International Development CommitteeWritten evidence submitted by SABMiller
This is SABMiller’s response to the call for evidence by the International Development Select Committee Inquiry on post-2015 development goals.
SABMiller is one of the world’s leading brewers, with more than 200 beer brands and some 70,000 employees in over 75 countries. Our business originated in Africa, where we have been brewing beer for over 115 years. The future of Africa and its economic development matters deeply to us. Our business growth depends on a healthy, growing economic environment in the communities where we operate.
We welcome the opportunity to make a submission on post-2015 development goals. Our submission focuses on four core areas:
Perspectives on the MDGs: effectiveness, context and future challenges;
Learning from SABMiller projects which aim to address MDGs;
Agreeing one set of global goals post 2015
Partnerships and the role of the private sector.
1. Perspectives on the MDGs: Effectiveness and Context
1.1 The 2012 Millennium Development Goals report concludes that the target of reducing extreme poverty by half has been reached five years ahead of the 2015 deadline, but recognises that achievements were unequally distributed across and within regions and countries. Economic growth was the most significant factor driving this poverty reduction, with China and India particularly delivering strong progress on the MDGs in line with their rapid economic growth.
1.2 This conclusion aligns entirely with SABMiller’s view: that the creation of jobs and economic growth are key to reducing poverty. While the MDGs have provided a useful framework for guiding development efforts, economic growth is clearly the key underlying factor.
1.3 Moving forward, there are major challenges to sustaining high rates of economic growth in some emerging markets, accelerating growth in others that have lagged behind, and ensuring that low levels of developed market growth do not impede development.
1.4 Understanding the impact of resource constraints and the relationship to economic growth provide a vital context to inform the next stage of development goals. The global natural resource challenge is a significant threat because of the interconnectedness of water, food, energy and climate: what many call the “water-food-energy nexus”. Future growth will call for a better understanding and appropriate valuation of natural resources to enable a better allocation through the market.
2. Learning From SABMiller Efforts to Address MDGs
2.1 SABMiller has a Sustainable Development framework based on ten priorities that guide activities globally. We also use the MDGs as a reference point when developing initiatives to support sustainable development. Three key areas of focus for us that relate directly to MDGs are inclusive growth, which relates directly to MDG 1, health, which relates directly to MDG 6, and water, part of MDG 7.
2.2 We would like to use two of our key sustainable development initiatives to illustrate the linkage to the MDGs and the ways in which we believe our activities contribute to the MDGs.
2.3 One of the key initiatives through which we seek to impact all three of the areas mentioned above is our Farming Better Futures programme. This is a comprehensive approach centred on locally sourcing our agricultural raw materials from smallholder and commercial farmers; it also extends, through value chain partnerships and depending on local need, to HIV/AIDS testing and treatment for farmers, sustainability programmes and water management initiatives.
2.4 The second key initiative is our Water Futures Partnership, formed in 2009 to work with NGOs such as WWF and The Nature Conservancy, and the German development agency GIZ, to protect the watersheds on which our businesses, local communities and ecology depend.
2.5 MDG 1—Eradicate Extreme Poverty and Hunger
The Farming Better Futures Initiative contributes directly to MDG 1 in three ways:
(i)
(ii)
(iii)
For example:
In Uganda, SABMiller’s subsidiary Nile Breweries supports 9,000 smallholder farmers who grow sorghum for Eagle Lager. It is estimated that between 2002 and 2007, farmer income has increased seven-fold.
It is expected that the production of Impala, the world’s first commercially produced lager made with cassava, will help create employment for over 1,500 smallholder farmers and their families in Mozambique.
SABMiller India’s Saanjhi Unnati (Progress through Partnership) works with around 6,500 smallholder farmers not only to optimise land use, improve farmer yield and income but also to improve their overall standard of living.
2.6 MDG 6—Combat HIV/AIDS, Malaria and other Diseases.
Combating HIV/AIDS is a major focus for our business, particularly in Africa. Our programmes mainly focus on those countries where the prevalence of HIV/Aids is high, ie more than 5%—a list that includes South Africa, Swaziland, Botswana, Lesotho, Zambia, Mozambique, Uganda, Malawi and Tanzania. We seek to provide education and awareness training for all our employees, spouses and their dependants, and provide access to voluntary counselling and testing (VCT) in countries with prevalence greater than 1%.
We are increasingly extending these programmes into our supply chain, and Farming Better Futures has provided a strong platform to do this. For example, Nile Breweries in Uganda has extended its work testing and treating HIV/Aids into the supply chain, working with farmers, truckers and taverners, working with HIPS, a Ugandan NGO with funding from USAID.
2.7 MDG 7—Ensure environmental sustainability
Our Water Futures partnership aims to tackle water scarcity by developing new approaches to water management. The Partnership, started in Peru, South Africa, Ukraine and Tanzania, and has now been expanded to include our businesses in four new markets: the US, Colombia, India and Honduras
An example of a recent project within the Water Futures partnership is in Peru, where we have started a series of studies to examine the water resources available in the basins that supply each of our breweries. The first was for the Rímac river basin in Lima. We’re now reviewing a number of aquifer sustainability projects including:
Improving the infrastructure of canals and river beds.
Reusing treated water to irrigate public green areas such as parks.
Establishing a Rimac River Water Observatory—an expert technical panel to monitor and assess the aquifer.
