sustainability
How can drinks firms connect with consumers on climate action?
Following this year’s World Economic forum in Davos, Ben Cooper looks into the efforts drinks companies have been making to improve their impact on the environment, and why those efforts are vital to consumers.
The decade has begun much as the last one ended, with climate change making headline news and a 16 year-old Swedish schoolgirl delivering uncomfortable truths to an audience of elite grown-ups.
The alphas on the receiving end of Greta Thunberg's uncompromising words and unsettling, piercing stare were gathered for the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland.
That climate change was one of four key areas of discussion at Davos, and the predominant theme among the four, comes as no surprise, just as the prevalence of climate-related issues in the WEF's Global Risks Report had been when it was published in mid-January.
Drinks companies are taking action
Last month, Carlsberg became the latest drinks company to sign up to the 'Business Ambition for 1.5°C'. The initiative was launched in June by the UN Global Compact (UNGC) and is aimed at increasing the emissions reduction ambitions of major corporations.
Having unveiled 87 participating companies at the UN Climate Action Summit in September, the UNGC was able to announce at the COP 25 conference three months later that 177 companies had signed up to the pledge.
Signatories commit to set highly ambitious science-based emissions reduction targets aligned with limiting global temperature rise to 1.5°C and/or to reach net-zero emissions by 2050, in line with 1.5°C scenarios and interim quantitative targets.
The UNGC plans to recognise further signatories at the crucial COP 26 conference in Glasgow in November.
The world needs leadership. Global challenges such as climate change and water scarcity require strong collective action.
In common with other companies, Carlsberg has alluded specifically to the importance of taking a leadership role.
When the brewer first launched a science-based emissions target, CEO Cees 't Hart said "The world needs leadership. Global challenges such as climate change and water scarcity require strong collective action."
Corporate reputation is multi-faceted. The reputational benefits from being officially recognised by the UNGC as a leader on climate action at COP 25 relate more to a company's relationship and standing with policymakers, peers, partners and external stakeholders, than with consumers.
The increased exposure climate change has seen since the landmark report by the UN's 'Intergovernmental Panel on Climate Change' (IPCC) in October 2018, undoubtedly means many more consumers have a clear understanding of the 1.5°C and 2°C scenarios, and the ranks of climate-savvy consumers will continue to grow.
However, the idea of the science-based target, along with the methodology that allows the 'Science-Based Targets Initiative' to certify a company is aligned with global efforts, are not concepts all consumers will find easily relatable.
Science based targets: decision time for companies
Drzik's comments speak to the increasing sophistication of climate risk analysis but the same is true of corporate action on climate.
The gamut of climate-related actions and metrics a company might place in the public domain ranges from greenhouse gas emissions reductions, the use of renewable energy, the creation of more sustainable packaging, and to carbon offsetting.
That consumer demand for environmental credentials is increasing is incontestable, with survey after survey from markets all around the world revealing consumers to be more motivated by environmental concerns when making purchase decisions.
Nevertheless, with so much information to offer, companies have choices to make regarding which elements to highlight to consumers and when to do so.
In addition to Carlsberg's announcement, a number of other prominent drinks companies have recently made major announcements in relation to mitigating their climate impact.
Nestlé has announced plans to invest up to $2.06bn to lead the shift from virgin plastics to food-grade recycled plastics and to accelerate the development of innovative sustainable packaging solutions.
The company has committed to source up to 2 million metric tons of food-grade recycled plastics, setting aside more than $1.61bn to pay a premium for these materials, between now and 2025.
While concerns about marine pollution were the primary catalyst for the recent scaling-up of drinks firms' commitments on plastic packaging, Nestlé has underlined that this significant new commitment on plastics has a climate element, and would contribute to its aim of achieving zero net greenhouse gas (GHG) emissions by 2050.
Driving towards renewable energy
Meanwhile, announcements by PepsiCo and Pernod Ricard suggest both companies see their progress on renewable energy as the achievement to highlight from their respective climate strategies.
PepsiCo is targeting the use of 100% renewable electricity in its US direct operations by the end of this year. The country accounts for nearly half of PepsiCo's global electricity consumption, while the company already uses 100% renewable electricity for its direct operations in nine countries.
The shift to renewable electricity in the US is expected to result in a 20% reduction in company-wide 'Scope 1 and 2' (direct operations) GHG emissions against a 2015 baseline.
This represents a significant contribution to the company's goal of reducing absolute GHG emissions across its global value chain by 20% by 2030 against a 2015 baseline.
Just getting better is no longer good enough.
A few weeks earlier, Pernod joined the 'RE 100' initiative, which now comprises 221 international corporations committed to 100% renewable electricity.
In April, the company set a target to use 100% renewable electricity in all of its production sites and administrative offices by 2025.
Pernod also committed to reduce absolute carbon emissions from production sites by 30% by 2030, certified by the 'Science Based Targets Initiative' to be aligned to the below-2°C global warming scenario.
PepsiCo and Pernod are in no way laggards. Their achievements and aspirations on renewable electricity are significant, but their overall GHG emissions targets look modest in comparison with companies now signed up to the 'Business Ambition for 1.5°C'.
However, whether this greatly affects their public standing in terms of climate engagement is questionable.
Commenting on Carlsberg's announcement, Tom Delay, chief executive of low-carbon certification and advisory organisation the Carbon Trust, said: "Just getting better is no longer good enough.
Carlsberg has taken a genuine leadership position on some of the most critical environmental issues the world currently faces."
With regard to winning and maintaining consumer approval, however, getting better may be good enough, for now, at least, if the story of how a company is progressing is compelling and memorable.
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