Among the world’s biggest marketers of fast-moving consumer goods (FMCG) companies, Unilever is best prepared to deal with the challenges of climate change, a new report says.
L’Oreal SA ranks second, according to CDP, which is now the official name of a nonprofit formerly known as the Carbon Disclosure Project.
Based in London, the CDP focuses on encouraging companies, investors and cities to take urgent action to build an environmentally sustainable world.
This is the first time it’s attempted to rank how big companies are meeting environmental challenges and reacting to growing consumer concerns.
In the household and personal care category, Unilever is followed by L’Oreal, Colgate-Palmolive, Henkel (based in Germany) RB (based in the United Kingdom), Procter & Gamble and Estée Lauder.
CDP separately ranked food and beverage companies. The best among them is Danone, followed by Nestle, AB InBev, PepsiCo and Diageo.
Companies with lower scores are deemed to be more prepared for climate risks and opportunities. Unilever earns a 2.31. Danone scores a 3.28 in its category.
Unilever’s grocery-shelf rivals Nestle scores a 3.59 followed by Pepsi Co (4.59,) P&G (5.32), Mondelez, (6.44) and Kraft Heinz (7.52).
The CDP ranks the top 16 FMCGs overall, which the organization says are in a race to respond to evolving environmental and consumer concerns.
“While consumers face limited direct regulation related to climate change, there is an emerging trend amongst millennials to adopt more environmentally conscious practices,” the report summary says..
“This is evidenced in shifting preference for vegan diets, smaller eco-friendly brands and reduced packaging. Leading companies are responding to these trends through the acquisition of small brands but more transformative innovation and shifts in business models may be needed to align with targets set by the Paris Agreement.”
The report notes that many of the improvements by these large companies are coming not so much from innovation as they are from mergers and acquisitions.
To that point, Unilever probably got a leg up from its 2016 acquisition of environmentally sensitive Seventh Generation. More recently, it acquired The Laundress, a line of eco-friendly detergent and home care products, and The Vegetarian Butcher which creates meatless, but meat-like, foods including its line of vegetarian meatballs.
In January, Unilever introduced Loop, described by Unilever as a global, first-of-its-kind, waste-free shopping system, that will market some products in reusable glass and aluminum containers, delivered directly to consumers.
But are some of these moves simply window dressing? The CDP notes that “almost 60% of the top 10 revenue generating brands for each company have failed to deliver low carbon innovations in the last 10 years. Given most companies (88%) generate over 50% of their revenues from these key brands, including Nescafé, Budweiser and Dove, they must up their game or risk falling foul of changing consumer demands.”
Added Carole Ferguson, head of CDP investor research, “Ongoing activism around plastics and packaging is just the tip of the iceberg, and we expect to see more environmental issues come to the fore as consumers start to question what goes into the products they buy, use and dispose of.”
The report also notes that all household and personal care companies “are exposed to [environmental] risks associated with palm oil use.” On average, “less than 50% of palm oil is supplied from physically certified sources.”