“Our view is that this rising collective consciousness of sustainability among consumers is influencing more forceful strategic choices by
companies, and increasingly determining opportunities, risks and innovation across product categories and brands,” said Jean-Xavier
Hecker & Hugo Dubourg Co-Heads of Sustainability & ESG Research. “
This, in turn, could materially impact a company’s financials and valuation. In many cases, companies are currently reporting only
anecdotal or sporadic evidence of these trends. But many corporates now expect sustainability issues to become increasingly important
over time when it comes to consumption drivers and financial impact. Particularly, with products at the heart of the consumer staples
business, product liability is the most financially material ESG issue for the sector. This includes environmental impact, health impact,
responsible marketing & labeling, product quality & safety, illicit trade and responsible innovation.
This trend has the potential to drive meaningful brand diferentiation and marketing opportunities. “We expect to see more forthright
marketing on sustainability attributes going forward, including carbon labeling, which anticipate being efective in communicating
sustainability credentials to consumers, as long as it is validated and goes hand-in-hand with broader education so the data can be as
easily interpreted as nutritional values on packaging,” said Pannuti. In recent years, plant-based brands Quorn and Oatly have adopted
carbon labeling. L’Oréal has pledged to introduce Environmental and Social Impact Labeling, with an A to E score, across all rinse-of
products by 2022. The efort is currently in place on Garnier’s haircare product webpages in France. For the investor community, a carbonadjusted Earnings Per Share (EPS) may be an efective means of communicating progress, notes Pannuti. Danone announced this strategy
in early 2020, using a price of €35 or $42/ton of carbon.