Accelerate smart supply chain decarbonization via renewables

Haleon plc is a British multinational consumer healthcare company that was formed from a demerger with GSK in 2022. Headquartered in Weybridge, England, it is a global leader in consumer health through a portfolio of trusted brands that include Sensodyne, Advil, Panadol, Voltaren, Centrum, and Theraflu. The company operates worldwide in categories like oral health, pain relief, vitamins, minerals, supplements, and respiratory and digestive health

Haleon aims to cut Scope 3 emissions (source to sale) by 42% by 2030. But driving decarbonisation across a complex global supply chain is tough, especially beyond direct suppliers.

Majority of Scope 3 carbon emissions across the source-to-sale process are associated with the raw and active pharmaceutical ingredients, packaging, and services used in product manufacturing. Key contributors within purchased goods and services include multilayer laminate tubes (PBL), paper packaging, and active pharmaceutical ingredients.

With these contributors identified, the company is concentrating on systematically reducing their impact and working to decouple emissions from future business growth. During the 2024 reporting period, source-to-sale Scope 3 emissions reduced by 10% compared with the 2022 baseline, driven by a combination of more accurate emission factors, switching to low emission logistics modes and initiatives to make packaging more sustainable.

Location of the initiative (region, country, city): Global

Haleon is accelerating decarbonisation by sourcing renewable electricity on behalf of its supply chain – boosting the scale, speed, and control of renewable energy use. Inspired by Mars Confectionary, Haleon is leveraging U.S. Tax Credit Transfers and an EU Virtual Power Purchase Agreement (vPPA) to fund RECs and generate income.

With rising demand from electrification and AI, market conditions are favourable, making it possible to reinvest profits in RECs in other regions (Although this cannot be guaranteed). This means Haleon can expand its impact globally.

This initiative is still rolling out, but Haleon has built a robust framework to ensure RECs are accurately accounted for, especially to avoid double counting.

Haleon developed a process that:

1. Identifies the amount of electricity used in the production of each material

2. Identifies the location of each supply chain

3. Does not allow retirement of RECs if there are any uncertainties related to whether RE is already counted in other accounting mechanisms, e.g. Product Carbon Footprints or Corporate Carbon Footprints.

Starting with the highest impact and lowest-cost markets, Haleon is purchasing RECs on their supplier’s behalf, leaving the most expensive markets until later in the transition plan.

Sustainability impact

Climate

This program accelerates Haleon’s Scope 3 Source to Sale emission reductions, Haleon has calculated that the emissions associated with electricity are approximately 20% of their total Scope 3 Source to Sale footprint. Whilst the traditional approach is to engage with every supplier across the globe, asking them to procure RECs, retiring them and report back the carbon savings. Haleon’s new approach is to Source and Retire RECs on behalf of their suppliers and add directly into their external reporting.

Therefore enabling Haleon to significantly accelerate the addressability of these emissions into the pre-2030 timeframe.

Social

COP 28 committed to tripling renewables by 2030 to mitigate the worst effects of climate change; this is a way in which we can contribute to this goal.

Business impact

Benefits

The US Tax Credit Transfer and the EU vPPA should both generate potential income / savings for the business. Both market mechanisms are highly efficient due to the scale of the transactions, and they would otherwise be inaccessible to smaller suppliers, also reducing administration.

This aligns with company goals to reduce cost of operations while potentially delivering 40% of the company’s 2030 decarbonization target.

Reputation & Resilience: Demonstrates leadership in supply chain decarbonization, enhancing brand value and accelerating the global transition to renewables.

Costs

In Q3 2025, Haleon’s renewables strategy requires no upfront capital investment, enabled by low solar installation costs — notably solar vPPAs priced around €35/MWh. To secure optimal economics, companies may need some form of guarantee to underwrite a vPPA.

In the U.S., Haleon is leveraging tax savings to procure RECs, again avoiding upfront spend.

While long-term market dynamics remain uncertain, rising demand driven by electrification and AI is tightening supply. This underscores the importance of a tailored risk-benefit assessment for any company considering a vPPA.

Indicative abatement cost

The abatement cost of renewable electricity varies by market, typically ranging from €1 to €20 per tonne of CO₂e. China and India offer the most cost-effective opportunities, where GECs or iRECs cost around €0.50 per MWh and grid emission factors allow 1 tonne of CO₂e to be abated for approximately €1.

Typical business profile

This approach works best for large multinationals, but it’s not exclusive.

By targeting cost-neutral or revenue-generating regions, even small companies can become part of cohorts to source renewable for their supply chain, and potentially even cover their Scope 3 Categories 10 (Processing of Sold Products) and 11 (Use of Sold Products).

Approach

• Map supply chain electricity consumption by supplier and location.

• Acquire RECs to cover identified consumption, ensuring no double counting.

• Leverage market mechanisms such as tax credit transfers (U.S.) and vPPAs (EU) to fund RECs.

• Prioritize markets with high impact and low cost; phase in remaining markets gradually.

• Monitor, report, and adjust to ensure accurate accounting and maximize decarbonisation impact.

Stakeholders involved

Delivering this solution takes cross-functional teamwork - Procurement, Tax, Finance, and the Sustainability team all play key roles.

With guidance from Schneider Electric through Haleon’s Energize sponsorship, the team built a strong business case. Big-picture thinking is helping to build buy-in, particularly around the modest risk of the EU vPPA and its potential to unlock large-scale sustainable impact — though final decisions are still in progress.

Key parameters to consider

Initiative Maturity:

Both vPPAs and TCTs are well-established mechanisms. vPPAs are widely used across Europe for corporate renewable sourcing, while TCTs are a mature financial tool under the U.S. Inflation Reduction Act, now increasingly applied to fund clean energy procurement.

Implementation Timeline:

vPPAs typically require around 12-18 months from partner selection to contract execution. TCT-based REC sourcing can be implemented within 3–6 months, depending on tax structuring and supplier onboarding.

Average Lifetime:

vPPAs generally span 10+ years, offering long-term price stability and emissions coverage. TCT-based REC purchases are annual but can be structured as multi-year commitments.

Technical Constraints / Prerequisites:

vPPAs require access to market data, legal expertise, and supplier aggregation. TCTs require tax capacity or a partner with tax appetite, plus mechanisms to allocate REC benefits across the supply chain.

Geographical Relevance:

vPPAs are most effective in deregulated EU electricity markets (e.g. Spain, Italy, Germany, Nordics). TCTs are specific to the U.S., where federal tax credits and low-cost RECs (e.g. GECs in China) make this model highly attractive.

Subsidies Available: TCTs leverage U.S. federal tax credits (e.g. ITC, PTC) to support net cost of REC procurement.

Other Considerations:

• Aggregated supplier participation enhances impact and cost efficiency.

• Both models support Scope 3 decarbonization and supplier engagement.

• Legal and accounting treatment should be aligned early to ensure compliance and traceability.

Implementation and operations tips

• The biggest challenge is evaluating the volume of electricity consumption and then aligning senior stakeholders on a complex and emerging topic.

• Estimating electricity use by country is also tough, but Haleon’s flexible method allows the gradual retirement or resale of excess RECs for profit, helping to manage uncertainty.

• Spotting an opportunity and acting fast in a time-sensitive market.

• While supplier electricity data is ideal, industry averages like those from EcoInvent can fill gaps by providing emission factors and their underlying source mix. Aligning assumptions with external reporting standards ensures the approach remains credible and practical, even in low data maturity environments.