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Wednesday, May 22, 2024

The Last Word

Unilever has been highlighted as a trailblazer in a new FTSE climate change report – but the wider picture appears bleak, writes Stuart Lemmon

Stuart Lemmon is MD of EcoAct  

The voice – and verdict – of millions of youngsters worldwide could not be clearer. Big companies are not pulling their weight to prevent catastrophic climate change.
Each year EcoAct conducts research that essentially places that premise under the microscope. By examining the sustainability reporting performance of companies in the FTSE 100 index, a snapshot emerges of how the UK’s largest companies are addressing carbon reduction and disclosing their progress.
The results from the 2019 report show businesses in the FTSE 100 are becoming more ambitious in their commitment to climate action, reflected by an increase in the number of companies setting science-based targets, using renewable energy, and reporting climate-related risks following the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Climate change awareness, inspired by the global movement of students, young people and protestors such as Extinction Rebellion, is growing fast. Studies show that consumers are buying more products that are marketed as sustainable and that the growth around this sector is substantial. Pressure from the investor community is also increasingly a driver for companies to act in order to safeguard future interests from the long-term impacts of climate change.

The number of consumer-focused companies, including FMCG and food and beverage, in the top 20 indicates clear recognition of this dynamic. Unilever has taken top spot in the rankings for the first time, not only in the FTSE 100 but also in our international rankings, which incorporate the French CAC 40, Spanish IBEX 35 and the US DOW 30. The company scored particularly highly in strategy and governance as they align with the recommendations of the TCFD, use climate scenario analysis, set an internal carbon price and have a green fund to kick-start investments in deforestation-free palm oil. It is clear that Unilever is not only addressing the impact of its direct operations on the environment but is collaborating with suppliers and customers across the value chain to reduce emissions. The company is developing low-carbon products by assessing all innovation projects on their sustainability criteria. In addition to this, it has committed to becoming carbon positive in its operations by 2030.

However, despite the leadership shown by our top performers, the report makes for sobering reading with a clear message that UK businesses are not going far enough.
With the IPCC reporting less than a 12-year window to limit global warming to 1.5°C, and the UK government’s recent net zero emissions law requiring the country to bring all greenhouse gas emissions to net zero by 2050, it is critical that the commercial sector urgently transforms its operations. Companies should start doing that by assessing the risks and opportunities posed to their business and value chain by climate change.
Significantly, this year’s report also shows that the number of FTSE companies purchasing carbon offsets has doubled – from 12 percent to 24 percent in the past year – indicating a growing awareness of the need to reduce carbon footprints in absence of 100 percent carbon neutral solutions.

Carbon offsetting absolutely has a place as part of a carefully considered carbon emissions reduction plan where a company is unable to reduce certain operational emissions. As an internationally-recognised market mechanism to help achieve carbon neutrality, carbon offsetting can play a significant role when not all emissions can be reduced in the short-term. Providing they are well-conceived and rigorously verified, offsetting projects can help deliver the promised carbon reductions whilst improving lives and supporting sustainable development.

Submissions and comments for ‘The Last Word’ to: eamonn.duff@mediaone.co.uk

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