ThaiBev Sustainability 2021

KEY AGRICULTURAL COMMODITY

Sustainable Agriculture

ThaiBev has a Sustainable Agriculture Guideline in place which is applied to all of our agricultural raw materials suppliers. The guideline covers all essential environmental and social issues in regards to sustainable agriculture practices. ThaiBev requires agricultural raw materials suppliers to acknowledge and accept the guideline before being able to continue any transaction on our supplier portal called Supplier Life Cycle Management (SLCM).

ThaiBev has launched numerous farmer development campaigns, collaborating with both private and government sectors, in order to support and educate local farmers in practicing sustainable agriculture and in compliance with applicable renowned standards, e.g., BonSucro, RSPO, SAI Platform, SEDEX / SMETA, Rainforest Alliance, etc.

KEY RAW MATERIAL

COMMITMENT IN 2025

ThaiBev will procure agricultural raw materials which are the main raw materials in the production process from sources that follow high standards and are environmentally and socially responsible.

SUSTAINABLE

Sustainable Agricultural Programs	Scope	ESG Benefits
Sustainable Agricultural Programs	Scope	Reduce water consumption	Reduce environmental pollution	Protect soil health	Prevent the destruction of ecosystems	Reduce GHG emission	Manage waste	Develop farmer capability
Developing Water, Developing Lives, Developing Quality of Life	Own operation Non-tier 1 supplier
Community Learning Center about Sustainable Economics	Non-tier 1 supplier
By-product Utilization	Own operation Non-tier 1 supplier
Promoting Ecological Conservation and Caring for Community Water Resources	Own operation
Preserving Water Quality and Ecosystem	Own Operation
Partnerships with SeaTreess	Own Operation
Fishpond Farming Using Treated Wastewater	Own Operation
Wastewater Management Through Artificial Wetlands	Own operation
Solar Rooftop Scheme	Own operation Tier 1 supplier
Reducing Transportation Distance	Own operation Tier 1 supplier
Malt Dust Value Creation	Own Operation
Community Engagement	Own Operation
ThaiBev Business Partner Award Program	Tier 1 supplier Non-tier 1 supplier

Scope Definition

Own operation refers to the application of agricultural commodities in ThaiBev’s own production process
Tier 1 supplier refers to the sourcing of agricultural commodities, used in own operation, from suppliers who directly supply goods and services to ThaiBev
Non-tier 1 supplier refers to the sourcing of agricultural commodities, used in own operation, from suppliers who provide their products and services to the supplier at the next level in the chain

Programs to

DEVELOPING WATER, DEVELOPING LIVES, DEVELOPING QUALITY OF LIFE

ThaiBev recognizes the importance of water conservation to maintain high water quality and ensure sufficient quantity for production while minimizing the impact to the communities. ThaiBev had been sending treated water to farmers surrounding its production facilities in effort to help reduce fresh water withdrawal from natural resources. These farmers cultivate agricultural crops that ThaiBev use as raw materials to make our products such as rice and sugar cane. In addition, volunteer programs had been carried out on regular basis to preserve tributaries, installing grease traps to reduce the release of waste water and household fats into community water sources.

Recognizing the value and importance of natural sources and the environment, we incorporate farmers development programs into community development with emphasis in the area of sustainable agriculture management and conservation of natural resources. In cooperatrion with Utokapat Foundation (Under Royal Patronage of H.M. the King), we established a project called ‘Developing Water, Developing Lives, Developing Quality of Lives' with the goal to help conserve water and forest resources, and promote sustainable economic development at local level, through a three-step process.

Understand

community members learn about local water sources and waterways, in order to understand their own water system and create a water supply map.

Reach out

community members come up with a local water management initiative make a grant proposal do a public hearing to gauge community understanding and for the Foundation to give recommendations to ensure maximum performance of the community’s initiative.

Develop

community members execute the development initiative, with participation from locals and newly trained youth groups so as to ensure long-term results and continuation.

