This case study presents analytics carried out by Risilience to profile impacts of physical climate change risks and those associated with the transition to a low-carbon economy. The analysis for Reckitt highlighted a greater potential impact from transitional changes, and the need to focus on mitigating them across the value chain. This initial analysis would, in part, inform how Reckitt would tackle combatting climate change to reach its 2040 net-zero goal.
The challenge
Reckitt, in its strategy to combat climate change, mitigate its effects and surface business opportunities, highlighted four key targets, set against a 2015 baseline, with an overall goal of reaching net-zero emissions across its entire value chain by 2040:
65%reduction in operational GHG emissions by 2030
100%renewable electricity by 2030
25%less energy in operations by 2025
50%reduction in product carbon footprint by 2030
The leading global consumer hygiene, health and nutrition company, had a big challenge ahead. Aggressive targets and contracted timelines can be tough to navigate but, in addition, the company directly controls only three per cent of greenhouse-gas (GHG) emissions associated with its own operations.
Fifty per cent is associated with its upstream supply chain, 37 per cent from transport and retail of its products, and a further seven per cent from direct consumer use of the brand’s products.
David Croft, Global Director Sustainability, Environment and Human Rights, Reckitt, said: “Dealing with these factors is highly complex, given that they’re outside our direct control. For this reason, change comes slowly and reducing our emissions in these areas is difficult.
“Our work on climate encompasses our whole value chain, including our own operations and our suppliers. Steps we take now can have a significant effect, whether it’s using more renewable energy or using less water to produce products. This involves working with suppliers at one end of the value chain, and with consumers and appliance manufacturers at the other. This is how we reduce emissions over time.”
The approach
The partnership between Reckitt and Risilience began in 2020 with a view to helping the company quantify climate risk, pinpoint areas to be addressed in the value chain, and establish the magnitude and materiality of climate-related impacts. This matured their approach to risk management and backs up the case for business transformation, with a view to supporting the company’s sustainable growth plans and net-zero strategy.
This has enabled Reckitt to use Risilience’s technology platform and expertise, founded on over a decade of influential frameworks pioneered by the Centre for Risk Studies at the University of Cambridge Judge Business School, to inform its risk management and strategic decision-making around climate change, in line with the rigorous targets set out by the company.
Risilience profiled the relative medium-term impacts of physical climate change risks and those associated with the transition to a low-carbon economy. The analysis highlighted a greater potential impact from transitional changes, and the need to focus on mitigating them across the value chain. This initial analysis would, in part, inform how Reckitt would tackle combatting climate change to reach its 2040 net-zero goal.
The solution
From the outset of the partnership in 2020, Risilience worked with Reckitt to develop a digital-twin model of the business. This enabled key stakeholders to view scenarios for low-carbon transition and physical risks throughout the entire value chain, across a five-to-20 year horizon, that were consistent with the emissions pathways and scenarios identified by the Intergovernmental Panel on Climate Change (IPCC).
This relationship continued through 2021 to the present, as the Reckitt team used real-time, quantitative analytics from the Risilience platform to inform and optimise its strategic approach to meeting its climate-related targets.
David Croft, Global Director Sustainability, Environment and Human Rights, Reckitt, said: “Our programme involves key functional stakeholders throughout Reckitt including procurement, brands, operations, sustainability and finance teams. A series of workshops developed the platform, populating it with our data and, subsequently, reviewed the scenarios to develop mitigation.”
As we move forward with this partnership, Risilience is focussed on supporting Reckitt with mitigating climate-risk and surfacing climate-related business opportunities across its entire value chain, as the company moves towards its net-zero targets.
The results
In 2021, Reckitt reported the following results in its TCFD disclosure:
66%reduction in GHG emissions in operations
94%use of renewable electricity in manufacturing
6%reduction in energy use in operations
David Croft, Global Director Sustainability, Environment and Human Rights, Reckitt, said: “Risilience is grounded on fundamentally great research. When I talk to stakeholders for Reckitt, having the backup of Risilience behind us as we talk about climate change risk is really important and powerful. The Risilience solution has been instrumental in communicating with investors, shareholders, board, policy makers, customers and other internal and external stakeholder groups. If you haven’t got the right technology, you create risk for yourself and we see this through the work we do with Risilience. Technology is going to be a real driver for everybody, I think, in terms of combatting climate change in the future.”
• Learn how Risilience can help your business create an actionable net-zero strategy. Get in touch: [email protected] and see: risilience.com
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