Why we’re putting our climate plans to a shareholder vote

Why did you decide to put your Climate Transition Action Plan before a shareholder vote?

The two biggest threats the world currently faces are climate change and social inequality – threats that are deeply intertwined. Climate change is not only an environmental crisis but one which will impact the lives and livelihoods of hundreds of millions of people around the world.

The implications of climate change for both our business and our consumers will be profound. It threatens our whole value chain – from how we grow our raw materials, to whether clean water is available for consumers to use our products. And a huge amount in between. Without decisive action on a global scale, climate change is the biggest long-term risk to our business.

In December 2020, Unilever’s Board announced its intention to put our Climate Transition Action Plan (PDF | 23MB) before shareholders and seek a non-binding, advisory vote on our ambitious emissions reduction targets – zero emissions from our operations by 2030, and net zero across our value chain by 2039 – and our plans to reach them.

It’s the first time a company of our size has voluntarily committed to putting its climate plans before a shareholder vote. We are doing this to be transparent about our plans, and to strengthen engagement and dialogue with our investors. As governments around the world wake up to the full implications of the climate crisis and start to regulate and price emissions, we are confident that early and ambitious climate action will drive superior performance and create value for all our stakeholders.

We hope that by setting out our plan, and the assumptions underpinning it, investors will share our confidence – and other businesses will start to follow suit.

Unilever’s new ‘net zero by 2039’ target excludes the impact of consumers using your products, although previous targets have included it. Why is that?

Since 2010, we have had a value chain emissions reduction target: to halve the full value chain emissions of our products on a per consumer use basis by 2030. This target includes the emissions associated with our products when consumers use them, such as the energy consumed by heating water for a shower with one of our shampoos. These emissions can be substantial – they typically amount to around two-thirds of a product’s value chain footprint.

However, we have learnt that our ability to reduce these emissions is limited as we don’t control a consumer’s choice of energy supplier, the efficiency of their appliances or, to use the above example, how long they spend in the shower. Instead, our greatest impact lies in our influence in advocating for the decarbonisation of the energy grid.

As a result, our net zero target covers:

• Our scope 1 & 2 emissions – from our operations and purchased energy;
• Our upstream scope 3 emissions – including from our raw materials and packaging;
• Our mandatory downstream scope 3 emissions – for example, direct emissions from aerosol propellants and the biodegradation of chemicals in the disposal phase.

We will keep our 2030 value chain emissions reduction target that covers the full value chain of our products, because it helps us guide innovation and monitor our performance. And we will continue to drive consumer behaviour change where it makes sense to do so, such as helping consumers reduce their greenhouse gas footprint by reducing food waste or choosing plant-based foods.

Even excluding consumer use, Unilever’s annual greenhouse gas emissions across the value chain amount to 32 million tonnes. How will you approach getting that to zero by 2039?

Yes, it’s a big number! We are tackling it in four different ways.

Our first ambition is to eliminate emissions from our own operations. We achieved 100% renewable grid electricity globally last year, so our focus is now on heating and cooling: transitioning to renewable heat sources in our factories and other sites, while removing HFC refrigerants from our cooling systems.

Secondly, through our value chain, where we will reduce emissions both up and downstream, such as by encouraging suppliers to set their own science-based targets and working with logistics partners to shift to lower emission transport options.

Thirdly, by looking at integrating climate action into our brands and innovation, whether by reducing the emissions of our laundry products through concentration and compaction, responding to consumer demand for plant-based foods, or using the influence of our brands like Hellmann’s to reduce food waste.

Then finally, through the wider influence we have on society. As the lion’s share of our value chain emissions falls outside our direct control, societal change is critical to achieving our targets and the Paris Agreement goals. We will step up our climate advocacy ahead of COP26, driving transformational change through industry partnerships such as the Carbon Pricing Leadership Coalition and Transform to Net Zero.

Around half of your GHG emissions comes from sourcing of raw materials. You won’t achieve your goals without ending deforestation in your supply chain – how will you tackle this?

Ending deforestation globally is absolutely critical – achieving the Paris Agreement goal of limiting temperature rise to 1.5°C will be impossible without it. Forests are one of the biggest natural climate solutions we have, as well as being critical for biodiversity and the home of many indigenous peoples around the world.

Our long-standing work on tropical forest commodities has already led to a significant reduction in emissions from our upstream value chain. For example, our sustainable sourcing of palm oil has contributed to an estimated 35% reduction, since 2010, in the GHG footprint of the palm oil we buy.