As part of the project, ThaiBev has worked with farmers to help them develop a water distribution system based on ‘New Agriculture Theory’ which requires less amount water, The project also aims to promote efficient water management by dredging canal to maintain a suitable water level for fish conservation during dry season and helped manage and store water in the canal for later consumption and agriculture. The New Theory of Agriculture also helped farmers decreased their agricultural expense while at the same time increased their income.

ThaiBev has also implemented several projects that aim to help conserve upstream forests and watersheds and protect water sources that are vital to local communities.

More information available in ThaiBev Sustainability Report 2021

Programs to

COMMUNITY LEARNING CENTER ABOUT SUSTAINABLE ECONOMICS

ThaiBev establishes a Community Learning Center about Sustainable Economics in the Prachinburi province. Initially, the project was initiated with the aims of developing the community as a source of safe food production, and of expanding into organic farming on a 15-rai organic vegetable farm. Later on it was upgraded as a learning center and a model of organic agriculture for the community.
More information available in ThaiBev Sustainability Report 2021

BY-PRODUCT UTILIZATION

ThaiBev had been working with the farmers in the areas surrounding its production facilities to reduce environmental pollutions from agricultural activities especially from burning agricultural by-products such as straws. In an effort to reduce pollution from burning rice straws, ThaiBev helped farmers to repurpose the straws into fertilizers by composting them with water-based soil conditioner from its production wastewater. ThaiBev supported farmers with Effective Microorganism (EM) solution to be applied to the water resources, which not only help prevent water spoilage during harvest season but also helps treat the water of nearby rivers and canals.

Programs to

BY-PRODUCT UTILIZATION

ThaiBev utilizes its by-products as raw materials in the agricultural and industrial sectors. For example, using malt residue and grain residue from alcohol production as ingredients in livestock feed. It also provides effluent from the vinasse treatment process as a soil conditioner for crops such as sugarcane, rice, cassava and palm oil. The vinasses/soil conditioner had been proven to provide the right supply of soil nutrients with nutrient demands of these crops as well as increase crop yield. In FY 2021, ThaiBev distributed more than 840,000 m3 of soil conditioner to farmers across the country.

Programs to

BIODIVERSITY COMMITMENT

In fiscal year 2021, ThaiBev launched the net positive impact to biodiversity commitment and no gross deforestation commitment. ThaiBev recognizes the importance of biodiversity conservation in minimizing the impacts of climate change, and guaranteeing the stable production of agricultural commodities vital to ThaiBev’s manufacturing process.

ThaiBev’s Biodiversity Commitment

THAIBEV’S BIODIVERSITY PROTECTION AND NO-DEFORESTATION STATEMENT

PROMOTING ECOLOGICAL CONSERVATION AND CARING FOR COMMUNITY WATER RESOURCES

ThaiBev collaborates with diverse group of its stakeholders to preserve the ecosystem and biodiversity in multiple areas where ThaiBev operates, e.g., Phra Nakhon Si Ayutthaya province, Pathum Thani province, etc.

Please refer to “Promoting Ecological Conservation and Caring for Community Water Resources”, ThaiBev Sustainability Report 2021.

PRESERVING WATER QUALITY AND ECOSYSTEM

ThaiBev cooperates with Nakhon Chai Si sub-district municipality and the villagers in Ton Son market to remove water hyacinth and other weeds from the Chedi Bucha canal. The massive amount of water hyacinth often blocks the water way and affects the ecosystem in the water. This initiative aims to improve the water quality and preserve the ecosystem in the canal which have direct impact on the villagers’ livelihood.

PARTNERSHIPS WITH SEATREES

ThaiBev’s distillery in Scotland, Old Pulteney, has partnered with SeaTrees, a non-profit organization which works to restore blue carbon ecosystems around the world, including mangrove forests, kelp forests and coral reefs. The partnership will see a minimum of 4,000 mangrove trees planted, sequestering approximately 300 tons of CO2 over the 25-year life of the trees and the restoration of 2,665 square feet of kelp forest.
Learn more about SeaTrees here.

