Supplier Sustainability Event - Group Level, April 2021
  • Vienna, Austria -May 2019
  • Budapest, Hungary - May 2019
  • Warsaw, Poland - June 2018
  • Schimatari Plant - June 2018
  • Brüttisellen, Switzerland - March 2017
  • Belgrade, Serbia - September 2017
  • Moscow, Russia - November 2017

Acceleration through partnership

It is important that we work closely with our suppliers to accelerate our sustainability journey, as their environmental and social impact has an effect on the footprint of our value chain and vice versa. Within the breadth and scale of societal, ecological and environmental challenges facing the world, it is impossible that one single stakeholder can have all the answers. Partnering is the only way for businesses and society to find solutions.


Mirela toljan jakomin

"We work collaboratively with our vendors to meet the expectations of our customers, consumers and communities and pursue mutual sustainable growth, while actively reducing environmental impact and adhering to highest industry standards, applicable laws and conventions.”

Mirela Toljan Jakomin Chief Procurement Officer

In October 2021, we committed to achieving net zero emissions across our entire value chain by 2040. To address the 90% of emissions in Scope 3 resulting from third party actions, we have broadened our existing partnership approach with suppliers.

To this respect the Procurement Function initiated back in 2021 our work together with our key packaging partners Crown, Ball and TetraPak on our mutual 2030 science-based greenhouse gas emission reduction targets and longer-term net zero aspirations. Moreover, we launched further collaboration with additional critical suppliers, reflecting our joint commitment to reduce emissions efficiently in an accelerated manner together with the Coca-Cola System.

In Coca-Cola HBC we have developed further in 2022 the collaborative framework with our key GHG generating Suppliers across the Coca-Cola System to calculate emissions using the Supplier-Specific method (SSEF). This involves gathering suppliers’ collect operational activity data, identifying the right emissions factor(s), and converting the activities to CO2e. Engaging with suppliers directly poses a number of challenges to the reporting organisation in terms of resource and cost. This is why it is crucial to understand which sources of scope 3 emissions are material, and therefore which represent opportunities for reduction. To this respect, together with TCCC and other System bottlers we have prioritised Sugar, HFCS, PET, Aluminium, Glass. This effort is supported by a specialist consultancy, IFEU, that has developed appropriate questionnaires for each raw and packaging category in scope and a 3rd party Assurance company, E&Y.

So far, we have engaged with 20 key pilot Suppliers, representing all the categories above and have almost concluded the collection of primary data. The joint effort has offered us a lot of learnings on the challenges and opportunities, and we have already created a plan for 2023 to engage further System Suppliers to join the SSEF journey.

In addition to potentially creating more accurate data through SSEF creation, capturing supplier information directly ensures that suppliers can become educated and engaged in the emissions calculation process. It also provides TCCC and Coca-Cola HBC with a means to assist the supplier organisation in their own environmental reporting and to collaborate on ways to reduce emissions related to their commercial relationship and beyond.

Our efforts to leverage the learning curve of our suppliers in GHG management, resulted in our decision as a System to join  Supplier Leadership on Climate Transition collaborative (SLoCT), an initiative dedicated to mentor and train suppliers in emissions reduction strategies.

SLoCT mobilizes collective climate action by providing suppliers with resources, tools, and knowledge to support their own climate journeys. SLoCT has three primary components:

  • An educational seminar series
  • Supplier maturity scoring, with four levels of recognition
  • A monthly check-in to drive dialogue for brands

Transport distances play an important role and through our local sourcing strategy are optimized. As an example, for sugar in the following countries that there is local sugar production & enough capacity i.e., Austria, Bosnia, Czech, Poland, Serbia, Romania, Russia, Ukraine, Belarus, Nigeria, Switzerland, Bulgaria we source from the country. For other EU countries, where they have no sugar production, or the capacity of production is limited we source from the closest and most cost-efficient sources within the EU. Similar approach we apply for Juices production. This way we also achieve to reduce CHG emissions for the transport of Ingredients and other direct materials. 

