Companies / Expert Perspectives

Talking Sustainable Business with Unilever CEO Paul Polman

Paul Polman (centre) was awarded a Lifetime Achievement Award at the 2014 Rainforest Alliance Annual Gala.

Paul Polman (centre) was awarded a Lifetime Achievement Award at the 2014 Rainforest Alliance Annual Gala.

Unilever is the Anglo-Dutch company behind dozens of well-known consumer brands, including Dove, Lipton, Knorr, Magnum, PG tips and Hellman’s. Under the guidance of CEO Paul Polman, Unilever has become an outstanding global leader in corporate sustainability, launching a far-reaching “Sustainable Living Plan” that seeks to halve the environmental impact of its products. The company has already achieved the impressive goal of purchasing 100 percent of its palm oil from sustainable sources and is currently working with the Rainforest Alliance to sustainably source 100 percent of its agricultural raw materials by 2020.

Polman was honoured with a Lifetime Achievement Award at the Rainforest Alliance annual gala last month for his many years of championing corporate social and environmental responsibility. (Watch his inspiring acceptance speech here.) He has famously dismissed statements made by other corporate executives that sustainability is incompatible with maximising short-term profits for shareholders. Instead, he has urged his peers to embrace sustainability as the only sound business model. Polman has been a key ally to organisations like the Rainforest Alliance that are working to make earth-friendly practices the new normal.

We spoke with Polman about sustainability in the business world and the path toward a brighter future.

What changes have you seen over the years in the business world with regard to sustainability?

The world of sustainability is moving faster than ever. The 2008-2009 financial crisis made more people aware of the fact that a system of growth based on high levels of public and private debt and overconsumption is not a sustainable system. Any system that’s not in equilibrium will ultimately fail.

Historically, citizens have relied on governments to solve major issues like food security, climate change and youth unemployment.  However the political system is increasingly gridlocked as global governance has not yet fully adjusted to a more interdependent world.  People expect businesses to step up and partly fill this void. Though companies have to adjust their business models (and many are still struggling with this), there are signs that progress is happening—and at an accelerated pace.  Many now see that the cost of inaction is beginning to exceed the cost of action, making the prioritising of sustainability an increasingly viable business option.

What have been some of the most exciting moments for you?

I am very encouraged by businesses that are increasingly embracing sustainability and by partnerships that are forming to address environmental challenges across many different levels of society.  Seventy-five percent of the world’s largest companies now have multiple environmental and social goals, and many are reporting on actions to address climate change.  In addition, an increasing number of financial institutions are responding to Socially Responsible Investment (SRI) guidelines.

However, we cannot be naïve.  Progress is too slow in many areas in light of the challenges we face.  We must work towards a long-term approach to protecting the environment, accounting for social and environmental capital alongside economic capital and creating true partnerships for transformational change.  This requires new types of relationships based on trust and mutual respect, where interest for the common good is placed above narrow self-interest. Any change of this magnitude is not easy and requires strong leadership with high levels of integrity, humility and humanity.

What is Unilever doing to create sustainable growth?

During the last five years at Unilever, we have put the emphasis squarely on a new business model for achieving sustainable and equitable growth. This is based on a firm belief that the main purpose of businesses should be to serve society before other stakeholders.  Being “less bad” is simply not enough anymore; striving for a positive net impact is the only way to guarantee success.

To that end, we have set ambitious goals, captured in the Unilever Sustainable Living Plan, to double the size of the company while drastically reducing our overall environmental footprint and increasing our positive social impact.  Central to this vision is taking responsibility across the entire value chain, in all countries and all products.  Thanks to the support and partnership of organizations like the Rainforest Alliance, we are well on our way to showing that you can run a healthy business while also having a positive impact on society.

OLYMPUS DIGITAL CAMERAWhat are some of the achievements of the Unilever Sustainable Living Plan to date?

Just three years into the plan, we have increased our sustainable sourcing of agriculturally-based products from 14 percent to 48 percent. For example, thanks to investments we have made over the last five years in improving farming practices, we now source around 50 percent of the tea purchased for all of our brands from Rainforest Alliance Certified™ farms—that’s over 170,000 tons.

We have positively impacted 300 million people, helping them to improve their health and wellbeing by providing such things as clean drinking water. We have also supported the livelihoods of a 570,000 smallholder farmers on top of the 1.5 million already linked directly in our value chain.

UnileverWhere is there room for improvement?

We have already identified several areas where we now need to step up our efforts.  Two in particular I want to mention because they are quite relevant to the Rainforest Alliance’s mission.

One of the many things I took from my experience on the UN Secretary General’s High Level Panel on the Post-2015 Development Agenda was the extent to which social progress and sustainable development go hand-in-hand. That’s why we are putting even more emphasis on areas like fairness in the workplace, opportunities for women, social inclusion and extending our engagement with, for example, smallholder farmers.

We have long recognised that the problems we face are too big to tackle alone.  It is one of the reasons why our partnership with the Rainforest Alliance has been so important.  However, reaching the tipping points needed for transformational change goes beyond one company and one NGO working together. To drive transformational change, we need whole industries and sectors to unite. We need governments and international agencies to come on board in a much more dynamic and proactive way, and we need NGOs to work across their own “value chains” in much the way businesses are required to do, equally addressing social, economic and environmental considerations.

How important are organisations like the Rainforest Alliance in the journey to a more sustainable future?

NGOs such as the Rainforest Alliance are playing a crucial role in our journey to source 100 percent of our agricultural raw materials sustainably.  Both Lipton and Magnum—two of our biggest global brands—have Rainforest Alliance certification fully embedded in their brand identity. As I see it, the Rainforest Alliance enhances our capabilities and credibility, and it helps us scale at a pace that is much faster than we could achieve alone.

For example, Unilever’s three tea factories in Turkey, all of which produce tea for the Lipton brand, achieved Rainforest Alliance certification in 2013—a full year ahead of schedule.  This means that 100 percent of the tea manufactured by Unilever in Turkey is now certified.  As a result, 18,000 smallholders who supply their crop to our factories are now benefiting from sustainable cultivation training.

Organisations like the Rainforest Alliance play a key role in the process, ensuring first and foremost the continued credibility of its brand by setting high standards and then ensuring enough capacity and resources are available to drive such an ambitious agenda.

What will motivate other companies to develop and implement more sustainable models?

There are many reasons that should motivate companies to drive for a more sustainable business model.

First of all, some of the world’s biggest challenges—like food security, climate change, poor sanitation and malnutrition—present enormous opportunities for companies to innovate and provide solutions.  Our brands with a strong social mission see stronger growth. Lifebuoy, our international soap brand, is helping to eradicate infectious deceases by providing accessible hygiene products. Knorr and Lipton are providing sustainable food and jobs for smallholder farmers and Dove is taking a stand on women’s body image issues. These are just a few examples.

Second, embracing sustainability eliminates risk from the supply chain and identifies new opportunities to take out non-value added costs.  Considering waste management and climate change mitigation will make any business model more robust.

Third, we have seen a huge lift in employee engagement and the attractiveness of Unilever as a place to work.  Indeed, we have become the preferred employer in most of the key countries where we operate. Young people especially understand that we need to protect this planet—not only for this generation, but also for many more to come.

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