Why household goods companies are struggling to turn sustainability into financial performance

Household goods companies operate at the sharp edge of climate and nature risk. Their value chains are asset-heavy, geographically dispersed and deeply dependent on stable access to raw materials, energy, water and logistics infrastructure. As climate volatility increases and regulatory expectations tighten, Risilience sets out why managing environmental risk as a core business issue rather than a sustainability ambition brings business upsides.

Research commissioned by Risilience shows that most household goods firms have not yet embedded climate and nature risk into the financial mechanisms that govern performance and investment. Only 34% currently link climate targets to financial KPIs, limiting their ability to manage exposure and prioritise capital.

This disconnect is becoming increasingly difficult to sustain.

A sector exposed to disruption, but not financially prepared

The transition to a low-carbon economy is forcing household goods companies to rethink how they operate, including how they design products, source materials and manage distribution networks. Physical climate risks are already disrupting production and logistics, while transition risks are reshaping energy costs, procurement strategies and asset values.

Despite this exposure, the Climate and Nature Risk Report 2025 shows that financial integration remains limited. While 78% of household goods firms report having a nature risk plan, fewer than four in 10 have embedded nature risk into enterprise-wide decision-making, and just 36% have connected it to financial and governance systems.

Many organisations can describe their environmental risks, but cannot yet quantify how those risks affect earnings, capital expenditure, asset lifetimes or enterprise value.

Why climate risk still sits outside core financial decision-making

For household goods companies, the challenge is not a lack of awareness. Boards are engaged, sustainability teams are active and investment in decarbonisation is increasing across the sector. The problem lies in execution.

Risilience’s research shows that a significant proportion of organisations struggle to translate physical and transition risks into financial metrics. Around a third report insufficient collaboration between sustainability and finance teams, while legacy finance systems make it difficult to integrate forward-looking climate and nature data into traditional models.

As a result, climate and nature risk often sit alongside the business rather than within it. Decisions about assets, sourcing, insurance and long-term investment are still made without a clear, quantified view of environmental exposure.

The cost of inaction is rising

This lack of financial integration creates a blind spot at a time when uncertainty is increasing. Volatile energy prices, supply chain disruption, tightening disclosure requirements and shifting investor expectations are all amplifying the financial consequences of climate and nature risk.

Companies that cannot quantify these risks struggle to justify investment in resilience, prioritise adaptation measures or demonstrate credible returns on decarbonisation. They are also less able to explain how sustainability initiatives protect margins, reduce volatility or support long-term competitiveness. By contrast, organisations that embed climate and nature risk into finance-grade models gain a clearer view of where value is at risk, where it can be protected, and where new opportunities may emerge. Financial quantification turns sustainability from a reporting exercise into a tool for strategic control.

What leading household goods companies are doing differently

The most resilient organisations in the sector are shifting their focus from targets to decision-useful insight. They are integrating climate and nature risk into enterprise governance, ensuring that environmental exposure is considered alongside other material business risks. They are building finance-grade models that quantify impacts on costs, revenues and asset values, enabling clearer investment decisions and stronger internal alignment.

At the same time, they are addressing Scope 3 exposure through improved supplier data and procurement governance, recognising that value chain risk often outweighs direct operational emissions. Importantly, they are treating nature risk as a financial issue alongside climate, reflecting growing dependencies on water, land and ecosystems.

Household goods companies have made significant progress in recognising climate and nature risk. The next challenge is turning that recognition into financial discipline. Those that act now, embedding environmental risk into the metrics and models that drive decisions, will be better equipped to protect value, secure investment and compete in an increasingly volatile global economy.

• Watch on demand: Climate and Nature Risk Management in Business webinar featuring Jennifer Duran, Global Head of Sustainability, Kenvue, in discussion with David Grant, Senior Director, Global Climate and Water Solutions, PepsiCo and Michael Weber, Senior Director Sustainability, Mondelēz International.

• Download the Risilience-commissioned and independently-conducted Climate and Nature Risk Report 2025 to explore how global corporates have responded to climate and nature risk in the wake of geopolitical and economic uncertainty. The survey polled more than 500 senior sustainability and finance executives across the US, UK and Europe on how global businesses with an annual turnover of $700m to $50 billion+