Our cans are among the lightest in the market and within the Coca-Cola System we have already gained benchmark status between Bottlers for can-weight optimisations. BALL, one of our strategic partners that supplies over 25% of our total can volume and one of our key pilot collaborators in the development of a joined roadmap for the reduction of Scope 3 emissions, has introduced the use of renewable electricity for all of their cans supplied to CCH in Europe, contributing to the reduction of Scope 3 emissions by more than 9,000 metric tons. Also with BALL support, CCH we further light-weighted 25cl aluminium cans cutting approx. 370 metric tons of CO2 emissions per year, bringing additional value to our supply chain that already works on the most sustainable can body supplied in the market.

In the field of Secondary Packaging, in Poland, we piloted a new stretch film developed by Megaplast, named Delta GP, which resulted in the reduction of stretch film usage by 40%, representing 26 tons of reduced plastic and translating into 50 tons of CO2  emissions reduction. The pilot indicated that this new technology is also offering better pallet stability, faster production times and solid compatibility with existing machinery.  Coca-Cola HBC Polska won the “Golden Innovation Retail 2022” award for Stretch Fibre Film Delta GP implementation and in 2023 we shall expand the pilot further in our Poland plants but also share this with our System colleagues for more extended application.

In Greece, with the support of TetraPak,  we have introduced plant-based packaging and bio tethered closures complying with the SUP Directive, for the aseptic fibre packaging of the AMITA product line, achieving 590 tons of materials and respectively 1028 tons of CO2 emissions reduction.

We are focused to continuously improve our coolers operation, so we tested successfully in 2022 and will introduce within the second half of 2023 a new cooling technology that cut energy consumption by >40% resulting in ca. 3,000 MWh energy saving per year on cooler operation for our customers once transition is completed.

In collaboration with our Logistics experts,  we aim to transform our passenger vehicle choices and enhance fleet options by introducing an extensive range of fully electric and other alternative power trains such gas and (plug-in) hybrids as part of our solid plans to continue with our GreenFleet initiative across Coca-Cola HBC as part of a 5-year plan to reduce the number of ICE Fleet vehicles and replacing with EV from 80% in 2021 to 28% in 2025. In 2022 we achieved 7% reduction, resulting in 120 tons emissions less. Interesting examples of such activities are the introduction of new Mercedes Actros BEV truck in Switzerland for distribution in city centre areas; the routing and capacity optimisation of trucks in Ireland that help reduce number of trips needed, the elimination of “empty” truck routes in North Macedonia.  The efforts also expand under Material Handling Equipment Vehicles (MHE) such as the example of 90% of Czech and Slovakian MHE fleet focusing on maximum utilization of LION technology from 0% to 59% of total MHE fleet resulting in 40 tons of emissions reduced in 2022 and reaching 198 tons within the 5-year use-cycle.

More examples of key joint activities with Strategic Vendors can be found under the 2022 GRI Content Index, Section 2-6 “Activities, value chain and other business relationships”.

Supplier Risk Management

Environmental Social & Governance (ESG) is a strategic imperative for Coca-Cola HBC as well as a topic considered critical not only at the board level, but also throughout our organization (Coca-Cola HBC Sustainability Governance).

As with any key strategic imperative, careful management of all the risks that impact this success or failure is essential. In Coca-Cola HBC we follow a well-established discipline of Risk Screening and Risk Assessment across our supply base, depending on the significance of suppliers in our supply chain in terms of business relevance, spend and ESG Performance. ESG screening and assessment in Coca-Cola HBC is covering our entire spectrum of our Suppliers, however the intensity of our program is depending on the significance of each Supplier within the Supply Chain.

In Coca-Cola HBC we initiate our assessment journey with 1st level Risk Assessment based across our supplier universe of approximately 15000 parent suppliers, leveraging the EcoVadis IQ Plus methodology as a starting point. EcoVadis IQ Plus leverages intelligence from the world’s largest sustainability performance database, our own procurement data, and screening of supplier-specific public documents, news and risk factors. In this way we gain supplier risk transparency based on validated data covering industry sector, country, and company-specific factors. EcoVadis IQ Plus is offering the possibility to initiate an EcoVadis Risk Assessment request straight from the IQ Plus platform. Our critical suppliers are invited to subscribe to EcoVadis CSR assessment platform that is hosting a collaborative network to manage the sustainability performance of suppliers.

A comprehensive EcoVadis dashboard gives us aggregated data and capabilities to understand our sustainability risk/ opportunity landscape, help meet regulatory reporting requirements, and fine-tune our assessment strategy.

