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Introduction: In the consumer goods industry, scented home- and personal-care products hold a unique place due to their daily use and the emotional connections they create with consumers. Beyond providing sensory and functional benefits, these products have the potential to also encourage environmentally conscious behaviors if they represent a credible sustainable approach. Consumers increasingly evaluate factors such as a product’s carbon footprint at the time of purchase, as well as its impact on water consumption and emissions during use. This has also led to a growing consumer demand in environmentally friendly products, at the same time prompting many brands jumping the bandwagon by engaging in communication practices that may be deemed misleading, such as greenwashing. More and more companies in the home- and personal-care industries, and fragrance house suppliers, are stepping up the quality, transparency and scope of their environmental, social and good governance efforts which are voluntarily published in ESG (Environmental, Social, Governance) reports. With increasing global scrutiny on corporate responsibility, ESG metrics are reshaping how we assess everyday goods and the companies that produce them.
ESG reporting is becoming increasingly important and moving from a voluntary disclosure reporting to a law-regulated one through the introduction in the EU of upcoming CSRD directives and related ESRS standards. ESG metrics are becoming increasingly comparable to financial metrics in how they shape perceptions of a company among investors, society, and its workforce. This article shares some thoughts on the key drivers for ESG strategy and how heritage narratives and innovation can strengthen ESG strategy communication.
New concepts such as double materiality assessments are recently introduced in the recommendation set forward by EFRAG in the CRSD directives. This new concept enables companies to assess both the impact of the company on environmental and social materiality, and the latter’s ongoing transformation impact onto a company. This more comprehensive assessment is conceived to help companies set a more holistic strategy and focus on the biggest material elements within the ambitions of the EU green deal. Assessing what is material to a company is not straightforward, as there may be different interpretations due to the nature of the stakeholders and how to assess the financial impact.1
ESG reporting, current baseline: Examining the double materiality analysis of consumer packaged goods (CPG) and fragrance and flavor (F&F) companies reveals that significant impacts are primarily of environmental nature, aligning with the United Nations Sustainable Development Goals (SDGs). Climate change (SDG 13) emerges as the most critical concern. Biodiversity is another key issue, though its implications vary across companies. Plastic pollution can be seen as a threat to biodiversity (especially aquatic life, SDG 14) while unregulated sourcing of natural resources like palm oil and essential oils poses additional challenges to terrestrial biodiversity (life on land, SDG 15). Both are of particular concern to CPG companies. Social concerns focus on the treatment of suppliers, especially farmers in developing countries, addressing their human rights and labor conditions. Internal policies promoting workforce diversity (SDGs 1, 2, 5, 8, and 11) are also vital. Governance priorities include responsible and transparent sourcing, ensuring product quality, and enhancing the livelihoods of suppliers, employees, and consumers.
Zooming in on the climate change impact, we see that greenhouse gases (GHG) emissions are mainly related to the upstream production of primary chemicals and formulation ingredients and for a range of consumer products downstream GHG emissions (consumer use) is also very relevant, like in the case of laundry products. The GHG Protocol is the most widely used standard for calculating emissions, which can be separated in terms of scope 1, 2, 3. Scope 3 are indirect emissions coming from the value chain and downstream consumer use, and typically carries the most weight.
Accurate primary data (i.e. based on direct measurements or records of emissions released into the environment from specific sources such as chemical reactors) is increasingly crucial for assessing and addressing companies’ emissions outputs. Companies are increasingly focused on certifying the biogenic carbon content of their ingredients through various approaches such as biomass balance approach and corresponding certifications (ISCC EU und REDcert EU). Organizational scope shifts are occurring within departments like procurement, traditionally focused on cost and supply stability, to incorporate these additional metrics. All major CPG companies have public targets to abate their emissions, with different timelines based on the different scopes. Forward-thinking companies have been setting emissions reduction targets aligned with the Paris Agreement2 (substantially reduce global greenhouse gas emissions to hold global temperature increase to well below 2°C above pre-industrial levels and pursue efforts to limit it to 1.5°C above pre-industrial levels), recognizing that this would significantly reduce the risks and impacts of climate change, and an increasing number are signing onto initiatives like the Antwerp Agreement (to express their full support for a European Industrial Deal to complement the Green Deal and keep high quality jobs for European workers in Europe)3 or the Science-based Target Initiative (SBTi)45
While a consistent and credible sustainability strategy is the baseline to prevent greenwashing, its goals and achievements provide the content for reliable communication. Thus companies can complement their ESG communication efforts by implementing parallel strategies that highlight their past endeavors in the ESG space and driving transparency regarding their products’s environmental footprints, demonstrating a genuine commitment to addressing these issues as integral to their identity. Such efforts can bolster communication with employees, media, and investors, reinforcing the firmness of publicly pledged targets and showcasing a consistent intent over time.
