FMCG Firms In FTSE 350 Also More Engaged With Diversity & Inclusion Initiatives

The UK’s largest producers of FMCGs appear to be stepping up their efforts to cut carbon emissions, but according to a new Environmental, Social, and Governance (ESG)* report, it’s at a slower rate than retailers and businesses operating in the hospitality sector.

National law firm Irwin Mitchell has analysed current and the previous Annual Reports of the FTSE 350** businesses which produce consumer goods, such as Diagio, Unilever and Britvic.

The study looks at the frequency of the acronym, ‘ESG’, along with other related words such as ‘diversity’, ‘net zero’, and ‘Scope 3’ emissions.

References to ‘ESG’ increased from 1,071 to a total of 1,220 across all FMCG businesses in the FTSE 350. Furthermore, 62.5% of companies used ‘ESG’ more frequently in their most recent annual reports compared to the previous editions.

Irwin Mitchell’s ‘Beyond Words’ study reveals differences between consumer goods businesses listed on the FTSE 350 companies and those in the retail and leisure & hospitality sub-sectors.

In terms of the frequency of 'ESG' mentions by sector within the FTSE 350, FMCG producers lead the way compared to retail & hospitality, with an average of 76 mentions per report compared to 67 in the previous year. 

Environment

References to Scope 3 emissions, the category of greenhouse gas emissions that are indirect emissions resulting from the activities of an organisation but occur from sources not owned or controlled by the organisation, increased by 38% compared to Retail (73%) and Hospitality & Leisure (65%).

Keith Davidson, environmental law partner at Irwin Mitchell, said:

"Businesses of all sizes must prioritise climate action and sustainability to succeed in an evolving business landscape. For some, reporting on Scope 3 emissions is now a legal requirement, not just a voluntary commitment.

“Companies are now choosing business partners based on their environmental credentials and carbon reduction actions. If you’re unable to demonstrate climate action, you may risk losing clients.”

Diversity & Inclusion

Irwin Mitchell’s report also detected variations in the mentions of diversity, equity & inclusion (DE&I). Amongst the consumer goods businesses, there is a 15% rise in DE&I mentions which compares to a small rise of 3% in the leisure & hospitality sector and retail, where DE&I mentions have decreased by 7%.

Expert Opinion

"Annual Reports are a window into the soul of an organisation. They are carefully curated documents and are a vital tool for companies to communicate their commitment to their numerous stakeholders on a range of issues, including ESG.
"Our latest study highlights the commendable efforts that the UK's largest FMCG firms are making with ESG. They also appear to be highly engaged with DE&I initiatives with an average of 63 mentions per report compared to an average of 55 across the 50 FTSE 350 firms studied.”
Charlotte Rees-John, partner and head of Irwin Mitchell’s consumer sector

Irwin Mitchell offers a comprehensive range of ESG advisory services including diversity training modules, cyber security, and Net Zero readiness assessments.

*Environmental, Social & Regulation

** The FTSE 350 is the 350 largest companies by market capitalisation on the London Stock Exchange. It consists of the FTSE 100 and FTSE 250

About the research

The analysis for this report was conducted in-house between 28th and 31st January 2024. The research examined the two most recent annual reports from each of the 50 businesses included in the analysis. Several search words and phrases were used, including 'ESG', 'cyber', 'climate change', 'decarbonisation', ‘Scope 3 emissions’ and 'net zero'. For the DE&I analysis, words such as 'diversity', 'inclusion', 'equality', 'ED&I', 'D&I', and 'DE&I' were searched. In cases where 'diversity' and 'inclusion' were mentioned together, it was counted as one mention in the overall count. Each search was manually checked for accuracy.