Changing face of multinationals
Capturing the mood of the times
The head of Unilever, Paul Polman, is spearheading a new approach — responsible business that works for society. By Dave Waller The Times
In early June President Trump announced that the US was leaving the Paris climate accord. The reason? The cost of the commitment and the impact it would have on the US economy. The president was sticking close to his populist script, playing on domestic economic fears, showing contempt for the scientific and political consensus, and hailing the move as “a reassertion of America’s sovereignty”.
The usual suspects, from Al Gore to Greenpeace, reacted furiously, pointing to the immeasurably larger cost of the world’s second-largest carbon producer pulling out. So did a wave of business leaders, among them Tesla’s Elon Musk, Disney’s Bob Iger, Apple’s Tim Cook and Goldman Sachs’s Lloyd Blankfein.
Paul Polman, the chief executive of Unilever, says the reaction to the US withdrawal is telling. “Change is happening. Look at the outcry when Trump left the Paris agreement. Even the likes of Goldman Sachs were speaking up and saying we need to do something about the rise of populism. They know that co-operation creates jobs, investment and security.”
It is eight years since Mr Polman arrived in the chief executive’s chair at Unilever, with a desire to get business to wake up, ditch short-term thinking and work for society, rather than against it.
He attributes that calling to the financial crisis of 2007-08, the effects of which are still being felt. Mr Polman says: “We have a financial system that works only for the few. There has been a continual increase in the Gini coefficient. Fewer people are getting a greater share of the money.”
That, he says, has driven the rising tide of populism across the globe. “Populists thrive on the dissatisfaction, distorting the real reasons we’re in this situation. And the people who aren’t sharing in the progress buy into it, because they’re anxious about jobs disappearing.”
Mr Polman has put his money — or rather his shareholders’ money — where his mouth is. In 2010 he launched the Unilever Sustainable Living Plan. It aims to halve the environmental impact of its products, and improve the health of one billion people by providing clean water, toilets and education on handwashing.
The plan has been hailed by activists, and Unilever has become the poster child of responsible capitalism. As a large multinational, that example has a huge impact. Mr Polman points to the 75,000 small businesses in Unilever’s supply chain that it can support to change their working practices.
“With the technology developing and the cost of not acting being so high, it’s now cheaper to introduce these things,” he says. “In fact, we see most movement towards sustainable suppliers among smaller companies, who can run electric cars or get electricity from clean sources.”
He points to Ben & Jerry’s — which Unilever bought in 2000 — and Seventh Generation, the producer of eco-friendly cleaning products, as smaller companies doing things right. It is difficult for such a large company to always get it right and Unilever has made serious mistakes. Its Indian arm was embroiled in a scandal involving the dumping of toxic waste at a thermometer factory in the state of Tamil Nadu. The facility was forced to close in 2001 and the case was settled last year.
Unilever has come under pressure from shareholders, frustrated with a chief executive focused on distant sustainability goals. Although Kraft’s attempt to buy its larger rival this year failed, Mr Polman has since talked of the “fine balance” between Unilever’s sustainability goals and shareholders looking for short-term returns. However, he likes to ask: what is the alternative, when the global population is suffering food riots, crippling unemployment and heart-wrenching displacement through environmental crises?
In the past this kind of rhetoric set him apart. Reaction to the US withdrawal from the Paris accord suggests the times may have finally caught up with him. Mr Polman notes Labour’s surprise performance at the general election.
“People are dissatisfied with the limited progress being made in addressing their concerns. Young absentees from the Brexit vote have now become active because they realise they need to be a part of it. Politicians such as Jeremy Corbyn have realised they need to be closer to people and respond faster in fixing the economic system.”
He says Unilever and other companies are listening, particularly to the young, to work towards more inclusive growth. “Business is there at the invitation of society, not for its exploitation. When they built the Statue of Liberty on the east coast of the US, they forgot to build a Statue of Responsibility on the west.
“Citizens of the world expect us to accept that responsibility and make the system work for the many.”
A win-win-win for caring companies
OpportunityThe Business & Sustainable Development Commission says achieving the UN’s sustainability objectives will open up a $12 trillion opportunity by 2030, creating 380 million jobs. Businesses, though, must “pursue social and environmental sustainability as avidly as they pursue market share and shareholder value”.