Discussion: Areas for improvement may include the historical timelines typically provided on companies’ websites. These timelines could be enhanced to include a more comprehensive range of past events and factual occurrences that demonstrate the company’s commitment to ESG values. Ideally these historical timelines are supported by subject-focussed peer-reviewed articles, published in trade magazines or scientific journals, to provide more context and credibility to the company’s achievements and narrative. As the “E” factor is dominant in ESG discourse, another activity that could enhance the environmental credentials of companies is the inclusion of detailed reports on environmental footprints, aligned with formats such as EPD (Environmental Product Declaration) and PEF (Product Environmental Footprint).
Examining the historical timelines of F&F companies on their websites reveals how they balance showcasing company expansion milestones and scientific breakthroughs with improvements in the ESG space.6 On the consumer packaged goods (CPG) side, companies such as Procter & Gamble and Unilever provide a comprehensive historical timeline that emphasizes their achievements in product innovation, technology and R&D, social and environment, and employee welfare.78 Sharing these historical narratives helps consumers, investors, and the public understand a company’s legacy and fosters accountability.
EPD and PEF are standards that could provide independent parties—such as scientists, journalists, and environmental activists—detailed sources of information, enhancing external credibility and at the same time foster sustainable innovation in R&D by identifying environmental hotspots. For instance, a prominent food company9 has published comprehensive EPDs for several of its product brands, outlining ingredient sourcing and energy-efficient cooking methods. Similarly, such transparency could be extended to home- and personal-care products. The efficacy of ingredients and products can be evaluated in terms of environmental impact—reducing product dosage lowers carbon footprint, while washing at lower temperatures decreases emissions, among other factors. The home and personal care industry is continually innovating to create products with improved carbon footprints. Recent notable advancements include the shift towards concentrated laundry detergents, the reduction of plastic packaging, and the introduction of water-free detergents and personal care cleansing products by major FMCG companies. Additionally, the growing market availability of refillable options for home-care products is increasingly significant. These product developments exemplify the potential for publishing PEF/EPDs thereby enhancing their environmental credentials in compliance with the future upcoming EU’s green claims directive.10
Conclusion: We advocate for a transition towards credible ESG strategy and reporting within the home- and personal-care industries, complemented by robust narratives showcasing companies’ historical track records across ESG domains. We also support EU-backed initiatives aimed at enhancing transparency in product environmental footprints to substantiate green claims. Scented consumer products are not merely daily essentials; they represent an opportunity to usher in a new era of consumer consciousness. Beyond aesthetics and functionality, they can foster a tangible connection to environmental awareness that can influence consumer behaviors across other products and services.
- Accessed May 2024 https://www.forbes.com/sites/bobeccles/2023/01/11/so-much-at-stake-unilevers-lysanne-gray-on-getting-sustainability-reporting-right/
- Accessed May 2024 https://www.un.org/en/climatechange/paris-agreement
- Accessed May 2024 https://antwerp-declaration.eu/
- Accessed June 2024 https://sciencebasedtargets.org/
- Accessed January 2024 https://www.henkel.com/sustainability/regenerative-planet/climate-positive; https://reckitt.com/media/ydvb4g2s/climate-change-2022.pdf; https://www.loreal.com/en/commitments-and-responsibilities/for-the-planet/fighting-climate-change/;https://www.unilever.com/planet-and-society/climate-action/partnering-with-suppliers-to-deliver-net-zero/; https://us.pg.com/blogs/net-zero-by-2040/
- Accessed May 2024 https://www.firmenich.com/company/discover-our-story
- Accessed May 2024 https://us.pg.com/pg-history/
- Accessed May 2024 https://www.unilever.com/our-company/our-history-and-archives/1800s/
- Accessed May 2024 https://www.environdec.com/library/epd1563
- Accessed May 2024 https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI(2023)753958
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