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Unilever Sustainable Living Plan: A Critical Analysis Fahad Bin Siddique and Iffat Sultana

DOI Number: 10.13140/RG.2.2.18106.29126 To Cite this Article: Fahad Bin Siddique and Iffat Sultana, ‘Unilever Sustainable Living Plan: A Critical Analysis’ [2018] | date accessed Or, Fahad Bin Siddique & Iffat Sultana (2018), Unilever Sustainable Living Plan: A Critical Analysis. doi: 10.13140/RG.2.2.18106.29126

School of Business and Economics

NORTH SOUTH UNIVERSITY

Unilever Sustainable Living Plan: A Critical Analysis Fahad Bin Siddique1 and Iffat Sultana2

Abstract: Unilever is a multi-national corporation, formed of Anglo-Dutch parentage that owns many of the world's consumer product brands in foods, beverages, cleaning agents and personal care products. Unilever products are in more than 180 countries around the world. In 2004, Unilever first-ever got a profit warning and their market share and financial performance continued to broken. They bring an outsider Paul Polman as their new CEO. And now it has become a leading brand which has succeeded in creating its own position in the global market, and it’s basically a success story of its great leader Paul Polman. The Unilever Sustainable Living Plan (USLP) shows a company is acutely aware of the great ecological and social challenges of our time, such as global warming, imminent food shortages and the everwidening gap between rich and poor.

1. Introduction The Unilever Sustainable Living Plan is directly linked to earnings and returns – it drives growth, reduces costs, mitigates risks and attracts talent. The Unilever plan identifies three main missions: ‘improving health and well-being’, ‘reducing environmental impact’ and ‘enhancing livelihoods’, whereas, each mission comes with a set of concrete goals. Unilever understands that climate change, tightened environmental legislation, and increased consumer awareness have an impact on its business. Unilever focuses its sustainability efforts on four key areas: greenhouse gas emissions, water conservation, waste reduction and sustainable sourcing. Unilever announced its ‘Sustainable Living Plan’ (SLP) in November 2010, the plan sets out its sustainability commitments and targets for the next decade. This plan is not just central to the company's business strategy but, in the words of CEO Paul Polman, a "new business model". It aims to decouple business growth from environmental impact so that while the company increases in size it will reduce its total environmental footprint across the value chain. The company has also set itself some stretching targets. By 2020 it aims to help more than a billion people take action to improve their health and wellbeing, halve the environmental footprint of its products, source 100% of its agricultural raw materials sustainably, and link more than half a million smallholder farmers and small-scale distributors to its supply chain. 1

Legal Practitioner, LL.B (Stamford University Bangladesh), LL.M (East West University), Student of MBA, School of Business and Economics, North South University. 2 BA in English (University of Liberal Arts Bangladesh), MA in English (North South University), Student of MBA, School of Business and Economics, North South University.

The billion people target is not just about reaching people with socially beneficial products such as soap, toothpaste and safe drinking water. It is about helping people to change their behavior so that healthy habits such as brushing teeth twice a day become part of everyday living. Lifebuoy soap, for example, which is sold in 55 developing and emerging countries, aims to change the hygiene behavior of 1 billion people by showing them the health benefits of hand washing with soap at key times of the day, such as before preparing food or after going to the toilet. This has the potential to reduce diarrheal disease by 25% and acute respiratory infections, two of the biggest killers of children under five, and increase school attendance by up to 40%. The Unilever Sustainable Living Plan was launched with debates in London, Rotterdam, New York and Delhi at which Unilever's senior executives and sustainability experts discussed how to make consumption sustainable. Unilever is regarded as a champion of sustainability and according to its CEO Paul Polman, what benefits the company also benefits the earth.

