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ECONOMIC SUSTAINABILITY
Interest rate risk
2.6 Quality assurance
Heineken attempts to hedge results and cash flows
against interest rate fluctuations as far as possible by
financing either at fixed rates or at variable rates
combined with the use of interest rate instruments,
namely interest rate swaps, forward rate agreements,
caps and floors.
Taxation risk
Heineken and its operating companies are subject to
a variety of local excise and other tax regulations. In
principle, Heineken's sales prices are adjusted to
reflect changes in the rate of excise duty, but in
creased rates may have a negative impact on sales
volume.
internat governance
Internal governance is based on the underlying
principle of local management's accountability for
managing performance and the underlying risks,
within the boundaries set by the Executive Board.
Local management is responsible for an effective
internal control system, which is designed to provide
reasonable assurance of achieving the business
objectives and prevent or ensure early identification
of potential material errors and losses and misrepre
sentation of circumstances.
Policies for the control of worldwide risks in areas
such as marketing, production, human resources,
finance, IT, environmental and social responsibility
and legal affairs are in place or are being developed.
These elements are part of the reporting cycle.
Heineken is making good progress with the develop
ment and implementation of uniform group-wide
processes and systems, in order to ensure consisten
cy and standardisation based on best practices.
The Executive Board, under the supervision of the
Supervisory Board and more particularly its Audit
Committee, oversees the effectiveness of internal
governance, including managing risks and monitoring
the effectiveness of internal controls. Group Internal
Audit, together with local internal audit departments,
plays a critical role in the objective and independent
assessment of business processes and the effective
ness of internal control.
The raw materials from which our beer is produced
are required to meet high quality standards laid down
in our recipes and specifications. The packaging
materials in which our beer is sold are also subject to
strict quality standards which comply as a minimum
with the statutory guidelines. The Heineken Values
and Principles are enshrined in policy statements and
translated into instruction which define how policy is
implemented and compliance is monitored.
In accordance with Heineken's product safety
policy, appropriate measures are taken in our brew
ing process to prevent product contamination. Our
breweries are required to implement the principles of
the HACCP (Hazard Analysis and Critical Control
Points) system. Our raw materials policy requires
suppliers to operate a system based on these princi
ples and compliance is verified by supplier audits. We
work with farmers to minimise their pesticide inputs
and we pursue a biotechnology policy that prohibits
the use of genetically modified raw materials, which
is monitored. Consumables likewise must present no
product safety hazard, and we conduct audits of
suppliers to identify and minimise risks. The water
used by our breweries must comply with all EU or
WHO drinking-water standards. To ensure that our
beer reaches the consumer in perfect condition, we
operate a freshness policy, which relates mainly to
our distribution channels. All products are coded so
that they can be traced throughout the supply chain,
facilitating the identification of the source of any
problems which may arise.
Alcohol Policy Day
Heineken Nederland brings home to students the importance of responsible alcohol use
Many student clubs in the Netherlands
have no policy for explaining to their
members the importance of responsi
ble alcohol consumption. This year,
Heineken Nederland organised an
Alcohol Policy Day for student clubs,
to explain why such a policy is
essential. Heineken Nederland has
since been asked by several clubs to
provide training in this area for the
mentors who run the induction
programmes for first-year students.
a* Mi
MARJOLIJN VENCKEN
TOWARDS SUSTAINABILITY
