4 key takeaways from Unilever’s path toward net positive
At the height of the 2008–2009 financial crisis, Unilever brought in Paul Polman as its CEO to jolt the business back to vigor and success. In his 10 years at the company, Polman led Unilever to double its revenues while reducing the company’s environmental impact by half. He has been described by the Financial Times as “a standout CEO of the past decade.”
Today, he works to accelerate action by businesses to achieve the UN Global Goals, which he helped developed. Polman recently co-wrote a book titled “Net Positive: How Courageous Companies Thrive by Giving More Than They Take”. He joined the Alltech ONE Conference (ONE) virtually to share how organizations can transform themselves to achieve big goals by serving the world.
“It really is about making a business model where you can show that you profit from solving the world’s problems, not creating them,” advised Polman. “And when you can honestly answer the question, ‘Is the world better off because your business is in it?’”
The world needs business to step up
“What was very clear during the financial crisis, to me, (was) that we missed an opportunity to address the two most burning issues that science points us to: climate change and inequality,” said Polman. He sees the increases in disparity, natural disasters and diseases as the cost of our failures.
Polman went on to explain that if we put the planet’s age of 4.6 billion years old on a scale of 46 years:
- Human beings have only been around for four hours.
- The Industrial Revolution only started one minute ago.
- In that one minute, we’ve cut down 50% of the world’s forests.
“You can’t have infinite growth on a finite planet,” Polman said. “Anything you can’t do forever is, by definition, unsustainable.”
For many companies, corporate social responsibility (CSR) commitments are about less plastics in the ocean, fewer carbon emissions and less deforestation. But in a world that has overshot its boundaries so much, Polman argued that “less bad” is still bad.
“So, the only way of thinking is really to think restorative, reparative, regenerative,” he continued. “And that is what we call ‘net positive’.”
Net positive is not about doing less harm. It’s about doing more good.
According to Polman, a change needs to happen well beyond the scale of the Industrial Revolution. Increasingly, CEOs are required to be broader social leaders and to partner up within and beyond the industry level. Many CEOs are struggling to make change — and that is normal. The good news, however, is that the greatest challenges also present the greatest business opportunities.
“We are at the point confirmed by study after study (where) the cost of not acting is becoming higher than the cost of acting,” said Polman, “which actually makes it an enormous economic opportunity to create this greener, more inclusive, more resilient future and not go back to the past where we came from, which, frankly, had run out of steam.”
Helping the world is good for business
Polman noted three opportunities for businesses who step up:
- Being highly valued in the financial market: Doing right by stakeholders is good for shareholders. Companies focusing on environmental, social and governance (ESG) performance get higher returns in the market.
- Attracting the best talent and increasing engagement: Gen Z and millennials are looking for purposeful companies to work for, where they can make a bigger difference than themselves and work on something that improves the state of the world.
- Getting economic benefits from using sustainable technology: Moving all supply chains to sustainable supply chains can reduce costs by 9–16%, according to a study by Boston Consulting Group (BCG). In food and agriculture, farmers are using precision farming, artificial intelligence (AI) and renewable energy to provide food to people in a sustainable way. “Planetary health (and) regenerative agriculture … are, by all means, possible,” said Polman. “We see economic benefits coming through as well.”
Key takeaways from Unilever’s transformation
For business leaders who wants to embark upon the path to net positive, Polman shared the following tips:
1. Think long-term
When Polman came to Unilever, he did something unusual in the business world: He stopped providing quarterly earnings reports to focus on a long-term strategy that would benefit all stakeholders. Within 10 years, Unilever saw a 300% shareholder return and a 19% return on investment capital, outgrowing their competitive set. This reconciled the need for shareholder returns.
“People often behave short-term because of the boundaries that are put around them,” said Polman. “It’s clear that the issues like climate change or inequality or food securities or these enormous opportunities out there can really not be solved in the rat race of short-term reporting.”
2. Have an aligned purpose
“Our first step was really to define that purpose, to get our people behind that,” Polman recalled. “You cannot run a purposeful company if you are not purposeful yourself.”
Unilever spent a year working to find out everyone’s personal purpose before collectively developing the company purpose: making sustainable living commonplace. This paid homage to their co-founder, Lord William Lever, who wanted to make good hygiene common practice in the 19th century. To drive performance, Polman introduced “3+1,” where three objectives aligned across the company and one objective was about personal development.
Unilever started to build true momentum when its purpose-driven brands were more profitable and growing faster than others. Those brands included the likes of Lifebouy, a bar soap with the mission to help children reach the age of five when 4 million children die every year of infectious diseases. That brand has grown by double digits and has more than doubled in size over 10 years, when it was previously a dying brand.
3. Setting aggressive, net-positive goals
“Once we decided that we wanted to make sustainable living commonplace, we also felt that we needed to take responsibility for our total impact in the world,” said Polman.
Unilever started to measure its impact in terms of water, waste, carbon emissions and livelihoods. The company wanted to decouple their growth with an environmental impact and increase their overall social impact.
Unilever set 50 targets in building a multi-stakeholder model, including:
- Improving the health and well-being of 1 billion people
- Creating 5 million jobs for smallholder farmers
- Running zero-waste factories
The company made these goals public. For Polman, transparency drives trust, and trust is the basis of prosperity. Being trusted attracted the needed partnerships that opened up many business opportunities for Unilever.
4. Create partnerships
Business cannot thrive in a society that fails. “Net positive” is about driving the broader systems changes that society needs. No company can do this alone — but in partnering up with each other, as well as with civil society and governments, businesses can drive bigger transformations.
Unilever worked with numerous other companies (including its competitors), as well as governments and non-governmental organizations (NGOs) in its effort to improve the well-being of people and the planet. This built credibility for the company. Consequently, Polman earned the only seat at the table as a private-sector representative on the UN Sustainable Development Goals (SDG) working group in 2013.
In concluding his virtual talk at ONE, Polman emphasized the important role that agri-business plays in creating a thriving world for all.
“I think what you (Alltech) are doing and what you are referring to as the Planet of Plenty™ is an important vision where you bring together the key principles of consumer health, environmental health and also animal health — where you leverage, obviously, very important technology, where you call out the importance of sustainable farm management, where partnership is engraved very high in your philosophy,” Polman said. “These are all key elements.”
“I could not think of a more important industry for the integral parts of health or people and planet — what we call planetary health — probably than this industry that you represent,” he continued. “The implementation of the [United Nations] Sustainable Development Goals, I would argue, is in the hands of the people that control our food and land-use systems. And that’s why it’s so important that we talk today.”
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