Consumer product giants put suppliers on notice with guidelines for emissions cuts

A coalition of 26 food and consumer product companies, including Danone, Mondelez, PepsiCo, L’Oreal and Unilever, is warning companies that contribute most to their supply chain emissions footprint to set environmental and emissions reductions targets starting in 2026.

The recommendations published by the net-zero working group of The Consumer Goods Forum call for suppliers to measure and publish complete emissions footprints within two years, along with a plan for reducing them in line with the Paris Agreement goal to keep global temperature increases below 1.5 degrees Celsius. 

The guide also includes deadlines for suppliers to adopt renewable electricity by 2026 and thermal energy by 2030 for production; to end deforestation and land conversion practices detrimental to nature and biodiversity by the end of the decade; and to adopt regenerative agriculture practices by 2026 and scale them up by 2030. 

The guidelines apply to suppliers that contribute 60-80 percent of the Scope 3 emissions generated during production and distribution of consumer goods. Those suppliers, in turn, are encouraged to “cascade” these measures to their own suppliers. 

Scope 3 emissions are the largest contributor to the carbon footprint of multinational consumer products companies. Roughly 90 percent of PepsiCo’s emissions, for example, come from Scope 3. Mondelez and Danone have Scope 3 emissions of around 95 percent. For Unilever and L’Oreal, it’s almost 98 percent. 

“The guidelines can not only help drive sector-wide consistency but also allow companies to engage suppliers more efficiently with clear targets and actions,” said Sharon Bligh, director of health and sustainability at The Consumer Goods Forum, an industry association with more than 400 members. They were developed by the forum’s Towards Net Zero Coalition of Action.

Recommendations, not mandates

Many of the coalition’s members already have programs in place that encourage their suppliers to measure their emissions and come up with plans to address them. 

Unilever, for example, has identified scaling supplier decarbonization initiatives as a key part of its climate transition plan, which calls for a 42 percent reduction in absolute emissions from ingredients, packaging, distribution and transportation by 2030. It works directly with about 300 suppliers that account for about 44 percent of its Scope 3 footprint.

“Each company has the flexibility to implement the targets as they see fit and is urged to conduct their own materiality assessments to ensure the most relevant sustainability issus are addressed,” Blog said.

“The flexibility of these targets is key, said Archana Jagannathan, chief sustainability officer at PepsiCo Europe and one of the coalition co-chairs. “It allows businesses to tailor their approach, making sure the most relevant sustainability issues are prioritized, while maintaining the momentum to drive sector-wide change.”

A commitment to sharing resources

While individual coalition members are responsible for communicating the guidelines to suppliers, they’re accountable for sharing information about best practices so that other members can benefit. 

The net-zero coalition will meet in January to define key performance indicators that will be used to communicate progress, Bligh said.