unilever: Green means go Unilever

unilever: green Means go

Unilever has long been recognised as a frontrunner when it comes to sustainability. For this globally renowned consumer goods giant, the mission is clear and simple: to ‘make sustainable living commonplace’. Industry Europe finds out how it has continued to further this agenda – while delivering results for its stakeholders at the same time – since we last looked at the company in 2016.

With over 400 Personal Care, Home Care and Food & Drink brands sold to consumers all over the world, Unilever’s global turnover totaled €52.7 billion in 2016. Brands such as Hellmann’s, Surf or Ben&Jerry’s are part of everyday life for millions of people throughout the world. Furthermore, as we shall see later on, the company is continuously making new acquisitions in order to strengthen its existing brand portfolios and global outreach. Indeed, in May this year (2017) it was named as the company with the most brands in the Kantar Worldpanel Global Top 50 index.

As many will be aware, Unilever also made headlines in February this year when it fended off Kraft Heinz’s £115 billion takeover bid. The offer was withdrawn ‘amicably’ after Unilever indicated it would use every tool at its disposal to ensure the deal did not take place. Kraft Heinz’s position was further weakened by the fact that rumours of the deal were leaked before it was ready to make its announcement, meaning it did not have time to sound out key investors before going public. This represented a positive outcome for Unilever, whose main objection to the bid was that it ‘fundamentally undervalued’ its substantial assets.

But quite apart from the above accolades and takeover dramas, what makes Unilever stand out is the fact that it uses the position it has built over its many years of operation to set an example on how a business can be run both profitably and sustainably.

According to the company: “Unilever believes profitable growth should also be responsible growth. That approach lies at the heart of our business model…It guides our approach to how we do business and how we meet the growing consumer demand for brands that act responsibly in a world full of finite resources.”

Sustainable and responsible

What is the Unilever sustainable living plan (USLP) we have heard so much about since its launch in 2010? For the group, it is far more than just words – it is an ethos around which its entire business strategy is built. Within this, its goals can be broadly divided into three main groups: improving health and wellbeing for more than 1 billion people; reducing its environmental impact by half, and enhancing millions of livelihoods throughout the world. Each year the company publishes a comprehensive account of its progress towards these goals in the form of its Sustainable Living Report.

With regard to improving health and wellbeing around the world, Unilever’s approach falls into two main categories: Health & Hygiene and Improving Nutrition. It seeks to provide safe drinking water, reduce infectious illnesses through hand washing, improve access to sanitation, oral health and, last but not least, improve self-esteem to help those from developing countries gain the tools to build a better future.

The push for safer drinking water has been greatly advanced with the development of the Pureit water purifier in 2008, a breakthrough innovation designed by Hindustan Unilever and offering complete protection from all water-borne diseases. It provides four litres of ‘As safe as boiled’™ water at a running cost of Rs 1 without the need to boil, and without the need for electricity or a continuous tap water supply. For the millions who live in the developed world with little access to water, this product can be life-changing.

Reducing environmental impact for Unilever means cutting greenhouse gases across its operations, cutting water use by at least a half, reducing waste and packaging, and ensuring all its raw materials are sustainably sourced. Finally, enhancing livelihoods for millions translates to fairness and human rights in the workplace, opportunities for women and inclusive business practices – the latter intended to improve prospects for smallholder farmers, small-scale retailers and young entrepreneurs.

A good example of Unilever’s responsibility when it comes to its supplier relationships is in its sourcing of palm oil – it being one of the world’s largest users of this resource. In recent years it has been working with specialist partners in North Sumatra, Indonesia, to drive sustainable palm oil. Following its partnership with the IDH Sustainable Trade Initiative, PT Perkebunan Nusantara III Persero (PTPN III) and the Roundtable on Sustainable Palm Oil (RSPO), 63 farmers – 19 of which are women – have now achieved RSPO certification. This move makes them the first independent palm oil farmers in the entire Indonesian province of North Sumatra.

According to Unilever Chief Supply Chain Officer Marc Engels: “As one of the world’s largest palm oil end users in the consumer goods sector, Unilever is committed to leading the transformation of a sustainable palm oil industry. By sourcing sustainably, we aim to reduce the impact of palm oil cultivation on forests, and drive positive economic and social impacts for smallholder farmers, indigenous peoples and forest communities.”

International recognition

And there have been clear indications that the USLP is effective. For example, Unilever was recently identified as a global leader in corporate sustainability and awarded a position on this year’s A List for climate, water and forests by CFP, the non-profit global environmental disclosure platform. CDP publishes A–D scores across climate, water and forests for over 3000 major corporates. This is the first year it has announced company scores across all three areas simultaneously, reflecting the interconnectivity between climate, forests and water.

Unilever Chief Financial Officer, Graeme Pitkethly, highlights the significance of this achievement for the company: “Disclosure through the CDP platform is an important tool for Unilever to measure how we are performing against our sustainability plans and making progress to reduce our footprint. We are delighted to have been recognised as one of only two companies to achieve straight ‘A’ scores across the rankings.”

