Top FMCG companies Unilever, Procter & Gamble and Colgate-Palmolive are putting their profits in jeopardy and risking greenwashing by failing to adequately tackle carbon emissions, according to the latest analysis from think tank Planet Tracker.
The study found that – despite publicly committing tackle indirect emissions – the consumer goods giants do not yet have comprehensive plans to tackle their climate footprint and related risk, putting future profitability in jeopardy.
More than half (51%) of Procter & Gamble’s annual operating income was found to be at risk from slow decarbonisation, while Colgate-Palmolive and Unilever were risking 30% and 14% of their annual operating incomes respectively.
This was largely due to the financial risks associated with potential carbon pricing mechanisms and other regulatory deterrents for corporate emissions.
The report found that Unilever, which is found to be on a path to surpass 1.5 times higher than the recommended SBTi level, demonstrates a more comprehensive strategy for Scope 3 emissions.
In addition, the findings highlighted that emissions for Unilever, Colgate-Palmolive and Procter and Gamble are up to three, five and eight times higher when indirect emissions are accounted for. The NGO has recommended that businesses focus on emissions they have greater control over, such as transportation and distribution.
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“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 Planet Tracker research and analyst Ion Visinovschi.
“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”
He continued: “We urge investors to be wary of public initiatives claiming to tackle indirect emissions, which could be linked to be 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 such as their supply chain”.
