Unilever sets out net-zero plans for shareholder vote

Energy

Unilever has become one of the first multinational companies in the world to publish a corporate net-zero action plan for oversight by its shareholders, as it prepares to put the climate strategy to an advisory vote at its upcoming AGM in early May.

The consumer goods giant this week unveiled its strategy for achieving net-zero emissions across its entire supply chain by 2039 in line with recommendations from climate scientists, with a focus on decarbonizing its heating and cooling, encouraging its suppliers to set science-based targets, and stepping up its broader advocacy work in the run up to the crucial COP26 U.N. Climate Summit later this year.

The “climate transition action plan” (CTAP) is set for a non-binding, advisory vote at Unilever’s AGM May 5, with the company also promising to report annually on its progress towards implementing the strategy in line with the guidelines of the Task Force on Climate-related Financial Disclosures (TCFDs).

“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,” the company said.

The Anglo-Dutch firm first announced plans to give its shareholders a direct say over its climate action strategy back in December, in a bid to boost corporate transparency and governance surrounding its drive to reach net-zero emissions for its core business by 2030 and across its entire supply chain by 2039. It is also aiming to eradicate deforestation in its supply chains by 2023, including for commodities such as palm oil, paper, soy, cocoa and tea.

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.

In a blog post explaining the firm’s decision to give its shareholders a say on its sustainability strategy, Unilever CEO Alan Jope said the aim was “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,” he wrote earlier this week. “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.”

Jope also explained Tuesday that achieving net-zero by 2039 would mean ensuring that the emissions associated with Unilever’s products are reduced towards zero “as far as possible, with residual emissions balanced by carbon removals, through either natural technological carbon sequestration such as reforestation or carbon capture and storage.”

However, over the next two decades, the company’s primary focus would be on emissions reduction across its value chain, he insisted. “We will not seek to meet our targets through purchasing and retiring carbon credits, known as offsetting,” explained Jope. “By 2039 and thereafter, we will ensure that any residual emissions are balanced with carbon removals to achieve and maintain our net zero position.”

In order to deliver its targets, Unilever said its priority was to decarbonize its use of heating and cooling, including removing HFCs — harmful greenhouse gas pollutants — from its refrigerants, having already achieve 100 percent renewable electricity across its business worldwide.

It also has set up a $1.18 billion Climate and Nature Fund to help its brands invest in decarbonization and nature protection projects, and the firm aims to increase its investments in plant-based food offerings and harness the influence of its brands to help encourage greener consumer behaviors.

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.

And, in order to slash both upstream and downstream emissions in its value chain, the company said it would work with suppliers to encourage the adoption of their own science-based emissions targets, and to help its logistics partners to shift towards low emission transport options.

Unilever also promised to “step up our climate advocacy ahead of COP26,” including though its membership of global industry groups such as the Carbon Pricing Leadership Coalition and Transform to Net Zero.

“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,” explained Jope, who argued that leading on climate action “will help Unilever be a more successful business.”

“Consumers are becoming more demanding of brands,” he wrote. “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.”

Jonathon Porritt, founder and director of corporate sustainability nonprofit Forum for the Future, welcomed the publication of Unilever’s climate transition plan this week as “something of a breakthrough on getting shareholders focused on what companies need to do to get to net zero.”

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