SUSTAINABILITY REPORT 2020

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GRI 102-11, GRI 102-15, GRI 102-17, GRI 103-1, GRI 103-2, GRI 103-3
RISK MANAGEMENT
ThaiBev manages risks in operations and management system in accordance with our sustainability strategy by monitoring, evaluating, and managing uncertainties that may represent significant corporate risks or opportunities for sustainable growth. Risk management enables ThaiBev to prevent and mitigate impacts, respond to challenges, and take full advantage of the arising opportunities to achieve goal of becoming stable and sustainable total beverage leader in ASEAN.
ThaiBev’s Risk Management Strategy in a Crisis Situation
The spread of COVID-19 pandemic has severely impacted human livelihoods and business operations causing global economic disruption. It has affected supply chains resulting in business closures, job retrenchment, and decline in consumption of goods. Therefore, successful management of risks from COVID-19 pandemic is vital to business survival. ThaiBev has implemented measures to mitigate risks to employees, relevant parties, or business operations and continues to create value for society. ThaiBev implemented the following risk management measures during the COVID-19 crisis:
  • Conducted business operations in alignment with governmental policies and measures on COVID-19 by focusing on production and logistics of finished products as well as providing services that are essential to society.
  • Implemented health prevention, safety and wellbeing measures for employees, business partners, and members of Thailand Supply Chain Network (TSCN).
  • Provided assistance to control and prevent the spread of COVID-19 through own initiatives and collaboration with external organizations and business alliances.
  • Contributed to economic and social recovery particularly the economy at grassroots and community levels.
By implementing the above measures, ThaiBev was able to manage the impact of COVID-19 pandemic on business and stakeholders promptly allowing ThaiBev to continue business operations without interruption during COVID-19 crisis.

For the risk management under uncertainties or in times of crisis to be effective and efficient, a clear enterprise risk management framework and systematic risk management process are the key element and foundation. ThaiBev’s enterprise risk management framework based on the COSO: Enterprise Risk Management Framework has been implemented with the following key components:

Governance structure
covering Board of Directors, Sustainability and Risk Management Committee, Audit Committee, Executive Committee, Corporate Sustainability Development Committee, Specific Committees appointed by the Management Committee, Sustainability Development Working Team, Corporate Risk Management Working Team, and the risk coordinators of product groups or business units.

Understanding of context and strategies in conducting business with a focus on sustainable development
all functions align on such commitment for food and beverage business by analysing and monitoring risk factors and significant future trends that may affect business operations or corporate strategies.

Holistic risk management process
from corporate to operating levels by collecting information, identifying and assessing key risks, and establishing strategies and systematic approaches for managing risks, including creating new business opportunities in line with the strategies and the sustainability materiality of ThaiBev.

Communication, reporting, and evaluation of risk and sustainability measures
at all levels, ranging from departments, subsidiary entities, business units, product groups to the corporate level, in a clear and continuous manner. For example, the progress of sustainability projects or risk management activities, potential risks that may impact ThaiBev, risk indicators, etc.

Sustainability and risk management culture
through training, processes, and activities for executives and employees at all levels throughout the organization to create awareness on the importance of the sustainability and risk management to encourage engagement in the sustainable development and risk management of the organization.

