Amazing. You know, these pilot projects
are so important to get some early data on. Is this working? Is this the direction we want
to go on a bigger scale? What kind of, what kind of results
are you looking for in, let's say, these several pilot projects that you mentioned? What do you want to see at the end of that in order to take the next step, which might be a a bigger rollout? Yeah, that's a great question for us. So it's regenerative
agricultural practices which obviously have
a huge impac
t on your soil health and your water
on your biodiversity. So we'll be measuring
all of those areas but probably our North Star
greenhouse gas emissions because our raw materials
are a substantial contributor to our greenhouse gas emissions. So what we might want to reduce water, improve water quality really
as I mentioned kind of that end goal is reducing
the greenhouse gas emissions on farm to help us reduce our overall greenhouse gas emissions. OK. So basically pilot project and then you know
if this is successful and the crop yields are looking good then the you know
the fertilizer that's gone in and then you can measure the impact on the on the emissions. Absolutely. And that's just one example. We look at cover crops,
we look at low till and no till. We look at different types of, in our agave we're sequestering, we're planting a native vegetation in
between our agave crops which helps sequester
carbon in the soil. And so a variety of initiatives
depending upon the crop, dependin
g upon the farmers, depending upon the funding and and how
we can continue to move forward. We got to start small
with a few things, test them and then we'll scale them up. Whether it's 10 growers
and 15 growers last year, you know our goal is then obviously 30 growers and 50 growers till we get
to our entire agricultural supply chain. It's so interesting because this, this is you were saying before this
is really changing the way of doing business and actually it goes
from purchasing a commodit
y, let's say wheat or barley to amend
an engineering system that you have to roll out. Globally. And you have to basically manage
that entire system, which then of course changes the way that you do business. It does, it does. And you know the most
important thing though is protecting the farmer's livelihoods. Most of these growers,
if you take in for example, corn, they have been growing corn for us in the Kentucky and Indiana region
for generations. So it's about building that partnership, bui
lding those relationships,
our teams, you know, it's a first name basis,
it's a family. So how do you protect it
so that they can, you know, obviously keep the farm
in generations to pass on to their family? And certainly how do we ensure that we have really great quality corn
for us for a long term as well? Great. Maybe we can touch
on transport a little bit. I'm curious how you view
the transition in transport, which is of course a contributor to greenhouse gas emissions,
especially in scope 3
. Right now we've got the vast
majority of trucks. I believe in Europe it's 98%
are diesel trucks and. A transition towards electric
and renewable diesel, how do you view that that change? How fast do you imagine that happening and how does that fit
into your supply chain? Also outside of road. transport, maybe maybe sea transport
and other things, how do you view that transition and transport? You know, that's super interesting
and earlier you mentioned the word easy and I was thinking, well, m
aybe easy for you. Not necessarily as easy for us. So right now just whether
it's transportation, logistics or the other areas
that we were discussing, the technology is evolving and the innovation is evolving. So you know when you
look at sea transport, some of the new things
that are coming in new going back to old- sail, How do you use sail to get
from France to the United States in a way that you might not
have ever foreseen or certainly maybe not even last year, But you know, what does
that
future look like? So really staying abreast of that, working really closely with our suppliers, can't emphasize it enough, whether it's
a packaging supplier, a transortation logistics supplier
or a farmer. It's that building that collaboration, building that thought partnership, leaning in, maybe investing together in technology or supporting each other
in innovation and technology and then doing business with suppliers that you want to be part
of your supply chain. If they're not committed
to
greenhouse gas emission reductions, they're not committed to the same, you know,
vision that we have. They'll probably move out
of our supply chain in the long term. Do you think that suppliers
who not not just for Beam Suntory, but in general that are? Really ahead of the curve
or behind the curve. Do you think that that will differentiate the business success of those suppliers in the future? I think so. I mean that you know
that's what we're thinking as our own company and looking at our stak
eholders. So if you're supplier
doing business with companies that are thinking that way, think it will definitely impact your business, but it might not just be you know
the the business aspect, the regulatory landscape
has changed more so than I've ever seen in you know the many years that I've been involved
in sustainability what we're seeing coming out of the EU. Or the Corporate Sustainability
Reporting Directive. If you're a company,
you might be taking step back saying, well, we're in EU
and it's not going to impact us, it is going to impact you if you are doing business in the EU. And so getting ready
for that regulatory change, actually disclosing your environmental and your social and governance factors just like you do your financial reporting, which means assurance. And you know reports
that will be in the public domain that's really going to probably expedite what's happening
just globally. The sheer volume of companies
that will be reporting whether you know the next coup
le years or you know up through 2029
is astronomical. It's going to have a sizeable impact
on how business gets done and allow us to all choose our own suppliers
where we say, look, these are the ones that are doing, everyone's doing their reporting, now,
we have visibility now we have transparency, we can make our choices there. We've got the also the inflation reduction
Act here in the US. And in Germany there's actually
a change to the road tolls for heavy duty vehicles
which is going to sign
ificantly. Increase the cost of running on diesel whereas electric and hydrogen trucks
are exempt through the end of 2025. So you've basically got two years
without road. tolls. Imagine we're going to start to see
even more and more of that also in the US and and other environments as well. I agree with you, we've seen so much regulatory change in such a short period of time. It's it's amazing to see, it's amazing we practically have
a team that their entire, not their entire job
at a good porti
on of their job is just maintaining, watching and monitoring regulatory change because you know the EU carbon tax. That's going to be very interesting
to see the implications from there. And then when you think about it, just taking a step back,
packaging, you know, whether you are the state of Washington
or you are the UK or the EU or Singapore or Canada or you know this,
the the list is endless. It just keeps coming
and it's different in each region and in each state or in each country. So mak
ing sure you can,
you know, monitor, maintain and make those changes
a packaging change takes a while for products
like ours that are, you know, on the shelf
for a long time. But hopefully not too long, but you can have long
term shelf availability. So how do you actually look for the future and be able to keep U
with the regulatory frameworks?
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