Sustainability at Unilever: Nebulous or Critical?

Who watches the watchmen as it concerns food sustainability.

Unilever has heavily marketed the issue of sustainability in the face of climate change as an important value that is critical to its business model. Though its results have proven fruitful in some areas, there are downsides to a mostly self-regulated model of sustainability.

Unilever is the third largest global consumer packaged goods company, best known as the maker of Ben & Jerry’s ice cream, Hellmann’s mayonnaise, and Dove soap, among other products [1]. The conglomerate is heavily influenced by climate change due to its reliance on commodities like dairy, palm oil, and soybeans, and due to the corporate social responsibility push it has very publicly marketed to maintain positive public relations and boost sales. The scientific community is in consensus that commodities highly concentrated in few suppliers and in few geographies that are predicted to be most negatively affected by climate change can have devastating supply chain effects. This was evidenced by the US droughts in 2012 when global food prices increased by 10% between June and July 2012 [2]. As it concerns corporate social responsibility, Nielsen has found that millennials within the age range of 18-34 years old are “four times more responsive to a company with sustainability credentials than older consumers.” While this is an important consideration from an end-consumer’s perspective, it is also of the utmost importance for talent acquisition as Unilever engages in the war for young talent [3].

The organization has been very public, chiefly through its CEO, Paul Polman, about its efforts to halve its environmental impact from the year 2010 by the year 2030 (revised from 2020). In many regards, the organization is well on its way to achieving some of its goals in both the products that it produces and the impact that its value-proposition has had on competitors. As an example of the latter, Unilever partnered with the Rainforest Alliance to certify many commodities sourced for some of its biggest brands, including Lipton tea bags. Following this partnership, many competitors, like Twinings and Tata, have changed their practices to secure certification [4]. To accomplish its internal goals, Unilever is focusing on halting deforestation to reduce global greenhouse emissions, on helping consumers use less water, and on championing sustainable agriculture [5]. Oxfam, an international collection of NGOs, has validated much of the work that Unilever is touting by rewarding the organization with the top spot on its “Behind the Brands” scorecard, with its highest score given on its tackling of climate change [6].

However, Unilever’s self-reported measures of success are not always trustworthy and some of its goals remain lofty at best. The organization is not being aggressive enough in trying to influence consumer behavior, given the fear that it will lead to lower sales, while it is aggressively marketing the sustainability of its brands to increase sales. One of the most ambitious goals set by the organization relates to changing the behavior of its consumers, who account for 70% of its environmental impact [4]. However, the Unilever CSR website states that “greenhouse gas impact per consumer use increased by around 8% since 2010,” mainly due to personal care products used in conjunction with heated water [7]. In terms of remedies, the corporation must enter serious lobbying efforts with governments around the world to encourage the use of renewable energy both for its own supply chain and for the ones that affect its consumers.

Another looming controversy concerns the method by which certifications for certain commodities are being secured by Unilever. The organization is credited with starting the Roundtable for Sustainable Palm Oil (RSPO), which certifies the sustainability of palm oil sources. Through this group, Unilever claims that 100% of its palm oil is sustainably sourced. However, a closer look by Greenpeace in 2013 determined that the criteria for sustainable sourcing was laughable as it mainly concerned not deforesting small, symbolic plots of jungle deemed of “high conservation value” while companies clear the surrounding land for the supposedly “sustainable” palm oil [8]. The organization needs to be less generous in the claims that it makes regarding sustainability and must enforce a policy of seeking approval regarding the validity of its certifications from some of its toughest critics, otherwise the nebulous certifications are meaningless.

While Unilever has made some strides in many areas, it remains relatively insular in its approach to sustainability as it concerns its CPG competitors. As climate change is a global problem with widespread consequences, how should Unilever balance its differentiating edge as the most sustainably-driven with the need to collaborate with its competitors to ensure that the combined sustainability efforts are materially fruitful?

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End Notes

[1] Bray, Chad. “Unilever to Review Options After Takeover Bid Is Withdrawn.” The New York Times, The New York Times, 22 Feb. 2017, www.nytimes.com/2017/02/22/business/dealbook/unilever-to-review-options-after-takeover-bid-is-withdrawn.html, accessed November 2017.

[2] Gledhill, Richard. “Business-not-as-usual: Tackling the impact of climate change on supply chain risk,” Resilience: A journal of strategy and risk, 2013, https://www.pwc.com/gx/en/governance-risk-compliance-consulting-services/resilience/publications/pdfs/issue3/business_not_as_usual.pdf, accessed November 2017.

