Case Study: Unilever Lengthens Its Time Horizons

This is part 5 of 11 from “Sustainability: The ‘Embracers’ Seize Advantage,” a report on the findings of the 2010 Sustainability & Innovation Global Executive Study and Research Project.

“Small actions, big difference” is how Unilever describes its recently launched “Sustainable Living Plan.” But unlike some companies — those that focus purely on the environmental impact of their operations — Unilever is taking its “small actions” and applying them to everything from environmental sustainability to the ways in which its global supply chain presents opportunities for job creation and income growth.

Santiago Gowland, the company’s vice president of brand and global corporate responsibility, describes the way the company arrived at this strategy as a journey with four stages: compliance, integration, transformation and systemic change. Compliance, for example, would be risk driven, focusing on reputation protection and license to operate. Meanwhile, integration for the consumer goods company would be the consideration of its social, economic and environmental impact and how they can be integrated into business processes to fuel innovation or cut costs.

Transformation, says Gowland, means using the sustainability aspects of its brands to take pressure off other elements of the business that are of more concern to investors or activists. He cites the Dove brand and its campaign to promote female self-esteem. “The social mission of Dove is part of sustainability in my opinion because it is dealing with social impacts of an industry, such as anorexia and bulimia,” he says.

FIGURE 9

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Dove also contains palm oil, whose impacts include deforestation and destruction of the habitats of endangered species. However, the self-esteem values promoted by the brand take pressure off the palm oil issue, which is something Unilever is addressing not through branding but by shifting its supply chain away from palm oil and developing new sustainable sources of oil, such as the seeds of the Allanblackia tree, a crop the company is developing in parts of Africa. “That doesn’t really add a lot of value to the product brand propositions because it’s an ingredient,” he says. “The reason why Unilever is investing in that is because this is such a big issue, it’s operating at a risk level.”

That, he says, leads the company into the next stage: systemic change. “There is a huge amount of detail work in terms of how this links to the business development agenda,” he says. He adds that the systemic change stage means addressing environmental issues such as the sustainability of palm oil along with other major global challenges.

That, in turn, leads to consumer trust — a key component of the business for a consumer products group — and greater customer loyalty, not only in terms of the increased brand equity at a product level but also through the trust that is built at the company level. “When you realize that this is not just a compliance agenda but is something fundamental to enhancing the equity of our product brands, protecting our brands and leading the way forward, then it receives much more investment,” explains Gowland.

Unilever, he says, therefore views sustainability as a key business growth lever, treated at the same level as marketing, HR or supply chain management. In short, he says, it is a new way of doing business.