Planning for policy change propels a multinational towards zero carbon
David Croft, Sustainability, Environment & Human Rights Director at Reckitt, tells us how the consumer goods company is wasting no time in investing in sustainability, and as a result is getting ahead of policy changes and consumer expectations.
As the race to net zero picks up pace, the cost of carbon will increasingly materialise in fossil fuel prices, companies will face more regulation, and they will be challenged by investors and consumers. They have to act now or they will miss the opportunity to help build a more sustainable value chain. And for that they will pay a price.
For our new report, Why wait to pursue net zero? Build a sustainable business model now, we interviewed David Croft, Sustainability, Environment & Human Rights Director at Reckitt. Here, he explains why cutting your emissions is not an add-on - instead, it should be a fully embedded part of business strategy.
Why do you think organisations need to plan for net zero now?
There will be a penalty for inaction. It will come from policy, but also from consumers, who increasingly expect brands and businesses to contribute solutions to the global challenges that we all face.
We see a higher cost of carbon in the future coming from increased costs for non-renewable fuel. And I suspect that the whole life cycle [Scope 3 emissions] rather than just the manufacturing elements of a product [Scope 1 and 2], will also become more of the focus of environmental policy going forward.
We already see that happening in other areas, for example in the packaging footprint and the increasingly prevalent tax policies on non-recyclable plastics, or the failure to use a proportion of recycled plastics in packaging. It seems quite reasonable to expect wider environmental footprint policies to arise between now and 2030.
How have you adjusted your own business strategy to tackle climate change?
Combating climate change is incredibly important for Reckitt because the connection between a planetary health and public health is increasingly apparent. Higher temperatures, water stress and loss of biodiversity lead to direct health impacts, challenges to hygiene, new vectors of disease and the potential loss of health solutions. It is a significant macro trend that influences our business and one we call out in our business strategy.
Our sustainability ambitions are a fundamental part of how we frame business activity, and they are entirely connected to the business agenda. They help to address climate change and other macro trends. They also provide a clear demonstration of our purpose, to protect, heal and nurture in the relentless pursuit of a cleaner, healthier world. In this way, we are trying to maximise the societal benefit we can create through the business, but also help the business to grow at the same time.
As we closed 2020, about a third of all our net revenue came from more sustainable products. By 2030 we want to increase that to 50%, and we also want to reduce the carbon footprint of our products by half. In doing so we want to reach half the world with products that help people live cleaner, healthier lives; engaging billions to help make that happen.
Why wait to pursue net zero? Build a sustainable business model now
What about your Scope 1 emissions from energy use?
We have significantly increased our use of renewable electricity and energy efficiency. Our approach, which is validated by science-based targets, confirms that we need to achieve about 65% absolute carbon reduction. We will get there by using green electricity - both buying it and generating it ourselves - as well as a driving a further increase in energy efficiency.
Our challenge comes in the short to medium term. We will need to replace gas-fired combined heat and power (CHP) plants with onsite renewable generation such as solar and efficiency measures. But we will still need to find cost-effective thermal energy from renewable sources, and that is something we are working on now. We anticipate that over the course of this decade we will start to see more commercialised opportunities for thermal renewable energy - not just from biomass or biogas, but also from hydrogen.
We are seeing increasing availability of renewable energy technology, and anticipate increasing cost of inaction progressively appearing through carbon taxation. There will be a time when those two lines cross over. That is why it is important to try to find best-value routes to decarbonisation. But best value does not mean cheapest - it means best value over the period of time that we are targeting. We see this is an investment for the medium term - not just the next two to three years.
How do you reduce emissions across your value chain - beyond the company walls?
Our ambition is for carbon neutrality across our whole value chain by 2040. Manufacturing operations are a small minority of our total value chain footprint, and other activity will become increasingly important. That includes the use of different ingredients and materials, such as recycled feedstocks for the chemicals we use, and the use of green energy in the manufacture of those products.
It is about creating opportunities through products that will be more effective in a low-carbon, low-water economy. And we see the need for collaboration here, we cannot go it alone - which is why we joined Amazon's climate pledge, for instance.
We have to work across our value chain on our collective footprint - with our suppliers, customers and consumers. With suppliers we are working to help reduce their carbon impact, improve environmental performance, and protect ecosystems. With customers, we’re collaborating to create scale and adopt new approaches, and with Amazon on the climate pledge and Walmart on chemical footprints. And because we rely partly on the way our consumers use our products, we’re working with them through our brands to support them in their homes and lives while also helping to make an impact on wider societal issues. We are innovating our products so they require less energy or less water when consumers use them. For example, if you are in a water-stressed area, having a bar of soap when you do not have much water is not helpful - a concentrated liquid soap like Dettol Squeezy is much better. Similarly, with our Finish brand, you can use your dishwasher with less water, helping save water and energy overall.
When it comes to sustainable business, the risk of inactivity is one thing, but the other thing to consider is the risk of missed opportunity. There is opportunity in developing products and working in a way that is part of the solution to the global challenge of climate change. I would much rather be part of the solution than part of the problem.
For more on Reckitt’s approach see www.reckitt.com/sustainability
To find out more about how sustainable business leaders are balancing the demands of planet and profit, download our new report: Why wait to pursue net zero? Build a sustainable business model now