As a next step, for suppliers of significance to our operations and supply chain continuity, we drill down further into their ESG practices and performance leveraging more detailed and elaborated screening and assessments to identify ESG risks. These tools are a combination of activities that our Procurement Sustainability Team is diligently performing and include, but are not limited to, the following:

  • EcoVadis Platform Assessments: this is 3rd party collaborative assessment platform that offers us visibility in the ESG performance of our suppliers reported under 4 main pillars that contain 21 different sustainability criteria: Environment, Ethics, Labour & Human Rights, Sustainable Procurement.  The criteria are based on leading standards such as the GRI, UNGC, ISO 26000, ILO etc. and is supervised by an international scientific committee. We integrate EcoVadis ratings across the procurement lifecycle for the Coca-Cola HBC Strategic Suppliers across our Group and our Business Units and use EcoVadis as a transformative tool for our teams. Through EcoVadis we can track not only performance but also and equally important the supplier action plans, status and improvement in ESG matters year-on-year.

  • The EcoVadis overall score (0-100) reflects the quality of the company’s sustainability management system at the time of the assessment and also acts as a benchmark between different companies and industries.

  • The medals criteria for scorecards published from 1 January 2023 are as follows:
    • Platinum - top 1% (overall score between 78 and 100)
    • Gold – top 5% (overall score between 70 and 77)
    • Silver - top 25% (overall score between 59 and 69)
    • Bronze - top 50% (overall score between 50 and 58)
       
  • No medal is assigned for overall scores below 50 or if there is a theme score below 30 in any of the Environment, Labour & Human Rights, and/or Ethics themes or below 25 in the Sustainable Procurement theme.

    Starting in 2017 we piloted 140 Suppliers at the platform and work diligently since then to develop the program. By May 2023 we have exceeded 1490 of Suppliers’ assessments with EcoVadis. Our plans are to extend further the 3rd party CSR assessments to ensure more objectivity and equity amongst our suppliers.

    EcoVadis goes beyond assessment and the development of corrective action plans to help our Suppliers develop their knowledge around the entire spectrum of ESG matters by means of giving them access to the EcoVadis Academy.  The academy contains courses designed to help our registered Suppliers to learn about and improve their sustainability management practices. The course materials cover policies, actions and reporting across the 4 sustainability themes as well as broader topics such as training, certification, and risk management. All courses have an introductory chapter outlining the content of the course and an animated video providing an overview of learning objectives. Courses also feature customer testimonial videos and guidance for those getting started and conclude with a question quiz. EcoVadis Academy courses are interactive, engaging, and require a high level of participation.

  • Supply Base Assessment (SBA): this is a deep dive and detailed view to T2 level of the Coca-Cola HBC Group Critical Suppliers. This is performed on a yearly basis by specialist consultancy in Sustainability (Denkstatt) with the collaboration of our Strategic Procurement Managers that are responsible for the highest impact and spend Procurement Categories. The SBA covers areas such as Water risk, Climate Change, Forced Labour, Child Labour, Disregard of Labour Rights, Biodiversity & Financial Risk and it includes both Tier 1 suppliers as well as Tier 2 suppliers.

  • Supplier Guiding Principles (SGP) Audits: TCCC and its affiliate Bottlers such as Coca-Cola HBC we are committed to upholding fundamental principles of international human and workplace rights everywhere we do business, and we seek to develop relationships with suppliers that share similar values. Our commitment to respecting human rights is formalized in our Human Rights Policy and our Supplier Guiding Principles. Third-party assessments are a critical way to ensure that our system and supply chain operate in a manner that is consistent with the Company’s commitment to fair, safe, and healthy workplace conditions. Therefore, for key Coca-Cola System Ingredients, Primary Packaging suppliers and Global Marketing suppliers we monitor the process and compliance via 3rd party SGP audits. Suppliers are physically audited for compliance with our Supplier Guiding Principles (SGP) on a regular basis and audit cycles are conducted via independent 3rd party auditing established institutions. Suppliers' facilities identified with very high ESG risks are receiving a corrective action plan that they are obliged to execute within a given time frame. In the case that any supplier with a Corrective Action Plan, fails to pass subsequent audits, they are given final warning and are prohibited from further contracting until issues are rectified.