[3] Oakley, David. “Paul Polman’s Socially Responsible Unilever Falls Short on Growth.” Financial Times, 9 Feb. 2015, www.ft.com/content/7c79452e-ae5c-11e4-8188-00144feab7de+, accessed November 2017.

[4] Gelles, David. “Unilever Finds That Shrinking Its Footprint Is a Giant Task.” The New York Times, The New York Times, 21 Nov. 2015, www.nytimes.com/2015/11/22/business/unilever-finds-that-shrinking-its-footprint-is-a-giant-task.html, accessed November 2017.

[5] “Reducing Environmental Impact.” www.unilever.com/sustainable-living/reducing-environmental-impact/ , accessed November 2017.

[6] “Unilever Takes Top Spot on Oxfam’s Behind the Brands Scorecard.” Oxfam, 31 Mar. 2015, www.oxfam.org/en/pressroom/pressreleases/2015-03-31/unilever-takes-top-spot-oxfams-behind-brands-scorecard , accessed November 2017.

[7] “Targets & Performance.” Unilever, 2017, www.unilever.com/sustainable-living/reducing-environmental-impact/greenhouse-gases/#244-503331 , accessed November 2017.

[8] Dupont-Nivet, Daphne. “Inside Unilever’s Sustainability Myth.” New Internationalist, New Internationalist, 13 Apr. 2017, newint.org/features/web-exclusive/2017/04/13/inside-unilever-sustainability-myth+, accessed November 2017.

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5 thoughts on “Sustainability at Unilever: Nebulous or Critical?

  1. This was so fascinating to read about. I’m curious what your views are on the responsibility of Unilever to self-police versus the government to provide restrictions, incentives, and regulations in order to drive their processes towards efficiency. For example, you talk about the “laughable” metrics for measuring sustainability efforts, but I’m curious how we can judge, in a market-clearing environment, what the right metrics Unilever “should” use. Thanks for sharing this issue!

  2. This is very interesting and a real world wide problem. As you stated, they had already revised their plan to halve its environmental impact from 10 to 20 years as these changes are hard to make, especially when they are a real financial burden. Another problem that immediately intrigued me was if and how are they dealing with excess packaging and reduce waste that also contributes to global warming? Are any efforts being made towards recycled, perishable packaging? Is that an issue they are addressing? Their website talks about “circular economy” but to your point, I wonder how trustworthy they and what are their measures in this aspect as well.

    https://www.unilever.com/sustainable-living/reducing-environmental-impact/waste-and-packaging/

  3. Really interesting article, thanks for posting. I tend to be a pretty harsh critic of CSR activities. I often think they are minimal impact and just a marketing ploy at best, or intentionally misleading at worst. Your reference to the Green Peace investigation is one of the reasons I’m so paranoid! In fact, this reminded me of our IKEA case recently – I suspect they too might be fudging some of the criteria they use to meet FSC standards.

    I think you hit the nail on the head with your encouragement of Unilever to increase lobbying efforts. I don’t think we can expect the company to unilaterally implement more sustainable strategies to the detriment of its bottom line and shareholders given that its competitors could take advantage of such a move. Instead, I think Unilever should be lobbying governments to implement across-the-board requirements related to sustainable sourcing and distribution. That would achieve two aims: (1) it would establish Unilever as an eco-friendly brand (which many consumers appreciate); (2) it would allow it to implement ‘green’ supply chain strategies that don’t put it at a competitive disadvantage to its rivals (since under new regulations, rivals would also have to implement these strategies). Since lobbying takes time, it should continue to invest in green pilots that it can then use as evidence to various governments that sustainable supply chains are in fact possible and still profitable for the private sector.

  4. I enjoyed reading your analysis, and found your point around consumer behavior particularly interesting.
    This raises the question of whether a company that promotes mass consumerism can really be sustainable at the same time. The obvious contrast for me is the Patagonia example, a company that has made the choice to grow slowly and which encourages its customers to buy only what they really need (although many cynics may think that this is just another form of marketing).

    I personally believe in Unilever’s commitment to sustainability, and am convinced that the management of the company see this commitment as a key differentiator in their industry. Of course, many of their efforts are far from perfect (e.g., your certification example), but in my view this should not be attributed to bad intent and rather to the difficulty of the task at end.

    1. *task at hand.

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