PepsiCo & Unilever: New Standards to Slash Scope 3 Emissions

In the realm of consumer goods, the knights of the round table are gathering. The Consumer Goods Forum's (CGF) Towards Net Zero Coalition, comprised of 26 market leading companies, has unveiled its newest targets for supply chain sustainability.

This initiative, announced as world leaders convene at COP29, represents a concerted effort by organisations including PepsiCo, Unilever and Ahold Delhaize. 

The purpose? To address the looming challenge of Scope 3 emissions, the form of emissions which figure most prominently across all industries, businesses and value chains.

Explaining Scope 3

The subject of Scope 3 emissions can often be difficult to comprehend, so let's dissect it using the example of a baker.

The baker's Scope 1 emissions could come from the smoke that comes from their oven, and their Scope 2 emissions might come from the electricity used to power their whisk.

The Scope 3 emissions, however, are those that come from elsewhere in the baker's supply chain. If the baker sells their cakes to a supermarket chain then the baker would be responsible for the emissions of the van that delivers their cakes, the energy used to refrigerate them in store and the way the packaging is disposed.

And from the opposite direction - if the baker buys their flour and eggs from a supplier with huge emissions, then that farmer's emissions also become linked to the baker.

The CGF's new targets establish clear baseline standards for suppliers that contribute to 60-80% of a company's Scope 3 emissions.

So, in this very simplified example, the CGF's new targets might be aimed at the supermarket or the farmer, depending on how much they contribute to the baker's Scope 3 emissions.

Setting a new standard for supply chain sustainability

What exactly is the significance of the CGF's new sustainability targets? The coalition's newest strategy comes at a critical juncture for the consumer goods sector, which is facing mounting pressure to reduce its environmental footprint amidst growing consumer awareness and the scrutiny of regulators.

Grant Sprick, VP of Climate & Environment at Ahold Delhaize, is keen to emphasise the significance of this development.

"By introducing these new targets, we are establishing a much-needed suite of supplier expectations that will help address Scope 1, 2 & 3 emissions across the supply chain," he says.

"This is a critical step toward making the supply chain more resilient."

Flexibility meets consistency

A key feature of the framework is its flexibility, allowing companies to tailor their approach while maintaining a unified front. This adaptability is crucial in an industry characterised by diverse product lines and complex global supply chains.

"The flexibility of these targets is key," says Archana Jagannathan, CSO of PepsiCo Europe.

"It allows businesses to tailor their approach, making sure that the most relevant sustainability issues are prioritised, while maintaining the momentum to drive sector-wide change."

Addressing the challenges of the industry

The consumer goods sector has long grappled with the challenge of reducing emissions across its vast and intricate supply networks.

Factors such as varying regional regulations, technological limitations and the need for substantial investments have historically hindered progress.

However, the CGF's initiative represents a shift towards collective action. By setting common expectations, the coalition aims to create a ripple effect throughout the industry, encouraging suppliers and non-member companies to adopt similar standards.

Without this collaboration, the reduction of Scope 3 emissions will be nigh on impossible.

Kickstarting a supply chain reaction

The CGF and coalition members are advocating for these expectations to cascade down the supply chain, extending to suppliers' suppliers and so on.

This approach recognises the interconnected nature of global supply chains and the need for comprehensive action to achieve meaningful emissions reductions.

Rebecca Marmot, CSO of Unilever, sees the potential long term benefits of the CGF's new targets. "By working together and setting consistent expectations for suppliers, we can create meaningful, long-term change across our industry," she says.

"These targets demonstrate our collective commitment to reducing environmental impacts at scale, helping to secure a more sustainable future for all."

How the CGF works with the UN

The Consumer Goods Forum works closely with the UN. Its new supplier sustainability targets form part of the coalition's role as a UN Race to Zero Accelerator and support the broader mission of limiting global warming to 1.5°C, as outlined in the Paris Agreement.

This alignment underscores the consumer goods industry's commitment to playing its part in global climate action.

A strong starting point

While these targets represent a big step forward, they are only meant to be regarded as an the first step in an ongoing journey.

The coalition hopes that this framework can be the catalyst for further action across the industry.

As the consumer goods sector navigates the complexities of global supply chains and evolving consumer expectations, initiatives like the CGF's Towards Net Zero Coalition of Action demonstrate the power of collective effort in driving meaningful change.

"For many companies, this will be an initial step in their supplier sustainability journey," says Rebecca, "and we hope that it encourages progressive steps going forward."

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