Tuesday, December 9, 2008
According to the results of a report released last week by the World Resources Institute (WRI) and global consulting firm A.T. Kearney, companies in the fast-moving consumer goods sector were warned that if they do not implement sustainable environmental strategies, their earnings could be cut in half by 2018.
Fast-moving consumer goods include food, beverages, personal care items and household care items. The analysis "concludes that physical climate change, water scarcity, deforestation and climate change policies could significantly increase the price of commodities, packaging, manufacturing and logistics." Many fast-moving consumer goods are "tied to natural resources at risk from environmental pressures," such as oil, natural gas, electricity, cereals, grains, soy, sugar, palm oil and timber.
Some recommendations of the report include changes in design and packaging, a network of more and smaller manufacturing sites spread across the country, and more local sourcing of production inputs. "Cost increases for FMCG companies that do not implement such strategies could diminish company earnings by 13 to 31 percent in 2013 and by 19 to 47 percent in 2018..."