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‘Partnerships Are Crucial for Water Goals’: Q&A with MillerCoors

Water is a moving environmental target. In 2015, MillerCoors set several ambitious water-related sustainability goals for 2020, including reducing the water-to-beer ratio across all their direct operations. The total of water gallons saved over five years across their whole value chain is expected to be in the billions. Since the majority of their water footprint is on the agricultural side, however, this is not a goal MillerCoors can achieve alone.

“The targets have a significant magnitude,” says Marco Ugarte, PhD, sustainability manager for MillerCoors. “The only way to achieve them is through a deep level of partnership with other organizations.” As a result, the company has connected with diverse public and private partners.

Ugarte will be speaking about the complexities of water sourcing at the 2017 Environmental Leader Conference next month. Recently we caught up with him to find out more about the beer brewing company’s approach and how strategic partnerships can help MillerCoors reach environmental goals.

What does water mean for MillerCoors?

The company has a sustainability strategy that describes 10 goals toward 2020. Five of those 10 goals are completely environmental. Water is the most material resource because the company has a long-standing relationship all the way back to the barley growers that grow and harvest all the components — what we call brewing materials.

Right now the commitment is to reduce the water-to-product ratio or ‘water-to-beer’ ratio. The goal is to use three gallons water to produce one gallon of beer. To put it in perspective, there are manufacturers that could easily be using five to nine gallons of water to produce one gallon beer. The economies of scale and investments we have across the supply chain allow us to reduce that ratio and become more efficient over time.

How does MillerCoors approach water?

Water is a key component everywhere we operate. Last year our barley-sourcing program turned 40 years old. More recently we emphasized measurement, and commissioned research and development to understand the conditions where we grow barley in Montana, Idaho, Wyoming, and Colorado.

Water is complex because it has an emotional connection and a regulatory connection. It’s not a clear-cut topic. You need to be aware of the state-level regulations, the level of scarcity and of opportunity in the places you source from, and you need to be respectful of the cultural and traditional aspects of these regions. It comes down to the level of risk that a whole family or a whole region invests by going into your crop versus a different crop.

Even though we have impressive numbers and a big commitment for 2020, the millions of gallons of water we use across our manufacturing supply chain only accounts for 10% of the water footprint. That other 90%, if not more, is in farming operations where we grow barley and hops.

What is MillerCoors doing on an agricultural level to address that?

We have a partnership with the U.S. Department of Agriculture Natural Resource Conservation Service. They take a look at the best management practices, agriculturally speaking, compare operations in different regions, and provide technical advice to the farming community.

If a grower is a candidate for this program, they go through a process to propose their project or solution. That entails a conservation plan. There should be an original state and expected results. If a family or a community is successful, NRCS deploys their technical team at the end of the season and verifies that the practices delivered a better quality of water, quantity of water or a conservation benefit.

After a successful audit by NRCS, they certify those acres, properties or fields that were positively impacted. The farmers and growers could be reimbursed between 60 to 75% of overall cost of their project. Then, on top of that, companies like us can provide another 10%, creating a public-private partnership that builds a safety net for these communities.

Are there metrics from the efforts around water reduction?

We had a very wet year, including plenty of rain and increased snowpack across barley regions. This is important to acknowledge because not every year is a wet year. What I can share at this point is that we had over a 30% water use reduction between 2015 and 2016 across farming operations, and that is because barley operations represent 90% of that footprint. The figures we will be sharing [publicly] are on the order of billions of gallons. That’s a significant amount of such a critical resource.

With the new administration, do you expect there will be changes in your partnerships?

We are extremely respectful of our public partners. While we anticipate some changes in dynamics, we are confident that we have laid down the work, the strategy, and — most important — the confidence in the community to keep moving along.

I want to keep it in perspective. Barley communities have been with us for decades. Similarly, the Miller Brewing Company in Milwaukee is 160 years old, Coors Brewing Company started in 1873, and this year the Jacob Leinenkugel Brewing Company in Northern Wisconsin is turning 150 years old. If you take those three companies together, you are talking about 450 years of combined brewing experience.

The goals I mentioned were already charted in 2015 for 2020. We’re halfway through. We’re going to have different targets for 2025. While public partnerships are critical, businesses have the opportunity to keep excelling in their fields, building partnerships, and delivering against goals.

What’s next for corporate water stewardship in general?

Many companies are already looking at the Natural Capital Protocol, a framework that starts thinking about how you value the natural capital of companies based on their operations, including how organizations interact with nature and the role of context-based metrics. For the first time, global and domestic organizations are realizing that the price of resources, for example water, is not what you pay the utility. The price is the impact on the aquifer, sourcing from one place versus another, the quality, and the potential impacts on the community.

Now, more than ever, companies are open to benchmarking, identifying best management practices, and importing them from completely different industries. I think that while the targets will be increasingly challenging, it’s a race to the top.

Marco Ugarte will be speaking at the Environmental Leader Conference in Denver June 5-7, 2017. His workshop, The Energy/Water Nexus – The Challenge of Sourcing Energy and Water, starts at 1 pm on June 5.

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