During his tenure as Unilever CEO, Paul Polman tried to reposition the 91-year-old conglomerate as one that embraces sustainability as an operating principle. Despite the company’s many brands — from Dove championing self-esteem to Lifebuoy promoting handwashing to Hellmann’s cutting food waste — this approach met with mixed results.
Now, Unilever’s new CEO is working to rethink how it prioritizes sustainability initiatives. Mongabay’s Rhett Butler interviewed him on the company’s next steps.
Sustainability Strategy
Unilever has a unique approach to sustainability, one that distinguishes it from the majority of companies that include it in their strategy. While most treat sustainability as a risk to be managed, or as a cost to be avoided, Unilever sees it as an opportunity for competitive advantage and growth. Zero-waste policies, reducing energy and water consumption, improving the health of workers—these things may benefit society, but they also improve efficiency and cut costs and are central to how Unilever operates its business.
To do this, it focuses on its corporate mission statement, which emphasizes how its products support life’s vitality: “To help people around the world live well within the limits of our natural resources.” This goal isn’t just aspirational; it’s central to the company’s culture and values, and informs all aspects of its operations, including brand and product development, standards of behavior for employees, partners and consumers, and advocacy.
This strategy is paying off: Unilever was ranked number one in the Dow Jones Sustainability Index for years; the company is a leader in the Global Reporting Initiative; NGOs are queuing up to work with the firm; and it has a strong record of supporting social causes. But it also faces an uphill battle from a group of irate investors. The outcome could determine whether the poster child of purpose and sustainability will back down from its ambitions, or rise to the occasion.
Climate Change
Paul Polman, Unilever’s former CEO, was one of the leaders who helped shift business thinking about sustainability. He took the lead in developing his company’s Sustainable Living Plan, which aimed to double the size of the firm while halving its environmental footprint and contributing more than it extracts. It was a bold plan, backed by transformative research and development programmes, that made it possible to achieve ambitious targets for decoupling growth from the environment.
He argued that the climate crisis demands an “ecological transformation,” with companies taking on an overall social responsibility, rather than just promoting their brand values. He is now advising governments and businesses on how to fight climate change, as well as serving on the UN Environment Program’s Sustainability Board.
Unilever has a strong track record in reducing its footprint. The company is a leader in using renewable energy, cutting water use and plastic waste, and pursuing a deforestation-free supply chain. It has also innovated, such as by replacing aerosol cans with compressed cans that require half the propellant gas and 25 percent less aluminium.
Hein Schumacher, Unilever’s new CEO, is continuing on this path but with a different approach. He is re-framing the sustainability strategy around four pillars of climate, nature, plastics and livelihoods, giving division heads and brands autonomy to set progress metrics. He has also announced a EUR1 billion Climate & Nature Fund to support these efforts.
Water
With an estimated 3.5 billion people living in water scarcity, Unilever is taking action to address the crisis by reducing its use of water and plastics and helping to create a sustainable supply. It’s also working to help communities manage water more efficiently, and advocating for a more ambitious response from world leaders.
The company has a long history of taking leadership on sustainability issues — whether it’s Dove championing self-esteem, Lifebuoy encouraging handwashing to reduce diarrheal diseases, or Domestos building millions of toilets to tackle open defecation. But in a time of climate uncertainty and resource constraints, it needs to go further, much further.
That’s why Polman has taken the company beyond CSR, and towards RSC (Responsible Social Corporation) by putting sustainability at the heart of the business. Zero-waste policies, reducing energy and water consumption, boosting the health of workers — these aren’t just good for the environment, they boost productivity, cut costs and help ensure viability in business.
In a time when many businesses have lost sight of their purpose and consumer ambivalence on sustainability is high, Unilever is still a powerful force for change. The company has a huge portfolio of brands, a commitment to achieving net zero emissions by 2039, and a EUR1bn “climate and nature” fund for landscape restoration, reforestation, carbon sequestration, wildlife protection, and water preservation projects. It is a leadership role that should be replicated by more companies and brands.
Energy
Paul Polman is a bold leader with a vision to move Unilever and the world away from fossil fuels toward a more sustainable future. He has done this by establishing an ambitious sustainability plan to cut the company’s environmental footprint in half while doubling revenue. He has also led the development of innovative new business models, such as sustainable sourcing for tea, that reduce waste and poverty while improving the quality of life for people who will buy the products.
In addition, Polman has made Unilever’s supply chain more resilient by supporting decarbonization and creating a 1 billion-euro climate and nature fund to help countries tackle the impacts of climate change. He has also promoted a more circular economy, which means one person’s trash could become another’s asset and reduces waste while saving energy and money.
Taking a long-term approach to business, including getting rid of quarterly financial reporting and earnings guidance, has allowed Unilever to invest more in sustainability. As a result, the company has reduced the amount of water and energy used in its factories and increased the percentage of recycled plastic it uses. It has also reduced its carbon dioxide emissions and has achieved zero waste to landfill.
Polman says that he knows that not everyone will agree with his vision, especially as many critics argue that sustainability is “just another cost”. But he believes that companies have an obligation to make this shift. If they do not, he says, they risk their own survival.
Plastics
The company has set goals to reduce its use of plastic, increase recycling and invest in waste-management facilities. It also plans to switch to green electricity, which will save money over time, and push for a shift to a ‘circular economy’ in which one person’s trash becomes another’s resource. Jope says such moves will also help Unilever lower its carbon footprint and deforestation impacts.
Those efforts, as well as Unilever’s commitment to its people and communities around the world, have earned Polman praise from investors. He believes a company’s growth can decouple from its environmental impact; that products with a purpose attract more consumers; and better-constructed supply chains are more sustainable long term.
But in the unsentimental world of markets, good intentions don’t always pay off. Some shareholders, like Terry Smith of the UK-based fund manager Fundsmith LLP, have accused Unilever of obsessing with its sustainability policies at the expense of profits. And others, like Oxfam’s senior director for Global Corporate Action, say that while Unilever is making progress, it should go further. Still, Polman maintains that businesses should not have to choose between pursuing profit and “doing good” for society. Rather, it can be done simultaneously and that doing both is a recipe for success. He points to the company’s “sustainable living brands,” such as Dove championing self-esteem, Lifebuoy promoting handwashing to cut childhood illness, Hellmann’s cutting food waste and Ben & Jerry’s tackling climate change, as proof.
Livelihoods
Under Polman’s leadership, Unilever has taken a new approach to sustainability, moving from CSR to RSC, whereby the company takes responsibility for its total impact on society. This means more than just reducing emissions and waste, but also helping to improve people’s lives through initiatives like food fortification, supporting smallholder farmers, and selling products in remote villages.
To make these commitments a reality, Unilever has gotten all employees, from senior executives to assembly line workers, personally involved in day-to-day corporate sustainability efforts. For example, inspired by the company’s “small actions can make a big difference” slogan, employees at the PG Tips tea factory came up with an idea to reduce the size of the end seal on each tea bag – a simple change that cut down on waste and saved 15 huge reels of paper each shift.
By focusing on these kinds of local impacts, Unilever can drive real change within each market, making it more likely that its ambitions will come to fruition. The resulting social benefits have helped to drive customer loyalty and boost sales. It has also fostered healthy competition between divisions, for example when a US factory succeeded in eliminating nonhazardous waste, it gave the European team a good benchmark to beat and drove them on to even greater achievements. In addition, this type of peer pressure can help to build internal awareness of the need for action on global issues.