FISHPOND FARMING USING TREATED WASTEWATER

ThaiBev supported local communities in Myanmar with a fish farming project that utilizes treated wastewater from the Wastewater Treatment Plant. In 2021, ThaiBev initiated a project to farm 4,800 baby fish of four different species using treated water from its Wastewater Treatment Plant at Yangon Distillery in Hmawbi Township. The company invited the villagers to come on an observatory visit to the pond where the fish were farmed and learn how the treated wastewater can successfully breed and increase the growth rate of the fish.

WASTEWATER MANAGEMENT THROUGH ARTIFICIAL WETLANDS

ThaiBev’s Scottish distillery subsidiary, Inver House, has championed biodiversity efforts. Knockdhu distillery has converted 2,000 m² of land on the distillery to wetlands, boosting local insects, bats, and bird populations. In addition to this, ThaiBev also requires tier 1 and non-tier 1 suppliers to avoid negative impacts on biodiversity as well. ThaiBev has worked with external partners such as suppliers, NGOs, and communities, and will continue to do so in the long term to ensure commitments are met.

Programs to

SOLAR ROOFTOP SCHEME

In ThaiBev’s manufacturing process, the company has initiated and implemented a long-term solar rooftop scheme. ThaiBev has three phases planned over the coming three years, which will lead to a total installation of 20.6 MW and annual emission reduction of 13,800 tCO₂e/year.
More information available in ThaiBev Sustainability Report 2021

ThaiBev encourages its its suppliers and farmers in the supply chain to implement renewable energy scheme within their own production processes such as solar power and biomass. In 2021, one of ThaiBev’s strategic sugar supplier has installed the floating solar at one of their facility in Suphanburi province.

REDUCING TRANSPORTATION DISTANCE

ThaiBev works with its suppliers and partners to reduce transport distances of agricultural crops where possible by cross-mapping the locations of its own production facilities with that of its suppliers to determine the shortest route.

MALT DUST VALUE CREATION

ThaiBev provides support to fish and prawn farmers in Samut Sakhon province by offering them ‘Malt Dust’, along with training in how to use the Malt Dust, a by-product from the spirit production process, to feed fish and prawns. This helps the farmer to understand the concept of turning waste in to value and at the same time reduce their operating cost.

COMMUNITY ENGAGEMENT

ThaiBev Group engages with the surrounding communities with the aims to establish environmental and social awareness among the local residents and improve their livelihoods and well-being. These engagement activities focus on creating the understanding on sustainable agriculture practice in the communities.

ThaiBev provides training in organic vegetable farming for the surrounding communities in Phra Nakhon Si Ayutthaya province, showing how to grow organic vegetables to reduce environmental pollution and contamination. ThaiBev encourages these villagers to set up an SME to sell their product and learn how to be self-dependent. The training also focuses on waste sorting to tackle waste and waste-related environmental problems in the community.

Programs to

THAIBEV BUSINESS PARTNER AWARD PROGRAM

ThaiBev invites agricultural raw material suppliers to participate in ThaiBev Business Partner Award program every year with the aim to increase awareness of sustainable agricultural practice. The program is an incentive for suppliers to implement sustainable agricultural initiatives and operate in line with sustainability standards, such as, BonSucro, RSPO, Rainforest Alliance, SEDEX, etc.

In 2022, ThaiBev requests suppliers to track the carbon footprint of the agricultural raw materials they supply to ThaiBev as well as provides recommendations for suppliers who have not yet tracked their own emissions. To further strengthen this endeavor, ThaiBev aims to have more visibility to its scope 3 GHG emissions and increase the proportion of primary data source acquired from suppliers in order to co-develop reduction plan.

One of the program participants has adopted BonSucro standard in their own sugarcane supply chain. The supplier educates the farmers to ensure the understanding of sustainable agricultural practice and how to apply to the agricultural processes. These farmers are monitored regularly with dedicated team to visit their farms onsite to provide any supports during the transition period. The area with major improvement after applying BonSucro include soil health, soil nutrition, fertilization, waste management, and water quality. In addition, to the application of BonSucro standard in the sugarcane supply chain, ThaiBev also collaborates with the supplier to develop the community within supplier’s facilities, e.g., provide knowledge on organic agriculture, promote the cultivation of quick-growing crop to be used as renewable energy, etc.