  • WWF Water Risk Filter (WRF): is a leading, online tool that enables companies and investors to Explore, Assess, and Respond to water risks. The WRF risk assessment is based on a Supplier’s geographic location(s). With its unique ability to combine state-of-the-art basin data with industry-weightings and operational information, the tool helps us better understand important aspects of water challenges across our supply chain and strategically plan for actions to mitigate these risks. Suppliers receive a questionnaire to fill in which we subsequently upload in the Water Risk filter on-line tool to generate the respective Risk Profile per Supplier location. In Coca-Cola HBC we use the WRF to assess all Direct Suppliers and specific Indirect Suppliers with potential water impact.

  • Moody’s Financial assessments: Credit research provided by Moody’s Analytics includes extensive and detailed coverage on the creditworthiness of Coca-Cola HBC Critical Suppliers. This research enables us to assess risk and opportunities associated with our supply chain and develop proactively risk management programs.

In Coca-Cola HBC we are also monitoring for stability beyond ESG and financial data, including:

  • Sanctioned countries, criminal and terrorists’ ties and operational performance via the Exiger Platform. Exiger is revolutionizing the way corporations, government agencies and banks manage risk and compliance in their third-parties, supply chains and customers through its software and tech-enabled solutions. Exiger’s mission is to make the world a safer and more transparent place to prosper.

  • Visibility into potential disruptions caused by geopolitical threats, acts of nature, etc. leveraging the Resilinc Platform. Resilinc EventWatchTM AI scans over 100M sources and sites for worldwide potential disruptions that can affect our supply chain. AI monitors internet and social media 24×7, thus Resilinc Team finds and validates developments that influence our supply chain operations, and pushes to us personalized, industry-related alerts via web, mobile, and API.

For more detailed information on the our Supplier Screening, Assessment and Improvement program, please refer to the link below (“Cola-Cola HBC Sustainability Monitoring Program").


SUSTAINABLE SOURCING

All suppliers are required to meet our Supplier Guiding Principles. These principles communicate our values and expectations of compliance with all applicable laws and emphasise the importance of responsible workplace practices that respect human rights.

The sourcing of our raw materials accounts for a large portion of our economic, operational and environmental footprint, and the behaviour of our suppliers directly impacts our sustainability performance. We therefore consider our suppliers as critical partners, as well as contributors to the ongoing and sustainable success of our business.

Ingredients are sourced under a common approach across the Coca-Cola System (TCCS) and governed by TCCS Principles for Sustainable Agriculture (PSA). The PSA and the System is covering a large scope of ingredients, including but not limited to, sugar, corn for High Fructose Corn Syrup (HFCS), different types of juices, coffee etc. As the majority of the key ingredients are purchased together with TCCC, as a result, we address many of the issues that we face in our supply chain as a joint Coca-Cola system.

Each bottler has a different mix of agricultural ingredients in scope, always relevant to their market and product mix. Of all PSA categories, the ones that are relevant to Coca-Cola HBC direct purchases are Sweeteners (Sugar & HFCS) and Juices (Fruit crops).  

In Coca-Cola HBC we also operate as Distributors for a number of products that we treat as Finished Goods Distribution business. We purchase the requirement of coffee, tea and plant-based drinks (Soya, Almond, Coconut, Oat & Nuts) for Coca-Cola trademark beverages from TCCC. All coffee, tea and plant-based drinks suppliers of TCCC must demonstrate compliance with the PSA by using global sustainable agriculture standards and assurance schemes, including Rainforest Alliance and Fairtrade.

As part of the Coca-Cola System and one of the biggest bottlers participating, our principles are routed in protecting the environment, upholding human and workplace rights, securing biodiversity and helping to build more sustainable communities. These principles are showcased in the Principles for Sustainable Agriculture (PSA), which provide guidance to our suppliers of agricultural ingredients. The PSA is covering a large scope of ingredients, including but not limited to, sugar, HFCS, different types of juices, coffee which are the key agricultural ingredients for Coca-Cola HBC.

The complete guidance on what is the PSA and how it can be achieved can be found under The Coca-Cola Company PSA Supplier Guide.

The scale and uniform approach of the Coca-Cola System helps us source our raw materials sustainably, while mitigating business risks. This enables us to balance the costs of sustainability by leveraging relationships and initiating new opportunities, ensuring that our agricultural suppliers and respectively their suppliers operate a sustainable business.

