Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate change
• Circular economy

Environmental Achievements

• All Group venues committed to local recycling policies, with less than 10% of waste going to landfill.
• Revised packaging introduced in 2021 significantly reduced protective and unrecyclable plastic.
• All shipping packaging is 100% recyclable and uses biodegradable components.
• Primary glass supplier improved recycled material content in glass used to 65% in 2020, aiming for 69% by 2025.
• All decoration on glass bottles is 100% recyclable.
• Masterton Bond facility significantly reduced road miles in manufacturing and supply.

Social Achievements

• Employee engagement index score of 81.
• Annual staff “Spirited Awards” recognising excellence in core values.
• Continued development of the Group’s Environmental, Social & Governance (ESG) approach.
• Attendance at industry ESG Forums and interaction with ESG experts.

Governance Achievements

• Continued pursuit of exemplary standards of corporate governance.
• Robust system to monitor and review trademarks across multiple jurisdictions.
• Work with the Scotch Whisky Association to protect Scotch whisky brands internationally.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions (bottling, storage, distribution).
• Protecting intellectual property rights in various jurisdictions.
• Maintaining brand reputation through franchises and partner bars.
• Uncertainty and unpredictability caused by Brexit.
• Changes in consumer preferences.
• General economic conditions and consumer spending.
• Seasonality and temperature changes affecting sales.
• Climate change affecting spirit production.
• Retaining and replacing key personnel.
• Data security breaches and IT system failures.
• Risks outside the Group’s control (labor unrest, civil disorder, etc.).
• Intense competition in the alcoholic beverage industry.
• Expansion into new markets.
• Foreign currency exchange rate risk.

Mitigation Strategies

• Multiple bottlers and warehousing arrangements.
• In-house supply chain services at Masterton Bond.
• Robust system to monitor and review trademarks.
• Work with the Scotch Whisky Association.
• Stringent quality assurance measures.
• Market research before new brand/product launches.
• Alternate procedures for EU product delivery.
• Monitoring franchises and partner bars.
• Review of third-party relationships.
• Regular review of regulatory frameworks.
• Diversification into other spirits (J.G. Thomson).
• Diversification across jurisdictions.
• Operations in different export markets.
• Succession plans for key personnel.
• IT strategy with third-party providers and backup systems.
• Global diversification.
• Market research before new market launches.
• Forward contracts to hedge against foreign currency risk.

Supply Chain Management

Responsible Procurement

• Strong relationships with distilleries and the whisky industry.
• Regular contact with suppliers (distilleries, bottlers, warehouse keepers).

Climate-Related Risks & Opportunities

Physical Risks

• Extreme hot/cold temperatures affecting consumer preferences.

Transition Risks

• Changes in climate affecting spirit production.

Reporting Standards

Frameworks Used: Scotch Whisky Association’s Sustainability Strategy

Sustainable Products & Innovation

• Revised packaging (reduced plastic).

Awards & Recognition

• Almost 300 awards for outstanding whiskies since 2019.

Environmental Metrics

ESG Focus Areas

• climate change
• circular economy

Environmental Achievements

• Reduced protective and unrecyclable plastic packaging
• Sourcing more environmentally friendly packaging from local suppliers, reducing waste and carbon miles
• Improved logistics and distribution across Europe, reducing road miles
• Increased recycled glass content in bottles to 67.6% in 2021 (aiming for 70% by 2025)

Social Achievements

• Launched Membership & Bottle pack with sustainable UK-produced packaging
• Launched Drop & Dram subscription service
• Launched SMWS app
• Refurbishment of The Vaults member room in Leith (£0.5 million investment)
• Successful Guinness World Record for largest online tasting

Governance Achievements

• Appointment of Andrew Dane as CEO and Billy McCarter as CFO
• Appointment of a new Nominated Adviser, Liberum
• Review of strategic direction for the next 5-10 years
• Move from franchise to joint venture in Taiwan
• Bringing fulfilment services in-house to Masterton Bond
• Renovation of The Vaults
• Securing revised credit facilities with Ferovinum

Climate Goals & Targets

Environmental Challenges

• Challenging macroeconomic conditions in China (consumer spending significantly impacted)
• Below-expectation results in some markets (China)
• Slower than forecast sales for 50th Anniversary Cask Club
• Economic conditions and high inflation in Australia impacting consumer spending
• Volume declines in the USA due to de-stocking in the first half of the year

Mitigation Strategies

• Revenue diversification (cask sales, Membership & Bottle, Drop & Dram, Taiwan JV, South Korea franchise)
• Cost base reduction (H2 cost base 16% lower than H1)
• Focus on profitable growth and margin improvement
• Disciplined investment programme
• Seeking partnerships in major markets
• Relocation to new Edinburgh HQ to improve employee value proposition

Supply Chain Management

Responsible Procurement

• Ensuring all aspects of the supply chain are assessed for sustainability, efficiency, and cost

Climate-Related Risks & Opportunities

Physical Risks

• Disruption of infrastructure due to adverse climate change

Reporting Standards

Frameworks Used: The Scotch Whisky Association’s Sustainability Strategy

Sustainable Products & Innovation

• Membership & Bottle pack
• Drop & Dram subscription service
• SMWS app

Awards & Recognition

• 297 awards for SMWS bottlings since 2018