2. Major issues in Unilever When Unilever got their first ever profit warning in 2004, they thought about implementing new business strategies and also thought to bring changes in the company. That’s the reason to bring an outsider in its leading position. Unilever board decided to make up their financial performance with a new CEO and new Strategy. New CEO and New Strategy Unilever brought their first ever outsider CEO and he introduced a new plan for Unilever. Mr. Paul Polman introduced Unilever Sustainable Living Plan (USLP), a commitment that placed three "sustainability" goals at the core of the company's strategy: to help one billion people in improving their health, to halve the environmental footprint of making and using Unilever products, and to enhance the livelihood of those in its value chain. Paul Polman is a Dutch business leader who started his career at Procter & Gamble where from 1979 he worked for 27 years and Paul had reached to P&G most senior level within few years. Paul then joined Nestlé in 2006 as chief financial officer and head of the Americas. On 1 January 2009, he succeeded Patrick Cescau as chief executive officer of Unilever. Breaking Conventional Rules The new CEO Paul Polman admitted that, there are some problem in the way Unilever doing business. Therefore, he wanted to break the typical rules of business and also want to connect the people with this new strategy who are facing problem to surviving their life, go to bed hungry every night. Environment was another priority for Polman and that’s why he wanted to make the business environment friendly and also create products which will reduce the uses of water.

Polman offered a different vision, as according to him, most businesses think how they can use society and the environment to be successful, while he thinks about how he can contribute to society and be successful. Accepting the Challenge as a Successful Leader The company experienced a major shakeup as Paul was ready to challenge much of the conventional wisdom in business arena. He also brought huge changes in the management as within a year Paul had changed a third of the top executives of the company and he has also created a ULE (Unilever Leadership Executive) team. Polman has used this sustainability program to make impact on the environment and also as a marketing strategy to connect with consumers because he believes that for consumers, Unilever is here, not for the shareholders. He has succeeded with his marketing strategy and Unilever has got back to its form and made good profit also. But the question is that, is he tried enough to reach the goals of sustainability or it was just a strategy to reestablish the financial and market performance of Unilever?

3. Action been Taken to Achieve the Goals Unilever’s CEO Paul Polman has quality of leadership to take action according the situation. The actions taken by him and by his team were effective for the company and also create high motivation in the employees mind. The CEO Paul Polman’s high motivation is clearly evident in his success story. As a successful leader, Paul Polman has always been confident enough to face the challenges with the implementation of new strategies. Job Engagement Polman invested his physical, cognitive and emotional energies into his performance. He knew that USLP required a radical new way of thinking not only from Unilever’s 165,000 employees, but also by the 5 million people in its supply chain, and eventually by the 2 billion people worldwide who used one of its products on any given day. It was a huge task, and internally the new strategy was greeted with nervous anticipation. While the idea of doubling revenues seemed exciting, some found USLP’s less familiar environmental and social goals harder to grasp. In order to engage employees in the company’s sustainability journey, he took few significant initiatives such as, defining company’s long term purposes, spelling out the economic case for sustainability, creating sustainability knowledge and competence etc. Implementation of the Term ‘Sustainability’ in Policy Ever since Polman took the reins at Unilever, sustainability has been at the core of the company’s corporate strategy. Not only is sustainability perfectly compatible with commercial success, Polman has claimed that the company can halve its environmental impact while ‘growing the business’ at the same time. In addition to internally executing its sustainability