For more details about ThaiBev Business Partner Award, please click here.

Other Sustainable Agricultural Program Implemented by

The majority of ThaiBev’s agricultural commodity tier 1 suppliers are either manufacturers or distributors. Instead, the local farmers are considered to be ThaiBev non-tier 1 suppliers who cultivate and supply agricultural commodities to the tier 1 suppliers.

Understanding the challenges local farmers face in adopting sustainable agriculture practice, we encourage our tier 1 suppliers to implement similar farmer support programs to ensure that the farmers have sufficient knowledge and resources.

REDUCE WATER CONSUMPTION

WASTE MANAGEMENT

FARMERS’ CAPABILITY DEVELOPMENT

THAIBEV’S MANAGEMENT OF

PROPORTION OF AGRICULTURAL RAW MATERIALS RESPONSIBLY SOURCED

Key Agricultural Raw Materials	Coverage					Applicable Standards
Key Agricultural Raw Materials	2018	2019	2020	2021	Target 2025	Applicable Standards
Malt and Hops	41%	100%	100%	100%	100%	SAI Platform SEDEX
Sugar	22%	37%	100%	100%	100%	BonSucro SEDEX
Broken Rice	0%	0%	100%	100%	100%	Sustainable Rice Platform (SRP) SMETA SEDEX
Palm Oil	89%	90%	100%	100%	100%	Roundtable on Sustainable Palm Oil (RSPO)
Tea Leaves	100%	100%	100%	100%	100%	Rainforest Alliance OneCert International Organic Standards (EU equivalent)

ThaiBev has established purchasing policy and bidding requirement to only procure key agricultural raw materials with the leading third-party certification / standards only, i.e., RSPO, BonSucro, SAI Platform, SEDEX, Rainforest Alliance. To ensure the compliance, ThaiBev requests evidence of certification and integrates the requirement into audit criteria. As a result, 100% of key agricultural commodities purchased is certified and responsibly sourced. It also aims to maintain the certified proportion to be 100% in alignment with our 2025 commitment to responsibly source 100% of key agricultural commodities.

Integration of Third-party Certification Requirement

Sourcing Policy

Product Specification

Bidding Requirement

Assessment & Audit

MALT & HOPS

Malt and hops are the key agricultural raw materials used in distilling and brewing processes.

ACHIEVEMENT IN 2021

of malt and hops are sourced from SAI Platform members or SMETA verified suppliers

RESPONSIBLE SOURCING STRATEGY

Supplier Selection
Establish mandatory sourcing requirement to source from suppliers who are member of Sustainable Agriculture Initiative (SAI) Platform or operate in compliance with such standards

ACTIONS TAKENS

ThaiBev encourages and supports malt and hops suppliers to become active members and follow the Sustainable Agriculture Initiative Platform (SAI), a global standard for agricultural practices. Most of the suppliers are members of SAI Platform and manage their own farms in accordance with such standard. Those who are not SAI Platform member operate under SEDEX /SMETA and have external verification in place. Non-tier 1 suppliers who supply barley to the malt suppliers who do not have their own farm are SEDEX/SMETA certified as well.

ThaiBev’s supplier also implements digital tool to improve supply chain visibility and traceability. The tool allows farmers to take a holistic view of their farm operations based on a broad set of sustainability criteria. Using this tool, farmers can assess not just the carbon footprint or water usage, but also other important parameters, such as yield, soil health, biodiversity and social aspects.

Other approach adopted by our supplier is the cradle to cradle with an investment in an anaerobic digester that utilizes waste product from the factory to make fertilizer and putting back on the land owned by local farmers that grows its agricultural raw material.

SUGAR

Sugar is mainly used in the production of ThaiBev’s non-alcoholic drinks and is locally sourced in Thailand.