Bonsucro is the Coca-Cola System most preferred sustainable sugar cane standard. TCCC, on behalf of the System, worked with Bonsucro members to create the first global metric standard for sustainable sugar cane production, and was the first to purchase Bonsucro certified sugar in 2011. TCCC also achieved Bonsucro Chain of Custody Standard certification, which enables the tracking of claims on the sustainable production of Bonsucro sugar cane and all sugar cane-derived products along the entire supply chain.

Through our active recruitment of our sugar suppliers and continuous support of the Bonsucro Certification, we leverage Bonsucro specialists to work with businesses of all kinds across the sugarcane sector to improve their social, environmental and commercial performance, bringing together a thriving international community that is creating a sustainable modern industry.

Bonsucro use their expertise to deliver training, develop resources and run impact projects and help our critical Tier 1 and Tier 2 supply base make the changes needed to achieve sustainability and gain independent certifications when they successfully do so.

Responsible production and resilient supply chains create lasting value. Businesses, communities, and the environment all benefit from high standards. Certified Bonsucro members perform better than the average on key metrics:

  • Starting from an average of 27 litres of water per kg of cane produced, there is a 53% reduction in average water consumption after just five years of certification (source: Bonsucro water use)
  • As a global average, Bonsucro-certified producers paid their workers 19% above minimum wage at mill level and 14% above minimum wage at farm level in 2020 (source: Bonsucro Wage Ratio)
  • In 2020, the global average of working hours on certified mills was 92% of the legal limit and at certified farms it was 91% of the legal limit (source: Bonsucro Working Hours)
  • On average, certified entities achieve a 6% reduction in GHG emissions in the first year of certification (source: Bonsucro GHG-emissions). Through ongoing certification, producers demonstrate the ability to reduce their N fertiliser use from an average of 81 kg N/ha at initial certification to an average of 67 kg N/ ha after five years, which is an 18% reduction of nitrogen fertiliser use per hectare (source: Bonsucro Fertilisers & agrochemicals)

Rain Forest Alliance, Fairtrade International, Sustainable Agriculture Initiative Platform (SAI Platform), Global G.A.P.  & GRASP certifications equally have in place similar to Bonsucro farm level support and development programs that secure the farmers are able to continuously improve and maintain their PSA certifications.

This framework for sustainable sourcing is integrated into internal governance and procurement processes. Our 2025 target for ingredient sourcing is to achieve 100% certification of our key agricultural ingredients against the Sustainable Agriculture Guiding Principles.

In 2022, 78% of the key commodities we purchased for use as ingredients were certified, down from 80% in 2021. Specifically, in 2022 we achieved the following PSA certifications:

  • 72% in Sugar and 100% in HFCS  (or 78% for Sugar & HFCS together)
  • 95% for Juices (Fruit crops)

The small drop is attributed primarily to our healthy growth rate in sales for non-European markets where we are still working towards the certification of our local suppliers. Our work to certify our key agricultural ingredients will continue to expand in 2023, with close cooperation with our Suppliers and The Coca-Cola System.

For Coca-Cola HBC distributed products such as coffee, tea and plant based drinks that originate from TCCC, in 2022 the TCCC sustainable sourced to our Leader standard in line with the PSA (The Coca-Cola Company 2022 Business & Sustainability Report pages 10 & 48):

  • 99% of coffee,
  • 100% of Soya beans
  • 74% of tea ingredient volumes

Becoming a Coca-Cola HBC supplier

Coca-Cola HBC aspires critical raw and packaging suppliers to embrace the following  ESG disclosure principles, targets or certifications (as applicable):

Ingredient and packaging suppliers must also achieve certification to FSSC 22000 for food safety or equivalent for FSSC 22000, recognised under GFSI framework.

A prerequisite to become listed as a Coca-Cola HBC new supplier, upon successfully achieving an award through the Coca-Cola HBC Sourcing Process, is to commit to the Coca-Cola HBC Supplier Guiding Principles, and to the extent these apply, the Coca‑Cola Hellenic Code of Business Conduct and Anti-Bribery Policy. These Policies make clear the values and behaviour we expect and audit in our value chain.