Building a sustainable future Unilever

BuiLdiNG A SuSTAiNABLE fuTuRE

The year 2018 has seen some big developments at Unilever, the global food, home and personal care giant, with the appointment of a new CEO, acquisitions and the continuation of its strategy for sustainable growth. Industry Europe reports.

AS our readers will be well aware, Unilever has a large stable of over 400 brands sold across the world, from Ben & Jerry’s, Hellmann’s and Lipton to Surf, Sunslik and Rexona. The company continues to combine its solid international success with a commitment to reducing its environmental footprint and effecting real social change.

In November 2018, Unilever made the announcement that its CEO, Paul Polman, would be stepping down after 10 years at the helm. During this time, Mr Polman has overseen a strategic transformation that has seen Unilever become a model for sustainable growth. All this while continuing to deliver top and bottom line growth, delivering a Total Shareholder Return of 290 per cent over his tenure. In 2017 it achieved a turnover of €53.7 billion, with growth across all three divisions.

The man taking over from Paul Polman, Alan Jope, has headed Unilever’s Beauty & Personal Care division since 2014 and has been on the company’s Leadership Executive since 2011. His main challenges will be to carry on Polman’s sustainability legacy while navigating today’s uncertain economic landscape and maintaining prices and margins to ensure Unliever remains competitive.

Sustainability focus

As we reported last year, under Mr Polman’s leadership Unilever has wholly committed itself to sustainable development, and it says this will continue to be a cornerstone of its business moving forward.

Remember that, according to the company, on any given day 2.5 billion people will use Unilever’s products – whether that is food,

personal care items or household cleaning products. This gives the group a unique opportunity to have a positive influence on the future of consumers throughout the world.

The Unilever Sustainable Living Plan (USLP), established in 2010, functions as a kind of ‘mission statement’, with three main goals: to help more than a billion people to improve their health and wellbeing; to halve the environmental footprint of its products; and to source 100 per cent of its agricultural raw materials sustainability and enhance the livelihoods of people across its value chain.

And this strategy continues to fuel growth. In 2017 Unilever reported that its most sustainable brands grew 46 per cent faster than the rest of the business and delivered 70 per cent of its turnover growth. At the start of this year, the company had 26 sustainable living brands (up from 18 in 2016), with new entrants including household names such as Vaseline, Sunlight, Sunsilk and Wall’s.

By the end of 2017, according to the Unilever Sustainable Living Plan report, 601 million people had been reached through its programmes on handwashing, sanitation, oral health, self-esteem and safe drinking water. In addition, by the end of 2017 109 of its manufacturing sites across 36 countries were using 100 per cent renewable electricity and 56 per cent of its agricultural raw materials were sustainably sourced.

Working together

Over the past year we have seen several instances of globallyrenowned corporations combining their strengths on sustainability initiatives, and Unilever is among them.

For example, in October this year Unilever and resource management specialist Veolia signed a three-year partnership to work jointly on emerging technologies that will help to create a circular economy on plastics across various regions, starting in India and Indonesia. In so doing, the companies have acknowledged that reducing plastic waste is a shared responsibility that requires joint action.

In 2017, Unilever made a commitment to ensure that all its plastic packaging will be designed to be fully reusable, recyclable or compostable by 2025. To help create an end market for this material, it also committed to increase the recycled plastic content in its packaging to at least 25 per cent by 2025.

Marc Engel, Unilever’s Chief Supply Chain Officer, commented: “The scale of the plastic waste issue is getting worse, not better, with the production of plastics expected to double over the next two decades. We all have a lot more to do to address this critical issue and we hope that by partnering with Veolia, a world leader in waste management, we can take meaningful strides towards a circular economy.”

