TAX
TRANSPARENCY
Having a broad impact on Romanian economy and society, and being an important actor in the market development, our disbursements to Romanian budget include: excise duties, profit tax or income taxes relating to our workforce. Our tax policies are governed by a set of specific guidelines and procedures.
They detail the elements of strategy, policy and operations related to taxation, and include management procedures. It is mandatory for Ursus Breweries and all our employees to comply with these procedures.
Our tax strategy sets the grounds for managing the risks derived from company business operations in a healthy manner, meeting in full all requirements (including legislative compliance and reporting obligations), thoroughly documenting all tax processes, in addition to identifying and implementing the appropriate controls. We fulfil our global tax obligations in full compliance with all local and international tax laws and Organization for Economic Cooperation and Development (OECD) guidelines.
We fully comply with the tax laws in Romania (i.e., the Fiscal Code), and undertake effective planning for the conduct of the business activity.
We operate under a comprehensive Tax Code of Conduct. Its main purpose is to ensure appropriate conduct of tax affairs with regard to tax management and tax transparency, while balancing the interests of our various stakeholders. The approach to tax is embedded in every aspect within the organization through different mechanisms such as: the tax policies (e.g. Excise Manual and Environmental Policy), training and guidance provided to relevant employees on the link between tax strategy, business strategy, and sustainable development.
Also, the company has succession-planning for positions within the organization that are responsible for tax and participates (through its representatives) in tax transparency initiatives or representative associations that seek to develop best practice around disclosures on tax or educate stakeholders on tax-related issues.
The Tax Code of Conduct sets out the fundamental thinking of Ursus Breweries towards the conduct of tax affairs, and its implementation is assured by a set of guidelines and procedures that apply to our company and its employees: Policies, Goals and targets, responsibilities, resources, grievance mechanism (e.g., Whistle-Blowing policy), and also specific forums and projects that address Tax matters.
The Tax Code of Conduct is laid down and managed by the Tax Team, that is supervised by Finance Vice President who is also a member of the company’s Executive Committee. Day-to-day work is assigned to the Senior Tax Manager and in-house tax specialists.
The Senior Tax Manager reports directly to the Finance Vice-President. Advisory and technical tax support is provided as appropriate by major tax and legal companies, and other small firms. The Tax Code of Conduct is constantly reviewed and revised in accordance with either the improvements at the Group level and/or in line with changes in local tax legislation. There are specific Committees and other forums that evaluate the management approach (e.g. Sustainability Task Force).
Also, there is an annual external audit process that ensures the correctness and effectiveness of the management approach with regards to Tax. As mentioned above, we have mechanisms for reporting concerns about unethical or unlawful behavior and potentially affecting the organization’s integrity with regards to tax matters, and are abiding by the principles of the Whistle-blowing policy.
This scheme has been set up to encourage early detection of risks associated with the corporate activities of the Ursus Breweries and prevent risks from turning into serious problems. Where the matter involves a breach or potential breach of the relevant laws and regulations or stipulations of the Ursus Breweries Code of Conduct, and where the matter cannot be resolved satisfactorily by the conventional organizational structure, the whistle-blower is encouraged to approach contacts either inside or outside the company. Members of the Internal Audit & Executive Committee, as well as the Head of Legal Affairs Department of Ursus Breweries are the internal focal points, while an outside attorney serves as the external liaison.
All notifications are thoroughly investigated by Ursus Breweries with the cooperation of relevant parties. If any issue is identified, it is dealt with as appropriate, then the whistle-blower is informed of the outcome.
Ursus Breweries internal reporting system policies guarantee confidentiality and stipulate that no person shall suffer detrimental treatment as a result of submitting a complaint.
We engage regularly with tax authorities and actively seek opportunities for dialogue. We are part of a series of initiatives and members in different organizations (see page 8), and platforms for an open and transparent dialogue with the institutions with attributions in many fields, tax included.
