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Earlier this year, Beam Suntory launched a “first-of-its-kind” pilot programme to explore regenerative practices in the agave fields near its Casa Sauza operations in Jalisco, Mexico. Following the announcement, Global Drinks Intel caught up with Kim Marotta, the group’s global VP for environmental sustainability, to learn more.
A cursory glance at Kim Marotta’s resumé serves to confirm we’ve come to the right person for all things environmental. Prior to joining Beam Suntory in June 2021, Marotta spent 17 years in the field, starting in mid-2004 with Miller Brewing Co in the US as director for corporate social responsibility – the precursor catch-all to ESG [environmental, social and governance].
“In almost every ESG role, you’re kind of an internal lobbyist,” says Marotta. “Basically, you’re trying to motivate and engage, and build those long-term strategies that we can all get excited about and move forward. When you do great things, it’s nice to be able to share it with other people. So, it’s both internally and externally facing.”
The level of engagement – and enthusiasm – has risen profoundly since Marotta started with Miller. “Certainly now,” she says, “the attention on ESG and on sustainability is much more focused, not only from a company perspective but also from the court of public opinion and consumers, as well as from regulators and investors. When all of those stakeholder groups got focused, the momentum really picked up. It’s always been an exciting space, but it’s even more exciting now.”
When did ESG pivot from nice-to-have to need-to-have? “The tipping point was when investors started to pay attention,” Marotta says. “That’s when ESG was catapulted. Beam Suntory isn’t publicly traded, but I’ve worked for publicly traded companies in the past and when investors started to incorporate ESG into their conversations with companies and wanted to know more, they became very sophisticated. What might have started as really simple questions became very technical.”
ESG-engaged companies offer strong investment foundations
The widely acknowledged source that dragged ESG overground is an unlikely one. In his annual letter to listed companies in early 2020, BlackRock CEO Larry Fink warned that the world’s largest fund manager “believes that all investors, along with regulators, insurers and the public, need a clearer picture of how companies are managing sustainability-related questions.
“Our investment conviction is that sustainability and climate-integrated portfolios can provide better risk-adjusted returns to investors,” Fink wrote. “With the impact of sustainability on investment returns increasing, we believe that sustainable investing is the strongest foundation for client portfolios.”
While the investment community hasn’t been known for its altruism, Marotta believes BlackRock’s approach wasn’t too radical a departure from the norm.
“The truth of the matter is that companies that engage in ESG are really focused, well managed and efficient,” she says. “They’re also looking at controlling their bottom line, at their long-term value and at securing stability. Investors have that same alignment.”
The beverage alcohol industry found itself in something of a schizophrenic position, of already being environmentally friendly – relatively speaking – while also being traditional in its mindset and less receptive to adopting more disruptive business practices.
“Alcohol companies were maybe a bit slower behind beverage companies,” says Marotta. “Coke and Pepsi got out there early and really aggressively. But it wasn’t like we had to switch practices. The great thing about alcohol companies is they’re really based in agriculture. Growing the best corn that you possibly can for the best Bourbon, or the best agave for the best tequila, has always required investing in your growers, in soil health, in yields and in production. That’s the core of an alcohol company.
“Maybe we didn’t talk about it, maybe we didn’t put firm goals around it, but we knew the importance of those relationships and built those foundations decades ago. Whether you were worried about water for the long term or not, you wanted to use water in the most efficient way. Whether you were worried about climate change 30 years ago or not, you were still looking at your energy usage and your efficiency.”
Sounds easy, doesn’t it: telling the world about what you’re doing anyway? “It’s definitely inspiring and motivating,” Marotta says. “I mean, you’re in Mexico and you’re right there with the growers and you can see it at such an important point and that they’re making a difference.
“Everybody wants to be part of sustainability: they want to help and they want to engage. Nothing’s ever easy but when everybody’s on the same page and everybody’s passionate about it, it’s definitely exciting. But today, it’s not just about saving this amount or being this efficient. You need to be more and do more all the time.”
From a company perspective, sustainability is a journey
Concurrent with promoting existing environmental cues, alcohol brand owners have also been busy setting their own targets for the longer term. These provide a challenge for ESG executives on a day-to-day basis.
“From a company perspective – and it’s a bit cliché – it’s definitely a journey,” according to Marotta. “All of the goals that you’ve seen companies set are really lofty. These aren’t things that you’re going to be able to be successful with overnight or even in a year or two.
“It takes a long time to start a pilot, grow and enhance it, build momentum and collaboration and achieve results. Brands have to understand that it’s a journey and consumers need to understand you have to test small, you have to think differently, think innovatively and then hopefully build some momentum. If people understand that it’s a journey and it’s going to take some time, they’ll see the results and see where you’re going in the end.”
While there is a universal realisation among consumers that these efforts by businesses are essential, there’s also a risk that buy-in on the front line is age-related, with younger LDA consumers easier to get on board than older ones.
Marotta is not convinced.
“It’s not just the younger group that cares about this area,” she says. “If you live in California, for example, and your brand cares about water, then you’ll care more about that brand. If you’re facing tornadoes coming through the Midwest, you’ll care more about a brand that’s connected to climate change.
“Across age, across demographics and across geographies, you can find different types of consumers that will lean in. They don’t have to be environmentalists and they don’t have to be tree huggers.”
All roads lead to Scope 3
As for the direction the ‘journey’ that Marotta refers to will take next, all roads lead to Scope 3 greenhouse gas (GHG) emissions. Scopes 1 and 2 – both of which are ‘owned’ – remain works in progress, but Scope 3 is, as Marotta puts it, “the biggest challenge today”.
“It’s out of your control,” she says. “If it was in our control, it would probably be a bit easier. More than 80% of Scope 3 GHG comes from a company’s suppliers. The opportunity is to engage with and influence your suppliers, and make choices about who you’re going to do business with. But it’s not as though there are 1,000 suppliers in a line that you can choose from. Besides, supplier relationships have been in place for a long time and they were chosen for a good reason.
“It’s probably going to be slow-moving, but I’m excited to see where we can go with that.”
Past, present and future, the ESG area of the alcohol industry is clearly the liveliest – as well as the area with the most scrutiny. One would understand if, after 17 years at the coalface, Marotta were to be jaded by the processes she’s had to get on top of. “We need to operate in a global world where we’re all committed to doing what we can to impact the environment in a positive way,” she counters.
The challenges don’t show signs of dying down anytime soon.
This article has been available to Global Drinks Intel subscribers since May. For details on how to join them, please click here.
