That’s because the original derivation
of the method the company used was based on the cost
accounting method for financial reporting purposes in
which fixed manufacturing costs are absorbed into unit
product cost. But the effect is to incorrectly treat fixed sustainability KPI contributions as variable. The flexible
budgeting method (the current method Bacardi Limited
uses) can be readily adapted to include both fixed and
variable components of the total emissions to yield a
more accurate measure of efficiency change.