Having been at the forefront of assessing companies’ environmental, social and governance (ESG) performance for almost two decades, EcoVadis co-founder & co-CEO Pierre-François Thaler is a well-placed authority on the trends impacting global boardrooms. When considering the geopolitical changes and legislative resets driving sustainability discourse, he is of the view that “regulatory pressure is only one driver for ESG”.
“The commitment to sustainability and ESG has become more and more important for customers, consumers, financial institutions and other stakeholders, but also from a risk management perspective,” Thaler says.
As a result, ESG issues are no longer confined to the pages of sustainability reports or corporate strategy decks. For international alcohol brand owners, ESG is now shaping everything from raw material sourcing to supply chain design and investor relations.
The pressure to attain excellence in ESG is coming from every direction, warns Thaler, not just from regulators, but also from investors, insurers, customers and communities. For the alcohol industry, a sector deeply connected with agriculture, water, packaging and global logistics, the pressure is particularly acute.
Climate risk at core of operations
“Beverage companies, similar to the food industry, are highly exposed to sustainability risks such as water use, packaging, agriculture and labour conditions,” says Thaler (below). “From the field to the factory, and all the way to the consumer’s glass, climate-related disruptions are having a profound impact on how beverage companies operate, source and plan for the future.”
The most critical of these disruptions is water availability, a risk that sits at the heart of every beverage.
“As a core ingredient – and a necessity in processing and cleaning operations – water underpins the entire value chain of beverage manufacturing,” explains Thaler. “Regions that were once considered stable are experiencing stress, pitting industrial users against communities and agricultural needs.”
This has already created reputational and operational issues. Coca-Cola, for example, faced significant public backlash and plant closures in India due to perceptions of over-extraction in drought-prone regions. Such scenarios aren’t isolated incidents; they reflect the new normal for brands operating in water-stressed markets.
Disrupted harvests, fragile supply
The drinks industry, points out Thaler, “depends heavily on agricultural raw materials; barley, hops, grapes, citrus, sugarcane and, above all, water.”
These crops are under growing threat from climate change. Yields are being reduced by heat stress, altered rainfall and shifting growing seasons, while the quality of ingredients – especially in wine and craft spirits – is becoming less predictable.
This uncertainty is creating a second layer of vulnerability: supply chain instability.
“Companies are re-evaluating supplier relationships,” Thaler explains, “placing greater emphasis on climate risk disclosure and sustainability ratings.”
Beverage brands, many of which rely on complex international supply networks for ingredients and packaging, are turning to platforms such as EcoVadis to assist them in assessing suppliers on environmental, labour and ethical criteria.
Sustainability has moved beyond being a cost centre; it’s becoming a proxy for resilience, agility and brand protection.
Challenges & financial risk
Climate risk doesn’t just disrupt agriculture; it also destabilises day-to-day operations. From wildfires and floods to transport delays, the frequency of climate-related disruptions is increasing – and so are the financial consequences.
Companies are already reporting higher insurance premiums, energy bills (particularly from refrigeration) and infrastructure costs. As Thaler puts it: “Rising temperatures also lead to increased energy costs, particularly for refrigeration and cooling – essential for preserving product quality.”
Consequently, many beverage companies are investing more heavily in risk mitigation, from back-up energy systems to diversified sourcing strategies and physical resilience upgrades at production sites.
Industry leaders driving change
Despite these risks, there are signs of significant progress. Industry leaders like AB InBev and Pernod Ricard are stepping up their ESG commitments – not just for their own operations, but across supply chains.
Companies are pushing ESG considerations deeper into procurement processes, incentivising sustainability performance and tying corporate financing to measurable outcomes. Net zero targets are increasingly viewed as strategic levers that influence how capital is allocated, how risk is managed and how competitive advantage is maintained.
The message for CEOs is clear: ESG is about much more than compliance or reputation. It’s about survival, strategy and stakeholder confidence. Whether it’s through rising costs, supply chain shocks or shifting consumer expectations, ESG factors are reshaping the global beverage alcohol industry.
While the road ahead is uncertain, the direction of travel is not.
