The just-food interview - Unilever CEO Paul Polman - part one
Sustainable Living Plan is "accelerating" Unilever's growth, Polman insists
FMCG companies the world over talk often and loudly about the ways in which they are alleviating their impact on the environment or trading more ethically. Few, however, set public targets and even fewer report their progress or the challenges they are facing. Unilever is a notable exception. This week, the consumer goods group published the latest results of its Sustainable Living Plan programme. Dean Best met Unilever CEO Paul Polman to discuss the initiative, the successes so far and the problems ahead.
Corporate and social responsibility, sustainability - call it what you will - are themes companies talk often about but the listener is sometimes left feeling less than certain the words will be matched by action.
Unilever CEO Paul Polman is different. On issues from climate change and water scarcity to energy use and ethical trading, the Dutchman is almost Polman the preacher.
And, this week, the Unilever chief, alongside senior executives, have outlined how the Knorr soup and Persil washing powder manufacturer is cutting its carbon emissions, reducing its water use and sourcing agricultural commodities sustainably.
Unilever yesterday (24 April) presented the first results of its Sustainable Living Plan, a ten-year programme to reduce the company's impact on the environment and "decouple" that impact from its growth. The first year of initiatives have seen Unilever make early progress, notably on palm oil, as well as sourcing more of its agricultural raw materials more sustainably and reducing the amount of energy used throughout its operations.
Of course, for Unilever to meet its target of halving its impact on the environment while continuing to grow, significant challenges remain. However, the very putting together of the plan, the transparency in reporting its results so far - and inviting campaigners, NGOs and others to question Unilever this week on its work - demonstrate the company is at the forefront of the way industry is tackling its impact on the environment.
"It's our business model. This is the way we do business. This is our permission to operate ten, 15 years from now," Polman tells just-food after Unilever's Sustainable Living Plan update in London, one of a series of events held worldwide this week.
Observers could label this as simply rhetoric but Unilever's first "progress report" on the programme goes into great detail on its sustainability initiatives, listing not just the successes but where it is "off plan" (including the sustainable sourcing of sunflower oil) and where it missed its target (on improving heart health).
Polman insists Unilever has had support for the programme both inside and outside the company. "I'm actually surprised at how quickly the key opinion formers have rallied around this, where people are saying to look at [the issue] holistically is the right way of doing it," he says. "Frankly, I am most pleased about the energy that it has given to our employees. It shows you there's energy and if there is energy we get breakthroughs."
The Unilever boss lists some of the areas in which the company, he says, has made progress - sustainable agriculture, nutrition and eco-efficiency - and reflects that, for all the work the group has put in to alleviate its impact on the environment or trade more ethically, it has continued to grow. "We have made major progress and, in fact, much bigger and faster than we said before," he says. "This company has always been at the forefront of sustainable sourcing and yet we were only at 14% sustainable sourcing [although] far ahead of any other company. Now, in one year, we've moved to 24% and by the way it hasn't affected our results in any negative way, if anything I think it has helped us to grow."
The increased sales of products like Persil Small and Mighty, Lipton tea and Ben & Jerry's ice cream, all lines that have been marketed to varying degrees as more sustainable products (Persil Small and Mighty as a washing detergent that can help consumers use less water, Lipton with its tie-up with the Rainforest Alliance and Ben & Jerry's ice cream with its Fairtrade certification) is evidence, Unilever says, that it can achieve growth and act more sustainably. And, Polman says, investors and the wider financial community are beginning to notice. There is now a recognition among investors, he says, that sustainability, for all the investment that sometimes has to be made, can still equal growth.
"It has nearly been the case that we have had to justify to the finance community why we are doing this. I really don't see that anymore," he says. "Those that invest in sustainable companies - if I can label them like that - are increasingly seeing a better return."
What was the reaction of Unilever's investors when he told them of the company's Sustainable Living Plan? Were they sceptical? Polman says it is hard to define a typical Unilever shareholder - some invest for long-term growth, others speculate - and it is his job to stick to a strategy rather than placate all investors.
"How could you run a company properly if you react to all these signals and try to please everybody? You try to have a strategy out there and you try to attract shareholders that can relate to your strategy," he says. "CEOs need to do a better job attracting a shareholder base that fits their strategy. We have dis-invited some shareholders and invited some shareholders in. We have changed our shareholder base bit by bit. People that hold that share and see that model are very happy with that."
The Unilever chief is notable among CEOs in his almost disdain for the short-termism that defines the decisions of some investors. He joined Unilever three years ago and, in a matter of weeks, he had raised eyebrows in the investment community by refusing to provide profit guidance for 2009 and 2010, pointing to the uncertainty created by the global economic downturn. However, Unilever still does not provide specific financial targets. Tomorrow, the company will publish a short update on its sales performance but there will be no specific guidance.
Polman is pragmatic. He knows a company must continue to demonstrate it can grow but he says Unilever's Sustainable Living Plan can boost the company's financial performance. "You need to perform, not every quarter and perhaps sometimes not every six months, but you need to perform. You cannot sit here and say 'I am not going to deliver results but in ten years time everything will be fine.' That's ludicrous. You need to perform. That's what we're doing as well. We're trying to show that this an accelerator for success and increasingly we are able to do that, at least for now."
Click here for part two of just-food's interview with Unilever CEO Paul Polman discusses the challenges that lay ahead for the company and business in general in becoming more sustainable.
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