He went on: “Transparency and reporting are more important than ever before, not only to ensure trust among employees and consumers, but also for our investors. Unilever is one of the first companies to commit to implementing the recommendations of the Task Force on Climate-Related Financial Disclosures. If markets are to operate efficiently, we must be transparent to help them evaluate companies’ risks and opportunities and make better decisions for the long term.” Combating stereotypes

Social and cultural responsibility are also a strong part of the Unilever ethos. To emphasise this, in March this year it released a trailblazing new report detailing its plan to challenge discrimination and outdated stereotypes across the company and society at large.

The report is entitled ‘Opportunities for Women: challenging harmful social norms and gender stereotypes to unlock women’s potential’, and builds on Unilever’s ‘Unstereotype’ commitment, launched in 2016, in which it pledged to change the way it portrays women and men in its advertising. It outlines the work Unilever is doing to support the women it directly employs, those working along the supply chain and in broader society.

Alan Jope, Unilever President of Personal Care, neatly summed up the importance of such initiatives, saying: “Empowering women and girls offers the single biggest opportunity for human development and economic growth…We are already making a difference to the lives of women, through the work of brands like Dove, with campaigns like ‘My Beauty My Say’ and partnerships like Surf’s work with Oxfam to alleviate the burden of unpaid care work on women.”

Innovation, innovation, innovation

At the heart of Unilever’s ambition to grow sustainably is its innovation programme. Each year it invests a massive €1 billion in R&D and holds a portfolio of more than 20,000 patents and patent applications. Through its research and technical centres in India, UK, China, North America and Netherlands it employs more than 6000 scientists, engineers, chefs and technicians to both anticipate and deliver what consumers are demanding. Its teams draw on local knowledge to ensure they are able to meet consumer preferences for each of the different markets its serves – always bearing in mind that tastes and needs vary radically across the world.

One result of the ongoing innovation efforts by its in-house teams appeared in May this year, when Unilever unveiled its groundbreaking new technology to recycle sachet waste. This technology, known as the CreaSolv® Process, was developed in cooperation with the Fraunhofer Institute for Process Engineering and Packaging IVV in Germany, and was adapted from a method used to separate brominated flame retardants from waste electrical and electronic equipment polymers. During the process, plastic

is recovered from the sachet and the plastic then used to create new sachets for Unilever products – in line with the company’s full circular economy approach.

This innovation marries perfectly with Unilever’s above-mentioned pledge to ensure all its plastic packaging is fully reusable, recyclable or compostable by 2025. The company is looking to create a sustainable system change by setting up waste collection schemes to channel the sachets to be recycled. Unilever is testing this by working with local waste banks, governments and retailers and will look to empower waste pickers.

Global leading brands

Of course, while we have so far put the spotlight on Unilever’s sustainability programme, we must not lose sight of the fact that it is also a business – and an extremely successful one. Its brands – whether they are Food & Drink, Personal Care or Home Care – are all of course developed with an eye to the USLP. To Unilever, a ‘Sustainable Living’ brand must have a clear purpose that helps tackle a social or environmental concern, while at the same time contributing to one or more of the key targets set out in the USLP.

In the category of Food & Drink, Unilever global brands include, amongst others, Cornetto, Knorr, Lipton, Hellmann’s and Marmite. And as with all the categories it covers, the company is continuously adding to its brand stable. In October this year, for example, it announced that it had signed an agreement to acquire the Brazilian natural and organic food business Mãe Terra. This is a fast-growing brand in Brazil, providing organic and food products that aligns with Unilever’s sustainable nutrition strategy.

When it comes to Personal Care, with well-known brands including Dove, Vaseline, Alberto Balsam, Brut and many more, the most recent addition to the brand stable is Carver Korea. This is a leading skincare business in North Asia which has shown exponential growth over the past five years, delivering sales of €321 million and EBITDA of €137 million in 2016. This will help Unilever to further consolidate its position in the South Asian consumer goods market.

In the Home Care market, growth has been driven by particularly strong performance from the fabric conditioner Comfort and the value brand Brilhante, as well as the roll-out of Omo into Iran. Furthermore, the recent acquisitions of the brands Seventh Generation and Blueair (an air purification product) have performed strongly and are expected to contribute to overalls sales growth in the coming months. Strategy for growth

Unilever’s plans for the future include further growth in emerging markets, particularly India and China. Commenting on its results for the third quarter of 2017, which showed an overall sales increase of 2.6 per cent driven by these emerging markets, CEO Paul Polman said: “The transformation of Unilever into a more resilient, more competitive and more profitable business continues and we are making good progress against the strategic objectives we have set out for 2020.”

He added: “The ‘Connected 4 Growth change programme is beginning to make our business less complex and more responsive to fast-changing consumer trends. The new organisation is delivering increased innovation speed and our savings programmes are allowing us to step up investment behind new growth opportunities. We expect to reap the benefits over the coming quarters.” n