Terry Slavin reports on how Unilever secured only one A in 2018 after CDP revamped its methodology to be more demanding, particularly on water risk

Firmenich, the Swiss fragrance and flavour company, and French cosmetics giant L'Oréal are the only companies to get As across the board for their actions on climate change, deforestation and water security in CDP’s A list ranking for 2018, which is published today.

Unilever, which had triple A scores in the previous two years, only achieved the top score in the climate category, though it scored B for water security and A- for forests, according to Dexter Galvin, global director of corporates and supply chains at CDP.

And while 126 of 7,018 companies scored As for climate risk, only 27 among a possible 2113 got an A for their action on water security, compared with 74 last year. They included Spain’s ACCIONA, Gap, Ford Motor Company and Japanese beverage companies Asahi, Kirin and Suntory. Missing were European and American names in the drinks sector that have scored As in the past, such as Anheuser Busch InBev, Coca-Cola and Diageo, which were among 100 companies that are “still undergoing final quality assurance checks,” according to CDP.

“If climate change is the shark, water risk is the teeth, the area where the effects of climate change will be felt most acutely

Galvin said CDP raised the bar considerably when it revamped its methodology last year, particularly in its questions related to water security, in response to the urgency of the issue, investor pressure and to comply with the metrics of the Task Force on Climate-related Financial Disclosures, which asks companies to use scenario analysis to test how their business strategy fares given the transition to a 1.5°C or 2°C world. (See ‘We can’t wait for Al Gore. CEOs have to lean in to the water crisis’)

“If climate change is the shark, water risk is the teeth, the area where the effects of climate change will be felt most acutely,” Galvin said in an interview. “Last year the number of companies receiving As [in water risk] didn’t reflect the level of preparedness in the marketplace. … This year we’ve been more probing in our questions on water and looked more deeply into the water impacts in supply chains.”

Women collecting water in Ethiopa - CDP has raised its water risk criteria. (Credit: Martchan/Shutterstock)

Galvin pointed out that with new, more demanding methodology, “you will find some companies falling off the A list. It’s been a big ask, and those companies that received an A this year are really doing a great job.”

He noted that Japanese companies featured strongly this year, with 20 achieving As in climate change, eight getting top marks in water security, and one in forest risk. The country has the biggest number of companies committed to Science Based Targets, he said.

The new methodology did not adversely affect the number of companies that scored A for their action on climate change. This year they included Apple, Cisco, Johnson & Johnson, Mitsubishi Electric, China Mobile, Danone, Infosys Limited, Kering and Brazil’s Klabin.

All of our manufacturing sites in the US and Europe are 100% powered by renewable electricity

Banks showed strong leadership in this sector, with Bank of America, BNY Mellon, Goldman Sachs, Lloyds Banking Group all making the A list.

Another 11 achieved As in both climate and water, including Bayer, Braskem, General Mills, International Favors and Fragrances, LG Display, Microsoft, Stanley Black & Decker, Toyota and Mitsubishi Electric.

Despite the fact that 800 companies have pledged to end deforestation in their supply chains by 2020, only seven of the 455 companies that reported to CDP on deforestation received an A, compared with six of 264 reporters last year.

CDP's Dexter Galvin: 'Companies that received an A this year are doing a great job.'

They are Beiersdorf, Fuji Oil, L’Oréal, Firminich, Sweden’s BillerudKorsnäs, UPM-Kymmene of Finland and Swedish packaging business Tetra Pak, which now only accepts paperboard that is certified by the Forest Stewardship Council.

Gilbert Ghostine, CEO of Firmenich, said his privately owned company was proud of its first triple A score this year.

“Today, all of our manufacturing sites in the US and Europe are 100% powered by renewable electricity, on our way to reaching our goal of 100% worldwide by 2020,” he said. “To further scale up our impact across our value chain, we are the first perfume and taste company to be mobilising our suppliers to also disclose with CDP, as well as one of only 149 companies worldwide to have approved science-based targets.”

Laure Malherbe, sustainable sourcing director at L'Oréal, which notched up its third year of triple A scores, commented: “As a CDP supply chain member, the wealth of information provided by CDP disclosure is critical in helping us understand how our suppliers are performing, and where we can engage with them to reduce environmental impacts and costs. We particularly look to the CDP A List and scoring process to help improve the environmental performance of our suppliers, actively managing risks and identifying future opportunities.”

L'Oréal's 2017 Sharing Beauty With All report addresses the impacts in its value chain. (Credit: L'Oréal)

In its press release announcing the A list winners, CDP highlighted some of its other A listers:

• Best Buy US helped its customers realise utility bill savings of more than $45m last year by promoting Energy Star-certified products.
• Brazilian petrochemicals company Braskem has developed ‘Green PE’, a polyethylene produced from sugarcane ethanol that captures CO2 from the atmosphere during its production.
• Japan’s Fujitsu has developed technology that uses AI-powered big-data analysis to enable accelerated development of recovery plans when disasters occur.
• UK property company Landsec has reduced its energy intensity by 14.3% by introducing energy savings initiatives.
• LEGO Group launched the first LEGO elements made from plant-based plastic sourced from sugar cane, and has committed to making all LEGO products from sustainable materials by 2030.
• Korea’s LG Display has invested in 156 water-related reduction technologies, to save about KRW 4.61 billion (US$4 million).
• RE100 member Novo Nordisk is already sourcing 79% of its power for production from renewable sources and has a target of 100% power from renewable sources by 2020.
• Australia’s Telstra has created a Cloud Calculator Tool that helps businesses to transition to cloud technology through quantifying GHG emissions.

Surprisingly, another sustainability leader, IKEA, which had its Science Based Target approved last year and has been a leading member of organisations such as We Mean Business, RE100 and EV100, was among the companies that were given an F for failing to report to CDP last year. Galvin said IKEA, which has reported in the past, was going through an internal reorganisation of its sustainability strategy.

Jorge Soto, Braskem’s sustainable development director, will be one of over 100 speakers at Ethical Corporation’s Responsible Business Summit New York 18-19 March, along with fellow A listers Unilever North America’s Jostein Solheim and Cisco System’s John Kern.

L'Oreal's Emmanuel Lulin, Lloyds Banking Group's Leigh Smyth, Leon Wijnands of ING and Geert Paemen of Telefonica are A-listers who will be among the 150 expert speakers at Ethical Corporation's Responsible Business Summit Europe 2019 on 10-12 June in London.

Main picture credit: Firmenich
CDP  climate change  water security  TFCD  L'Oreal  Firmenich  Unilever 

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