PepsiCo & Unilever: New Supplier Standards Tackle Scope 3

In the consumer goods sector, a united front is forming to tackle one of the industry's biggest environmental challenges. Twenty-six companies, including PepsiCo, Unilever, and Ahold Delhaize, have announced new sustainability targets through the Consumer Goods Forum's (CGF) Towards Net Zero Coalition. These standards aim to reduce Scope 3 emissions - those generated throughout supply chains - by setting clear supplier expectations.

This initiative, launched at COP29, underscores the increasing urgency to address emissions not directly produced by companies but linked to their operations. Scope 3 emissions account for 60-80% of a company’s environmental footprint, making them a crucial focus area.

Understanding Scope 3 Emissions

Scope 3 emissions often appear complex but can be simplified with an analogy. Consider a baker. Their Scope 1 emissions might come from their oven’s smoke, while Scope 2 emissions stem from the electricity powering their kitchen equipment.

The more elusive Scope 3 emissions originate in the baker’s supply chain. This could include the delivery van transporting cakes to a supermarket, the refrigeration energy used in-store, or the disposal of packaging. The baker is also indirectly responsible for emissions from suppliers, such as the farmer producing flour and eggs.

For companies like PepsiCo and Unilever, the scale is magnified. Their supply chains span thousands of suppliers, making robust frameworks like the CGF’s standards essential for impactful change.

Procurement's role

Procurement is critical in this equation. As companies aim to slash Scope 3 emissions, supplier selection and contract terms increasingly hinge on sustainability metrics. The CGF’s framework empowers procurement teams to evaluate suppliers against unified standards, ensuring alignment with climate goals while maintaining operational efficiency.

“This isn't just about environmental benefits; it’s about making supply chains resilient and future-proof,” says Grant Sprick, VP of Climate & Environment at Ahold Delhaize. By embedding emissions criteria in procurement processes, businesses gain leverage to influence upstream and downstream partners.

Setting New Standards in Supply Chain Sustainability

The CGF’s targets arrive at a pivotal moment. The consumer goods industry faces growing scrutiny from regulators and environmentally conscious consumers. These new standards address long-standing challenges like regional regulations and the complexities of global supply chains.

Flexibility within the framework allows companies to customise approaches while adhering to a collective vision. PepsiCo Europe’s Chief Sustainability Officer Archana Jagannathan highlights this adaptability: “It ensures the most pressing sustainability issues are tackled first while maintaining momentum across the sector.”

Procurement teams play a frontline role here. For instance, by prioritising low-carbon materials or favouring logistics providers committed to clean energy, businesses can operationalise their climate commitments effectively.

Driving sector-wide change

The CGF's initiative reflects a larger shift toward collective action. By cascading expectations across supply chains, the coalition hopes to influence suppliers and their networks to adopt similar standards. This ripple effect is essential for achieving the systemic change needed to reduce emissions at scale.

“By working together and setting consistent expectations for suppliers, we can create meaningful, long-term change,” says Rebecca Marmot, Chief Sustainability Officer of Unilever.

Such collaborative frameworks also bolster companies’ standing with international climate initiatives. The CGF works closely with the United Nations as part of the Race to Zero Accelerator, supporting the Paris Agreement’s goal of limiting global warming to 1.5°C.

Laying the foundation for change

While the CGF’s targets mark significant progress, they are seen as just the beginning. For many companies, these standards serve as a starting point for more ambitious climate action.

As the consumer goods sector grapples with evolving consumer demands and complex supply networks, frameworks like the CGF’s Towards Net Zero Coalition highlight the power of shared responsibility.

“For many companies, this will be an initial step in their supplier sustainability journey,” Marmot concludes. “We hope it encourages further progress across the industry.”

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