Just transition in the FMCG sector

Anna Triponel
May 26, 2023
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What does the just transition mean for the FMCG sector? How are human rights, climate and the environment inter-connected, and what are companies supposed to be doing about it? What does the road ahead look like - and what can FMCG companies do today? We at Human Level have been discussing these questions - and many more - with AIM-Progress and its 44 member companies and suppliers as well as a range of external experts. This reflection and research process, which started in October 2022, has culminated in a summary report just out this week: β€˜The Fast Moving Consumer Goods Sector and the Just Transition.’

It is essential reading for anyone interested in the road ahead for companies that still want to be around in 2030…

A few key highlights:

  • This is urgent work that needs to pick up pace. We are in a new business context where it is increasingly challenging to distinguish respect for human rights from the inter-connections between human rights, climate and the environment - and the future of business altogether. Recognising and responding to these interconnections is the future for companies. It is also, increasingly, the reality for companies, workers and communities. We need to urgently enhance our sharing of practical recommendations and steps to support the road ahead. 🌎
  • Companies are eager to move forward with further work on the inter-connections between climate, the environment and human rights. At the same time, there is a risk that companies might use the term just transition to re-brand their existing work. External experts emphasized that this would lose the necessary business model transformations grounded in strong social dialogue and the restoration of the imbalance of power between corporates and impacted stakeholders that are viewed as central to the just transition. There was also sensitivity with companies extending the term too widely, so as to lose its focus on green and sustainable transitions. In other words, define the term too narrowly and we risk missing the essence of just transition; and define it too loosely and we risk diluting it to render it meaningless. βš–οΈ
  • One of the key findings of the study was the need to further flesh out what just transition risks and impacts are in scope for FMCG companies. During the course of our conversations, we found that it helped to start to unpack the transitions in the FMCG sector out into several buckets. A number of respondents found these buckets helpful to articulate their thoughts and practices. Therefore, we provide a proposed β€˜Just Transition Risks and Impacts Identification Framework’ that we used as part of this process (see picture below) πŸ•Ή
  • The focus in the first bucket is on how the company’s existing business model – including from its existing adverse human rights impacts as well as its environmental impacts (e.g. GHG emissions, water, land, biodiversity) - has impacts on people. The focus in the second bucket is on how the actions the company is taking to respond to its environmental/ climate impacts can impact people, capturing the unintended consequences of mitigation and adaption actions that may be beneficial for the planet, but detrimental to people. Taken together, this identification framework offers a starting point for companies seeking to take a holistic, long-term approach to how they respect human rights throughout their operations as they transition toward environmentally and socially sustainable economies and societies. πŸ₯
  • The framework applies a temporal framework of 2030. This is critical because many human rights risks connected to the transition are only just starting to emerge, and will be missed by a focus on present-day risks and impacts. By 2030, the operating context will have acted as an amplifier of existing human rights risks in the FMCG sector. By 2030, environmental impacts of companies that impact people (notably: emissions of greenhouse gases; impacts on biodiversity; impacts on water (both availability and quality); and impacts on land use (including deforestation) and soil integrity) will look very different to how these impacts are manifesting today. Risks to people from mitigation (e.g. human rights impacts from renewable energy, carbon credits, move to circular systems and the agricultural transition) and from adaptation will be much more present. πŸ•°
  • In fact, impacts on people from adaptation activities have already started – and these impacts will accelerate with time. These include changing sourcing locations to respond to extreme weather events, changing sourcing markets to accommodate changes in growing commodities from rising temperatures, changes in sourcing markets to reflect changes needed to offer climate-friendly diets, relocation of factories to areas with lower heat stress impacts, and new constructions to adapt to extreme weather events. 🏭

I will not attempt to list here all of the company representatives, AIM-Progress members and external experts who have been a part of this - anything like this is necessarily the result of significant team effort and collaboration - and we at Human Level are so grateful to you for opening up your businesses, your practices, your thoughts to us so that we can advance together on the next step ahead. We particularly commend AIM-Progress and its members for advancing on this journey - concretely, but with pace. It is the road ahead for business. 🌟