Grappling with growth: How CCEP kept to climate science as it expanded into the Philippines

CCEP commits €300 million to Philippine expansion despite climate pressures

Coca-Cola Europacific Partners has announced a €300 million investment to expand manufacturing in the Philippines. The move comes as the country faces mounting pressure to reduce emissions while managing rapid economic growth.

The investment marks a significant commitment to Southeast Asian markets. However, it also places CCEP operations in a region where emissions are projected to rise sharply without stronger policy intervention.

For UK businesses with Asian supply chains or expansion plans, the announcement highlights growing tensions between growth strategies and climate commitments. These tensions are particularly acute in emerging markets where infrastructure and regulatory frameworks differ substantially from European standards.

The Philippines presents both opportunity and challenge for companies with science-based targets. Understanding how multinationals navigate these complexities offers useful insight for smaller businesses managing their own international operations and Scope 3 emissions.

Philippine climate context shapes investment decisions

The Philippines currently projects emissions will reach 84% above 2010 levels by 2030 under existing policies. This trajectory significantly exceeds the reductions needed to align with Paris Agreement goals.

The country has increasingly turned to fossil gas as what officials describe as a transitional fuel. This approach aims to support economic development while theoretically reducing reliance on coal. Nevertheless, the strategy locks in carbon-intensive infrastructure for decades.

Manufacturing expansion in this environment requires careful planning. Companies must balance immediate operational needs against medium-term climate commitments. This becomes particularly complex when group-wide targets apply across geographies with vastly different emissions profiles.

For businesses evaluating similar expansion decisions, the regulatory landscape matters enormously. The Philippines has committed to reducing emissions by 75% below business-as-usual levels by 2030, conditional on international support. However, current policies fall well short of delivering this ambition.

This gap between commitment and implementation creates uncertainty. Companies cannot assume regulatory requirements will tighten on predictable timelines. Therefore, those with their own science-based targets must build in safeguards regardless of local policy development.

Large-scale investments require long-term emissions planning

A €300 million manufacturing investment involves substantial built infrastructure. Production facilities typically operate for 20 to 30 years. Consequently, decisions made today determine emissions profiles well into the 2040s.

CCEP has committed to science-based climate targets. These require absolute emissions reductions across Scope 1, 2, and 3 categories. Meeting these targets while expanding in higher-emissions regions demands careful strategy.

Several factors influence whether expansion aligns with climate commitments. Energy sources for new facilities prove critical. The Philippines’ electricity grid remains heavily dependent on fossil fuels. Therefore, on-site renewable generation or power purchase agreements become necessary to achieve low-carbon operations.

Water usage and process efficiency also matter significantly. Beverage manufacturing requires substantial water resources. In regions facing climate-related water stress, efficiency improvements and circular water systems reduce both environmental impact and operational risk.

Transport and logistics create additional challenges. Distribution networks in island nations like the Philippines involve longer distances and more complex routing than compact European markets. This increases transport emissions within Scope 3 calculations.

Packaging represents another major consideration. While not directly tied to manufacturing location, expansion typically involves establishing local supply chains for bottles, cans, and secondary packaging. The emissions intensity of these suppliers affects overall footprint.

UK businesses face similar challenges in international operations

Many UK SMEs operate international supply chains or serve overseas markets. The challenges CCEP faces in the Philippines echo concerns across sectors and scales.

Businesses with PPN 06/21 commitments must report Scope 3 emissions. For companies sourcing from or selling into emerging markets, these calculations become complex. Different regions have different grid intensities, transport infrastructures, and supplier capabilities.

Understanding your full value chain becomes essential. You need visibility into where emissions arise and which interventions offer genuine reductions rather than simply shifting impacts elsewhere.

Several practical questions emerge for businesses managing international footprints. First, how do you ensure suppliers meet your emissions requirements when local standards differ? This often requires direct engagement, capacity building, and sometimes financial support to help suppliers improve their own performance.