SavingsAs the price of renewable energy drops, it becomes a way to cut costs. Facebook now runs its power-hungry data centres with wind energy.
Engagement Sustainable goals can attract young talent. Paul Polman cites Unilever’s sustainable strategy as the reason it was ranked top in LinkedIn’s list of best fast-moving consumer goods companies to work for.
The usual suspects, from Al Gore to Greenpeace, reacted furiously, pointing to the immeasurably larger cost of the world’s second-largest carbon producer pulling out. So did a wave of business leaders, among them Tesla’s Elon Musk, Disney’s Bob Iger, Apple’s Tim Cook and Goldman Sachs’s Lloyd Blankfein.
Paul Polman, the chief executive of Unilever, says the reaction to the US withdrawal is telling. “Change is happening. Look at the outcry when Trump left the Paris agreement. Even the likes of Goldman Sachs were speaking up and saying we need to do something about the rise of populism. They know that co-operation creates jobs, investment and security.”
It is eight years since Mr Polman arrived in the chief executive’s chair at Unilever, with a desire to get business to wake up, ditch short-term thinking and work for society, rather than against it.
He attributes that calling to the financial crisis of 2007-08, the effects of which are still being felt. Mr Polman says: “We have a financial system that works only for the few. There has been a continual increase in the Gini coefficient. Fewer people are getting a greater share of the money.”
Mr Polman has put his money — or rather his shareholders’ money — where his mouth is. In 2010 he launched the Unilever Sustainable Living Plan. It aims to halve the environmental impact of its products, and improve the health of one billion people by providing clean water, toilets and education on handwashing.
The plan has been hailed by activists, and Unilever has become the poster child of responsible capitalism. As a large multinational, that example has a huge impact. Mr Polman points to the 75,000 small businesses in Unilever’s supply chain that it can support to change their working practices.
“With the technology developing and the cost of not acting being so high, it’s now cheaper to introduce these things,” he says. “In fact, we see most movement towards sustainable suppliers among smaller companies, who can run electric cars or get electricity from clean sources.”
He points to Ben & Jerry’s — which Unilever bought in 2000 — and Seventh Generation, the producer of eco-friendly cleaning products, as smaller companies doing things right. It is difficult for such a large company to always get it right and Unilever has made serious mistakes. Its Indian arm was embroiled in a scandal involving the dumping of toxic waste at a thermometer factory in the state of Tamil Nadu. The facility was forced to close in 2001 and the case was settled last year.
Unilever has come under pressure from shareholders, frustrated with a chief executive focused on distant sustainability goals. Although Kraft’s attempt to buy its larger rival this year failed, Mr Polman has since talked of the “fine balance” between Unilever’s sustainability goals and shareholders looking for short-term returns. However, he likes to ask: what is the alternative, when the global population is suffering food riots, crippling unemployment and heart-wrenching displacement through environmental crises?
In the past this kind of rhetoric set him apart. Reaction to the US withdrawal from the Paris accord suggests the times may have finally caught up with him. Mr Polman notes Labour’s surprise performance at the general election.
“People are dissatisfied with the limited progress being made in addressing their concerns. Young absentees from the Brexit vote have now become active because they realise they need to be a part of it. Politicians such as Jeremy Corbyn have realised they need to be closer to people and respond faster in fixing the economic system.”
He says Unilever and other companies are listening, particularly to the young, to work towards more inclusive growth. “Business is there at the invitation of society, not for its exploitation. When they built the Statue of Liberty on the east coast of the US, they forgot to build a Statue of Responsibility on the west.
“Citizens of the world expect us to accept that responsibility and make the system work for the many.”
A win-win-win for caring companies
OpportunityThe Business & Sustainable Development Commission says achieving the UN’s sustainability objectives will open up a $12 trillion opportunity by 2030, creating 380 million jobs. Businesses, though, must “pursue social and environmental sustainability as avidly as they pursue market share and shareholder value”.
SavingsAs the price of renewable energy drops, it becomes a way to cut costs. Facebook now runs its power-hungry data centres with wind energy.
Engagement Sustainable goals can attract young talent. Paul Polman cites Unilever’s sustainable strategy as the reason it was ranked top in LinkedIn’s list of best fast-moving consumer goods companies to work for.
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