Relevant for this topic is our presence in specific working groups cooperating with Romanian authorities (Parliament, Government, Presidency, County Councils & City Halls/Mayors), industries’ associations (Brewers of Romania, AmCham, Concordia, FIC etc.), other stakeholders (e.g. NGOs, consumers’ groups/associations, key business partners, international organizations’ offices – EU Commission, World Bank etc.), all interested in maintaining or improving the regulatory framework required for our goals related to our license to operate.
In addition to other relevant key performance indicators (such as number of employees or sales volume) that have been included in the section Who we are (page 6), we are presenting additional on tax transparency:
ETHICS AND INTEGRITY
We are diligent and transparent on tax issues, we also understand to appreciate the trust of our stakeholders by fully complying with the national laws and public regulations, company regulations and other voluntary rules of conduct.
We have zero-tolerance to bribery and corruption.
Our transparency framework and substantial information on anti-corruption policies, including the Code of Business Conduct and Ethics, and the Anti-Bribery Policy, which supplements it, are available to all our staff via the internal platform. Our Code of Business Conduct and Ethics derives from Asahi Group Code of Conduct, established in January 2019 as a means of submitting the Group’s philosophy across the entire organization.
The internal transparency framework consists of:
Internal
regulation
The Code of
Business Conduct
Anti-bribery
policy
Gifts and
entertainment policy
Harassment,
intimidation and
victimization policy
Policy on the
Protection and
Processing of Personal Data
Governance rules
for investigations
Whistle-blowing
policy
The internal regulation is based on the provisions of the Labor Code, other legal provisions in force, as well as company policies and procedures, including the company position on issues related to employee rights, discrimination, equal opportunities.
The Code of Conduct covers compliance, ethics and our commitments to partners and stakeholders and is based on several principles: satisfying customers by providing quality products, developing employees and creating a pleasant working environment, contributing to a sustainable society, increasing organizational value and protecting company assets, developing fair relationships with business partners.
The anti-bribery policy is based on the relevant principles set up at group level. Through this policy we aim to prevent employees to be involved in any way in the payment of bribes or kickbacks, whether in the public or commercial sector. Employees must understand and comply with applicable anti-corruption legislation.
We understand that our responsibility regarding ethics and integrity does not discontinue at the company’s border. As such, we elaborated and apply policies that guide our relationships with all suppliers beyond the commercial aspects.
The anti-bribery policy for suppliers applies to all suppliers of Ursus Breweries or its subsidiaries and sets out the minimum standards to which they must adhere at all times. It defines what bribery is and spells out all relevant situations that the supplier should not engage into related to this topic, including the contact details and the steps to be performed in the event of any actual or suspected breach of the policy noticed.
The code of conduct for suppliers also applies to all our suppliers and defines the minimum standards that these organizations are required to adhere to, and which are not negotiable. Respect for human rights and labor standards, and of the freedom of association; prohibition of forced and compulsory labor, including child labor; intolerance of discrimination; promotion of safe and fair labor conditions are some of the aspects covered by this policy. Both these documents are communicated to all suppliers when signing the supplier agreement; the Code of Ethics is also attached to distributors’ contracts.
The gifts and entertainment policy sets boundaries and provides guidance for employees about giving or receiving gifts or form of entertainment to/from third parties connected with the business.
Harassment, intimidation and victimization policy was designed to create and maintain a cooperative, enjoyable and non-harassing work environment. Acts of harassment or serious intimidation will not be allowed, tolerated or forgiven and will be interpreted as serious disciplinary misconduct, and the guilty employee is liable to immediate dismissal.
Personal data processing and protection policy was prepared to ensure compliance with EU data protection regulations, an important component of the company's core values and its commitment towards the rights of customers, suppliers, employees, seconded staff, trainees and internal contractors.
The governance rules for investigations define the responsibilities and duties in relation to the investigation of incidents or allegations involving potential misconduct within Asahi Europe International group companies. It complements the Group's Governance Policies and other compliance-related policies.
These are supported by the whistle-blowing policy, which is constantly communicated within the organization, giving all employees the opportunity to make confidential disclosures on suspected impropriety or wrongdoing. The contact information our employees can use is displayed in all our locations.