Under Farming Better Futures, we also work with partners to build farmers’ capability and skills, typically through agro-economic and business training, financial and technical assistance, provision of fertilisers and seeds, and crop insurance. Our partners such as FARM-Africa in South Sudan and IFDC in Mozambique have a crucial role to play in working with the farmers to transfer technology and knowledge of agricultural best practices so they can increase the productivity of their land whilst managing the environmental impact. This can be through methods such as appropriate use of fertilizer and pesticides and improved irrigation techniques.
2.8 Finally, both Farming Better Futures and the Water Futures Partnership approach align closely to MDG 8. Whilst the focus area and precise model of projects vary from country to country, there are certain elements which remain consistent—one of which is the critical importance of a partnership approach with a range of stakeholders including government, NGOs and farmers.
2.9 Initiatives such as these have the potential to increase livelihoods, build food security and preserve and enhance water sources and other natural assets in developing regions such as Africa and India. They demonstrate the crucial role of the private sector in driving economic growth and development, and supporting achievement of development goals such as the MDGs.
3. Agreeing one set of Global Goals Post 2015
3.1 We believe that the MDGs’ target-based approach has been effective in creating real momentum, and would support some form of targets moving forward. However, a great deal has been learnt too about which strategies have been successful and which less so, and about the need for close linkage between goals to achieve holistic development rather than conflict between goals
3.2 It is critical that we do not have separate sets of goals established by the post Rio+20 process and the post MDG process. Rather we should have one set of global post 2015 goals covering both development and sustainability. The need to manage and preserve scarce resources and to enable economic and social development can easily become competing priorities if they are not considered in an integrated way.
3.3 Understanding the flows within the water-food-energy nexus is a good example of this, and is illustrated by this recent animation from SABMiller:
http://www.youtube.com/watch?v=uCAO8yga5NM. Agriculture accounts for about 70% of global freshwater use and can pollute freshwater supplies if mismanaged. Water is also used to generate electricity: in the USA, power generation accounts for about 50% of all freshwater withdrawals and drought in countries that use hydropower—Ethiopia and Ghana, for example—can lead to black-outs. Energy, in turn, is needed to fertilise and transport crops, which can themselves be used as biofuel to create energy. Large amounts of energy are also required to pump water to drier regions and, as water scarcity increases, so will the energy needed for technologies such as desalination. Given these trade-offs and interactions, successfully addressing the triple challenge of water stress, food security and energy supplies means taking a holistic view and balancing the many competing demands.
3.4 Progressive elements of the private sector are applying “nexus thinking”, thinking holistically about the resources needed to support their business growth, and about the other demands on these resources, and seeking to manage resources in a more joined-up way. In so doing they are not just managing for the long term but also making significant short-term efficiency gains—cost savings they might otherwise not have found.
3.5 To effectively manage resources, governments also need to work more holistically. Government departments traditionally work in silos—often with water, food and energy policy set without reference to one other. Governments must, therefore, become more connected—to use nexus thinking in order to help manage the inevitable trade-offs between scarce resources, reach a point where resources are priced to reflect their scarcity and therefore markets are better able to understand their true value.
4. Partnerships and the Role of Business Moving Forward
4.1 There is no longer any doubt that business plays an integral role in delivering economic and social progress.
Ban Ki-moon, UN Secretary-General, UN Private Sector Forum, New York, September 2010
4.2 In the development of the next phase of Development Goals, attention must also be given to roles and responsibilities of different sectors within society. Recent discussions, for example at the G8 in May, have focused on the role and commitments of business. We fully agree that business has a fundamental role to play, particularly in driving economic growth. However, this new focus should not detract from the need for continuing strong commitments from governments to enable growth and development, particularly in emerging economies.
4.3 We firmly believe that business, government and civil society must work effectively together if we are to deliver the economic growth that will fuel development in the face of a global economic crisis and growing resource scarcity. The focus should be on developing practical, local solutions that generate inclusive growth and social development, and respect human rights, while conserving water and energy and managing the use of land.
4.4 Businesses are well placed to innovate and drive efficiencies. There are also great opportunities to leverage business infrastructure, for example distribution networks sourcing infrastructure. As an example, SABMiller has worked with local NGO ColaLife in Zambia to enable anti-diarrhoea rehydration kits to be distributed to new mothers in remote rural areas in the Coca-Cola crates. In South Africa, SABMiller distributes condoms to licensed premises via its distribution network, in partnership with the Global Fund (8.5 million distributed in first 18 months). There are also great opportunities for collaborative efforts between companies that operate in the same geographical area, for example on watershed protection. SABMiller is seeking to foster such collaboration through the Water Futures Partnership.
4.5 Yet other stakeholders, notably governments, need to continue to improve the enabling environment for business, especially in relation to infrastructure and legal and governance frameworks. An effective business environment depends on robust legal and corporate governance frameworks, and good infrastructure, thus providing a stable and predictable environment for businesses to invest with confidence. Strengthening property and land rights is a particular priority in the smallholder farmer context.
4.5 We would suggest that donors and governments should focus more resources on public-private partnerships that by providing linkages to markets, can deliver sustained economic growth and development. In the context of smallholder farming for example, the focus should be on guaranteeing a market for smallholder outputs whilst building overall capability to enhance food security. Innovative financing instruments like the Africa Enterprise Challenge Fund (AECF), pioneered by DFID, have a key role to play in helping companies to scale inclusive business models and to maximise development impacts.
October 2012