The cost of inaction face financial losses, penalties & trust

Dear CEO's and Sustainability Teams in the consumer goods industry (and beyond!),

Unibloom hopes this message finds you both well and you are thriving in your roles despite all challenges on cost of living, climate crisis and injustice in our society. It's extremely hard to balance priorities and trade offs nowadays. We know that from our own lived experiences in the consumer goods industry  and that's why we today like to delve into the essential insights and financial challenges that await you on your journey to achieving Science-based targets in the consumer goods industry. But the cost of inaction might end up in NO business in ten years.

Just to re-emphasis a stressed  leader :  

António Guterres opened the UN climate ambition summit, held in New York on Wednesday, with a lacerating attack on wealthy countries and the fossil fuel industry for their ponderous response to the climate crisis.

The UN secretary general said the world is “decades behind” in the transition to clean energy. “We must make up time lost to foot-dragging, arm-twisting and the naked greed of entrenched interests raking in billions from fossil fuels,” Guterres said, adding that some fossil fuel companies had embarked upon a “shameful” attempt to stymie the transition.

Actions and cost of inactions to consider:

Insight #1: Supply Chain Complexity: As CEOs, you're no strangers to the vast and intricate web that is our supply chain. Navigating this complexity to measure and reduce emissions, waste, water and community impact, across the entire value chain is a formidable challenge. We must face gaps in data availability, transparency, and control head-on to create a truly sustainable footprint.

Financial Challenge: Inadequate supply chain sustainability can lead to increased costs, regulatory fines, and reputational damage, affecting your bottom line. The cost of inaction is high in this regard. Procurement needs guided and committed targets on sustainability when evaluating suppliers, not just cost and reliability metrics.

Insight #2: Product Life Cycle Analysis: Understanding the environmental impact of your products from raw materials to disposal is paramount. Yet, conducting comprehensive life cycle assessments can be daunting. Gaps in your knowledge regarding the impacts at each stage must be addressed to set and achieve science-based targets.

Financial Challenge: Misjudging the life cycle impact of your products can result in wasted resources, increased costs, and potential legal liabilities. Conversely, getting it right can yield substantial savings and customer loyalty.

Insight #3: Energy Transition: Transitioning to renewable energy sources is a necessity. However, the path forward may not always be clear. Access to renewable options, infrastructure limitations, and the costs involved can be formidable hurdles. Be aware that usually half of your energy emissions are coming from heating, so make sure you plan for a just transition on heat also, which two examples are Carlsberg & Peroni who teamed up with Absolicon for the heat transition to reduce emissions. Make sure decisions are not postponed, they have to be made on time, as installation, commission and full implementation takes time on all those renewables. Do not postpone investments in the energy transition.

Financial Challenge: Staying reliant on non-renewable energy sources can expose you to volatile energy prices and regulatory penalties. The cost of inaction in embracing renewables can be significant, but the benefits include cost savings and reduced risk exposure.

Insight #4: Circular Economy: Embracing circularity in product design and packaging is crucial. Yet, this transition often requires significant investments and changes in business practices, a gap that you must bridge. The new EU regulations, CSRD, represents a game changer in the shift from a linear to a circular economy. For the first time, the most ambitious set of mandatory reporting requirements includes a dedicated standard that closely links a company's resource use with its sustainability performance.

Financial Challenge: Failing to transition to circular models could result in waste generation, resource depletion, and higher costs. Embracing circularity, on the other hand, can drive efficiencies and reduce environmental impacts.

Insight #5: Regulatory and Policy Gaps: Operating in various regions with differing regulations can be complex. Regulatory and policy gaps can create uncertainty and challenges for compliance. As you all prepare for the new CSRD regulations and  understand how to report to those standards, the main objective with the new CSRD, is to drive ACTION into operations, understand impact on both environment and people-communities and connect to financial impact, not just about reporting anymore.

Financial Challenge: Non-compliance with regulations can lead to fines and legal issues. Staying ahead of regulatory changes can save costs in the long run and build trust with stakeholders. But it also help you to transition to a complete new business model. A new way to operate!

Insight #6: Consumer Behaviour: Changing consumer behaviour to favour sustainability can be challenging. Gaps in consumer education, awareness, and incentives may hinder your efforts. As a corporate you can't rely on consumer behaviour changes, do not factor that into your reduction and transition plans. Unibloom has seen several examples where KPIs are set to get more consumers buying vegan, or refills, which is great and shifting internal focus, however, it's a fraction of all consumers who are willing to give up old habits and primarily, it will take time and education, together with competitive price points and taste.

Financial Challenge: Ignoring shifting consumer preferences can result in losing market share and revenue. The preferences might be to deliver the same taste, efficiency and price price point though and that's why you need to start innovate & transition core products ingredients and packaging now. The cost of inaction is the loss of customers and market relevance.

In closing, these insights underscore the intricate landscape you navigate in the consumer goods industry. The financial challenges are real, but so are the rewards of proactive sustainability action. The cost of inaction encompasses financial losses, regulatory risks, and a potential disconnect with customers who increasingly demand responsible choices.

As we jointly pursue science-based targets, let's seize the opportunity to align financial prudence with environmental responsibility. Collaboration between leadership and sustainability teams will be pivotal in driving us toward a more sustainable and prosperous future.

Curios to learn more and understand how you can make actions happen, with data driven financial and sustainability scenarios, gap analysis and capital allocation through digitalisation, across the organisation, but in one platform, talk to us! anna.sandgren@unibloom.world

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