Unilever is widely recognised as having one of the best track records for sustainability in the world. This post considers why sustainability has made such good business sense and how Unilever is reporting it today.
“There is no inherent contradiction between sustainability and growth. In fact, in our experience sustainability drives growth”.
Paul Polman, Unilever CEO
The argument that Unilever continually makes is that “growth and sustainability go hand in hand”.
One element to this is that some consumers and retailers demand products that are ethically sourced and responsibly made. But as Unilever itself recognises, this group is still small.
Lighter weight and better-designed packaging saves money on transportation. It can also reduce the need for petroleum-based plastics, which are becoming more expensive as oil prices continue to rise. In 2012 Unilever even launched an online innovation platform to encourage the development of sustainable packaging.
Innovation is a key ingredient of growth, not only for individual businesses but also for the wider economy. This connection between sustainability and innovation helped Unilever record profits over £5.6 billion in 2012, despite sluggish performances from other European companies.
Unilever also recognises that a strong sustainability ethos has benefits for its own workforce. Research suggests that ‘green companies’ have more productive employees whilst sustainability reporting helps attract the best new talent.
What is Unilever’s Approach to Sustainability?
One of the most striking aspects to Unilever’s sustainability strategy is its broad scope.
Unilever doesn’t consider environmental and social responsibility to end as soon as the customer has bought one of its products or once a retailer places an order – it considers what happens next.
This is why it has developed its ‘Five Levers for Change’ – behaviour principles to inspire sustainable living among consumers. It has even conducted research on people’s showering habits to see what products might reduce hot water demand.
Gaining a better understanding of the impact that its suppliers are having is another crucial area, although as for all supply chain owners, getting hold of consistent supplier data is notoriously difficult.
How does Unilever report sustainability?
Unilever has taken a simple yet comprehensive approach to reporting its sustainability. Firstly it has divided ‘sustainability’ into three categories –Health & Wellbeing, Environmental Protection and Enhancing Livelihoods.
For each category there are specific themes, for example Nutrition, Water and Sustainable Sourcing, and for each theme there are a number of clear targets. Each target has a colour-coded status: Achieved, On-plan, Off-plan or Missed.
It’s like an interactive sustainability report which is clear and easy-to-use.
How does Unilever define sustainability?
Unilever recently made headlines with its announcement that over a third of its agricultural raw materials are sourced sustainably. But what does this actually mean?
Unilever bases sustainability on a number of international standards, for example Rainforest Alliance Certified for its cocoa and tea bags, and the Forest Stewardship Council for its paper and board. It has also developed its own sustainability software – Quickfire.
While these standards are a good benchmark for environmental and human wellbeing they are not perfect, as the debate regarding soya bean certification demonstrates.
Ultimately the true measure of sustainability incorporates financial health.
The term sustainability is a highly contested concept, and for some the above definition still falls short (a recently-published book issued a damming criticism of modern CSR programmes, suggesting that current business practice might ‘reduce unsustainability’ but will never ‘create sustainability’).
Unilever should be applauded for its leadership in defining this space in a way that benefits the planet while delivering bottom line benefits to the business.