We are committed to respecting internationally recognized human rights as defined by the International Bill of Human Rights and the principles laid out in the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work and we expect our suppliers to embrace these international standards as well.
We also encourage them to promote these standards and principles in their own supply chains. Regarding the implementation of our transparency framework and related documents within the organization, the complete package of governance policies is communicated at all levels on an annual basis, including through specific training sessions.
Employees were required to sign a declaration of compliance with company's ethics and integrity policies in 2021, as well. This annual process implies the acknowledgment by all employees of the Code of Ethics, the Anti-Bribery Policy, the Gifts and Entertainment Policy, and the declaration of full compliance with all of these.
These declarations provide the management with an overview regarding the degree of knowledge and understanding about the ethics requirements at the company level.
In 2022, the Asahi Group Code of Conduct, Ursus Breweries Code of Business Conduct and Ethics, Anti-Bribery and Anti-Corruption Policy, Internal Regulation were communicated to employees. Employees were then required to complete the online course ‘Business Conduct and Ethics’ and obtain a passing score.
As of 2022, employees with email access declare conflicts of interest in the online HR management system HOPS and the manager is informed of their existence/non-existence. Employees without email access make a statement on a physical form, which the local HR administrator then enters into the centralized HOPS system.
An additional layer for ensuring the adherence to these policies is ensured by the local Executive Committee that states the compliance with the ethics policies in the Letter of Representation, document signed twice a year.
These statements refer to awareness programs within the organization and provide for the disclosure of any ethics related incidents, investigation thereof and measures taken with respect to such investigations.
QUALITY OF INGREDIENTS
& TRACEABILITY
Ingredients and their quality are essential for our business.
When we look into this topic, we also take into account how the yields or the quality of raw materials could be affected by climate change. Further on we would introduce you into our policies that govern the production and the product safety.
From the reception of raw materials and their processing to packaging the finished product, all activities are aligned with our sustainability performance and meet the changing needs of all parties involved. Our management teams are in charge with ensuring all material and human resources required to develop, maintain and improve the Quality Management System (QMS) implemented by Ursus Breweries, based on the ISO9001:2015 and FSSC - Food Safety System Certification scheme (ISO 22000:2018, ISO/TS 22002-1, FSSC additional requirements).
Quality Management Systems (QMS) are aligned with Occupational Health and Safety, Environment and Energy Management Systems. Some of the procedures and measures aimed at translating the QMS into practice are:
detailed description of the processes and key responsibilities
communicating our quality and food safety policy to all our employees
objective evaluation of the QMS
constant training, education and performance evaluation of our employees on matters related to quality management and food safety
ensuring full compliance with the legislation and regulations related to quality and food safety, applicable in Romania and the EU
a transparent and constructive approach in our interactions with suppliers, authorities and other stakeholders
building a partnership with our suppliers
ensuring a natural flow in terms of product quality and safety, throughout the food chain to consumers
We are committed to producing high-quality products, safe for consumption. To prove our commitment, our beers comply with the Codex Alimentarius Commission’s recommended code of practice of the Good Manufacturing Practice (GMP) and the Hazard Analysis and the Critical Control Point (HACCP) aligned with ISO22000:2018 and the additional FSSC requirements.
All our employees play a fundamental role in achieving our commitments by internalizing the food safety program.
The quality and food safety management systems are evaluated on yearly basis by an external ISO certification body; no nonconformities were raised over the reporting period.
The management systems are also audited internally every year, according to our internal audit procedure.
In addition, our breweries are audited on regular basis through the Asahi’s group production risk management audit. The performance is monitored on quarterly basis, while action plans are in place to ensure the full compliance.
Consumer health and safety impact assessment 2021-2022
of our products are assessed for safety and quality risks, to meet the requirements of ISO 9001:2015, ISO 22000:2018, ISO TS 22002-1 and FSSC additional requirements.
Traceability is another important part of our quality and food safety management system, giving us the possibility of a fast feedback in case of any quality complaint or quality accident (a recall caused by a food safety problem of the product).
Our goal is to maintain the performance of having zero nonconformities related to traceability raised by external auditors or by authorities.
