Helping suppliers count and cut carbon

Our Climate Transition Action Plan (PDF 7.98 MB) sets out the steps the company will take to achieve net zero across our value chain by 2039. As Climate Week NYC draws to a close, Stella Constantatos, Senior Manager in the Business Operations Sustainability team at Unilever, talks about why it’s critically important for us to look outside our own walls and engage our suppliers on climate.

How did you start working on sustainability and climate change?

I joined Unilever at a Home Care factory in South Africa in a process engineering role, producing soap powder more than 20 years ago. After a while, I wanted to work on something that had a positive impact on the environment. Through stints in manufacturing and logistics, supply chain and procurement, with 15 of my 20 or so years focused on sustainability, I developed a good grounding for the role I’m in now.

What does your current role involve?

I lead the work on our upstream emissions. Just over 60% of our total greenhouse gas footprint arises upstream of our operations, which covers all the raw materials and packaging – grown, extracted or refined, and processed – that arrive at our factory gates.

My day-to-day job is a mix of internal and external interfaces. There’s a lot we need to do internally with our procurement organisation. For example, we’re looking at how we can leverage our buying power to drive impact when we buy a chemical or a commodity. There’s also a big external part, which I love, dealing with our suppliers directly. At the moment, we’re in the middle of a pilot of the Unilever Climate Programme, working with over 30 of our suppliers – a small but important subset of the 54,000 suppliers we buy materials and services from. We’re figuring out ways to improve transparency of climate impact and ultimately reduce emissions from our shared value chain.

Why is it so important to help suppliers reduce their emissions?

Unilever has been acting in this space for a couple of decades, and we believe it’s absolutely relevant for our consumers and other stakeholders and for the longevity of our business.

We’ve seen disruption to our value chain in the past due to extreme weather events, and this is only going to worsen with climate change if we – and other companies and parts of society – don’t move fast enough. We need to tackle emissions in our supply chain to ensure the future security of supply. And we have to do this by working with others, because we won't be able to achieve our goals on our own.

We’re not directly in control of what suppliers do – we can only influence them. So, we’ve spent quite a bit of time looking into the materials and the services that Unilever buys, to identify the most important ones for us to focus on. That’s how we’ve arrived at a target of 300 suppliers we want to work with to accelerate their climate journey. These suppliers effectively cover 60% of our upstream emissions.

What are we asking our suppliers to do?

Three things. One is to set a climate target in line with what the science says is needed to limit warming to 1.5 degrees – namely, to halve emissions by 2030.^[a] We’re also asking them to publicly report on their progress for accountability. And the third, and probably most important thing, is that they share the carbon footprint of the materials they sell to us.

Being able to understand the source of emissions and look at the scenarios to reduce them and then work out the trajectory over time is very powerful. We believe that when you know the footprint of the material you are producing as a supplier, then you can dig into where your biggest source of emissions is, and you know where you need to act.

What are we doing to support our suppliers?

The suppliers currently working with us in our pilot are a very diverse group, covering different sectors of the economy and ranging from small, privately owned enterprises through to very large corporations, bigger than ours in some cases, and they are scattered all over the world.

They are also all at different stages of their climate journey. Some are really advanced and we can learn a lot from them. Then, at the other end of the scale, we have suppliers who have not started acting on climate yet. And this is a real challenge, because we’ve had to adapt our engagement approach depending on what stage these suppliers are at. A one-size-fits-all approach doesn’t cut it.

For those just starting out, we’ve partnered with some great organisations to provide access to free online materials so suppliers can effectively fast-track their climate learning. Then we’ve given the next group up access to a platform that helps them calculate a footprint for the materials they sell to us, and we’ve commissioned independent consultants to help them develop the numbers. We’re funding the work, but the suppliers will own their data.

The third group of suppliers already know their product footprints, and so they’re testing a new data exchange mechanism intended to standardise the receipt of this data into our business. We need all our suppliers to share information in the same way – for example, without excluding methane emissions. Once this has been established, we’ll identify how we can best make use of the data for mutual benefit.

What has been the biggest learning so far?

I’ve been positively surprised that our pilot suppliers are much more advanced in their journey than we could see from desktop research. Having conversations rather than reading reports has been extremely informative.

We’re also learning to look at each business individually. If we’re buying skimmed milk powder from a host of different suppliers around the world, we know that the contexts are different. In some cases, it will be a smallholder farmer with three or four cows per farm. In other cases, it might be a couple of hundred cows with a high degree of automation and we know these factors influence the product footprint.

So absolute comparisons are risky because they don't show that level of context. It’s more important to know the trajectory of numbers. If they start at, for example, eight kilograms of CO2 per kilogram of skimmed milk powder, then we need to know how that figure is coming down over time. That’s the conversation we want to have.

What do you see as the biggest contribution Unilever can make?

I think we offer a deep insight into what drives consumption and consumer behaviour, combined with an understanding of the sources of emissions and climate impact of choices. This helps to build the business case for our suppliers and makes us a credible partner.

What do you think has been the biggest shift in Unilever’s climate strategy?

When I was recruited to join Unilever in South Africa, I asked, “OK, what kind of environmental strategy and programmes do you have as a business?” And they put a one-page environmental policy in front of me that was largely compliance-based. Since then, I’ve seen the evolution of the Unilever Sustainable Living Plan, which brought sustainability to the forefront of the business, to our current Compass strategy, which integrates sustainability and business into one single strategy. It’s been a massive transformation and it’s fascinating and amazing to have been part of that.

Given the scale of the challenge that lies ahead, do you feel hopeful for the future?

I feel very motivated to work in this space, but I do it with a healthy dose of realism and pragmatism. I’m not blindly optimistic because I think we have to be realists to know what we’re dealing with so we can tackle it face on.

All the people I work with are absolutely committed to tackling this challenge – my colleagues in the Business Operations Sustainability team, our extremely smart R&D colleagues, our expert Science team and highly professional procurement organisation. And when you mobilise thousands of people in one direction, there’s massive potential to have an impact – both across our own business, and influencing other companies to follow.