Leading FTSE 100 Sustainability Report Gives Top Ranking to Unilever But Warns FMCG Strategies to Meet Net Zero Are Lacking
Leading FTSE 100 Sustainability Report Gives Top Ranking to Unilever But Warns FMCG Strategies to Meet Net Zero Are Lacking
• High achieving FMCG companies including Unilever and Coca-Cola Hbc demonstrate exemplary sustainability practices
• FMCG coming under greater scrutiny from consumers as concern for environment becomes more prevalent
• Only 42% of FMCG companies across the full international study have committed to Net Zero revealing urgent action needed
London, September 23, 2020 – EcoAct, the international climate and sustainability consultancy, has today released the 10th edition of its Sustainability Reporting Performance of the FTSE 100. The report, which includes a leader board ranking the top 20 companies for environmental sustainability disclosure reveals that although an increasing number of companies are setting a Net Zero target, there is an absence of a clearly defined strategy for many.
Two FMCG companies appear within the report’s top 5, with Unilever retaining its number 1 position from last year’s research. It is also ranked at number 2 in EcoAct’s international rankings which cover the FTSE 100, DOW 30, CAC 40 and IBEX 35. The Coca-Cola Hellenic Bottling Company (Coca-Cola Hbc) is ranked at number 4, moving up from 5th position last year.
Scores allocated to all FTSE 100 companies in the report range from 0% at their lowest to 92% at their best, demonstrating a highly disparate mix of sustainability performance and indicating that adequate climate-related reporting is still not a given in large companies.
“Over the ten years we have undertaken this research, we’ve continued to see year-on-year improvements to climate-related reported best practice”, said Stuart Lemmon, CEO, Northern Europe, EcoAct. “Although we are encouraged to see an uplift in company commitments to Net Zero this year, if we are to succeed in this goal, it is imperative that commitments are backed by sound and achievable strategy.”
Key report findings:
Commitment to Net Zero
Despite some excellent performance from companies like Unilever and Coca-Cola Hbc, only 42% of FMCG companies across EcoAct’s international rankings (FTSE 100, DOW 30, CAC 40 and IBEX 35) have committed to Net Zero or carbon neutrality and fewer still – only 17% - have set out a detailed strategy for achieving that target by 2050. Comparing the sector to all those assessed in the research – of which 45% have committed to Net Zero – it similarly has more progress to make.
Given the wide-reaching climate impacts of these organisations and their ability to influence change from supply chain to consumer, it is essential that more FMCG organisations commit to these ambitions.
Scope 3
83% of FMCG companies are reporting on at least some of their Scope 3 emissions - those indirect emissions occurring across a company’s value chain from sources not owned or controlled by the company. They are also including them in their carbon reduction targets which is encouraging as they play a crucial role in identifying the greatest sources of emissions involved in a company’s total operations and are key to a decarbonisation strategy. Despite this engagement, only 50% of companies provide proof of any reduction in their Scope 3 footprint.
The highest proportion of FMCG company emissions fall within Scope 3 and their reduction and reporting can be a significant challenge for the sector given the complexity of its value chains.
Science based targets
All but one of the FMCG companies within the FTSE 100 have set science-based targets (SBTs). SBTs are ambitious, but essential, emission reduction targets aligned to a decarbonisation pathway to limit global warming to 1.5°C or well below 2°C as advised by climate scientists. The report shows that companies are more likely to be on track to meet carbon reduction targets if they set SBTs.
Assessing risk
While the report reveals that all FMCG companies in the report are assessing risks to their operations from climate change, disappointingly, none have set out management procedures and mitigation measures for addressing those risks. And only 50% of companies have incorporated Climate Scenario Analysis (CSA) into their risk assessment and reporting as recommended by the Task Force on Climate-related Financial Disclosures (TCFD).
The report shows that 92% of FMCG companies report on other sustainability key performance indicators (KPIs) including waste production and recycling rates with 83% setting targets for these KPIs. This indicates the sector’s engagement with their environmental impacts beyond carbon emissions.
COVID-19
As a consequence of COVID-19, much of the world’s industry went into lockdown the second quarter of this year and we witnessed a significant drop in CO2 emissions as a result. Although it is too early to measure the impacts to corporate emissions in this year’s report, it is estimated that overall emissions globally for 2020 will be down by 5-7%. However, EcoAct warns that with a shift to home working that needs to be accounted for, emissions reductions for businesses should not be assumed.
Next year the research will be looking at how companies have disclosed the impacts of COVID-19 on their emissions and expecting the climate leaders to be improving their strategies for Net Zero.
A copy of the report is available here: https://info.eco-act.com/en/sustainability-reporting-performance-ftse-100-2020
Notes for editors:
The research uses only publicly available information. The report defines sustainability as environmental sustainability rather than wider, social and governance issues. Companies are scored against 64 tailored criteria covering four subject areas: Measurement & Reporting; Strategy & Governance; Targets & Reduction; and Engagement & Innovation. The most recent disclosures are scored using annual integrated and corporate sustainability reports, and any additional links from company websites, including sustainability micro-sites and blogs.
About EcoAct
EcoAct is a privately held international sustainability consultancy and project developer, headquartered in Paris, with 160 employees in offices across France, the United Kingdom, Spain, the United States and Kenya. The company has unmatched depth and breadth in delivering holistic solutions to enable businesses to reduce their carbon emissions while driving commercial performance. EcoAct has undertaken carbon reduction and sustainability projects for some of the world’s leading brands while also developing and partnering with carbon offset, biodiversity and economic development programmes across Africa, Asia, China and South America. EcoAct is a CDP gold partner, a founding member of ICROA, a strategic partner in the implementation of the Gold Standard for the Global Goals and reports to the UN Global Compact.
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EcoAct
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Email: susan.brownlow@wordsforindustrypr.com