To meet this goal, all our suppliers are technically accredited, according to our group standard methodology, which includes the assessment of aspects related to process, quality and food safety management, raw materials purchasing and storage, finished goods delivery.
We expect and require our suppliers to abide by the same strict rules that we apply, so that the raw materials and other materials we purchase from them meet our quality standards.
In order to ensure that our products preserve the same level of quality and safety with which they were delivered from the breweries, our distributors are informed and required to apply the necessary rules and applicable law requirements in terms of beer storage and delivery.
Regular audits are performed by the technical team in order to assess the compliance. Furthermore, the customers (bars, restaurants, key accounts) are trained on how to store and serve the beer in order to preserve its quality, and are audited to assess the compliance. We are ready to respond to any quality issue whenever one may occur. In case of an incident, we take immediate measures to identify the cause and quickly and properly solve it.
Within our breweries, we share the expertise gained from such actions, and leverage it to prevent the recurrence or lead towards continuing quality improvement. All necessary financial resources are ensured by company management through annual budgeting exercises. The competent human resources are ensured by running complex training and awareness programs developed by the company.
As a company with a strong focus on customer needs, our grievance mechanism is developed in such a manner to provide our clients fast and professional feedbacks to their requirements. As strong evidence of our customer orientation, part of our factories' vision - ‘9000’ for 2030 (9000 = 9 million Hl packaged, 0 accidents at work, 0 quality problems, 0 CO2 emissions) - is to reduce quality complaints to zero.
MARKET PRESENCE,
PRODUCT PORTFOLIO,
RESEARCH AND INNOVATION
According to the 2023 annual report of the Romanian Brewers Association, our country is the 8th largest market for beer production in Europe. Of all the beverages and food products produced in Romania, beer generates the highest added value in the economy, i.e. € 1,1 billion annually.
Although the volume of the beer market in Romania has decreased by 5% in 2022, the beer sector continues to be an important contributor to the Romanian economy. The beer industry directly and indirectly provides more than 61,000 jobs throughout the country and covers about 97% of domestic beer consumption exclusively from local production.. Rising inflation and costs for energy and fuel, raw materials or packaging have led to a cumulative increase of more than 60% of costs for beer production.
We are the largest beer producer in Romania, therefore our role on this market and impacts are significant.
Despite the unfavorable context and tax pressure, we continued to follow our commitments to sustainable development by reducing negative environmental impacts, responsible management of social issues and economic development. Our considerable number of employees has a direct impact on the local communities surrounding our breweries.
Our employees and workers are not compensated based on wages subject to minimum wage rules. As benefits, some of the services or activities are run through third parties: private sector medical services, wellbeing workshops, holiday vouchers, medical investigations refunds. Other employee benefits include access to company products, life insurance with a medical component, medical discounts (e.g. optical), support in case of serious/incurable illness.
We monitor market evolution in the salary and benefits area to ensure that we offer appropriate packages to our employees. See People chapter for other aspects related to our human resources.
Proportion of executive managers employed from local community 2021-2022
percentage of executive managers (Hay Grade 19+) in significant locations of operation (breweries, warehouses, headquarters, sales field representatives) that are hired from the local community (Romania)*
*employees not allocated to the Romanian pay system excluded
PORTFOLIO
Ursus Breweries has a broad portfolio of brands, including a wide range of beer types for different consumer segments and tastes, as well as for different drinking occasions, from super-premium to economy brands. Ursus Breweries uses innovation to continually improve and strengthen its offers to respond quickly to market demand and preferences. Innovations in recent years have been launched in response to the high interest of Romanian consumers for new beer varieties and new ways to experience beer in retail locations.
For example, in 2022, as part of the company's sustainability strategy, but also to meet consumer demand, we added a new non-alcoholic beer to our portfolio, Peroni Nastro Azzurro 0.0% alcohol, thus taking another step towards the goal that 20% of sales to be of non-alcoholic products by 2030 .