plan, Unilever relies on strategic partnerships with NGOs, governments, international organizations, and other industry players to move forward the global sustainability policy agenda. Unilever has not just asked – ‘how can I be sustainable?’ Critically, in drawing up the USLP, their main question was, how could business contribute towards a sustainable future. In Paul Polman’s words, ‘Most businesses operate and say how can I use society and the environment to be successful? We are saying the opposite – how can we contribute to the society and the environment to be successful?’ Thinking Long Term It is perfectly possible, today, to be commercially successful and think short-term. Many businesses are in this camp – fueled by a fascination with short-term profit maximization. But this short-termism means that businesses are missing out on an opportunity to build resilience into the business, and secure its medium and long-term success. If a business hasn’t thought about the impact of these long-term trends, then its ability to deliver long-term value creation is seriously compromised. Unilever has worked through the longer term implications of global trends for its business. The USLP targets are responded to these implications and are designed to ensure that Unilever is in business next year, and into the next decade. Cultural and Management Change He brought huge changes in the management as within a year Paul had changed a third of the top executives of the company and he has also created a ULE (Unilever Leadership Executive) team. He created a new role on the Unilever Leadership Executive (ULE) combined with Chief Marketing Officer (CMO) with responsibility for the leadership of both Communications and Sustainability. After that he redefined his marketing strategy and introduced an environmental issue sustainable development in the business arena. Sustainability means “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” He said that sustainability gives support to Unilever’s commercial interests and its mission “doing well by doing good.” Widening the Focus on Consumers Rather Than the Shareholders Polman made, and not for the first time, two interesting comments about the relationship with shareholders. First, he’s not working for the shareholders, but for the consumers, or in his words, “we are not out there just to make money, but to satisfy consumer needs and doing it well, we will make money.” Second, he wants to have only shareholders that are interested in the long-term. Innovative Marketing Strategies to Compete Globally and New Invention For its marketing strategy Unilever combines its strategy with social project along with USLP priorities in many countries. For example, the laundry brand persil was no longer built on the platform that “Persil Washes Whiter”, but instead developed a brand love key linked to mother’s strong interest in her child’s development by campaigning that ‘Dirt is Good’, which

reversed the traditional fear based laundry detergent advertisement. It was actually projecting a positive life-celebrating message inspiring mothers to encourage their children to play outside. Educational campaigns have been important tools for raising awareness for Unilever brands such as Close-Up and Dove. The company’s partnership with the World Dental Federation has seen it become involved in oral healthcare projects in both developed and emerging nations, including Austria and Brazil. The company also has more directly brand related programs, including Life buoy’s hand wash program in schools, Close -Up’s Project Smile in Nigeria, which used small kiosk outlets to showcase both its products and oral hygiene information, and the Dove Self-Esteem Fund, which has joined with organizations such as the Girl Scouts of the USA and the UK’s Eating Disorder Association to fund educational Body Talk programs in schools to improve body-related self-esteem. There were two shortfalls among the USLP defined targets: Greenhouse Gas emissions and water usage. Management emphasized the need for impactful innovations. After that, Unilever introduced laundry detergents that required shorter wash cycles, minimum rinse fabric conditioners, and dry shampoos. Intensive Communication Campaigns and New Partnership Programs The new CEO and his management teams held meetings, hosted forums, and visited operations to outline the vision, answer questions, and celebrate early achievements. Externally Polman Gave interviews to the media, met with analysts, and spoke at meetings from UN conferences to the World Economic Forum at Davos. Within a year, few in the business world were unaware of Unilever’s USLP Strategy. Polman understood that it could not achieve its bold objectives by itself, so Polman had emphasized on partnership with governments, NGOs, suppliers and others to address the big challenges. The company started “Partner to Win” program resulted in hundreds of agreements being signed by the suppliers. It also partnered with scores of NGOs including Oxfam, Unicef, Save the Children, WWF and Rainforest Alliance. And it had dozens of collaborating programs with governments at national and local levels worldwide. Unilever partnered with NGOs, social entrepreneurs, academics, and other businesses because the CEO believed it could lead changes in the broader system to improving health and hygiene, particularly for the 2.5 billion people sanitation ,safe drinking water, hand washing. Gaining Market Leading Positions and Quicker Product Development Unilever is the leading bath and shower products and deodorants marketer in the world, as well as in its domestic Western Europe, Eastern Europe, Latin America and Africa and the Middle East. Unilever is very advanced in its advertising and marketing program and very active in in-store displays, which is a must for success in cosmetics and toiletries. In many of Unilever’s largest sectors, the company’s wide presence has been built on successful product innovation with the timely introduction of brand extensions well suited to changing consumer preferences.

