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Case study: How Unilever is acting on climate change by eliminating deforestation

When forests are cleared, burned or degraded, they turn from being carbon sinks to carbon sources – contributing up to 15% of global greenhouse gas (GHG) emissions. As one of the world’s largest buyers of
palm oil – a major driver of deforestation – Unilever has committed to working with others to eliminate deforestation  Tweet This! from the world’s commodity supply chains.

This case study is based on the 2015 Sustainable Living Plan by Unilever that can be found at this link. Through all case studies, we aim to demonstrate that CSR/ sustainability reporting done responsibly is achieved by identifying a company’s most important impacts on the environment and stakeholders and by measuring, managing and changing. 

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Sustainability reporting using the Global Reporting Initiative’s Standards is essentially a four-step process: Identify – Measure – Manage – Change.

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Abstract

Across the globe, 1.6 billion people depend on forests for food, medicines, fuel, for their jobs and livelihoods. As one of the world’s largest buyers of palm oil – whose production is responsible for large-scale  deforestation –, Unilever aims to work with suppliers, governments and industry forums to eliminate deforestation from the world’s commodity supply chains, tackling the climate change threat. In order to achieve this target Unilever took action to:

  • transform its supply chain through a range of partnerships, policies and mechanisms
  • encourage the whole industry to set and meet high standards
  • work with others to embed no-deforestation pledges into national and international policies and
  • achieve external recognition of its efforts to tackle deforestation

What are the material issues the company has identified?

In its 2015 Sustainable Living Plan Unilever identified a range of material issues, such as mainstreaming sustainable agriculture, ethical business practices, safe drinking water, sanitation and hygiene, enhancing women’s lives, trust and transparency. Among these, as growing populations with rising incomes have increased demand for commodities – such as palm oil – that are the major drivers of deforestation, eliminating deforestation from the world’s commodity supply chains stands out as a key material issue for Unilever, as one of the world’s largest buyers of palm oil.

Stakeholder engagement in accordance with the GRI Standards

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The organization should identify its stakeholders, and explain how it has responded to their reasonable expectations.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Unilever engages with:

Stakeholder Group
Governments
Intergovernmental organisations
Regulators
Customers
Suppliers
Investors
Civil society organisations
Academics
Consumers
Concerned citizens

How stakeholder engagement was made to identify material issues

Over the course of one year, internal and external perspectives on Unilever’s most critical issues were gathered, through a four-step process:

  • Identification: Over 400 issues were identified, which included benchmarking competitors’ practices and global standards.
  • Review: During this phase the list was reduced to a shorter list of 191 issues that were then clustered into 38 ‘topics’.
  • Prioritization: Sessions with internal stakeholders from various functions were held, including Sustainable Business, Corporate Strategy, Finance, Investor Relations, Issues Management, External Affairs and Communications, to assess each topic’s potential significance to the business and its potential importance to stakeholders.
  • Validation: A roundtable discussion with a cross-section of external stakeholders took place to review a draft materiality matrix and provide new insights into priority topics, along with telephone interviews with stakeholders around the world, which helped determine the relative priority of the topics.

What actions were taken by Unilever to eliminate deforestation from the world’s commodity supply chains?

In its 2015 Sustainable Living Plan Unilever reports that it took the following actions for eliminating deforestation from the world’s commodity supply chains:

  • Transforming Unilever’s supply chain
  • In early 2016 Unilever updated its palm oil sourcing policy to include:
  • a time-bound implementation plan with clear annual milestones to achieve 30% physically certified oil by 2016, 50% by 2017, 80% by 2018 and 100% by 2019
  • transparency: Unilever’s new policy encourages suppliers and their third parties to be transparent about their supply chains, disclosing complaints and reporting breaches of Unilever’s Responsible Sourcing Policy
  • ‘zero-tolerance’ and enhanced verification: a new grievance mechanism will be activated if any of Unilever’s suppliers do not comply with its strict principles
  • Together with the World Resources Institute (WRI), Proforest and Daemeter, Unilever is implementing a robust traceability and risk verification system with WRI’s Global Forest Watch Platform, which uses the latest satellite technology to allow more informed sourcing decisions.
  • Encouraging the whole industry to set and meet high standards
  • Palm oil: the Roundtable on Sustainable Palm Oil (RSPO) made an important first step, but with a great deal of variability in practice. Unilever is supporting the development of RSPO Next, which will raise the bar for the industry.
  • Working with others to embed no-deforestation pledges into national and international policies
  • Unilever has encouraged other consumer goods companies on their deforestation commitments through collaborations such as:
    • the Consumer Goods Forum
    • Tropical Forest Alliance and
    • the New York Declaration on Forests
  • Together with others in its industry, Unilever has committed to achieving zero net deforestation associated with key commodities by 2020.
  • In December 2015, together with several other consumer goods companies, Unilever signalled an intent towards preferential sourcing from jurisdictions with adequate no-deforestation policies in place which both increase production and protect the environment and communities.
  • Achieving external recognition of Unilever’s efforts to tackle deforestation
  • Unilever has participated in the CDP Forests programme since it began.
  • 2015: Unilever was recognized as sector leader for timber, cattle products and soy in the Food and Beverage Processing Sector in CDP Forests programme, gaining an A performance grade for each commodity and an A- for Palm Oil.
  • February 2015: the Global Canopy Programme launched Forests 500, which identifies, ranks and tracks the ‘powerbrokers’: the governments, companies and financial institutions worldwide that together could virtually eradicate tropical deforestation. Unilever was in the top six of the 250 companies assessed, with 5/5 points and an overall score of more than 80 out of 100.

Which GRI indicators/Standards have been addressed?

The GRI indicators/Standards addressed in this case are:

1) G4-EC2: Financial implications and other risks and opportunities for the organization’s activities due to climate change – the updated GRI Standard is: Disclosure 201-2 Financial implications and other risks and opportunities due to climate change

2) G4-EN27: Extent of impact mitigation of environmental impacts of products and services

3) G4-EN32: Percentage of new suppliers that were screened using environmental criteria – the updated GRI Standard is: Disclosure 308-1 New suppliers that were screened using environmental criteria

4) G4-EN33: Significant actual and potential negative environmental impacts in the supply chain and actions taken – the updated GRI Standard is: Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken

 

References:

1) This case study was compiled using published information by Unilever which is located at the links below. For the sake of readability, we did not use brackets or ellipses but made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following links:

https://www.unilever.com/Images/uslp-mobilising-collective-action-summary-of-progress-2015_tcm244-424809_en.pdf (2015 Sustainable Living Plan by Unilever)

https://www.unilever.com/sustainable-living/the-sustainable-living-plan/reducing-environmental-impact/greenhouse-gases/acting-on-climate-change-by-eliminating-deforestation/ (May 2016)

https://www.unilever.com/sustainable-living/the-sustainable-living-plan/our-approach-to-reporting/about-our-reporting/ (May 2016)

https://www.unilever.com/sustainable-living/the-sustainable-living-plan/our-approach-to-reporting/defining-our-material-issues/ (May 2016)

https://www.unilever.com/sustainable-living/the-sustainable-living-plan/our-approach-to-reporting/engaging-with-stakeholders/index.html (May 2016)

https://www.unilever.com/Images/unilever_gri_g3_index_tcm244-438330_en.pdf (Unilever 2015 GRI Index)

2)  http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page

3) https://g4.globalreporting.org/Pages/default.aspx

4) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to Unilever: With each case study we send out an email to your listed address in request for a comment on this case study. If you have not received such an email please contact us.

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