Unilever reduces costs and emissions with clean electricity in India
We Mean Business Coalition
How does a multinational corporation save money while reducing emissions? For Unilever, one way was through how it sourced its electricity in India.
Previously, while the company was already buying renewable energy certificates for electricity at its owned factories, its contract manufacturers — which account for a third of all manufacturing for Unilever in India — got most of their electricity from the country’s coal-heavy grid. To change this, Unilever brokered a deal to bulk buy solar energy at a competitive price, via a power purchase agreement (PPA), delivering 25% cost savings for its partners over the next 20 years.
The move aligns with Unilever’s global goal to reduce scope 3 energy and industrial emissions by 42% by 2030, compared to 2021, and its ambition to reach net zero by 2039.
It’s also an example of business taking action in alignment with the electricity procurement guidance in We Mean Business Coalition’s Fossil to Clean Business Action Checklists, which outline what companies can do in the next 2–5 years to reduce their reliance on fossil fuels and leverage the benefits of clean energy solutions.
How it works
Many of Unilever’s smaller supply chain partners lack the resources to secure competitive rates for renewable energy. So Unilever supported these partners by providing their expertise and facilitating discussions with the developer.
By partnering with renewable energy company Brookfield, Unilever and 10 of its partners will get 45 megawatts of renewable electricity from an off-site solar project in Rajasthan in Northwest India over a 20-year period.
Supplying 32 sites across 15 Indian states, this single PPA is expected to cut contract manufacturer emissions by over 28,000 tonnes of CO2 per year — the equivalent of taking 6,500 gas-powered cars off the road.
“We are working closely with collaborative manufacturers to make a greater impact with our sustainability agenda and to create value across our supply chain,” said Yogesh Mishra, Executive Director, Supply Chain for Hindustan Unilever Limited & Nepal. “By transitioning electricity use to renewable sources of energy, this initiative will help us move towards our climate targets and net zero ambition.”
Tackling the trickiest emissions: Scope 3
The project is a good example of how business can reduce its scope 3 emissions, which typically make up most of a company’s carbon footprint.
Unilever has made progress on its operational emissions (scope 1 and 2), with the goal to reduce these emissions by 100% by 2030, compared to 2015. But scope 3 emissions are typically associated with assets outside a company’s control, such as the upstream and downstream activities in a company value chain. Since many of Unilever’s products are made by its contract manufacturers, the deal directly addresses these scope 3 emissions.
Down the road, Unilever has the potential to reduce even more emissions by expanding the project by 20 megawatts to include suppliers beyond manufacturing, like those in raw materials and packaging.
Where advocacy comes in
To make the project happen, Unilever collaborated with India’s federal government, as well as distribution companies and state governments.
One key element of that cooperation was India waiving central transmission charges for early adopters of renewable energy — a key selling point for partners, since transmitting new renewable energy across state was up to 20% more expensive than existing power options.
“To help us move faster towards our climate targets and our net zero ambition, we’re calling for policies that support business action and create a level playing field,” states Unilever, in its approach to sustainability. “It’s only through working with governments, regulators, and other businesses that we can overcome barriers and take faster action where it’s needed most.”
Unilever was also one of over 260 companies to sign a letter, coordinated by We Mean Business Coalition and its partners through the Fossil to Clean campaign, to urge national governments to scale clean energy and phase out the use and production of fossil fuels.
More recently, ahead of COP30, Unilever signed a business group statement that called on leaders to realign public finance and policy support toward an affordable, reliable clean energy system. Unilever also signed a letter, coordinated by We Mean Business Coalition, that urged governments at COP30 to adopt a robust, credible roadmap away from fossil fuels and toward clean energy and electrification.
“Now is the time for a credible fossil fuel roadmap, scaling up renewables and phasing out fossil fuels,” said Unilever’s Hannah Hislop, Head of Sustainability – Climate. “It will give businesses like Unilever certainty to invest, strengthen energy security, cut costs, and create a level playing field that de-risks the transition.”
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Unilever’s model shows how innovative solutions and collaboration, enabled by supportive government policies, can accelerate the adoption of renewables among business, while also helping companies reach climate targets and save money.
As a first initiative of its kind across the fast-moving consumer goods industry in India, this deal paves the way for other companies to follow.