India's FMCG Are Adopting Sustainable Practices, But Challenges Persist

Sustainability is increasingly becoming the only viable option for leading consumer goods companies in India. Climate change is affecting agricultural yield, impacting supply chains of the country’s top fast-moving consumer goods (FMCG) majors, prompting major players like ITC, Hindustan Unilever Limited (HUL), Nestlé India and Dabur to focus on adopting suitable practices as well as innovate new processes to go green.

Growing awareness among governments and companies is already changing how these businesses use fuels that harm the environment. According to global standards, the most direct sources of pollution fall under Scope 1 and Scope 2 emissions. These include greenhouse gases released from burning fuel on-site, refrigerant leaks and electricity used by the company.

Scope 3 emissions, however, are much broader. They cover the whole supply chain, from the goods a company buys to the waste it produces and how its products are transported. Tackling Scope 3 emissions is more complex but essential for achieving net zero, where a company balances the emissions it creates, with actions that remove or offset the same amount from the environment.

Take the case of homegrown ayurvedic products maker Dabur India. It has set an ambitious goal to become a net-zero emissions enterprise by 2045 and as part of the endeavour, it is eliminating coal from operations and aiming for 60% reliance on renewable energy sources for its Scope 1 and Scope 2 energy requirements.

According to Chief Executive Officer Mohit Malhotra, turning its operations and supply chain green is not an option but an inherent part of Dabur’s culture now. “Sustainability in the modern business world is about balancing consumer needs with environmental stewardship, a commitment Dabur has wholeheartedly embraced. This ongoing journey towards sustainability sees Dabur making significant strides, not only in creating eco-friendly products but also in greening its entire operations and value chain,” he tells Business Today.

HUL, the largest FMCG company in India by revenue, is not resting on its laurels either. According to B.P. Biddappa, Executive Director and Chief People, Transformation, and Sustainability Officer at HUL, the company is integrating environmental and societal considerations into its business model, paving the way for a sustainable and responsible future.

“A testament to HUL’s dedication is its significant reduction in environmental impact since 2008. The company has dramatically decreased CO2 emissions by 98% per tonne of production, water usage by 47%, and total factory waste by 58%. HUL’s sustainable sourcing practices also speak volumes, with 94% of paper and board, 81% of tomatoes, and 79% of tea being procured sustainably,” he tells BT.

Additionally, HUL is chairing a working group under the Resource Efficiency and Circular Economy Industry Coalition (RECEIC), initiated during India’s G20 Presidency in 2023. This collaborative effort, supported by the Ministry of Environment, Forest and Climate Change, aims to guide India’s chemical industry towards a net-zero future, focusing on reducing Scope 3 emissions.

“In pursuit of a zero-waste business model, we are exploring new ways to maximise reuse, recycling, and recovery. Transitioning from a linear economy to a circular one, HUL aims to retain the value of materials for as long as possible. This strategy aligns with the company’s purpose of making sustainable living commonplace, recognising the intersection of sustainable business practices and financial success,” Biddappa adds.

Salts-to-cigarettes major ITC Ltd has a wide-ranging sustainability programme spanning its verticals that cover Kolkata and the hinterlands of Bengal alike. As per the company spokesperson, for more than 25 years, ITC has been religiously pushing a benchmark in sustainability, guided by its ‘Responsible Competitiveness’ philosophy.

ITC’s climate strategy is two-fold, focusing on transitioning to a low-carbon economy while adapting to climate change impacts. The company sources 50% of its energy needs from renewable sources and is implementing projects like the high-pressure recovery boiler at the Bhadrachalam paper mill to reduce its coal consumption by 25%.

Global data shows FMCG majors, including the ones operating in India, are a major source of Scope 3 GHG emissions. According to London-based analytics and consulting firm GlobalData, Swiss FMCG giant Nestlé SA added more CO2 equivalent in 2021 than any of its peers.

“Nestlé SA is a leading Scope 3 greenhouse gas emitter. In 2021, Nestlé’s Scope 3 emissions were 113,700 thousand tonnes of CO2 equivalents, accounting for around 95.8% of total GHG emissions,” it said in a report. It is followed by the Brazil-based meat processing major JBS SA and Unilever (Anglo-Dutch parent entity of HUL) with 65,000 and 61,000 tonnes of CO2 equivalents, respectively, in the same year. Henkel, Colgate-Palmolive, ABInBev, Mondelez International, Danone, and General Mills were the other large emitters globally.

“Greenhouse gas emissions are one of the major causes of rising global warming, and companies from the FMCG sector account for a significant amount of global emissions. CO2, Methane & NOx gases form a major part of greenhouse gases released from Fossil Fuels such as gas and oil,” analysts at GlobalData noted. FMCG companies are under increasing pressure to reduce their carbon footprint. Consumers are becoming more aware of the impact of excess carbon dioxide emissions on the environment. According to GlobalData, consumption behaviour has changed due to awareness.

In response to BT’s detailed questionnaire Nestlé India’s spokesperson says, its “sustainability commitment focuses on climate change, packaging, responsible sourcing, and water. We have been a pioneer in responsibly managing an amount equivalent to the post-consumer plastic waste generated by its products. Since 2020, our brands have remained plastic neutral.”

Mumbai-based FMCG major Marico’s commitment to environmental stewardship has meant it consistently prioritises sustainable practices in all facets of operations. “From the moment we set our foundation, we recognised the vital role environmental consciousness plays in our decision-making process, thereby embedding it as a core value,” says Amit Bhasin, Chief Legal Officer & Group General Counsel and Secretary of CSR Committee at Marico Ltd.

Marico aims to pivot to a circular economy by ensuring 100% recyclable packaging by 2027 and integrating 30% recycled post-consumer resin into its product packaging, while Dabur became the first Indian consumer goods company to be Plastic Waste Positive by recycling 35,000 MT of plastic waste.

While FMCG companies have made notable progress in addressing their environmental impact, significant challenges remain in the journey toward true sustainability. Efforts to reduce emissions are often hindered by complex global supply chains, limited access to low-carbon alternatives, and inconsistent regulations across regions. Companies would also have to invest in scalable, systemic solutions that integrate sustainability into core business strategies, to reduce their carbon footprint.