Second, how do you account for grid emissions in locations where renewable energy access remains limited? Options include on-site generation, virtual power purchase agreements, or facility-level renewable procurement. Each approach has different costs, risks, and accounting implications.

Third, how do you build resilience into supply chains facing increasing climate impacts? The Philippines experiences regular typhoons and other extreme weather events. These disrupt operations, damage infrastructure, and create supply chain volatility. Climate adaptation becomes a commercial necessity, not just an environmental consideration.

Companies expanding into new markets must also consider reputational factors. Stakeholder expectations increasingly extend beyond direct operations. How you manage environmental and social impacts in all locations affects brand perception, investor confidence, and customer loyalty.

Manufacturing expansion in emerging markets involves specific risks

Infrastructure reliability varies significantly across regions. Power supply interruptions, water scarcity, and transport disruptions all affect production continuity. These operational challenges intersect with climate considerations in important ways.

For example, unreliable grid power often leads companies to install diesel backup generators. This increases emissions and creates dependency on fossil fuels. Better approaches involve investing in on-site renewable generation with battery storage. However, this requires higher upfront capital.

Water availability presents growing concerns. The Philippines faces increasing water stress in some regions due to changing rainfall patterns and growing demand. Manufacturing facilities need secure water access for decades. Therefore, investment decisions must incorporate climate projections, not just historical availability.

Regulatory compliance also requires attention. Environmental standards and enforcement vary across countries. Meeting only local minimum requirements may satisfy legal obligations but can create problems elsewhere. Parent companies with global commitments need consistent standards across all operations.

Supply chain complexity increases with geographic spread. Longer distances between suppliers, manufacturers, and customers create more emission sources to track and manage. This affects both carbon accounting accuracy and reduction opportunity identification.

Key considerations for businesses expanding internationally

Several factors determine whether international expansion aligns with climate commitments. The following points summarize critical considerations based on the CCEP announcement and broader market context.

• Grid carbon intensity at proposed locations directly affects Scope 2 emissions and determines whether renewable energy procurement is essential from day one rather than a future improvement.
• Supplier ecosystems in target markets influence Scope 3 emissions, particularly for packaging, ingredients, and logistics services where local sourcing often proves necessary.
• Infrastructure resilience affects both operational continuity and climate adaptation, with extreme weather events creating increasing disruption in climate-vulnerable regions.
• Regulatory trajectories shape long-term compliance costs, though current policy gaps mean companies cannot rely on government action alone to drive necessary reductions.
• Water availability and quality create operational constraints while also affecting local communities, requiring careful management to avoid resource conflicts.
• Transport networks determine distribution emissions, with island geographies and developing infrastructure creating challenges absent in compact, well-connected markets.
• Local environmental standards may differ from home market requirements, creating tension between legal compliance and corporate commitments.

Aligning growth strategies with science-based targets

Companies with science-based targets face a fundamental challenge. These targets require absolute emissions reductions, typically 50% or more by 2030 compared to a baseline year. Achieving this while growing revenue and expanding geographically demands careful planning.

The key lies in decoupling growth from emissions. Revenue can increase while total emissions decrease, but only through deliberate intervention. This requires making different decisions than those that would minimize short-term costs.

Renewable energy procurement becomes non-negotiable. New facilities in emerging markets must access clean power from the outset. Waiting to add renewables later means years of unnecessary emissions that make overall targets harder to achieve.

Energy efficiency also matters enormously. Modern manufacturing equipment uses substantially less energy than older alternatives. The marginal cost difference between standard and high-efficiency equipment pays back quickly through reduced operating costs.

Process optimization reduces emissions while improving productivity. Beverage manufacturing involves heating, cooling, cleaning, and packaging steps. Each process offers efficiency opportunities. Systematic improvement programs identify and capture these savings.

Circular economy approaches cut both emissions and costs. Water recycling, waste heat recovery, and byproduct utilization all contribute. These initiatives require upfront investment but deliver ongoing operational benefits.