The year 2022 also marked the launch of Kozel beer in Romania, with Kozel Premium and Kozel Dark. The innovation in Kozel beers also comes from the unique rituals of serving draft beer, one of these rituals, for example, is even combining the two beers in equal proportions in the same pint, giving consumers a different serving experience.
We are keen to deliver the highest quality products to our consumers with deep care for the environment. Policies and procedures within Ursus Breweries departments ensure quality and focus on caring for consumers, even relying on their opinions (either from market research or direct interaction). The high quality of our beers is primarily reflected by consumer preferences, as all three traditional Romanian brands - URSUS, Timișoreana and Ciucaș - are leaders in their segments.
See chapters Environment, People and Responsibility for more information.
RESEARCH & INNOVATION
Research and innovation are critical to creating new value and delivering best experiences to our consumers. At the Asahi Group, this topic is based on the following pillars: product development (where we use unique technologies), fundamental technologies (where we look into quality assurance, the development of production technologies or delivering high quality and safer products), and search for new ingredients (where we look into maximizing the potential of functional microorganisms and expand their uses).
In Romania, we have a New Product Development (NPD) strategy and an annual project agenda aimed at strengthening our product portfolio and ensuring that it will meet future market conditions in terms of consumer trends, competitiveness and resource shortages (material and human).
The strategy integrates our Legacy 2030 agenda from a multi-dimensional perspective: consumers (preferences for diversity and wellbeing) and product impact on the environment (use of resources and waste generated).
HERE'S HOW WE DO IT
qualitative products means products fit to the market, ensuring legal requirements and consumers safety, with a zero-complaint target (no waste, resources efficiently reach the target market)
special focus on high value/ premium products (efficient use of resources, focusing rather on quality, not quantity)
developing the non-alcoholic beverages portfolio and share (offering both diversity and responsible consumption)
reducing sugars in alcohol-free flavors products with keeping good savory balance
attention to environment impact (efficient use of resources resulting in less waste no matter the types of beer we produce, process design and packaging materials).
Each new recipe/product is jointly developed by our product development and brewing & packaging teams, with the support of our specialists in legal, tax and corporate affairs. The due diligence assessment is done along product development for the ingredients, production process, packaging materials, and also for product concept, labelling, claims and visuals (in terms of legal compliance, adherence to internal procedures and corporative responsibility).
As the ultimate goal is the consumer safety, we invest significant resources in ensuring that product innovations are in line with global safety and quality standards while they also follow the consumption trends. Product sustainability (minimum volumes, production cost, impact on existing process and products, impact in brewery efficiency and capacity) is an essential part of the prior multi-functional due diligence assessments performed for each product.
Apart of the commercial benefits that a new product brings to our product portfolio, it also impacts the existing operations. All the below are considered when assessing and deciding on the implementation of any new product:
production lines need to integrate the new products
equipment/ technology installed in the breweries
usage and availability of ingredients (water, malt, hops etc)
utilities (energy - electrical, cooling, heat; water)
waste generated (organic, inorganic) and effluent treatment needs
availability and expertise of human resources in order to integrate the new product
Since we produce alcoholic beverages, we need special licenses to operate. These are related to taxes (excise duties),quality (of ingredients, final product, process) and consumer impact (safety).
The new product development strategy includes several evaluation and approval stages, as well as post-launch assessments. As a driver to continuous improvement, the lessons-learned are integrated into the strategy and taken into consideration for future projects.
Lastly, working tools are in place for quick and consistent evaluation criteria and for supporting objective and factual decision making. To ensure our efforts can be applied to business and to deliver high-quality and safe products to our customers, we constantly develop the technical expertise of our teams, which is further combined with the experience already existing in the Group or among the suppliers.
At the same time, our research and innovation also considers the environmental impact of packaging. Over the past two years we have managed to reduce the weight of our packaging and the quantities of raw materials used, thereby reducing their CO2 footprint. We also use recycled content materials for some packaging.
More details on these achievements can be found in Environment chapter, under Circular economy and packaging.
