The move comes as more businesses find themselves facing risks linked to weather changes—including unseasonal rains, delayed winters, and periods of water stress that can potentially derail business continuity plans.
In its annual report released last week, packaged consumer goods maker Dabur India said that climate change, marked by uneven weather patterns such as unseasonal rainfall, delayed and contracted winter, impacted its seasonal portfolio in FY24. The company sells hair oils and health and wellness products. The Ghaziabad-based company has sharpened focus on climate-related uncertainties such as drought, and flooding as potential risks to business since 2021-22. Last fiscal year, it hired Rahul Awasthi as the company’s first-ever chief sustainability officer.
Climate-related challenges such as heatwaves, droughts, and water stress can significantly impact the availability and quality of essential raw materials by causing lower yields and greater yield variability, the company said. The company deploys research and development to identify alternative raw materials whenever specific ones are unavailable.
Additionally, Dabur’s procurement team works towards reducing reliance on single suppliers by developing a network of multiple vendors across diverse geographies, ensuring a consistent supply of raw materials at all times. “Our biodiversity team collaborates closely with farmers and local communities to cultivate critically endangered herbs, guaranteeing their availability, both now and in the future,” the company said.
To be sure, while companies have been safeguarding businesses aganst the impact of climate change, they have now stepped up the efforts, as extreme weather events grow in frequency and intensity. This is because such extreme events can lead to water shortages or floods in areas where companies operate. Additionally, climate change poses a significant threat to agricultural yields in a country like India; climate-related risks can also drive up raw materials costs.
Bisleri’s carbon credits
Last month, packaged water maker Bisleri said it was looking to introduce water credits akin to carbon credits, aimed at making beverage makers more accountable for water usage. The company has partnered with TERI School of Advanced Studies to conduct a study that would set a benchmark for the beverage industry’s commitment to water conservation. Bisleri said it will share its findings with the central government to facilitate discussions and develop a framework, advancing the concept of water credits for the beverages industry.
The move comes as large cities increasingly face water shortages. This summer, Bengaluru faced acute water shortages, driving up demand for packaged water.
Meanwhile, companies such as Nestlé, Hindustan Unilever Ltd and ITC have for long driven their commitment to reducing their impact on the planet while also securing their supply chains that involve agricultural produce such as wheat, tea and coffee.
Nestlé India’s sustainability focus
In its annual report released last month, Nestlé India said the FMCG industry faces multiple climate risks, including erratic monsoon patterns, harvest uncertainties and volatile raw material prices. This reliance on weather patterns directly affects rural incomes, consumer demand and trade, accentuating the sector’s vulnerability to weather-related risks, the maker of Maggi noodles said.
The company tracks its environmental impact and takes measures to reduce it via a monitoring framework. The company’s Risk Management and Sustainability Initiatives (RMSI) Committee oversees the sustainability initiatives of the company and its compliance. The company has also set up a Governance Council to provide oversight, direction and support on sustainability, headed by the chairman and managing director. Additionally, as part of its NESCAFÉ Plan-that leverages regenerative agricultural practices-the company is engaged with more than 5,000 coffee farmers in sustainable agricultural practices and working towards improving their livelihood.
ITC, which also has a large agri business in India, has put forth various initiatives to de-risk farmers from erratic weather events through the promotion of climate-smart practices, including adoption of climate-resilient crop varieties, conservation agriculture techniques, agroforestry, precision farming, water management strategies and others.
In 2021, the company launched ITCMAARS (Metamarket for Advanced Agriculture and Rural Services) that provides on-ground agri-linked interventions, while bringing the conveniences of digital to farmers through a super app. The initiative covers over 1.5 million farmers and over 1,650 FPOs, across 10 states and over 18,000 villages.