Carbonated Soft Drinks Industry ESG Thematic Report, 2023

Environmental, Social, and Governance (ESG) in Carbonated Soft Drinks Industry

The term "environment, social and governance" (ESG) describes an organization's business interests, which are mainly sustainable and ethical in nature. Capital markets use ESG to evaluate organizations and determine future performance. Although ethics, sustainability, and corporate governance are not considered financial performance indicators, they play an important role in ensuring accountability and managing a corporation's impact.

In the context of ESG, carbonated soft drinks affect both social and environmental health. The carbon dioxide in carbonated beverages is the same as the CO2 released from tailpipes and power plants. This CO₂ creates bubbles in soda. To keep power plants from adding CO2 to the atmosphere, it is collected from their exhaust, purified, and sold to the nation's bottlers and soft drink fountains. However, the CO2 always escapes when you pop the tab.

In the soft drinks industry, sustainability is a key issue. Innovations in packaging, the efficient use of transport, and energy and water savings are some of the ways they try to minimize their environmental footprint.

ESG Trends

The main ingredients in soft drinks are carbonated water and sugar or syrup. Despite supporting some fluid and energy intake, these drinks mainly provide sweetening agents to our bodies, most of which are linked to high obesity rates, diabetes, type 2 diabetes, and cardiovascular disease. In terms of sustainability, this can be directly linked to health impacts.  According to the United Nations’ Sustainable Development Goals (UNSDG), this directly holds companies within the carbonated soft drinks sector to ensure accountability to UN-SDG 3 – Good health and well-being for all.

In addition to being unhealthful, soft drinks are not only damaging the health but also dangerous to the environment. As with any highly chemically processed food, the production process uses a great deal of energy. Despite this, the most significant impact is due to their raw ingredient production. The World Wildlife Fund (WWF) states that sugar has negatively affected the environment as much as any agricultural commodity.

The carbon footprint of soft drinks varies by country (because of different recycling systems) as well as the number of uses a container can undergo. Plastic, glass, or aluminum cans are usually used for packaging soft drinks. The lowest footprint is found in refillable glass bottles, followed by aluminum cans, and recycled PET.

Carbonated soft drinks sector can adopt various sustainable approaches for better environment. It is well known that water is used not only as the primary ingredient in all soft drinks but is also an integral part of their production process. Water scarcity is at the forefront of sustainability concerns within the beverage industry, and manufacturers need to play a crucial role in ensuring that water is managed effectively as a finite resource. A transparent supply chain is also essential to ensuring a sustainable future for the beverage industry. It is important to source ingredients in a fair and ethical manner, as well as to treat the workforce ethically, so that this does not negatively affect the environment. This holds companies operating within the sector to ensure their operations support UN-SDG 12 – responsible production and consumption.

There are vast amounts of energy and fossil fuels consumed by the beverage industry every year not only in the production of soft drinks, but also in packaging, refrigeration, and transportation. The packaging of these products should be made from thinner plastic, which reduces landfill waste and pollution.

As soft drinks have no nutritional benefits and a large environmental footprint, it's a no-brainer to maintain its consumption. But you can also enjoy them mindfully, as a treat, and prioritize healthier and more sustainable hydration options. It is crucial for food and beverage companies to implement a sustainability strategy to keep business continuity and to remain competitive. This will allow them to operate more efficiently and to reduce their exposure to risks associated with climate change.

Growth of the Carbonated Soft Drinks Market 

In 2020, the market for carbonated soft drinks was valued at USD 221.6 billion and is expected to expand at a compound annual growth rate (CAGR) of 4.7% between 2021 and 2028. As consumers today place a high value on convenience, a large percentage of everyday purchases include grab-and-go products rather than bulk buy items. As a result, shelf-stable innovations and environmentally friendly packaging have been developed, using clean, renewable materials and fewer chemicals and preservatives. Products are constantly being improved and innovative to meet the needs of a wide range of consumers. As consumers become more aware of their health, companies are increasingly incorporating natural, low-calorie, and low-sugar ingredients into their products, including stevia sweeteners instead of synthetic sweeteners.

Key Companies in this theme

    • COCA-COLA FEMSA

    • Danone

    • JONES SODA CO.

    • Keurig Dr Pepper Inc.

    • Monster Energy Company

    • National Beverage Corp.

Scope of the Carbonated Soft Drinks Industry ESG Thematic Report: 

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits of the Carbonated Soft Drinks Industry ESG Thematic Report:

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the carbonated soft drinks market globally

    • Key insights into Infrastructure developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the carbonated soft drinks industry

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment