10 years after setting “daring objectives”, Unilever reveals how goal and revenue can coexist
When Paul Polman became CEO of Unliver in 2009, the venerable brand wasn't in the best shape. According to Polman, the company's first external chairman of the board, the consumer goods giant has had a decade of stagnation among its shareholders. A strategy that relied on the short term to meet the immediate needs of shareholders was at the heart of the issues Unilever had to address.
“(Ad spend) has been flexible because we've made significant savings on investments, factories, and training,” recalls Polman. "And even all of that didn't pay off."
When he joined the company, the world was in the midst of a financial crisis. Polman saw that trying to cut costs instead of carefully looking for growth opportunities revealed flaws in this business strategy. The process of future revitalization and sales growth has been shaped by the soft force of purpose-driven marketing efforts. This led to the Unilever Sustainable Living Plan (USLP), an ambitious program that started 10 years ago and is based on the double success of long-term growth and sustainability.
"I have spoken many times about the need to move from corporate social responsibility to responsible social enterprise," said Polman. "(The USLP) had to be a net positive for the company to be successful, and it had to show that it would have a positive impact on society."
The USLP had a finite window of time – it ended earlier this year – and did not span the entire brand portfolio. Instead, it was limited to the company's 28 brands, including popular mainstays like Ben & Jerry, Dove, Hellman, Seventh Generation (acquired by Unilever in 2016), and Vaseline.
It focused on three main areas of focus: improving health and wellbeing, reducing pollution and improving livelihoods. Every point of these ambitious goals has been pursued for the USLP. In addition, Unilever used the United Nations Sustainable Development Goals (SDGs) as a guide to achieving the overall goals.
Rebecca Marmot, Unilever's Chief Sustainability Officer, found that more than 80 metrics covered internal issues such as supply chains, sustainable agriculture, waste, water use and greenhouse gases. Other goals included improved health and hygiene, better nutrition, fairness in the workplace, opportunities for women and inclusive business.
While the 2020 progress report has not yet been published, 2019 saw significant growth. Health and hygiene, for example, exceeded Unilever's goal of reaching one billion people. Total production waste has decreased by 96% since 2008. Still, some goals are difficult to achieve. Water use in products increased 1% and greenhouse gas pollution (a goal the company aims to cut in half by 2030) increased 2%. Although 62% of USLP brands are sourced sustainably, it is well below the 100% target.
In the three-year summary of progress, each pillar (related to SDGs) has several highly specific commitments. It's fascinating read and a story about how difficult it is for any company, let alone a Unilever company, to be so entitled to a commitment to purpose and build a more sustainable company that is fairer. And while Unilever missed some of its goals, Polman said it was crucial to have a high level of transparency and accountability.
"These were very bold goals that would make anyone feel uncomfortable," said Polman, co-founder of sustainability consultancy Imagine, after his departure. "And we didn't have all the answers and couldn't do it alone," noted a variety of stakeholders, including governments, were key partners in building the USLP.
"We did not achieve all of our goals," added Marmot. “But we learned a lot. Sustainable procurement, for example, was really difficult. We made rapid progress in the first five years. However, we have found that trying to establish a sustainable supply chain for every crop or commodity is not an effective use of our time or resources. "