The salaries and bonuses of Heineken managers could soon depend on how committed they are to fighting climate change. The world’s second-largest brewer is looking for ways to meet its goal of net zero emissions by 2040.
“We investigated how to link this to executive compensation,” CEO Dolf van den Brink said in an interview with Bloomberg TV.
Board members, investors and clients are increasingly putting pressure on companies to show that they are taking meaningful steps to reduce their impact on the planet. Experts say that linking executive compensation is a key step in incentivizing corporate management to meet targets labeled ‘climate’.
Heineken reported a “remarkable acceleration” in the last year in the importance of climate action for company stakeholders, Van den Brink said, and that it will be key to attracting and retaining future employees.
While there is a growing understanding among consumers that addressing global warming is crucial, Van den Brink said he is not sure they are willing to pay a “large premium” for green improvements throughout the company’s value chain.
Approximately 90% of Heineken’s emissions are derived from suppliers, packaging, and the logistics of storing and transporting its beer. The rest is generated when producing the drink.
Reducing emissions from the supply chain is the hard part. That’s why Van den Brink said Heineken could cut ties with suppliers that don’t decarbonize their operations fast enough. It’s too early to say when that might happen, he said.
By setting short-term climate targets validated by the Science-Based Targets initiative, Heineken committed to reducing all its emissions by 35% by 2030, compared to a 2018 baseline. That is in line with the Paris Agreement target of keep global warming below two degrees Celsius.
“I see an emerging awareness that this must be done,” Van den Brink said of Heineken’s commitments. “The days of delegating this to the corporate affairs and sustainability team are long gone,” he concludes.