ACHIEVEMENT IN 2021

of sugar sourced is BonSucro certified or sourced from SEDEX member

RESPONSIBLE SOURCING STRATEGY

Farmer Support
Partner with sugar producer to support sugarcane farmers to operate in compliance with BonSucro requirements

Supplier Collaboration
Collaborate with affiliated sugar producer to obtain BonSucro certificate (Production Standard including Mass Balance Chain of Custody Standard) and create the demand for certified sugar in Thailand.

ACTIONS TAKEN

ThaiBev adheres to BonSucro standard which covers 3 pillars of sustainability: environmental, social, and economic and incorporates these in its sourcing requirement for sugar. In terms of collaboration with its business partners, ThaiBev collaborates with its strategic sugar supplier to launch farmer development program with the objective to promote sustainable sourcing and reduce ESG impacts in agricultural processes.

ThaiBev’s supplier is one of the largest sugar producers in Thailand. The supplier has implemented farmers’ capability development programs and encourage farmers to practice modern cane farming that promotes effectiveness in quality and products, as well as reducing environmental impacts. One of the successful initiative is buying sugar cane leaves and straws from local to reduce burning sugar cane, the major cause of PM 2.5 smog.

BROKEN RICE

Rice is mainly used in the production of ThaiBev’s product and is locally sourced.

ACHIEVEMENT IN 2021

of broken rice is sourced from Sustainable Rice Platform compliant or SMETA verified suppliers

RESPONSIBLE SOURCING STRATEGY

Supplier Collaboration
Encourage major rice millers and distributors to address human rights and environmental issues in the farming processes in compliance with local applicable ESG standards

ACTIONS TAKEN

ThaiBev engages with the local farmers to properly educate them in adopting sustainable agriculture practice and makes them aware of relevant sustainability issues in the agricultural processes, for instance, water efficiency, soil fertility, organic farming, etc.

Additionally, ThaiBev has implemented a strict pesticide control for rice. It is included as the requirement in its product specification. ThaiBev has systematic process to sample and test the product to ensure food safety.

TEA LEAVES

Green tea products contribute majorly to ThaiBev’s non-alcoholic beverages product portfolio. The highest quality tea leaves grown via organic farming are being used to produce our tea products.

ACHIEVEMENT IN 2021

of tea leaves sourced are Rainforest Alliance certified or are organically produced in accordance with OneCert International Organic Standards (EU Equivalent)

RESPONSIBLE SOURCING STRATEGY

Farmer Support
Continuously engage with key suppliers to support farmers in adopting sustainable agricultural with the primary focus on organic farming

ACTIONS TAKEN

All of the tea leaves used in ThaiBev’s production of non-alcoholic beverages are certified in accordance with Rainforest Alliance or OneCert International Organic Agriculture standards. The organic agriculture requirements cover all key essential issues stated in the EU Organic Farming, for instance climate and environment protection, conservation of soil fertility, absence of GMO, etc. ThaiBev also displays the Organic Product label on its tea products to ensure that its customers can make a well-informed purchasing decision.

One of ThaiBev’s suppliers and Thailand’s major tea leaves producer, works closely with farmers in their supply chain through Farmers Empowerment program. As part of this program, farmers are able to acquire knowledge on organic farming practices, pesticide-free farming and preserving soil fertility. As a result, farmers are able to minimize their operational cost while maintaining lowest environmental impacts.

PALM OIL

Palm oil is a key ingredient used in both restaurant business and manufacturing of packaged food.

ACHIEVEMENT IN 2021

of palm oil sourced is RSPO certified

RESPONSIBLE SOURCING STRATEGY

Promote the use of RSPO certified sustainable palm oil (Identity Preserved, Segregation and Mass Balanced) focusing on addressing deforestation and GHG emissions through on-going discussions with our key suppliers

ACTIONS TAKEN

ThaiBev supports large-scale palm oil producers and small-scale farmers in the responsible and efficient production of palm oil and to be certified with the Roundtable on Sustainable Palm Oil (RSPO) international standards.

ThaiBev has established a sourcing requirement to procure RSPO certified palm oil. Since 2018, 100% of palm oil use at KFC restaurants is RSPO certified. ThaiBev is extending this requirement to its Oishi restaurant and is committed to ensure that 100% of palm oil used in food business is sourced responsibly.

