Unilever is outpacing its fast moving consumer goods competitors when it comes to meeting climate transition goals, according to a new report.
A study by non-profit financial think tank Planet Tracker, which analysed the company transition plans of Unilever, Procter & Gamble (P&G) and Colgate-Palmolive, found Colgate-Palmolive and P&G’s expected emissions to 2030 to be seven times higher than the recommended level set by the Science-Based Targets initiative (SBTi).
The SBTi promotes best practice in emissions reductions and net-zero targets for alignment with 1.5ºC by 2030.
The report indicated that Unilever, although on a path to surpass 1.5 times over the recommended SBTi level, nevertheless exhibited a more comprehensive mitigation strategy for Scope 3 emissions, especially upstream.
The think tank calculated the magnitude of the companies’ emissions when downstream ‘optional’ Scope 3 emissions – for example, emissions derived from the use of other products and services together with the companies’ brands – were included.
The findings showed that emissions for Unilever, Colgate-Palmolive and P&G are up to three, five and eight times higher, respectively, when optional indirect emissions are accounted for.
Planet Tracker said P&G’s emissions, for example, are 26 MTCO2e (million tonnes of carbon dioxide equivalent).
But when downstream Scope 3 emissions are included, this figure increased to 200 MTCO2e – almost equivalent to the national emissions of France.
Planet Tracker again singled out Unilever for praise for including in its targets the downstream Scope 3 emissions the company has control over, such as transportation and distribution.
The think tank further estimated that the FMCG goods companies continuing with their current trends of emissions could cost Unilever 14% of its historic annual operating profit (US$1.5bn), Colgate-Palmolive 30% of profit ($1.1bn) and P&G 51% of profit ($6.7bn).
“Our comparison of leading consumer goods companies demonstrates a worrying trend of companies failing to effectively tackle direct Scope 3 emissions, especially upstream, which if not mitigated soon could cost billions of dollars in the future,” said Ion Visinovschi, Research Analyst at Planet Tracker.
“When it comes to greenhouse gas emissions, we look at the emissions disclosed by the company in the last three or five years, depending on comparable data availability,” Visinovschi explained.
“Then, we calculate the annual change in these emissions for the selected period.
“Lastly, we assume that if the companies continue to do what they have done so far (in the last three to five years) the same average annual change will continue in the future up until 2030.
“That is how we get the 2025 and 2030 emissions levels.”
Visinovschi added: “While Unilever is on track for a +2ºC pathway and thus still has some work to do, the comparison between companies allows us to see how far behind giants like Colgate-Palmolive and Procter & Gamble are from the targets laid out in the Paris Agreement.
“We urge investors to be wary of public initiatives claiming to tackle indirect emissions, which could be linked to substantial emission reductions, as such reductions could come from other actors such as the public grid renewable electrification.
“Instead, investors should encourage these companies to increase their ambitions on Scope 3 emissions they have a direct impact on such as their supply chain.”
Inside FMCG giants' Scope 3 strategies
In response to the findings, a Unilever spokesperson told Cosmetics Business: “Back in 2021, we were one of the first companies of our size to put a Climate Transition Action Plan to a shareholder vote, which was approved with 99.59% of votes cast.
“In this, we have set out how, and where, we intend to address emissions across our value chain, including Scope 3 emissions.
“We have opportunities to reduce emissions from our product portfolio through targeted interventions both up and downstream – for example, by encouraging suppliers to set their own science-based targets and working with logistics partners to shift to lower emission transport options.
“Perhaps even greater opportunities come from strategic integration into our brands.
“Innovation programmes can drive the redesign of our products in ways that reduce emissions.
“This can be through concentrating or compacting products, or developing new lower emission ingredient substitutes.”
They added: “But with the lion’s share of our value chain emissions falling outside of our direct control, societal change remains critical to achieving our targets and to achieving the Paris Agreement goals.
“Influencing wider society is, therefore, an integral part of our plan but we cannot do this alone.”
The company added that it was focusing on the biggest sources of its emissions, and is being transparent about its progress and where it falls short.
The spokesperson futher added: “In terms of improvement, progress from everyone, whether it be businesses or governments, needs to speed up.”
A P&G representative, meanwhile, told Cosmetics Business: “P&G has set an ambition to be net zero by 2040 as shared in our Climate Transition Action Plan, and we are continuing to make progress toward our 2030 Climate targets.
“P&G changed our reporting scope during the timeframe Planet Tracker used for their model, making it inaccurate.
“P&G continues to be committed to our climate goals while also working on broader solutions that can also help move the industry forward.”
Cosmetics Business also reached out to Colgate-Palmolive for comment, which responded: “Colgate-Palmolive’s ambitious target to be net zero by 2040 has been approved by the Science-based Target Initiative (SBTi), the leading authority on corporate climate goals.
“We are the only large multinational CPG with an approved SBTi target aligned with a 1.5°C pathway.
“The Planet Tracker report contains significant inaccuracies, including inconsistent use of SBTi boundaries, base years and scopes.
“The company is proud to be a perennial CDP Climate A-list awardee, remains steadfast in leading on climate action and reports annually on our progress.”