Described as one of the first-of-its-kind in the global beverage industry, the program will be structured and operated by specialist food and agri bank Rabobank, which will provide funding to the program with other banks expected to participate in the future (Rabobank is the primary financing bank and as the program grows towards the expected funding level of €600m / $610m, it has agreed additional syndicated funding with other banks such as Santander.)
The program will provide competitive financing that is linked to a number of sustainability-driven KPIs for suppliers that, when met, unlock incremental discounts against the initial funding rate.
It will help CCEP reach its ambition of net zero by 2040, and reduce greenhouse-gas emissions across its value chain by 30% by 2030 (compared to 2019).
From sugar cane to paper packaging
CCEP notes that supply chains are under increasing pressure from population growth, increased demand for food products and climate change.
It depends on a global supply of agricultural ingredients and raw materials from more than 20,500 suppliers to produce its drinks: ranging from sugar beet, sugar cane, coffee, tea and fruit juice through to packaging materials such as glass, aluminum, paper and PET.
CCEP has identified 13 priority agriculture-based ingredients and bio-based packaging materials: cane sugar, beet sugar, high-fructose corn syrup, stevia, orange, lemon, apple, grape, mango, coffee, tea, soy, pulp and paper.
It manages the purchase of these key ingredients together with The Coca-Cola Company and other Coca-Cola bottlers.
CCEP is the world's largest Coca-Cola bottler which covers some 600 million consumers across 29 countries, centered around western Europe as well as the Australian, New Zealand, Indonesian and Pacific markets gained through its acquisition of Coca-Cola Amatil last year.
It has already asked suppliers to take actions in three key areas to reduce carbon.
These are setting and validating reduction targets with the Science Based Targets Initiative (SBTi) by 2023; committing to using 100% renewable electricity across their operations by 2023 and sharing their carbon footprint data.
The new finance program will build on this and set KPIs for suppliers in improving their overall ESG ratings, via assessment from business sustainability rating provider EcoVadis (EcoVadis evaluates suppliers across four main themes: environment, labor and human rights, ethics and sustainable procurement).
Initially launching in Germany, the program will be expanded to CCEP’s suppliers in the rest of Europe, Australia and New Zealand in future phases.
CCEP will also partner with Rabo Foundation, Rabobank’s social impact fund, to support one of its farmer programmes in Indonesia that promotes the adoption of sustainable practices and farm inputs to increase yields and achieve better long-term economic strength.
"We know how crucial it is that we work together with our suppliers to decarbonize our businesses, and are committed to providing the support and solutions they need to help them reduce emissions, aligned with our own sustainability goals," said Ralf Peters, vice president of procurement at CCEP.
"Our new supply chain finance program is another important step that will help us to take collective action – by implementing positive and impactful change and driving continuous sustainability improvements."