Furthermore, in September, at the Global Climate Action Summit (GCAS) in San Francisco, USA, Unilever committed to supporting work in Sabah, Malaysia as part of its strategy to achieve a deforestation-free supply chain and further reduce emissions. Unilever is to help sustainably certify 60,000 hectares in Sabah as part of a programme led by Forever Sabah, World Wildlife Fund (WWF) Malaysia and the PONGO Alliance. Sabah is pushing to certify 100 per cent of the state’s palm oil production to Roundtable on Sustainable Palm Oil (RSPO) certification by 2025. According to WWF, this will help to reduce 17 million metric tonnes of CO2e in greenhouse gas emissions by 2030.

According to Unilever Chief Sustainability Officer, Jeff Seabright: “At the COP 21 climate negotiations we pledged to support a jurisdictional approach of production and protection. This means we are moving our sourcing to areas that have good forest management

and working in partnership to reconcile competing, social, economic and environmental objectives. Our ultimate ambition is to help drive a sustainable palm oil industry.”

Rethinking plastics

Aside from the above, in December 2018 Unilever announced it would be developing and piloting a crowdsourced plastic-free laundry solution to combat single-use sachets. This follows the EU’s announcement in October that it would be introducing a ban on single-use plastics.

Unilever will be investing €100,000 in the plastics-free laundry tablet – an idea that was one of 10 new solutions to emerge from its ‘Rethink Plastic’ Hackathon, a one-day event that brought together Unilever teams with leading designers, innovators, venture capital and packaging experts.

The tablet concept aims to replace the billions of single-use laundry sachets sold every year to provide an affordable solution for low-income consumers in developing markets. The innovation resides in an affordable plant-derived coating that protects each tablet against humidity, one of the main reasons for using plastic packaging in the first place. The tablet will be further developed before being trialled in a suitable market.

Kees Kruythoff, President of Unilever Home Care, said: “The scale of the plastic waste issue is getting worse, not better, with the production of plastics expected to double over the next decade. Addressing this issue is the shared responsibility of all stakeholders in the value chain. However, as a major player in the consumer goods industry, we are aware that our response is critical in setting the pace of change. This hackathon is part of our broader work with leading experts and innovators to redesign our packaging and work with the wider industry to accelerate the systemic change that is so urgently needed.”

Recent developments

Each year, Unilever expands its global brand stable with new acquisitions, and 2018 has been no exception. Perhaps the biggest announcement was in December, when it agreed to acquire the Health Food Drinks (HFD) portfolio of GSK in India, Bangladesh and 20 other Asian countries. In 2018, the portfolio generated a total turnover of €550 million for GSK, primarily through the Horlicks and Boost brands. This transaction is in line with Unilever’s stated strategy of increasing its presence in health food products and high-growth emerging markets.

According to Nitin Paranjpe, President, Food & Refreshment, Unilever: “The iconic Horlicks brand has a deep heritage, credibility and resonance around the world. The acquisition is transformative for our Foods and Refreshment business allowing us to enter the Health Foods Drinks category, further strengthening our position in health and wellness. It is rare to be able to acquire brands with such leading market positions and fantastic consumer equity in one of the world’s most exciting and fastgrowing markets. Improving the health and wellbeing of 1 billion people by 2020 is a key pillar in our Unilever Sustainable Living Plan.”

Earlier this year, in June, Unilever signed the initial agreement to acquire a 75 per cent stake in the Italian personal care and wellbeing business, Equilibra. This was finalised in October. Equilibra has a growing presence in the so-called ‘natural’ personal care segments with its skincare and haircare ranges using plant-based ingredients.

An ongoing challenge

In light of the continuing social and climate challenges we face, global giants like Unilever have the power to set an example and pave the way for companies to take responsibility for their environmental footprint. It is to be hoped that it will continue to do so under its new CEO, and that many others will follow suit.

This ethos of building a truly sustainable future is perhaps best summed up by the outgoing CEO, Paul Polman: “It has been an honour to lead Unilever over the last 10 years. Throughout this time, I have been humbled by the commitment and hard work of our people, and their passion for creating a truly purpose-driven company. I am very grateful to them, as I am to Unilever’s many other stakeholders, with whom we have worked to build our long-term, sustainable business.

“I look forward to engaging with many of these partners – in a different capacity – to help address the many environmental and social challenges facing the world.”