Bacardi is making bold claims, backed by independent analysts, that its new sustainability tracking tool is best by name and by nature
Global drinks giant Bacardi has developed an alternative approach to sustainability reporting. It uses new metrics and methodologies, based on management accounting, to derive more precise results, measuring performance and progress against environmental and sustainability targets.
Stephen Harvey, global environmental director for Bacardi, says: “The Bacardi Environmental Sustainability Tracking [Best] method is an accounting metric. It is a robust method for accurately measuring operational efficiency. Conventional measures cannot do this.”
Harvey says Best has been extensively peer reviewed and stands above other methodologies of environmental impact reporting. “Puma’s [environmental profit and loss] is a method that attempts to quantify environmental impacts in monetary terms. Bacardi recognises this is important work,” he says.
“Best, however, does not rely on qualitative judgments on the monetary value of natural resources and environmental impacts. Best applies fundamental accounting principles to measuring sustainable progress, and in so doing eliminates misleading distortional effects such as outsourcing, divestments and changes in product mix.”
These, Harvey claims, mean Best cannot imply progress where no such progress has been achieved, an area where alternative integrated reporting falls down. “Best uses methods commonly used for monetary purposes, but does not attempt to convert progress to monetary terms.”
University researchers, independently of Bacardi, have produced a study of the tool. They believe it could revolutionise integrated reporting.
“The Best method enables the tracking of improvements in sustainability performance at the corporate level, adjusted and corrected for changes in relative production volumes at the company’s major production facilities,” says Jon Bartley, professor of accounting at North Carolina State University.
Bartley describes Bacardi’s moves as a “critically important refinement of the less sophisticated measures other companies are using that ignore changes in product mix”. He adds: “The Best method can be adopted readily by other companies and will provide more meaningful information for both external reporting and management control.”
As yet, Bacardi is not using Best to influence its suppliers and partners – a decision that has surprised some given the company’s confidence in the system and the fact that other corporate leaders, such as Wal-Mart, have pushed their reporting standards further down their supply chains.
Corporate Accountability International (CAI), which campaigns for corporate transparency, suggests regulatory control is the only way to deliver meaningful change on sustainability.
“We have seen that whenever a corporation voluntarily adopts ‘environmental’ or ‘social responsibility’ policies, it almost always does so to avoid governmental regulation or for PR purposes and these policies are quickly violated in the name of profits,” argues Jesse Bragg, a CAI spokesman.
But Bacardi says Best is part of its strategy to improve sustainability performance. And the company stringently defends the science behind its model, arguing that by using Best, the company can reward true improvements and recognise failure, in scenarios where other, flawed metrics use averages which indicate success.
“Best filters this distortion out and allows us to properly reward performance and better focus priorities,” says Harvey. “As the expectations we place on our suppliers grow, Best will no doubt prove a powerful tool to assess their true sustainability performance.”Bacardi corporate accountability environmental performance operational efficiency sustainability reporting
May 2014, London, UK
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