Report on Corporate Sustainability Practices in the

FMCG Industry
Group Report

Section C Group 10

Annmaria (PGP/24/130)
Debapriya (PGP/24/140)
Javin (PGP/24/150)
Meghana (PGP/24/160)
Rishav (PGP/24/170)
Sonu (PGP/24/180)
 Introduction
The companies in the FMCG sector have a major impact on the environment and society they operate in.
FMCG sector responsible for over a third of global greenhouse gas emissions. The way the world produces,
distributes and consumes food is at the heart of many of the challenges we face today, therefor FMCG
companies which operate an agricultural supply chain that spans across nations and supports millions of
farm workers undoubtedly have a huge role to play in addressing these challenges.
Also, Customers are increasingly becoming more mindful of their purchasing habits, being attentive to the
sustainability of the product, the company, and the supply chain.
Recent research from the Stern Center for Sustainable Business found that products marketed as sustainable
grew 5.6 times faster than those that were not.
Recent Global Sustainability Report from Nielson concluded that 66% of consumers were willing to pay
more for a sustainable brand and among millennials, 73% were willing to pay a sustainability premium.

Corporate Social Responsibility

Most companies in the FMCG sector recognize the need for a sustainable food system, one that can meet
human needs and continue to drive economic growth and social development, without exceeding the
planet’s natural boundaries.

Shared Challenges:
• 70 percent of the world’s freshwater use is in agriculture alone, even as more communities experience
water scarcity.
• A third of greenhouse gas emissions originate in the food system.
• More than half of fertile topsoil is classed as degraded.
• Only 14 percent of plastic packaging is recycled for future use.
• Over 800 million people are undernourished.
• Almost 40 percent of adults are overweight.
• 80 percent of the world’s extreme poor live in rural areas and rely mainly on agriculture for their
livelihood.
Keeping these major challenges in mind, the five key Sustainability trends in the FMCG sector are:

1) Sustainable Packaging: One of the major polluters in the industry is plastic packaging, therefore there is
increasing pressure on the Companies to reduce their environmental impact by cutting plastic use. For
example - Coca Cola made an announcement at Davos 2020 about their commitment to recyclable plastics
and is currently trialing paper bottles. Pepsi Co has committed to moving to 100% recyclable plastic bottles
by 2022.

2) Sustainable Sourcing : With supply chain extending in different countries touching multiple stakeholders,
FMCG companies like Nestle and Unilever are collaborating with non profits and other companies in order
 to clean up their supply chains(minimizing environmental footprint) and ensuring that various stakeholders
(farmers etc.) get their rightful dues.

3) Plant based alternatives : The trend for plant-based eating has been prevalent for the past few years, and
it’s not showing signs of stopping. The proportion of meat eaters who have reduced or limited the amount
of meat they consume has risen from 28% in 2017 to 39% in 2019.

Taking this a step further, dairy alternative drinks Oatly have announced they will include the climate
footprint of the product on the packaging to show customers the environmental impact comparable to the
animal alternative. This retail activism is engaging with the rising environmental consumer concern and the
mindfulness of direct environmental consequences of purchasing habits.

4) Energy efficiency : Organisations are investing more in sustainable manufacturing and distributing
processes. Primarily we have seen a movement towards sourcing renewable energy. Companies are using
renewable energy providers, or in the case of Budweiser, they are partnering with the providers to build the
renewable source necessary to power their manufacturing.

Waitrose has committed to a zero carbon fleet of trucks for distribution, using only electric vehicles by
2045, and L’Oreal has made headway in building ‘dry’ factories with closed loop water systems.
Sustainability in transport and manufacturing is a slow progression with challenges of technology and
production disruption, but there has been increasing momentum in committing to change

Alignment with UN SDG’s: All major FMCG companies are aligning their CSR goals with UN SDGs
with a major focus on nutrition. Companies are re jigging their portfolios to introduce micro nutrients,
vegetables and to cut down sugar in their products.
Nestlé is reworking on ingredients of its product such as adding iodine to Maggi cubes. Unilever and Coca
Cola are also cutting sugar, fat and salt from their products. The same makes business sense for these
companies as well with increasing awareness and gradual shift towards healthier foods.

Stakeholder empowerment: All the major FMCG companies have lately realized the need to focus on
local communities and stakeholders like farmers are working towards their upliftment. ITC is working
successfully on its e-choupal program which focusses on farmer training and providing adequate resources
like weather updates, access to markets for its farmers. Unilever, through Project Shakti is financially
empowering rural women by involving them in their local distribution

Corporate Governance & Reporting

As stewards of any company, the Board plays an essential role in determining its strategic priorities. The
full Board considers sustainability issues a vital element of its business oversight, as sustainability topics
are integrated into, and not separate from, the company’s business strategy. Most of the FMCG companies
have a Public Policy and Sustainability Committee, which assists the Board in providing more focused
oversight over the Company’s policies, programs and related risks that concern key public policy and
sustainability matters. Another key role played by the Committee is managing the integrity of the data on
which the company reports. Year-round engagement with diverse stakeholders informs the company’s
sustainability strategy. GRI Materiality Topics represent the issues that are priorities for the business and
stakeholders. These sustainability-related topics are publicly reported on based on the Sustainability
Reporting Guidelines followed by the company.