Around 80% of emissions in the food and consumer goods sector stem from their supply chains. The value of India's FMCG stands at $230.14 billion in 2023, growing at a rate of 27.9% CAGR until 2030. That's a pretty significant number, but the environmental impact is worrying.
In 2021, major global FMCGs, including Nestle, JBS, Unilever, Henkel, and Colgate-Palmolive, were among the top emitters of greenhouse gas emissions. The brighter side? Conducting smart supply chain audits with expert GHG Consulting in India turns this challenge into a sustainable growth opportunity.
What Are GHG Emissions in FMCG Supply Networks?
Every link in the FMCG (Fast-Moving Consumer Goods) supply chain contributes to greenhouse gas (GHG) emissions, but the distribution of these emissions is far from equal. For a typical Indian FMCG company:
- Scope 1 emissions (5–10%) originate from direct activities, including on-site fuel use, factory operations, and company-owned transportation fleets.
- Scope 2 emissions (2–5%) arise from the purchase of electricity, as well as heating and cooling for manufacturing and warehouses.
- Scope 3 emissions (80–95%) account for the majority of the footprint, encompassing raw material sourcing, supplier operations, packaging, logistics, and even the consumer use and disposal of products.
In India, Scope 3 emissions consistently account for the largest share due to extensive supplier networks, fragmented logistics, and high packaging intensity. According to the World Resources Institute, packaging accounts for about 10–15% of Scope 3 emissions in the consumer goods sector, whereas purchased items and logistics account for more than 65%. This illustrates the importance of accurate data tracking and effective supply chain management in FMCG firms' efforts to meet their climate targets.
Why Do Supply Chain Audits Matter for the Reduction of GHG in the FMCG Sector?
A supply chain audit, for instance, is to a business what a health check-up is to a person. Through audits, companies can identify the primary sources of emissions that impact their operations. In India's FMCG sector, this is especially important due to the sheer complexity of suppliers—large companies often manage between 2,000 and 5,000 active suppliers, making emissions tracking highly fragmented. This dispersed network is one of the defining challenges for the industry.
As with health check-ups, proper audits must track every supplier, transportation route, and production step. Measuring energy use, packaging intensity, waste, and resource consumption enables companies to reduce emissions while maintaining cost-effectiveness and sustainability.
But the real challenge is engagement: suppliers must be brought into the process through training programs, joint efficiency projects, and sustainability-linked contracts, ensuring reductions extend beyond a company's direct control.
Credibility is established for supply chain audits through the application of internationally recognised practices, including the GHG Protocol and ISO 14064 standards, as well as rigorous data quality checks, such as benchmarking and digital monitoring systems. Third-party assurance promotes transparency and facilitates compliance with India's BRSR Core framework, which requires accurate and truthful disclosures.
Global benchmarks reinforce this need—companies like Nestlé and Unilever report that over 90% of their FMCG emissions fall under Scope 3, underscoring the importance of supply chain interventions for India's FMCG companies to remain competitive and climate-resilient.
Where FMCG Companies Can Cut Emissions?
Audits and reliable professional verifications allow seamless identification of clean and efficient raw material suppliers. Most FMCG enterprises work with a multitude of suppliers, and these audits help them utilize clean energy, implement efficient processing, and adopt sustainable practices. These audits also enable prioritisation of renewable options over those that do not consider their carbon footprint.
Manufacturing Processes
Even if a business makes minor production adjustments, it can significantly reduce its emissions. Numerous companies have modified their operating methods, including reducing waste, lowering energy consumption, and optimising equipment, since the Conservancy became involved in the audits. As an added benefit, several manufacturers are even moving to sustainable energy sources.
Logistics and Transportation
One of the most significant sources of emissions is the transportation of goods from manufacturers to merchants. A thorough auditing process checks vehicle types, delivery routes, and even packaging. In some cases, redesigning packaging allows more products to fit into trucks, lowering the number of trips trucks have to make.
Packaging Innovation
FMCG companies spend large amounts of money on packaging. Audits often reveal areas where the packaging can be improved, such as using lighter, recycled materials or reducing overall waste. Packaging weight contributes to emissions; lowering the weight creates a bonus.
