Ekaterra Tea c.e.o. John Davison briefs NGOs and press on the company’s decision to become carbon net-zero by 2030. Photo courtesy ekaterra tea.
The global tea community, concentrated in countries under severe climate duress, closely monitored and generally applauded Sunday's agreement to facilitate carbon emissions credits. The reaction was muted on efforts to control emissions as delegates from 190 nations attending the United Nations Convention on Climate Change (COP26) disagreed on curtailing the expansive burning of fossil fuel for energy.
COP26 brought tea stakeholders in government, non-government, and major suppliers to reaffirm the importance of controlling emissions.
Ekaterra Tea, Unilever’s newly-created division of legacy tea brands and the world’s largest tea supplier, seized the spotlight with a pledge to become carbon net-zero by 2030. The combined portfolio has a 10% of the global tea market.
The division, led by c.e.o. John Davison, drew attention to several climate and sustainability goals, including a commitment to 100% sustainably sourced teas, a switch to all plant-based tea bags, and a pledge to recyclable, compostable, or reusable packaging by 2025 along with the adoption of regenerative agriculture practices for raw materials sourcing by 2030.
"It is clear from everything we have heard at COP26 that we need to go further than ‘net-zero’ and we need to do that as quickly as possible, working with scientists, NGOs and others in our industry," said Davison. Attending the summit and joining Davison were senior executives representing IDH – Sustainable Trade Initiative, the executive director of the Ethical Tea Partnership, and the Rainforest Alliance.
Greenhouse gases have been reduced by 66% since 2010, said Davison, who promised a further reduction to 80% from the 2010 baseline. Ekaterra owns Lipton, PG Tips, TAZO, Brooke Bond, Lyons, Pukka, and Red Rose – leading tea brands in 58 of the 110 countries where its portfolio of 34 products is sold. The division employs 1 million people in 21 countries earning €2 billion annually (about US$2.3 billion).
"Real leadership today, means mobilizing and transforming the entire tea industry for positive impact," said Davison.
There was a greater sense of urgency during the two-week summit. "Everyone knows what is at stake for the future, we have no choice but to rise to that challenge," COP26 president Alok Sharma told delegates. COP26 promises a renewed commitment to climate change in the most crucial response since the Paris Agreement.
Bidders remain active in pursuing ekaterra with a shortlist that includes several hedge funds. Last January, Jope announced that declining consumption of black tea led to his decision to split off the tea portfolio for possible sale. Unilever shares declined 11% during the 10 months it took to unravel the far-flung brands that make up the backbone of the division. Black tea is the most important source of revenue for Lipton, PG Tips, Lyons, Red Rose, and Brooke Bond. Lipton, acquired in 1971, and Brooke Bond, acquired in 1984, generated significant volume for decades, but even that has faltered in recent years.
Last week Unilever c.e.o. Jope abandoned a similar carve-out that sought a buyer for Dove, Q-Tips, and other personal care brands that generate about $700 million annually in sales. According to the Wall Street Journal, the effort failed to attract a high enough bid, prompting Unilever to abandon the sale process.
Several private equity firms, including Advent International and Carlyle, are on the hunt along with Cinven and the Abu Dhabi Investment Authority consortium. The decision to retain ekaterra tea to enter into joint partnerships like PepsiCo in the US is expected by year-end.