RESPECT FOR HUMAN RIGHTS
& SOCIO-ECONOMIC
COMPLIANCE OF SUPPLIERS
Supply-chains around the world have gained importance in the last decades, mainly due to the globalization, including the extension of trade and labor collaborations across continents.
Their growing dimensions influence the significance of the effects resulted from their operations, be them positive or negative.
Although the expansion of international supply-chains contributes to macroeconomic benefits, due to their complexity, certain aspects of compliance can be lost sight of, including violations of human rights and labor law. Thus, attention needs to be paid to how these supply chains work and what are their impacts not only economically, but also socially (i.e. the people involved in or affected by these impacts) and environmentally.
The emphasis we put regarding our responsibility on the impacts we directly cause or contribute to within our supply chain is based on the policy framework elaborated at the Group level described earlier in the Ethics and Integrity section.
Regarding the respect for human rights in the supply chain, we guide our actions observing the Asahi Group Human Rights Principles in all our operations. These principles apply to all officers and employees of each Asahi Group company. It also applies to our suppliers.
As of 2017, Asahi Europe & International (AEI) issues an annual Anti-Slavery and Anti-Human Trafficking Statement which spells out the commitments, the policy framework and the roles and responsibilities that derive from these commitments and policies. It also reflects on the progress registered regarding the commitment to human rights, including labor rights and the fight against modern slavery and human trafficking. The last statement was issued in 2021.
Point 6 of the group’s code of conduct focuses on fostering fair and healthy relationships with the business partners. This implies the overall commitments towards:
1. healthy business relations by making customer and consumer safety and trust a top priority;
2. fair business relations by complying with laws and regulations on fair competition;
3. banning and preventing inappropriate gifts and entertainment;
4. avoiding relations with organized crime elements.
Ursus Breweries strives for building strong business relationships with responsible suppliers that share the same business principles and commitments towards sustainability, including respect for human and labor rights.
Being compliant with our Ethic Policy and our Code of Conduct - the supplier version - is critical for qualifying as our supplier. Our goal is to get 100 percent acceptance of these requirements from suppliers. Verifications can be done by our audit department or a third party if we suspect a violation. Our contracts with suppliers give us the right to conduct audits to check compliance.
Prior to initiating any collaboration with a potential supplier, we provide our policies for their information and action. Upon signing the contract, the new supplier is informed about our Ethics Policy and the Supplier Code of Conduct requirements, which become part of the contract they have to comply with. Moreover, subsequent purchase orders and terms & conditions for purchase also make reference to the Ethics Policy.
New suppliers are not screened using social criteria but once they are selected they are all contractually bound to accept our terms of business conduct and ethics.
SUSTAINABLE SOURCING
Our target is that, by 2030, our beers will be produced only with ingredients from sustainable agriculture. Global climate change can lead to changes in average temperatures, precipitation patterns, humidity levels and frequency of extreme weather events.
These changes can influence agricultural production and have significant effects on crops. That's why we work closely with growers and partners to encourage the development and implementation of sustainable farming practices.
The Czech Republic is one of the world's leading hop producers and one of the countries where Asahi Europe & International operates. It is also one of the countries from which we import hops for beers produced in Romania. Over the last ten years, hop production has been very unstable due to changing weather and insufficient water. Therefore, in order to support hop suppliers the project ‘For HOPS‘ was launched.
Using state-of-the-art technology, hop growers are helped to map crop conditions using weather stations and soil sensors.
Based on the information gained over the past two years, a pilot application will be developed in 2023 which will provide growers with detailed information for optimal plant cultivation, including when, where and how much to irrigate hop crops so that plants thrive and growers don't waste water.
Together with suppliers, we want to ensure that safety, quality and a long-term focus with respect to the environment are values that our partnership is built upon.
We also encourage and support our suppliers to embed sustainability in their operations. Some of the actions carry out are related to the type of products we buy from them. For example, in 2021 we purchased 50% renewable electricity and, following negotiations with suppliers, we continued with the purchase of 100% green electricity in 2022. We have also started purchasing commercial refrigerators with a higher energy efficiency class, reducing the impact of carbon dioxide emissions.
More details on these initiatives in Environment chapter.
