Partnerships Key to Sustainability AchievementsWed, 02/19/2014 - 12:41
Over the course of 120 years, FEMSA states it has shown commitment to the community, education, social security, and the environment. However, the largest beverage company in Latin America decided to take its efforts to the next level by integrating its sustainability area and energy division in 2011. FEMSA’s sustainability strategy, which is focused on positively transforming the communities where the company operates, involves three main areas: energy, waste and recycling, and water use.
FEMSA’s energy strategy aims to lower the company’s carbon footprint in ways that are economically feasible. The first step in this strategy consisted of mapping the company’s largest energy consumption points. The results showed that out of the ten countries where the company operates, Mexico represented 80% of the firm’s energy consumption. This situation made FEMSA decide to incorporate renewable energy sources into its operations. Wind energy was the most promising renewable source at the time. FEMSA partnered up with Macquarie Goup to develop a wind farm in Oaxaca in which the firms took equity stakes of respectively 45% and 55%. Mareña Renovables was destined to become the largest wind farm in Latin America, with 396MW to be installed on the Isthmus of Tehuantepec. Before development started, in April 2012, FEMSA sold its 45% equity to Mitsubishi and Dutch pension fund PGGM, but together with the Heineken-owned brewery Cervecería Cuauhtémoc Moctezuma remained the project’s off-takers under a 20-year self-supply contract, with FEMSA using 85% of the generated electricity while Cervecería CuauhtémocMoctezuma would consume the remaining 15%. After the project had been held up for well over a year due to local community resistance, the decision was taken to relocate the project to two alternative wind sites in the same region, meaning that Femsa will have to remain patient to receive its anticipated wind energy supply.
Deciding how to approach the incorporation of renewable energy required thorough planning and analysis. “We identified that the key for us was to maintain our focus in our core business and try to find strategic alliances with specialists in other areas,” says Victor Treviño, Director of Energy and Environment of FEMSA. Treviño’s team is evaluating possibilities such as photovoltaic and geothermal to substitute its fossil fuel consumption with renewable energy sources. Other plans to reduce FEMSA’s carbon footprint include reducing energy consumption, and each business unit has specific projects to reduce the amount of energy it consumes. The company operates OXXO, the largest convenience store chain in Mexico, which represents a challenge as this involves a very large number of consumption points. “For example, the Smart Store project looks to optimize the amount of energy used in OXXO convenience stores on a store-by-store basis. This is a continuous process and energy consumption has been going down every year,” states Treviño. He says that energy efficiency is an ongoing process because businesses have to always look for new technologies and find ways to incorporate them in operations.
FEMSA’s social and environmental commitments extend to its supply chain, with a major focus on sustainable sourcing. Recently, the company launched a pilot program involving equipment suppliers for the OXXO convenience store chain. Imbera, a FEMSA supplier that is the second largest refrigerator producer in the world, implemented the One Planet Living Principles. Imbera is now producing refrigerators that are 70% more energy efficient than the ones produced eight years ago. Imbera also implemented the Environmental Leadership Program with PROFEPA, involving 16 suppliers in the process and generating around MX$9 million (US$660,000) in energy saving practices. At the same time, this led to a 14% reduction in CO2 emissions. The Imbera case provides a good example of how FEMSA approaches federal government initiatives. SEMARNAT has a program where large companies are invited to lead a strategy in which suppliers are involved. Larger companies have more resources and information to design strategies for smaller companies that might not have the time to learn about the latest trends in energy efficient technologies. FEMSA partnered with the Global Institute of Sustainability at Tec de Monterrey, FOMIN, and Banorte, inviting 3,000 small suppliers to share information and educate them on green practices as well as the types of energy efficiency technology they could implement. “This number is important but small when compared with the number of SMEs in Mexico. We need to be successful with this project so we can scale it up,” says Treviño. FEMSA also teamed up with Ashoka, one of the world’s leading NGOs for social entrepreneurs, in promoting entrepreneurship among young people between 14 and 24 years old. The youngsters explain a specific idea and FEMSA-Ashoka helps them to develop a business plan. This collaboration has already led to 210 projects across Mexico, with 1,320 more in development. “This is the best way in which we can really seed the right spirit for future leaders of the country,” concludes Treviño.