Supply Chain

In Supply Chain Capabilities our people lead our business, enabling profitable business growth, exceptional customer service, and global sustainability leadership. To create value, we’re focused on building unmatched, customer-centric supply chain teams dedicated to executing with excellence in everything we do.

Developing a future-proof organisation with the right people capabilities is crucial for our current and future success.

That’s why we devote our energy, knowledge, and passion on operational excellence through our Supply Chain Capability building programmes, aimed at enhancing capabilities that directly contribute to sales.

Our Supply Chain Academy is our flagship programme covering over 90% of our entire Supply Chain organisation. It enables employees to achieve six different license certifications based on their role. Graduates of our Supply Chain Academy are certified not only in knowledge, but also in  the skills & performance requirements to their roles. We offer  more than 1,750 skill-based learning paths tailored to  over 110 different Supply Chain roles, using a mix of learning methods, including online courses,  classroom sessions, reading resources and on-the-job training.

We view Supply Chain Capability building as an ongoing journey that continuously identifies and integrates the necessary skill sets our people need to suceed today and in the future. This approach ensures our success as we adapt to evolving global trends, customer expectations, and supplier dynamics. 

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 13,200 parent level supplier organizations (14,594 supplier code) into direct and indirect spend suppliers (actively used for purchasing transactions in 2023.

• 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.

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. 

Supplier ESG Risk Screening and Assessment Annual Review Program:

In CCHBC we have a robust program in place to review every year the risks and performance of all our suppliers against our SGPs, PSA principles for agricultural ingredients, Water Risk Assessment as well as other equally important aspects with impact on our business such as Supply Risk and Financial stability.  Sustainability is a key criterion in supplier selection under Strategic sourcing as well as a criterion for the Annual Supplier Review process that we contact cross-functionally for critical supply base.

In order to secure that suppliers demonstrate ESG requirements compliance we rely in multiple screening and assessment practices that offers us a holistic view of their performance. The Sustainable Agriculture program secures ESG monitoring through PSA certification process of The Coca-Cola System (TCCS) across all agricultural commodities. For the remaining supply base, we have designed a robust assessment journey leveraging ESG physical audits as well as a number of globally recognized screening and assessment tools such as EcoVadis IQ Plus, EcoVadis Assessments, SEDEX, Supply Based Assessment executed by specialist consultants for Group Critical suppliers, WWF Water Risk Filter Assessment, Resilinc Event Watch, Exiger and Moody's Analytics. 

The results of our Sustainability risk screening and assessment for 2023 supplier activity are demonstrated in summary in the tables below.

2023 Supply Base Screening Summary

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

2023 Supply Base Assessment Summary

^{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 3^rd party auditor (PWC). Please find respective link here: 2023 Suppliers’ ESG Assurance Report.

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 2023 GRI Content Index Section 2-6 “Activities, value chain and other business relationships”.

Coca-Cola HBC total suppliers spent for Direct, Indirect and Cold Drink Equipment Categories reached €5.3 billion in 2023 (Procurement Addressable Spend). Including Concentrate supplies from The Coca-Cola Company the spend is €6.9 billion (reportable over a 12 months rolling period between December 1^st 2022 to November 30^th 2023).

Our practice is to source locally, provided that goods and services meet our requirements and quality standards in an economically viable way. As of 2015, we have a formal Procurement KBI of over 95% of local spend in our countries of operation or from countries within the European Union, which is considered local for EU countries.

In 2023 we had 97.96% sourced locally representing €5.2 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) and we assess critical supplier’s compliance on an annual basis. 

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:

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 2023 we have identified 176 Suppliers with significant environmental impact findings.  All Suppliers were instructed to develop corrective action plans and demonstrated improvement through the year. More detailed info available at 2023 GRI Content Index section 308-2 “Negative Environmental Impacts in the Supply Chain and Actions Taken”.

In 2023 we have identified 79 Suppliers to have labour & human rights critical findings, of which all developed corrective action plans and demonstrated improvement. More detailed info available at 2023 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.

ESG Supplier Performance Benchmarking

We consider as priority to provide with our Suppliers information on the gaps identified in their ESG performance, support them to develop corrective actions and offer access to capacity building programs and benchmarks against their industry peers contributing to a sustainable and socially responsible business ecosystem.  We have developed two types of benchmarks for our Suppliers:

a)    External:  EcoVadis platform gives the participants access to insights from global supply chain ratings based on data derived from +125,000 sustainability ratings and +73,000 companies assessed by EcoVadis between 2019 and 2024.

2024 EcoVadis CCHBC Supply Base benchmarking summary (EcoVadis Date reference: 16 May 2024)

b)    Internal: We collaborated with EY denkstatt® to develop  customized methodology for our critical Suppliers 

2023 EY denkstatt CCH SBA Supply Base benchmarking summary

For more information please visit: 2023 ESG Benchmark &  Assessment methodology in Cola-Cola HBC Sustainability Monitoring Program (pgs. 15-77)

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.

