Unilever Shows How Purpose and Profit Can Coexist

By | December 21, 2020

When Paul Polman became Unliver’s CEO in 2009, the venerable brand wasn’t in the greatest of shape. According to Polman, who was the first outside chief executive in the company’s history, the consumer packaged goods giant had been struggling through a decade of shareholder stagnation. A strategy that driven by short-termism to satisfy shareholders’ immediate demands was at the heart of the problems Unilever had to address.

“[Advertising spend] was flexible, there we significant cuts in investments, factories and training,” Polman recalled. “And even all of that wasn’t paying off.”

When he joined the company, the world was in the midst of a financial crisis. Polman saw that scrambling to cut costs, instead of thoughtfully exploring possibilities for growth, exposed weaknesses in that business strategy. The process of future revival and revenue gains was steeped in the soft power of purpose-driven marketing efforts. That led to the Unilever Sustainable Living Plan (USLP), an ambitious program started 10 years ago, and premised on the dual success of long-term growth and sustainability.

“I’ve talked many times about the need to move from corporate social responsibility to responsible social corporations,” said Polman. “[The USLP] had to be a net positive for the company to succeed and it had to show it would have a positive impact on society.”

The USLP had a finite time window—it ended earlier this year—and didn’t include the entirety of the brand’s portfolio. Instead, it was limited to 28 of the company’s brands, including popular mainstays like Ben & Jerry’s, Dove, Hellman’s, Seventh Generation (acquired by Unilever in 2016) and Vaseline, were part of the program. 

At its core were three main areas of concentration: improving health and wellbeing, reducing environmental impact and enhancing livelihoods. Each point of these ambitious targets were tracked for the USLP. Additionally, Unilever used the UN’s Sustainable Development Goals (SDGs) as a guide to reaching the overall goals. 

Unilever chief sustainability officer, Rebecca Marmot, noted that more than 80 metrics addressed internal issues like supply chains, sustainable agriculture, waste, water use and greenhouse gasses. Other targets included improved health and hygiene, better nutrition, fairness in the workplace, opportunities for women and inclusive business.

While the 2020 progress report is yet to be published, 2019 showed some significant growth. Health and hygiene, for example, exceeded Unilever’s goal of reaching one billion people. Total manufacturing waste dropped by 96% since 2008. Yet, several goals remain elusive. Water use in products went up by 1%, and greenhouse gas impact (a goal that the company wants to halve by 2030) rose by 2%. Additionally, though 62% of the USLP’s brands are sustainably sourced, it’s far below the goal of 100%.

Indeed, looking through the three-year summary of progress, each pillar (connected to SDGs) has several, highly-specific commitments. It’s a fascinating read and a story of how challenging it is for any company, let alone one of Unilever’s size, to have so much aspiration around a commitment to purpose and building a sustainable business that’s more equitable. And though Unilever missed some of its targets, Polman said it was critical to have high levels of transparency and accountability. 

“These were very audacious targets that would make any person feel uncomfortable,” said Polman, who co-founded sustainability consulting firm Imagine after his departure. “And we didn’t have all the answers, and we couldn’t do it alone,” noting that a wide swath of stakeholders, including governments, were vital partners in building out the USLP.

“We didn’t [reach all of our goals],” added Marmot. “But we learned a lot. Sustainable sourcing, for example, was really difficult. In the first five years, we progressed quickly. But we realized that trying to put a sustainable supply chain in place for every crop or commodity wasn’t an effective use of our time or resources.”