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Report of the Executive Board Risk Management and Control Systems
Operating Companies are well respected in their regions.
Constant management attention is directed towards enhancing
Heineken's social, environmental and financial reputation. The
Heineken brand is, along with our people, our most valuable
asset and one of the key elements in Heineken's growth
strategy with a portfolio that combines the power of local and
international brands. Anything that adversely affects consumer
or stakeholder confidence in the Heineken brand or Company
could have a negative impact on the overall business.
Company reputation, brand image and revenue could be
potentially impacted by unethical or irresponsible behaviour of
the Company or its employees and by product integrity issues.
Therefore, the whole supply chain of all Operating Companies
are subject to a global framework and governance system with
high quality standards and intensive monitoring procedures
to secure product integrity in accordance with international
legislation and locally verified by international (ISO-) certifying
bodies. Starting in 2010, Heineken began to roll out a reputation
survey with critical stakeholders at both a global and national
level. This will further provide insight into the Company's
reputation and how to mitigate risks.
The Code of Business Conduct aims to prevent any unethical
and irresponsible behaviour of the Company or its employees.
During the year under review, the new practical crisis manual
was further distributed throughout the business. Alongside
this, a simulation workshop was rolled out across the business.
A number of Operating Companies have carried out this
workshop, but all Operating Companies are required to
complete this workshop and undertake a 'refresher' exercise
at least once every two years.
The Company also invests considerable resource in activities
that drive sustainability and support the Company reputation.
Heineken's Sustainability Report outlines Heineken's priorities,
goals and achievements in these areas. Heineken believes
that the new 'Brewing a Better Future' approach strikes the
right balance and makes positive long-term commitments
to investments in the environment, communities, people
and partnerships. For further information on the Company's
sustainability programmes, see
www.heinekeninternational.com/sustainability
Alcohol under pressure
Alcohol abuse remains a serious concern in many markets
and could prompt legislators to introduce further restrictive
measures including restrictions and/or bans on advertising,
sponsoring, points of sale and increased government tax.
Further restrictions of our commercial freedom to promote
and sell our products could lead to a decrease in brand equity
and potentially in sales and damage the industry in general.
National debates on further restrictions could be accelerated
by the fact that the World Health Organisation (WHO) adopted
the Global Alcohol Strategy in May 2010. In the coming years,
countries will have to implement the Strategy by developing
national Alcohol Action Plans. These plans can include several
of the policy options. Some of these policy options can severely
restrict our commercial freedom or lead to higher taxing.
We therefore need to work with our colleagues in markets,
as Heineken and through the industry, in order to ensure a
balanced and evidence-based implementation of the Global
Alcohol Strategy.
In 2013, the WHO will report on progress of the implementation,
which could lead to calls from Member States for a stricter
Global Alcohol Strategy because implementation is considered
to be too slow or inadequate. Heineken will work with industry
to give the necessary input to the WHO secretariat to make sure
that the contribution of industry to the objectives of the Global
Alcohol Strategy is known and hopefully adequately reflected
in the progress report prepared by the WHO secretariat.
Heineken has offered, as part of a coalition of major
alcohol beverage companies, a package of industry activities
in a number of developing markets to the Director General
of the WHO. The actions include ensuring responsible alcohol
marketing, combating drunk-driving and to get a better insight
on the impact of non-commercial (illicit) alcohol in society. These
actions are called 'global actions to reduce alcohol related harm'
(www.global-actions.org). Great responsibility lies with us and
our partners to ensure full execution of these programmes
and actions.
Heineken will continue to work through the EU Alcohol Health
Forum, chaired by the European Commission. In 2010 we put
forward new commitments to support the objectives of the
Forum, which is to reduce alcohol-related harm in Europe.
Next to concrete commitments from the stakeholders, the
Forum offers a platform for policy debate and development.
Unfortunately, the focus of some of the Forum stakeholders
is to attack the commercial freedom of the alcohol beverage
industry. We therefore have to continuously balance this debate
through evidence-based input and by ensuring strict compliance
to our own rules, as Heineken and as brewers, on Responsible
Commercial Communication.
Attractiveness of beer category under pressure
The image of our sector and products is of key importance
in maintaining our licence to operate and to grow the beer
category in a responsible manner. This is especially relevant
in markets where beer sales are under pressure and/or where
beer has a less favourable image. As market leader in Europe
we will lead the strengthening of the image of our sector and
products as Heineken and through the European and national
brewers' associations. At European level we led actions by the
Brewers of Europe, which included high level image-related
events with the EU Council President, the European Commission,
the European Parliament and media. Heineken has mitigated its
relatively high gearing to mature markets by the acquisition of
the beer operations of FEMSA.
