47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 43
Strategic Report
Corporate Governance
Accounts
Physical risks
Associated with increased severity of extreme weather events such as cyclones and floods (acute), and associated with changes in precipitation patterns and extreme variability in weather patterns,
rising mean temperatures and rising sea levels (chronic).
Risk Type & Description
Chronic risk
Timeframe
Potential financial impact
Long-term
The risk that long-term climate change impacts the future availability, quality and cost of the natural ingredients required to manufacture our
products, such as sugar, fruit and water.
Strategic response:
We have dedicated Sustainable Sourcing and Water workstreams within our No Time To Waste environmental sustainability programme with ambitious strategies in these areas. By way of illustration of
action taken related to fruit availability, we have developed a network of suppliers who can supply materials from different origins and have set up a programme to approve products from different
geographical sources, such as passion fruit from Vietnam, in addition to our existing supply from Ecuador, thus reducing the risk of supply issues and ultimately protecting availability.
We have developed a raw material origin tracker which allows us to see beyond our direct suppliers and understand specific geographic locations of raw material processors. By reviewing this data we
can better understand the mitigating actions we can take and spread our raw material sourcing across broader geographical areas.
As a core ingredient, we have three approved mango suppliers who source from two distinct districts in India to provide us with diverse sources of the fruit. We are also engaging with suppliers to establish
alternative sources from other countries, such as Bangladesh, to mitigate against poor crop yields.
Engagement has now commenced with the Sustainable Agricultural Initiative to support us in working with our suppliers to help mitigate and manage longer-term climate change impacts.
Our well communicated sugar reduction programme also provides mitigation against some of the risks associated with sugar availability. With a portfolio now less reliant on sugar we have reduced our
exposure to potential longer-term sugar sourcing issues.
Acute risk
Long-term
The risk that an extreme weather event impacts the crop or yield of a natural ingredient used within our products or that an extreme weather
event causes supply chain, transport or customer service disruption – such as a flood at one of our strategic supplier locations, resulting in a
lack of supply for some key materials and loss of sales. The greatest risks to our business operations in terms of extreme weather events are
likely to be severe winter weather affecting our ability to service customers, or an extreme weather event at a key supplier, e.g. flooding.
Severe storms could also affect harvests, transport and/or logistics. Logistical challenges could lead to an immediate, but likely short-term,
impact on sales while any harvest impact could lead to reduced supply and higher raw material prices.
Strategic response:
In addition to broadening our supplier base to mitigate key supplier risk we ensure that we retain appropriate levels of inbound raw material stock and outbound finished stocks. We also discuss with suppliers
their disaster mitigation recovery plans.
We have a fully researched suite of contingency recipes using alternative ingredients where appropriate should short-term weather events impact raw material availability.
Workstreams have been established at our Milton Keynes site to improve water usage efficiency and explore production changes to pre-empt water restrictions.
Potential financial impact movement:
Moderate
Major
Critical
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