Sustainable Agriculture Guideline

An Essential Part in Achieving Sustainable Supply Chain

INTRODUCTION

Thai Beverage Group (hereafter “ThaiBev”) seeks to deliver a quality end product which answers our consumers’ demand and originates from a sustainable source. It has always been our concern to build a solid and effective supply chain in collaboration with our suppliers. ThaiBev’s Sustainable Agriculture Guideline (hereafter “the Guideline”) shall be our additional requirements for our suppliers in order to ensure that the material we source meet our standards.

We expect our suppliers to share our vision on sustainable agriculture and adopt the same practice to their own supply chain.

SCOPE

The requirements stated hereinafter shall apply to only agricultural raw material suppliers (hereafter “suppliers”). This includes suppliers’ related business entities, for instance, suppliers’ affiliates. Raw materials shall refer to only unprocessed materials.

Environmental

Conservation of Biodiversity

Suppliers may protect the natural state of ecosystem, ensuring sustainable use of natural resources and where possible, avoid interfering at all. We expect our suppliers to avoid sourcing agricultural raw materials in high conservation values or legally protected area under any circumstances.

Conservation of Forests

Suppliers may avoid deforestation in ecologically sensitive areas and take into account the prior use of land to ensure that no forests are not cut or burned for conversion to agricultural land.

Local Agriculture

Suppliers may support local farming in order to promote domestic agriculture and minimize pollution from the transportation of raw materials harvested. We encourage our suppliers to provide local farmers, whose raw materials they rely on, with knowledge and support necessary to promote sustainable and secure long-term supply of raw materials.

Organic Farming

Suppliers may adopt organic farming in their own agricultural operation or promote organic farming practice where applicable. We encourage suppliers to obtain organic farming certification from third-party or comply with organic farming standards established in countries where raw materials are being sourced.

Energy and Emissions Management

Suppliers may optimize energy usage within their supply chain, minimizehouse gas (GHG) emissions and implement activities to mitigate the negative impacts arising from GHG emissions on surrounding communities.

Soil Management

Suppliers may protect and improve soil fertility, for instance, by conserving soil, rotating crop, and maintaining the balance amount of soil nutrient.

Water Consumption

Suppliers may optimize water consumption during their agricultural process. Our suppliers are encouraged to measure their water consumption and identify opportunities to reduce their water usage where possible. In addition, we urge suppliers to conduct water risk assessment of their operating sites using internationally recognized tools and implement mitigation plan in area where water stress level is found to be significant.

Pesticide Control

Suppliers may manage and closely monitor the usage of pesticide especially contamination of nearby water sources. At minimum, we expect our suppliers to establish a maximum pesticide residue limit for their raw materials. Where in use pesticides should be applied responsibly in adequate amount required to control the invasion of pests and should be stored properly in a way that they do not produce negative impacts on surrounding communities.

GMO Declaration

Suppliers shall notify ThaiBev if their raw materials are GMO or contain or derive from GMO ingredients. They must also comply with regulations concerning GMO in countries where they operate. Please refer to ThaiBev’s GMO Guideline for more detail on our position on GMO.

Human Rights

Land Use Violation

Suppliers shall not violate the community’s right to access land and natural resource and respect the established rights of indigenous/tribal people to their land as well as their prior and informed consent. Furthermore, we expect our suppliers to maintain a good relationship with the communities in which they operate, conducting impact assessment of their operations on local community on regular basis and establish development programs where necessary.

Child and Forced Labor

Suppliers shall adhere to the laws and regulations concerning minimum working age in countries where they operate, and avoid any forms of forced labor, including slave labor, indentured labor, bonded labor.

Wages and Well being

Suppliers shall work to ensure that farmers in their supply chain are entitled to income and wages that meet basic income needs in countries where the raw materials are being grown. Furthermore, we expect our suppliers to maintain good relationships with farmers and implement empowerment programs to develop their skills and capabilities where applicable.

ALSO AVAILABLE AT THAIBEV SUPPLIER LIFE CYCLE MANAGEMENT