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 14^th 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.

In November 2023, we held our 2nd Virtual Supplier Sustainability Event ‘Opening up a more sustainable future together’ where we invited all our Group Critical suppliers to talk about emissions reduction, biodiversity and deforestation. More than 400 people from almost 200 suppliers, Coca - Cola System colleagues, and trade partners joined our virtual Supplier Day conference. Our Chairman of the Board, Anastassis G. David opened the conference, and we were also joined by representatives from the Coca-Cola System and Coca-Cola bottlers. Our partners CDP and the World Economic Forum offered their expert guidance, tools and tips for suppliers on what climate action they can take with focus on Emissions. Our suppliers Nordzucker, Ball Corporation and Graphic Packaging International shared their ESG and emissions best practices.

Our Chief Executive Zoran Bogdanovic, who is a member of WEF’s Alliance of CEO Climate Leaders, said: “On this journey to net zero, there are still corners we cannot see around. But innovation, partnership and trust – along with the right mindset – will continue to open up more opportunities for a sustainable future.

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.

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.

For less mature suppliers we have engaged since 2022 with Guidehouse on capacity building programs and offer training leveraging the SLoCT program (Supplier Leadership on Climate Transition) every year. This way we are able to help our less mature suppliers build a strong foundation to start reducing GHG emissions. 

Since April 2021, when we first launched the Coca-Cola HBC emissions supplier program, we have recruited 189 significant suppliers in the CDP of which 117 have already set or committed to the SBTi, and on average 26% of their energy they source from renewable sources.

We engage in a very large number of activities across all our BUs together with our Suppliers to promote the sustainability agenda. Some activities with significant sustainability impact include but are not limited to the following examples:

In 2023 we have successfully delivered preforms lightweight efforts in Hungary, Czech, Poland, Baltics, Nigeria, Northern Ireland and Greece saving over 600t of PET, representing on average 11% reduction in resin use for the specific SKUs and approx. 1300t of CO2 emissions on annual basis.  Equally we delivered optimisation for aseptic plastic closures in Hungary, Czech, Romania and Poland and SSD closures for Nigeria, saving overall 300 tones of HDPE annually, representing over 600 t of CO2 reduction.

The S.U.P (Single Use Plastic) EU Directive will mandate, as of July 4th 2024, all plastic closures to remain attached to one-way beverage containers up to 3 lt. In this context since early 2023 Coca-Cola HBC initiated an extensive roll-out program, after 4 years of R&D with suppliers and detailed planning, that covered 80% of the volume in scope by 31/12/2023, e.g. 6 months ahead of the compulsory deadline. Notably, the scope of the project went well beyond EU countries to also include Serbia, Bosnia, N. Macedonia, and Switzerland closures.

In the field of Secondary Packaging during 2023, we concluded an assessment related to the introduction of low-density film in the Biaxially Oriented Polypropylene (BOPP) labels instead of standard plastic labels. Following this assessment, we expect to deploy starting from 2024 and anticipate to reduce by 12% the use of plastic in labels, translating into 240t less material or 600t of CO2 emissions reduced annually.

In 2023 we have implemented multiple down-gauging shrink film initiatives in Czech, Northern Ireland, Hungary resulting in a solid reduction of CO2 emissions of appr 240t pr year, while in Northern Ireland we have proceeded to partially replace the plastic film with paper board removing annually 6t of virgin plastic materials.

Overall, the replacement of plastic with corrugated cardboard and paper stretch solutions constitutes a key innovation that we invested time and effort. During 2023 in Austria, we positively tested SSDs multipacks with LitePac Top corrugated solution to replace shrink films.

In close collaboration with our Manufacturers and the Coca-Cola Cross Enterprise Procurement group, we deployed in Q3 2023 new cooling technology that reduces energy consumption by 40%. Moreover, starting from 2024 we plan to initiate the deployment of the next coolers generation with even higher energy efficiency (Class B) expecting reduction in energy consumption by 45% on average.

For corrugated cardboard in 2023 we have reached > 80% of recycled content in Europe (excl. Russia and Belarus) while we equally focused on optimising material weight.

In collaboration with our Logistics experts,  we have stated transform our 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. 

More examples of key joint activities with Strategic Vendors can be found under the 2023 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 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 1^st level Risk Assessment based across our supplier universe of approximately 13,200 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 2024 we have exceeded 1741 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.
  
  
• 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 (EY 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 EventWatch^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 our Supplier Screening, Assessment and Improvement program, please refer to the link below (“Coca-Cola HBC Sustainability Monitoring Program").