Decarbonization of consumer goods
In consumer goods, 39% of industry players globally have publicly committed to decarbonization, so to reducing their greenhouse gas emissions. Usually the horizon is 2040 and also usually the percentage is 70%. Ambitious we would say.
However, despite these vocal promises, the reality paints a different picture: most companies are deviating from their sustainability goals. This deviation from the desired trajectory is mainly attributed to the following three challenges: the intrinsic nature of consumer goods value chains, insufficient collaboration between stakeholders and the tumultuous macroeconomic landscape full of uncertainties.
Decarbonization, however, is not only a burden, but also a path to value-generating opportunities. Taking initiatives to reduce your carbon footprint can bring significant benefits such as cost savings, stimulating growth for green products, cultivating new green businesses and ultimately reducing your negative ecological footprint.
Understanding the value of decarbonization
At the heart of successful decarbonization is the formulation of a strategic path: a meticulously orchestrated series of reduction measures arranged over a clearly defined timeline. Each company can chart its own unique course toward decarbonization by navigating various paths of change.
While some options require substantial investment, such as reconfiguring heavily polluting infrastructure, others open pathways to operational efficiencies and subsequent cost savings. However, the real essence of a decarbonization plan goes beyond simple financial considerations, requiring a holistic assessment of the aggregate value proposition.
Shifting the mindset from perceiving decarbonization as a mere expense to recognizing it as a strategic investment requires a paradigm shift among business leaders. Especially in the difficult economic climate, it is imperative for companies to take a long-term perspective, recognizing the intrinsic value of decarbonization initiatives.
Creating multiple value through decarbonization
Apart from its environmental benefits, decarbonization promises to unlock value through various pathways:
Cost savings: Certain decarbonization measures translate into direct cost savings, covering both capital and operational expenditure. In addition, proactively adopting these measures can protect companies from the financial repercussions of possible carbon taxes or regulatory measures – a growing concern in the context of the global effort to reach net zero emissions.
Green growth: As consumer awareness of sustainability increases, the demand for green products is experiencing a simultaneous increase. Consumers, especially the younger generations, show an increased willingness to pay premium prices for products with a reduced carbon footprint. This evolution of the consumer environment presents a profitable opportunity for companies to capitalize on green growth initiatives, potentially billions of euros in annual sales by 2030 across various market segments.
Expanding green businesses: Increasing demand for sustainable offerings also paves the way for the emergence of new low-carbon businesses or the diversification of existing businesses. Big-picture leaders are increasingly inclined to integrate sustainability into their strategies. Anticipating the future where environmental awareness is not just a secondary element, but a fundamental principle driving growth and innovation is plausible.
Realizing substantial value potential
Illustrative examples highlight the substantial potential value embedded in strategic decarbonization initiatives. For example, a leading European luxury brand is set to boost its EBITDA by 20% by 2030 by adopting seven crucial decarbonization efforts.
Similarly, a European food delivery conglomerate anticipates a remarkable 15% growth in EBIT-DA by 2025, thanks to short- and medium-term initiatives that include introducing reusable packaging, monetizing food waste and offering CO2 offsets at the cash register.
Capturing the potential of decarbonization
Consumer goods companies are at a critical juncture, poised to carve their way to resilient and future-ready business models through holistic decarbonization strategies. Success in this endeavor depends not only on the ability to reduce emissions, but also to leverage sustainability as a strong differentiation strategy, expand market share and encourage innovation in the green sphere.
In conclusion
Decarbonization of consumer goods is not only a moral imperative; it is an economic imperative loaded with transformative potential. By embracing this imperative with strategic foresight and sincere commitment companies can not only protect the planet, but also unlock tremendous value, ensuring a sustainable and prosperous future for generations to come.
Florentina Șușnea este Managing Partner în cadrul companiei PKF Finconta. Experiența ei profesională de peste 26 de ani cuprinde domeniile de audit statutar și IFRS, consultanță fiscală, probleme de rezidență fiscală, restructurare financiară și fiscală, documentație și politici de Transfer Pricing, fuziuni și divizări, M&A, expertize judiciare, contabile și fiscale, due diligence de achiziții. Florentina este membru acreditat al următoarelor organizații profesionale: Camera Consultantilor Fiscali, Camera Auditorilor Financiari din România, Camera Expertilor și Contabililor Autorizați din România si Association of Certified Anti-Money Laundering Specialists. A absolvit Facultatea Finanțe-Contabilitate din cadrul Academiei de Studii Economice, București, Facultatea de Drept din cadrul Universității ”Titu Maiorescu”, programul MBA de la Tiffin University din SUA, este doctor în economie și a urmat numeroase cursuri naționale și internaționale în domeniul fiscal. florentina.susnea@pkffinconta.ro