Unilever's green target: long on ambition but short on details

Unilever has admitted that it doesn't know how it will meet an ambitious target to reduce its environmental impacts, including those of its suppliers and customers, while doubling turnover. This may explain why the company is finding it so difficult to talk openly about what has the potential to be a ground-breaking initiative.

Google's "don't be evil" philosophy might be a little too broad but the environmental targets of many companies tend to the opposite, focusing on carbon and a few other key issues. A recent commitment from Anglo-Dutch giant Unilever pitches it somewhere in between, potentially encompassing every possible environmental impact of its products from the field or mine to the bin. It is a bold aim but the details remain hazy.

Unilever is one of the largest food and consumer goods companies in the world with a turnover of €40bn (£33bn) in 2009 and an operating profit of €5m. It is the market leader in several product categories including tea, ice cream and deodorant. Big-name brands include Flora, Domestos, Persil and Dove.

Last November, Unilever quietly let it be known that it was pledging to reduce its total environmental impact from current levels while doubling in size.

The commitment got top billing in Unilever's 2009 sustainability report, published in May. The exact wording is to “reduce our overall environmental impact while doubling the size of our business”. A spokeswoman said the doubling in business size refers to turnover rather than market capitalisation.

The target will force the company to decouple growth from resource use, and so acts as both an absolute cap on its environmental impact and an intensity target. A survey by ENDS Carbon of 634 UK brands last year found only a third had set carbon emission targets (ENDS Report, December 2009). Fewer still have both absolute and intensity targets or targets that apply across all types of environmental impact.

Life-cycle use

Unilever’s target is also unusual in including the activities of its supply chain and customers’ use of its products. Most firms, even environmentally conscious ones, have not yet fully quantified their impact through these phases of their products' life cycles (ENDS Reports, November 2009 and March 2010).

Unilever says it has chosen this approach because the greatest part of its products’ footprint often lies beyond its own gates. It estimates that the carbon footprint of its supply chain is ten times that of its own operations and its customer-related emissions is 30-60 times larger. The picture is similar for water, with suppliers and consumers each using ten times the water Unilever does.

The firm says it has already improved its own operations by cutting carbon dioxide emissions from energy use by 40% over the past 15 years, water use by 65% and waste per tonne of production by 73%. These figures are verified by Deloitte.

At present, Unilever measures the environmental impacts of its products against four indicators: carbon, water, waste and sourcing. The first three were used to assess impacts of 1,500 products across 14 countries last year, but Unilever provides no quantitative details of the results in the sustainability report or on its website.

It may be that these figures are to form a baseline against which progress towards the overall target will be assessed, but Unilever declined to answer any questions on the matter.

There is also no detail in the report or online of the methodologies used in the 1,500 calculations. Methods of carbon and water footprinting vary considerably and agricultural products, on which many of Unilever's products are based, are particularly hard to quantify.

Call for transparency

Indeed, this point is made by Jonathon Porritt, former chairman of the Sustainable Development Commission, in an external commentary at the end of Unilever’s sustainability report. “Very few companies have as yet got their act together [to develop baseline metrics] in this kind of way – but increasingly, that is what customers, shareholders and regulators are now demanding,” he says. “Show us your workings!”

A spokesman for the firm said it has been working on the details of the commitment for some time but is not ready to share its thoughts. He said it was not the first time Unilever had put forward a commitment without having worked out the full details.

The same was true of promises made to source all palm oil from sustainable sources by 2015 and for all the fish used by Birds Eye (no longer owned by Unilever) to be sustainably sourced by 2005 (ENDS Report, March 2003). The latter was successfully met.

However, Unilever’s sustainability director John Temple did explain some of the firm's water footprinting work at an event organised by London Business Conferences at the end of April. The metrics established by organisations such as the Water Footprint Network (WFN) were too complicated to be widely applied, he said, so the firm decided not to look at the volume of rainwater used in crop production or at water use in countries where water is not scarce (ENDS Report, April 2009).

For foods, most water is used in the agricultural phase, while for personal care products most water is consumed during their use. To help automate the footprinting process, Unilever is now working with the WFN to develop standard figures for the key agricultural commodities it buys. By June, Dr Temple expected 63%, by volume, of Unilever’s agricultural crop purchases to be footprinted.

For waste, water and carbon footprints, there are established metrics for Unilever to choose from in meeting its new target. But it is less clear how “sustainable” sourcing might be satisfactorily quantified across all purchases. Unilever also says it has developed a new metric for the social impact of its products, but again it declines to give details. It is currently being tested on a Lifebuoy soap used for handwashing.

It is also unclear whether the company’s commitment is to reduce its impact in each area or to somehow aggregate them. Nor has it given a date by which it expects to have doubled in size and therefore meet its environmental obligation. This would make it easier to assess interim progress.

Assuming annual sales growth of 3.5% a year (the figure for 2009), it would take about 20 years for total sales to double, giving Unilever a 2030 deadline.

By comparison, Unilever’s competitor Reckitt Benckiser aims to reduce its products' total carbon footprint by 20% below 2007 levels by 2020 (ENDS Report, November 2007). However, this target is based on CO2 emissions per item sold. If the total quantity of products sold grew by 1.5% a year or more, then the group could still meet its 20% carbon reduction target for 2020 while its total emissions remained static or increased. Procter & Gamble’s closest equivalent target is instead based around cumulative sales of “sustainable innovation products” (ENDS Report, May 2010).

One thing that is evident from Unilever’s sustainability report is that much of the effort to reduce impacts will be addressed at the “in-use” stage of products’ life cycles. The firm has already worked alongside other detergent manufacturers to encourage consumers to wash clothes at lower temperatures. It also has its own Cleaner Planet Plan programme which develops sustainable laundry products and help influence consumer behaviour.

With several rival initiatives also urging consumers to set their washing machines to 30°C, it might be hard for Unilever to separate out the effect of its own efforts. Much of the challenge in this and other areas may also depend where in the world Unilever grows.

Unilever has been doing sustainability assessments of some of the farms supplying it for more than a decade. This work has included detailed sustainability assessments against 11 indicators and trials of technologies such as drip irrigation (ENDS Report, March 2003).

The firm is a big buyer, purchasing 12% of all tea, 3% of palm oil and 1% of soy. It also has a long history of involvement in certification programmes. It was a founding member of the Marine Stewardship Council and the roundtables on responsible soy and sustainable palm oil, and one of the first firms to ask suppliers to report their carbon emissions through the Carbon Disclosure Project (ENDS Reports, June 2009 and October 2007).

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