Warehouse Operations
Reducing emissions from storage facilities is possible through the use of energy-efficient lighting, improved insulation, and more intelligent inventory control. Better energy strategies minimize energy costs.
Latest Trends and Technologies
New tools and innovations are transforming how FMCG companies in India track and reduce emissions. As of mid-2025, there are 15–16 specialist carbon footprinting companies in the nation, indicating a sizable and expanding need for reliable sustainability measurement and tracking services.
Supply chain processes are undergoing rapid changes due to the adoption of digital technologies. Compared to the global average of 44%, more than 64% of Indian businesses are currently using AI-based solutions for ESG data analysis, emissions forecasting, and more informed decision-making. Companies can now quickly identify pollution hotspots thanks to innovations like real-time tracking tools. At the same time, AI-powered predictive models evaluate the impact of reduction strategies before implementation, driving both accuracy and efficiency.
The adoption of science-based targets (SBTs) is accelerating significantly. India ranked sixth globally in 2024 with 127 companies committing to SBTi-aligned net-zero goals, marking a 520% year-on-year surge in target setters. These commitments are propelling credible climate pathways—supported by robust audits, third-party verification, and transparent reporting—to ensure practical and verifiable reductions in emissions.
Success Stories from Indian FMCG Companies
Several Indian FMCG brands are now walking the talk when it comes to emissions reduction across their supply chains—delivering both real environmental impact and cost efficiencies.
HUL, a leader in the sector, has achieved remarkable results:
As of March 2024, a staggering 96% of the energy powering its manufacturing operations (both electricity and thermal) comes from renewable sources, including solar, wind, biomass, and IREC-certified power.
- Simultaneously, the company has slashed emissions and energy intensity per ton of production by 98% (Scope 1 & 2) and 45%, respectively, compared to its 2008 baseline.
- These strides demonstrate the power of the clean energy transition and energy-efficient infrastructure in helping FMCG companies significantly reduce emissions while also lowering operational costs—delivering tangible returns on sustainability investments.
Building a Sustainable Supply Chain Step by Step
Step 1
Complete Assessment
Conduct a first-of-its-kind supply chain audit for a particular company and identify all the possible sources of emissions. A solid team with experience in FMCG and emission standards should be established.
Step 2
Priority Setting
Identify the most significant emission sources and the easiest opportunities for improvement based on the audit results. Prioritize changes that reduce emissions and are cost-saving, or that improve operational efficiency.
Step 3
Supplier Engagement
Support key suppliers in their efforts to reduce emissions. This could involve educational workshops, collaborative projects in cleaner technologies, adjustments to procurement policies, or the development of new purchasing criteria.
Step 4
Technology Integration
Utilize emission tracking software and digital reporting systems to access emission data during supply chain activities. Having access to emission data enables the tracking and identification of new opportunities for improvement.
Step 5
Continuous Monitoring
Conduct regular emission reduction follow-up audits to ensure that new innovative opportunities are identified and captured as the business grows and evolves.
Conclusion
For the FMCG industry in India, the turning point is now. Companies with foresight can build sustainable operations from the ground up as the market expands. Compliance in supply chain audits is no longer optional; alongside cost reduction and efficiency gains, these audits are becoming strategic tools for staying competitive.
Regulatory imperatives are sharpening the focus. The BRSR Core framework, mandated by SEBI, requires listed FMCG firms to disclose Scope 1, 2, and 3 emissions, accompanied by third-party assurance. EPR rules require that packaging waste be collected, recycled, and tracked transparently.
At the same time, India's carbon market (ICVCM) is evolving, and FMCG companies will soon need to align with carbon pricing and credit-trading mechanisms. When combined, these regulations provide businesses with both responsibilities and opportunities to take the lead in sustainability.
Cutting-edge FMCG companies are discovering that emission reduction tactics not only enhance internal operations but also foster stronger supplier relationships, build investor trust, and benefit the environment.
Are you unsure about where to start on the journey to a more lucrative and environmentally friendly supply chain? For the FMCG industry, SGS provides supply chain audits and GHG verification services with a strong presence in India. SGS's knowledgeable staff assists in identifying gaps, implementing emission-cutting plans, and providing assurance that aligns with BRSR, EPR, and global best practices, thereby positioning FMCG companies to thrive in a future that is both sustainable and governed by regulations.