Climate And Environmental Governance: Decarbonising the business

This article first appeared in Forum, The Edge Malaysia Weekly, on November 9, 2020 - November 15, 2020.
Climate And Environmental Governance: Decarbonising the business
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Is sustainability still an important theme for corporates in the light of the Covid-19 pandemic and other global crises?

This year will go down in history as one where the world faced several crises at the same time. On top of the ongoing pandemic and the expected “mother of all recessions”, we are seeing overdue and increasing demand for racial and gender equality and a new battle being fought for 5G tech supremacy.

And, of course, the burning forests in the West Coast of the US were among the latest casualties — and a harsh reminder — of the borderless, devastating impacts of the climate crisis, which continues to escalate at a relentless pace.

While the severity of the pandemic has forced many businesses to redefine their priorities overnight and rightfully focus on immediate issues like employee safety, cash flow and protecting jobs, a big risk is that long-term issues like sustainability may get pushed down the organisation’s priority list. Yet, we know that climate change will not wait.

In leadership parlance, what we are facing is called a crucible moment — an opportunity to transform and redefine priorities because of extraordinary circumstances. There is no doubt in my mind that companies need to pivot, if they have not already, towards being a purposeful business, which looks at both short and long-term goals and addresses the needs of people and the planet.

The reason for this is simple. Businesses that do not serve the greater good — for consumers, employees, shareholders, the environment — will become increasingly irrelevant in the future and, particularly, in a time of multiple crises.

For instance, at Unilever, we know that consumers want more affordable and sustainable products that are at least just as good as conventional ones. Research by data, insights and consulting company Kantar (Who Cares, Who Does report) commissioned by us found that 67% of consumers try to buy products produced in an environmental-friendly way. But with a recession looming, being able to act on these sustainable intentions will not be possible for everyone unless sustainable products are also affordable and at least as good as conventional ones.

In addition, cash-strapped governments around the world are increasingly looking at the taxation of business’ environmental externalities — carbon, water and waste — as a solution to balance public budgets without angering electors.

It is in this context that Unilever announced a goal to decarbonise and future-proof its home care business. In September, we launched a major plan to replace all fossil-fuel-derived chemicals from our entire portfolio of home care and cleaning products by 2030.

Under the Clean Future strategy, we are investing €1 billion in research and development in renewable and circular carbon sources with which to make our laundry soap, surface cleaners and dishwashing liquids more sustainable.

Chemicals account for 46% of the lifecycle emissions from our home care products, more than the emissions from manufacturing, transport or consumer use. By switching to cleaner sources of carbon for our fossil-fuel-derived chemicals, we are expecting to cut this by 20%.

Additionally, we also intend to make the products more water-efficient and biodegradable, innovate with packaging and address the growing fear of chemicals among our consumers with more transparency of ingredients and claims.

The Clean Future strategy is one way in which we are working towards achieving the goal of net zero emissions for all products by 2039, in the belief that it is the right thing to do for the business, people and planet.

Engineering a solution

In many ways, this feels not so different from the literal moonshot that John F Kennedy announced in 1962. We decided on the Clean Future strategy one year ago, when the home care leadership team gathered for our annual science and technology review. In that session, we had a chance to hear from Charles Fishman, author of One Giant Leap: The Impossible Mission That Flew Us To the Moon, which details the true story of the people behind America’s quest to get to the moon.

The parallels between Kennedy’s moonshot and what we at Unilever are attempting to do are significant — the need to push the boundaries of technology and innovation, the numerous logistical and operational challenges to be solved, the critical role of partners to leverage the best brains within and outside the organisation, and the race to find effective solutions quickly.

The challenge is that cleaning products across the industry are based on age-old carbon chemistry with the primary source of carbon being fossil fuels like petroleum, the sourcing and use of which have contributed to our climate crisis. Alternative sources of carbon are not yet ready at the scale and volume at which a global enterprise requires.

So, much like the people who invented space travel because the geopolitics of the day demanded it, the cleaner home care business needs to be developed because the challenge of climate change is too urgent to ignore.

The Clean Future programme is underpinned by a new strategic framework called the Carbon Rainbow, which maps out how the company will move away from fossil fuel-based carbon or black carbon. We will fund and leverage other sources of carbon like blue carbon (for example, from marine algae), or purple carbon (from carbon dioxide captured from the air), green carbon (carbon from plants) and grey carbon (from waste like plastic or textiles).

In Vietnam, our dishwashing liquid is made with surfactants derived from plants. In India, our partners are capturing carbon from the air and turning that into soda ash (purple carbon), a key component of laundry powders.

Unilever’s moonshot will be an exercise in transformative leadership. We need leaders who can mobilise the energy and resilience of thousands of ordinary people inside and outside the organisation and unite them behind a quest to achieve “a small step for man and a giant leap for mankind”.

Now is not the time to lose sight of the world’s big goals on sustainability. One of the big lessons we have learnt from the Covid-19 pandemic is that we must anticipate the big challenges of climate change and proactively lead the change to prevent another disaster.

Now is the time for us to work together — in public and private organisations — and double down on sustainability. The question now can’t be “Is sustainability still a focus?” but rather “How can we become even more sustainable?” Now is the time for you to be asking yourself, “Will you be on the right side of history, or not?”

Deepak Subramanian is vice-president of the home care division (Southeast Asia) at Unilever

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