Consumer goods companies score big green goals - Economic Times

When Sanjiv Mehta joined Hindustan Unilever as its managing director in 2013, he said he had 'opted' for an India stint as Unilever's corporate purpose was in sync with his own. A decade later, on the verge of his retirement, numbers bear witness to his boost to the company's green quest.

The maker of Surf and Dove decarbonised operations with 97% reduction in CO2 emissions per ton of production against the 2008 baseline. It has been plastic neutral since 2021. About 95% of its paper and board in packaging, 82% of tomatoes and 69% of tea came from sustainable sources. It also delivered a combined water potential of over 2.6 trillion litres.

"This is more than the quantity required to meet the drinking water needs of India's population for nearly two years," said Mehta. "Sustainability and business success are not mutually exclusive; they are two sides of the same coin."
Like Mehta, several consumer companies are increasingly try to link environment and societal purposes with their operations. After all, companies that make a host of products from soaps and shampoo to whiskey and cigarettes and sell trillions of units annually can potentially either heal or ruin the planet just by their sheer scale and reach.

From greenhouse gas emissions and water conservation to improving livelihoods of communities near their factories, companies are judging themselves on these sustainability metrics and even reporting their progress.

For instance, Diageo, the maker of Johnnie Walker and Smirnoff, wants to use 30% less water by 2030 and replenish more water than its use in all its water-stressed areas by 2026. Strangely, the world's biggest distiller even wants tipplers to consume their drinks in moderation."On the responsible drinking side, we have educated 1.04 lakh young people to curb underage consumption as against a target of 70,000. We created awareness amongst 1.72 lakh consumers on the risks of drink-driving against a target of 1.1 lakh," said Hina Nagarajan, managing director at Diageo-owned United Spirits, adding that it has developed partnership with 25 regional transport offices across India to make drink-driving modules before licences are issued.For several years now, consumer companies including Diageo, ITC, Mondelez, Dabur have moved beyond single-minded focus on financial sustainability, to braiding environmental, social and governance (ESG) goals into their operations. In fact, many of their product labels carry their claim about being responsible.

ITC has been carbon-positive for 17 years, water-positive for two decades and solid waste recycling-positive for 15 years. Nearly 43% of ITC's total energy consumption is from renewable sources. Yet, it's still a work in progress. The new target is to enhance the share of renewable energy usage to 50% of total energy consumption, meet 100% of purchased grid electricity requirements from renewable sources, and create rainwater harvesting potential equivalent to over five times the net water consumption.

"It will further strengthen ITC's large-scale efforts to combat climate change, enable the transition to a net zero economy, work towards ensuring water security for all, restore biodiversity through adoption of nature-based solutions, create an effective circular economy for post-consumer packaging waste and scale up programmes that support sustainable livelihoods," said S Sivakumar, group head, agri business, sustainability, ITC.

Focussing on three aspects - waste, water and climate - has been a secular trend across companies although the goal posts keep changing. And some have already achieved what others are aiming for. The moment of truth, however, is to know whether consumers are opening up their wallet to buy environmentally and ethically sustainable products.

Most companies say the propensity to buy or pay more by consumers goes up significantly when they know there is a worthy purpose behind the brand. After all, taking an ethical high road does have its benefits, even if it is not downright altruism.

"Brands with purpose establish a deeper connect with the new age consumers, particularly millennials and centennials. We have made rapid strides in this direction as we work towards not just creating sustainable products - like outer carton-free toothpaste, shampoo refill pouches to reduce consumption of paper and plastic - but also making our operations as well as operations within our value chain greener," said Mohit Malhotra, CEO of Dabur.

To fix the environment, companies are even forging unlikely partnerships. For HUL, Mondelez and Dabur, even penniless rag pickers are offering a hint of a fix to India's plastic junk pile-up. Since 2021, Mondelez has been supporting a waste picker managed centre with a capacity for handling 600 metric ton per year plastic waste.

"Building on our 2025 public goals, we have bold and targeted long-term ambitions which help us focus, accelerate and scale our efforts, and we are also putting a longer-term focus on working toward," said Christine Montenegro McGrath, sustainability officer at Mondelez International that also has a global cocoa sustainability programme, where over 2.3 lakh farmers have participated.

Mondelez said the programme has been backed by an additional $600 million through 2030, for a total of $1 billion investment since the start of the programme, to increase its cocoa volume scale, and aims to work with nearly 3 lakh farmers by 2030 to accelerate its impact.

This article is part of a series on sustainability in association with BCG. BCG did not play any role in editorial decision-making.

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Consumer goods companies score big green goals - Economic Times
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