Nestlé will shift away from carbon offsets to meet its net zero goals and towards insets, or removing emissions from within the company’s own value chain. The company is also withdrawing its pledges to make certain brands ‘carbon neutral’, including KitKat, San Pellegrino, and Perrier. Nestle has set a target of net zero emissions by 2050.
“We are moving away from investing in carbon offsets for our brands to invest in programs and practices that help reduce GHG emissions in our own supply-chain and operations, where it makes the most difference to reach our net zero ambition,” a Nestlé spokesperson said. “Our net zero roadmap does not rely on offsets. We focus on GHG emissions reductions and removals within our value chain to reach our net zero ambition.”
Critics of carbon offsetting argue that it is difficult to verify the methodologies used by companies, and that there are no global verification standards. This could give consumers a false impression of a company’s impact on climate. Insetting is increasingly viewed as a more direct and effective way of managing carbon footprints than offsetting.
Some companies have also faced legal challenges over their carbon neutrality claims. For example, a French consumer group is currently suing Nestle over its claim that Nespresso is carbon neutral. Similarly, a Swedish court fined and banned European dairy group Arla Foods from using the term “net zero climate footprint” in the marketing of its products sold in the country.
Nearly 95% of Nestle’s emissions are Scope 3, or indirect emissions resulting from upstream and downstream activities like sourcing and the use of its products. Ingredient sourcing is its largest source of emissions, followed by packaging, logistics, and manufacturing.
As publicity of offsets’ shortcomings has grown, companies across industries are shifting their efforts and investment to reducing emissions within their own spheres of influence.
That means more focus on areas with real implications for consumers and the CPG business model, like sourcing, product design, packaging, and logistics. And given how much opportunity lies upstream and downstream, the odds are high that Nestlé will engage suppliers, retailers, and consumers differently in these areas.