Unilever, which has been affected by the rising problems of climate change has actively stepped forward to combat the challenges. Climate change leadership has put Unilever on the ‘A List’. Unilever’s approach to combating climate change has been recognized for the fifth consecutive year by the latest leadership index published by CDP (formerly the Carbon Disclosure Project).
Unilever’s supply chain and bottom-line have been significantly impacted by climate change
CEO of Unilever, Paul Polman believes that climate change affects everything from Unilever’s employees to the price of products to the bottom line. Disasters linked to changing climate have cost Unilever more than $400 million a year. Some growing challenges include
- Increasing raw materials cost: Unilever sources raw materials from tropical regions and deforestation in Latin America, Africa, and Asia is increasing carbon emissions, intensifying erratic weather and hurting business.
- Changing supply and demand patterns: Climate change is affecting rainfall patterns and driving water scarcity in highly populated regions. When so many of Unilever’s products require water to use – whether to make a cup of tea or take a shower – this presents another immediate risk of climate change. In future, more extreme and unpredictable weather patterns may affect not only consumer preferences but also the types of products they seek in response to resource and economic constraints. Consumers may seek products that are more energy and water efficient to adapt to decreasing water availability and energy shortages.
- Reduced productivity: Erratic rainfall, high temperatures, resulting pests, and diseases create a negative effect on the volume and quality of products produced.
In summary, climate change affects the entire supply chain of Unilever, posing threat to growth and bottom line.
Unilever’s 2016 greenhouse gas (GHG) footprint across the supply chain – consumers contribute to the highest share of footprint
Unilever is adopting a multi-pronged approach to tackling climate change across the supply chain
- Eliminate coal from the energy mix by 2020.
- Tackle climate change by halting deforestation, championing sustainable agriculture and food security. For instance, Unilever uses a software tool, developed with the University of Aberdeen, to collect data on whether farmers in its supply chain are using sustainable practices. Unilever offers them the tool for free, with the aim of procuring 100 percent of its agricultural content from sustainable sources by 2020.
- Become carbon positive by 2030. Source 100% of energy from renewable sources. Support the generation of more renewable energy, making surplus available to markets and communities.
- Make manufacturing and distribution eco-efficient. Manufacture as efficient as possible – using fewer resources and generating less waste. Eco-efficiency targets focus on water, waste, energy, and carbon-di-oxide and cover 263 manufacturing sites in 71 countries.
- Design products which are less GHG intensive. Some innovative products include climate-friendly ice cream freezers, compressed deodorant sprays, and concentrated laundry detergents which wash clothes at lower temperatures.
- Help consumers use less water, less energy, and recycle more. Advocate public policy to tackle climate change.
Other initiatives that Unilever could adopt
Introduce business targets and incentives based on tackling climate change
Unilever could consider motivating its business divisions by attaching incentives to the agenda of tackling climate change. Divisions adopting the most sustainable practices and reducing carbon footprint could be rewarded financially and non-financially. On the contrary, divisions contributing to increasing climatic challenges could be monitored and penalized.
Extend support to suppliers
Unilever’s leadership and advocacy can be extended to instill discipline and commitment among its many suppliers. Unilever could make a greater effort in setting an example to the smaller suppliers, supporting them with the handholding required to embrace climate change initiatives and pushing them to commit to climate change goals through support such as financing, technology and business continuity. It could also choose to be stringent in working with only those suppliers who commit to the climate change agenda through sustainable practices.
Market climate change imperatives and educate end consumers
Unilever’s advocacy has been strong, but it has not been consistent across all its brands. Unilever could promote greater awareness among its 2.5 billion customers to reduce actions causing climate change through thought-provoking commercials and product packaging. Unilever has 400+ brands and can make a signification difference in customer education as more of its brands embrace customer advocacy. Climate change campaigns on social media will also lead to behavioral change. Periodic communications will serve to strengthen advocacy while improving the reputation of Unilever.
Improving the future
- In addition to following the aforesaid value protection measures to fight climate change, how can Unilever turn climate change into an opportunity for value generation?
- How can Unilever inspire conversations and actions among organizations and governments who are indifferent to fighting climate change?
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