Drinks group Pernod Ricard, which is being targeted by activist investor Elliott, is banking that its push into socially and environmentally sound business practices will boost its growth in the coming decade.
Pernod, the world’s second-biggest spirits group behind Diageo, unveiled a strategic roadmap plan going up to 2030.
That plan includes eight pledges to undertake socially responsible business habits, such as preserving and looking after the land used to produce its Martell cognac or Mumm champagne brands.
Other pledges include aims to save water and cut down on waste and carbon emissions, as well as fighting alcohol abuse and promoting gender balance in its top management teams.
Companies around the world are tweaking business models to ensure they capture the current vogue for having strong environmental, social, and corporate governance habits. This is partly to win over
so-called millennial customers and to attract investments from funds that specialise in putting trillions of dollars into companies screened for having good ethical criteria.
Pernod executive Vanessa Wright said:
Pernod, together with peers such as Diageo, Danone and Nestlé, is looking to respond to new demands from consumers choosing healthier diets and lifestyles seen as helping the environment and communities.
Ms Wright, who is group vice-president for sustainability and responsibility at Pernod, said the new ethical pledges formed part of Pernod’s broader plan to lift profits and sales. New York hedge fund Elliott Management wants Pernod to improve profit margins and corporate governance.
Pernod, which also makes Jameson whiskey and Absolut vodka, has already vowed to raise operating margins by 50-60 basis points each year between now and 2021, provided it can deliver annual organic sales growth of 4%-7%. Pernod is also promising to close the gender pay gap across its business by 2022.
In the last eight years, some 95% of Pernod’s vineyards have been awarded formal certificates to show they do not harm the environment.
“A lot of these actions will create long-term value. Value will also come from consumers being more attracted to our brands and we will also save some costs,” said Ms Wright.
By 2030, Pernod is committing to halve its carbon footprint levels from 2.84m tonnes per year at present.
It is also hoping to replenish 100% of the water consumption at production sites, and will ban promotional items made from single-use plastic by 2025, among other gestures.