Supply chain engagement proves essential for Scope 3 reductions. Working with packaging suppliers, ingredient providers, and logistics partners to reduce their emissions affects your overall footprint. This often involves sharing expertise, providing financial incentives, or changing procurement specifications.

For UK businesses, these principles apply regardless of scale. A small manufacturer expanding into European markets faces the same fundamental questions as a multinational entering Asia. The numbers differ, but the strategic approach remains consistent.

Carbon accounting complexity increases with international operations

Accurate emissions measurement becomes more challenging across multiple countries. Different electricity grids have different carbon intensities. Therefore, identical equipment using identical energy produces different emissions depending on location.

Scope 2 calculations require location-based or market-based approaches. Location-based methods use average grid emissions for each region. Market-based methods reflect specific electricity contracts, including renewable power purchases. Companies typically report both figures.

Scope 3 emissions introduce additional complexity. Supplier data quality varies significantly across regions. European suppliers increasingly provide product-level carbon footprints. Many Asian suppliers cannot yet offer this detail. Companies must therefore use industry averages or estimation methods.

Transport emissions require careful tracking. International shipping, local distribution, and business travel all contribute. Longer supply chains create more emission sources. Each requires its own calculation methodology based on distance, mode, and fuel type.

Our compliance services help businesses establish robust carbon accounting systems. These systems must handle multi-country operations, varied data sources, and changing calculation standards. Getting this foundation right enables meaningful reduction programs.

Practical steps for managing international expansion sustainably

Businesses planning international growth should integrate climate considerations throughout decision-making. This starts before selecting locations and continues through facility design, supplier selection, and ongoing operations.

Initial site selection should evaluate renewable energy access. Some regions offer abundant solar or wind resources. Others have limited renewable availability. Power purchase agreement markets also vary. Understanding these factors helps identify locations where clean operations are feasible and affordable.

Facility design should prioritize efficiency and flexibility. Installing renewable generation capacity, even if grid power is initially cheaper, provides long-term cost stability and emissions certainty. Designing for water efficiency protects against scarcity and reduces operating costs.

Supplier engagement should begin early. Identifying local suppliers who can meet environmental standards takes time. Building their capability may require support. Procurement processes should weight emissions performance alongside cost and quality.

Transport planning should minimize distances and optimize modes. Rail and sea freight produce far lower emissions than air freight or road transport. Route optimization and load consolidation reduce both emissions and costs.

Monitoring systems should track performance against targets. Monthly energy, water, and waste data enable rapid problem identification. Comparing facilities across regions highlights improvement opportunities and shares good practice.

Stakeholder communication should be transparent. Investors, customers, and local communities increasingly expect clear information about environmental performance. Honest reporting about challenges and progress builds credibility.

Where to find detailed guidance and support

Several authoritative sources provide guidance on managing emissions across international operations. The UK government publishes comprehensive carbon reporting guidance through the Department for Energy Security and Net Zero. This covers accounting methodologies, reporting requirements, and target-setting approaches.

The Greenhouse Gas Protocol offers detailed standards for Scope 1, 2, and 3 emissions calculations. Their guidance addresses multi-country operations, supply chain emissions, and renewable energy procurement. These standards underpin most corporate carbon reporting globally.

The Science Based Targets initiative provides sector-specific guidance for setting emissions reduction targets aligned with climate science. Their resources help companies establish credible commitments and track progress.

For businesses needing direct support with carbon reporting, target setting, or reduction planning, our net zero program for carbon reporting compliance provides structured assistance. This includes establishing measurement systems, identifying reduction opportunities, and meeting procurement requirements like PPN 06/21.

Understanding how international expansion affects your carbon footprint requires expertise. The challenges CCEP faces in the Philippines illustrate tensions many businesses encounter. Growth and climate action can align, but only through deliberate strategy and consistent execution.