Pernod Ricard refocuses business and marketing on sustainability: ‘Investors are asking for it’

Absolut has been leading Pernod Ricard in its embrace of sustainability

The maker of Absolut and Jameson has set out an ambitious, company-wide sustainability and responsibility roadmap that will bolster its CSR credentials until 2030. Its implementation is driven as much by profits as it is by brand reputation, says Pernod Ricard’s global sustainability and responsibility director.

The ‘Good Times from a Good Place’ plan, which was revealed by Pernod Ricard’s chairman and chief executive, Alexandre Ricard, to analysts today (2 April), comprises eight key commitments from the drinks giant to support the UN’s Sustainable Development Goals.

Falling into the four strata of nurturing terroir, valuing people, circular making and responsible hosting, the goals include developing packaging that is 100% recyclable, reusable or compostable by 2025, implementing a gender balanced management team by 2030 and reducing the overall intensity of its carbon footprint by 50% by 2030.

The ambitious charge will be spearheaded by Vanessa Wright, Pernod Ricard’s vice-president of sustainability and responsibility. The former Chivas comms director, who led the company’s ban on non-biodegradable plastic straws late last year, said that while sustainability is by no means an alien concept the parent company or its affiliates, the roadmap places a new emphasis on 'responsibility' and an onus on every part of the business – from farming operations to marketing – to deliver.

“We need to make sure ... we're responsible in the way that we're putting together our communications and marketing campaigns,” Wright said. “So that means really exploring creative routes to break stereotypes, which is something that we'll be looking at by at least by 2023.”

The company already has a small “responsible marketing panel” installed centrally in the business to review every single piece of branded collateral before it goes live. And while marketing does not make up a particular pillar of the company’s eight-part commitments, Wright wants to make sure the philosophies of this panel are extended right across the business in order to guarantee complete diversity across all consumer-facing creative, in a commitment similar to Unilever’s 2017 ‘Unstereotype’ pledge.

Pernod Ricard is the second-biggest wine and spirits company on the planet after Diageo, enjoying brand equity through the likes of Absolut, Jameson and Jacob’s Creek and presenting itself to investors as a sure, if not hugely exciting, bet.

Its reliable financial successes – coupled with the leadership of a young, enthusiastic chief executive with his family’s name on the door – mean now is as good a time as any to implement such an ambitious sustainability plan without rocking the shareholders boat, particularly as investment in the plan is being covered by the entire business, rather than being siphoned off or raised from a particular operation.

Yet Wright contends the pressure on the company to give back to the planet and its people is also coming from the investors themselves.

“Increasingly they're are asking us what we're doing and challenging us on whether we're doing enough,” she said. “Investors are increasingly asking more questions, [such as] ‘What are you doing to tackle climate change?’ An ‘What are you doing on water?’”

Wright cites the company’s fourth-largest investor, Blackrock, as a stakeholder patently pushing for sustainability. The asset manager became the first to publish the environmental, social and governance ratings of companies in its investment portfolio, while its global head of sustainable investing recently argued against the perceived “trade-off between value and ‘values’.”

There’s no doubt Pernod Ricard will hope the eight-pronged resolution will also prick the ears of Elliot Management, which took a 2.5% stake in the business at the end of last year. The activist hedge fund is pushing for greater operating margins, a demand that has caused slight consternation among fellow stakeholders who are happy to see the board “investing sensibly in the business for the long-term”, according to The Financial Times.

Yet Wright is confident the plan itself has the potential to improve margins while upping the reputation of the company and its brands, not least because it feeds into consumers’ current demand for transparency.

“We really see that sustainability is an opportunity for the business – an opportunity to rethink how we do some of the things,” she said. “It's an opportunity to drive innovation. It's opportunity to drive business resilience. If you're reducing the weight of glass in your bottle, for instance then you're reducing your transport costs.

“We're a business, but if we can be in the business of making profit, while also at the same time doing social good or environmental good with our brands, especially because they all come from nature, then that's what we want to do.”

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