Unilever stands out as an exception, and has managed to sustain a wide variety of products as part of its inclusive business activities and core business model. The expansive size of Unilever’s customer base allows it to scale new products more quickly than competitors.

4. Shortfalls of Unilever’s Strategy The strategy of Unilever was very effective and got the popularity day by day. Many consumers especially from Least Development Countries (LDC) connect themselves with this outstanding business strategy. There is no doubt that Unilever’s CEO Paul Polman was targeting the consumers from developing countries and spread his business according to that way. Now his strategy is not successful in all sectors. May be he reestablished the growth of financial performance again but shortfalls are there because he promised many things. Failure in Reduction of Greenhouse Gas (GHG) Impact and Water Footprint Despite of every possible effort, the company couldn’t reach to its defined target regarding GHG emission and water usage. The analysis had shown that Unilever’s footprint per consumer use had actually increased by some extent. Unilever’s GHG impact per consumer use had actually increased by 4% since 2010, and consumer water use impact had been reduced by only 2%. The CEO acknowledged that because both of the “off -track” USLP pillars were linked to consumers’ use of its products, they would be hard to fix. In contrast to a goal of halving its environmental footprint, in part due to its merger and acquisition activity. Changing People’s Behaviors is the Hardest Challenge It will not be possible to meet its goals without changing customers’ behavior, which is an extremely difficult job. Three years ago the company measured the carbon footprint of 2,000 products and found that on average 68% of greenhouse-gas emissions in their life cycles occurred only after they got into the hands of consumers, mostly through the energy intensive process of heating water (eg, for tea bags or washing powder).

5. Alternative Solution of this New Strategy: The CEO of Unilever is a great motivator and has the ability to divert problems into solutions. This type of great leader actually motivates others to be like him and follow his footprints. Now the USLP sets the target for 2020 and this is the right time to analyze the shortfalls of the strategy and make solutions for them. And it’s also important to acknowledge the shortfalls by internal managements to fulfill the target. More Focus on Research and Invention USLP’s implementation has been characterized by continuous adaptation, adjustment and learning. So once again the company has an opportunity to explore further innovations with

the necessary adjustments. In order to produce more sustainable products, they should go through more innovations and researches. More Focus on Developed Countries Unilever is more focused on the developing countries because the consumers of these countries are not much aware about sustainability. And Polman has used that thing to make Unilever products famous in those countries but this could be harmful because the economic and political situation in developing countries is not so well which may slow down its growth. As developed countries have the economical and political stability, so Unilever can make a dedicated strategy for developed countries. Introducing More Campaigns to Raise Awareness In order to make people aware about Unilever’s sustainable programs and the importance of it, they can think about more innovative strategies to change people’s behavior such as they can arrange more workshop programs at the ground level. But all these possible initiatives require a long period of time and these can be identified as time consuming processes.

6. Conclusion Unilever’s CEO Paul Polman has shown great potentials in making perfect decisions to achieve the goal and to lead the company towards its ultimate destination. Polman and his ULE team has mainly focused on influencing people through innovations in business strategies as they started recognizing people as individuals, instead of consumers. Unilever’s CEO has also shown great initiatives in an intensive communication campaign to make people aware about their new innovative strategies. Polman and his ULE team have successfully led the company towards its goal to be achieved gradually. Finally, we can say that zero-waste policies, reducing energy and water consumption, improving the health of workers – all these things promote the wellbeing of the environment and society, and they also improve efficiency, reduce costs and ensure viability in business. While Polman has extremely moral intentions, he is also a businessman, and as Young noted, ‘Unilever’s attempt to cut resources, while still growing, is the holy grail of industry.’ Polman certainly is an ambitious leader, even a radical some may say, yet the world needs radicals like him – radicals who never stop striving for the Holy Grail.

References 1. Christopher A. Bartlett (2016), Unilever’s New Global Strategy: Competing through Sustainability. Harvard Business School, 916-414 2. Unilever (2011, October 5). Unilever Sustainable Living Plan. The...