However, we know there is much more to do. Last year we committed to zero deforestation by 2023, covering our key commodity crops: palm oil, paper and board, soy, cocoa and tea. We will achieve this through building a transparent and traceable supply chain, and working with technology partners to ensure we understand the origins of the materials we source and can independently verify that they are free from deforestation and conversion of natural ecosystems.

There is a debate over the role that carbon offsetting should play in corporate net zero commitments. What is Unilever’s position?

For Unilever, ‘net zero by 2039’ means ensuring that the emissions associated with our products are reduced towards zero as far as possible, with residual emissions balanced by carbon removals, through either natural or technological carbon sequestration such as reforestation or carbon capture and storage.

This target, as well as our short- and medium-term targets to reduce our operational (scope 1 & 2) emissions to zero by 2030, guides our approach. In the 2020s and 2030s, our primary focus will be emissions reductions across our value chain. We will not seek to meet our targets through purchasing and retiring carbon credits, known as offsetting. By 2039 and thereafter, we will ensure that any residual emissions are balanced with carbon removals to achieve and maintain our net zero position.

Lastly, we know that the world can’t wait until 2039 to begin investing in nature and protecting tropical forests, so we have set up our €1 billion Climate & Nature Fund, to help our brands to invest in projects that tackle climate change and protect nature. Some projects may generate carbon credits that brands can use to support consumer-facing claims of ‘carbon neutrality’, but this would be on top of making progress towards our emissions reduction targets, and not a means of achieving them.

What role can your brand and innovation teams play in the race to net zero?

Our brands and the innovation teams behind them are at the very core of our business and can play a hugely significant role in driving emissions reductions.

Despite already representing a significant source of our emissions reductions, concentration and compaction continue to offer significant opportunities. These efforts require fundamental changes to the chemistry – and often the packaging – of our products in order to deliver a great consumer experience. We believe we can reduce the emissions of some of our products by up to 60% through concentration and compaction efforts, including through ultra-concentrated laundry liquid and fabric conditioners, the creation of a range of dilutable products such as Cif eco refill, and other new disruptive formats.

We are also working to transition away from fossil fuels as feedstocks for the chemicals we use. In September, we announced our ambition to replace all the carbon derived from fossil fuels in our Home Care formulations with renewable or recycled carbon by 2030. We plan to produce highly efficient cleaning materials from sustainably sourced biomass, turn non-recyclable plastic waste into biodegradable cleaning and fragrance chemicals, and turn carbon dioxide from industrial chemicals into useful chemicals and minerals.

With COP26 around the corner, how will Unilever be advocating for more urgent global climate action?

The postponement of COP26 due to Covid-19 has given countries more time to prepare revised emissions reduction plans, and a recent wave of national net zero commitments from China, Japan and South Korea has put the Paris Agreement’s 1.5˚C goal within striking distance.

Unilever will be advocating for more countries to strengthen their emissions reduction plans. These should include targets to achieve net zero by 2050, interim targets consistent with a Paris Agreement-aligned pathway and enabling policy measures to support delivery. We will work directly in priority countries and through global associations such as the World Business Council for Sustainable Development, the We Mean Business coalition and the Consumer Goods Forum to support such goals. We will also call for ambitious goals and actions by both governments and the private sector on key themes like nature-based solutions, finance, and adaptation and resilience.

How will you continue to report on your progress against delivering the plan?

We will report annually on the progress we have made with implementing our plan, in line with the recommendations of the Task Force on Climate-related Financial Disclosures, and will participate in the annual CDP disclosure process. We will also submit an updated CTAP for an advisory shareholder vote at our AGM every three years, noting any material changes we have made or propose making.

Ultimately, how will being a leader on climate action help Unilever be a more successful business?

It is not hyperbole to say that how the world responds to the climate and ecological crisis over the next few decades will determine the future of our planet and thus the future of humanity itself. Or, to put it more simply, there is no business on a dead planet.

We do not need to look that far into the future, however, to believe firmly that climate leadership will help Unilever be a more successful business. Our collective knowledge of the climate crisis is growing. Consumers are becoming more demanding of brands. Investors are increasingly seeking to build net zero-aligned portfolios. High-quality talent is seeking employment with purpose-led companies.

In this context, we believe that any costs associated with this additional level of ambition represent a wise investment in building our purpose-led, future-fit business, one that will be respected and trusted by future generations as much as it has been by past generations.