Thaibev group's sustainability development and risk management structure
Commitments and Achievements
To develop appropriate risk management measures, ThaiBev reviewed sustainability material topics in 3 dimensions (environment, society, and economy) and existing corporate sustainability risks. The post-review sustainability risks are categorized into 3 groups.
1. Existing risks with unchanged risk level
  • Water-related risks
  • Climate change risks
2. Existing risks with higher risk level
  • Supply chain risks as business operations were halted by COVID-19 pandemic causing increases in risk with higher operating costs and lack of raw materials or delayed delivery causing supply chain disruptions during lockdown
  • Employees’ occupational health and safety risks due to COVID-19 infection
  • Product quality and safety risks due to COVID-19 contamination
  • Regulatory compliance risks as government issued special orders to control COVID-19 pandemic
  • Financial risks, particularly financial liquidity and interest rate fluctuation
All risks with increased risk level could impact production, delivery of products and services to customers, which could affect income or sales as well as profit and performance.
3. New risks
  • Risks of restaurants located in shopping malls
  • Risks of dine-in restaurants, especially those in fine-dining segment
  • Risks of selling alcoholic beverage through restaurant channel
  • Cyber risks
  • Information security risks
These new risks arise from “new normal” lifestyles and business contexts related to COVID-19, such as government lockdown measures to reduce the spread of COVID-19 resulting in the shutdown of dine-in restaurants, and physical distancing. All of these impact the demand for products and services and led to drastic changes in consumer behavior and business models.
Opportunities from COVID-19 Crisis
The COVID-19 pandemic has caused many businesses to lose income and business shut down, but it has also catalyzed many organizations, including ThaiBev, to transform business strategies and invest in digital technology and innovations for business activities along the value chain from sourcing, production, distribution, marketing and sales to post-consumption packaging management, to change business model to full-scale digital business. This creates new business opportunities by preparing for future changes and offering customers new experiences that are better than the existing products and services.
  • In the early and widespread stages, there was significant demand for hygiene and health-related products. The demand for delivery of products and e-commerce increased more than usual.
  • In the later stage when the outbreak subsided and controlled, people started returning to their normal lifestyles resulting in increased transportation, whether for leisure or business, and demand for products and services gradually returned to a normal level.
ThaiBev adjusted its business and service models through the transition of COVID-19 pandemic stages. For instance,
  • In the early stage, Thaibev focused on the production of drinking water to meet national demand and launched marketing promotions and advertisements on social media.
  • Thaibev's food business implemented online ordering systems through the BevFood application, partnered with food aggregators to extend ordering and delivery services to more consumers.
Even when the COVID-19 pandemic is fully under control or ends, ThaiBev will remain committed to developing new products, especially healthy beverages and food products, and to leverage digital technology in its business operations, including innovations in order to create opportunities and sustainable business growth for the future.
Insight

Prasit Kovilaikool
Independent Director, Chairman of the Sustainability and Risk Management Committee and the Audit Committee
Thai Beverage Public Company Limited
COVID-19 Crisis and Risk Management at ThaiBev
The COVID-19 pandemic is a significant risk factor that brought about various risks that could impact ThaiBev’s business operations, such as risks associated with employee health, supply chain management, financial liquidity, and corporate image and reputation. If there is news regarding ThaiBev employee as being infected with COVID-19, or an infected visitor/customer entering ThaiBev production facilities, office buildings, sales and service premises, or any of them become infected after coming to ThaiBev’s facilities, it could lead to the closure of those areas. This could also have a long-term effect on operations due to delays or inability to follow business plans. Given that COVID-19 pandemic continues to be an ongoing crisis with no end in sight, operating business cannot follow business-as-usual strategies or approaches. ThaiBev must implement contingency plans to manage the rapidly changing situation in order to prevent and mitigate impacts as much as possible.

In March 2020, ThaiBev’s management established the following:
  • COVID-19 ThaiBev Situation Room
    to monitor business continuity in sourcing, production, transportation, and distribution by creating business and employee database, analyzing information and news and internal information to assess, decide and plan responses to the situations in the short and long terms.
  • COVID-19 Relief Center
    to collect information communicate necessary information, and provide health and safety assistance to employees, especially personnel in Thailand (where there are more than 49,000* persons), including measures in the workplace and for operations under the COVID-19, the provision of COVID-19 prevention and risk-avoidance gear to employees and their families, the purchase of accident and COVID-19 insurance, and the provision of COVID-19 screening tests as part of its employees’ welfare at the cost of approximately 39.2 million baht.
* information as of March 2020