Examining Unilever's Net Zero Commitments

Executive Summary

Unilever is one of the world's largest fast-moving consumer goods company, producing foods, refreshments, home care, and personal care products used by hundreds of millions around the world. The company set a net zero ambition aligned with a 1.5°C pathway.

Key strengths of Unilever's net zero strategies include:

• refusal to rely on carbon offsets

• rigorous carbon calculation methods aligned with the GHG Protocol, and

• ongoing innovation in alternative ingredients

However, the plan falls short of full transition leadership due to:

• exclusion of significant use-phase emissions for consumer goods

• limited clarity on supplier enforcement mechanisms

• dependence on future accounting rule changes, and

• lack of a structured external innovation strategy

This review evaluates Unilever's net zero strategy across key areas, including scope and coverage completeness, carbon accounting, renewable energy and process transformation, and innovation and carbon removal pathways. It concludes with a set of targeted recommendations.

Scope Coverage and Completeness

Carbon Accounting and Data Integrity

Unilever deserves credit for investing in rigorous carbon calculation methods to obtain primary data rather than rely on industry averages. The company has also made significant investments to improve traceability and monitoring capabilities for GHG emissions along the supply chain at the farm level.

However, nearly 80 metric tons of carbon emissions are outside Unilever's target emissions.

The company assumes future changes in accounting rules may allow supply shed emission reductions without full physical traceability

Renewables and Value Chain Transformation

At the moment, Unilever relies on EACs, which are valid but can be a form of offsetting since they compensate for energy consumption whether or not the actual grid electricity comes from renewable or mixed sources. Due to Unilever’s scope and presence in multiple countries, these are practical, and advocating for continued acceptance of EACs in carbon accounting frameworks is a good strategy to keep regulatory changes at bay.

Unilever is funding expert services to help suppliers be onboarded, which can help build capacity and assuage supplier hesitancy since decarbonizing can require a significant upfront investment. However, Unilever’s supplier engagement strategy doesn’t feel aggressive enough. Unilever should still outline the set of incentives (and penalties) they have put in place to support (and pressure) their suppliers to adopt environmentally responsible processes. These can include subsidies, financing, procurement exclusion, and public disclosure of supplier compliance rates.

Offsets and Removal

Unilever is not relying on offsets. This could have been an opportunity to focus funding on innovations for carbon removal, but apart from internal research and development for developing alternative plant-based ingredients through biotechnology, the net zero plan lacks a clear pathway for addressing the innovation gap outside of Unilever’s direct operations. Unilever depends on innovations in the market, and the company is engaging in selective industry roundtables, but Unilever should have a more aggressive plan to bridge the innovation gap. Fostering external innovation can include venture capital-style funds to invest in breakthrough technologies, funding research in key areas such as next-gen regenerative agriculture techniques, or crowdsource breakthrough ideas through open calls for innovators and supplier innovation challenges.

Recommendations for Strengthening the Net Zero Plan

1. Develop a structured consumer engagement strategy targeting use-phase emissions

2. Introduce supplier incentives and penalties tied to procurement eligibility

3. Establish contingency accounting pathways independent of potential GHG Protocol revision

4. Launch or participate in external climate innovation funding mechanisms

5. Publish clearer roadmaps for residual emissions management post-2035