Unilever is employing collaborative approaches to decrease their environmental impact and grow sales. Unilever has announced plans to halve the company’s environmental impact and double sales by 2020. This is a particularly ambitious undertaking when you consider that Unilever comprises over 100 brands and has sales in 170 countries with annual revenues of over $63 billion.
Unilever’s Sustainability Approach
Unilever is part of the Dow Jones Sustainability Index (DJSI) which tracks the financial performance of the leading sustainability-driven companies worldwide. To be incorporated in the DJSI, the company was assessed and selected based on their long term economic, social and environmental asset management plans. Selection criteria evolve each year and Unilever must continue to make improvements to their long term plans in order to remain on the Index. Inclusion is based on an analysis of their economic, environmental and social performance, assessing issues such as corporate governance, risk management, branding, climate change mitigation, supply chain standards and labor practices.
In 2010, Unilever announced its Sustainable Living Plan which has many positive attributes in addition to cutting environmental impacts in half by 2020. The plan also sources only sustainable agricultural materials, and helps more than one billion people improve their health and well-being. Unilever’s sustainability plan has set more than 50 social, economic and environmental targets. The company has measured the carbon, water and waste footprints of 1,600 products. Their assessments also take into account the full life cycle impact of their products, from seed to disposal.
Prior to the announcement of their Sustainable Living Plan, the company had received unwanted attention. Unilever got into trouble because the companies they used to source palm oil were clearing rainforests and carbon-dense peat lands. After some pressure, Unilever addressed the problem by flexing its supply chain muscles and dropping those responsible, (Sinar Mas Agro Resources and SMART). Unilever’s actions also caused Nestle, Kraft, Burger King, and General Mills to follow their lead.
Unilever’s sustainability actions go beyond their internal efforts and the pressures they exert throughout their supply chains. Unilever realizes that changing consumer behavior is critical to decreasing the overall environmental impact of a product. Consumers’ use of Unilever’s products account for 68 percent of the company’s GHGs (the production of raw materials accounts for only 26 percent of the company’s GHGs).
In a June 29th, 2011 Greenbiz article, Adele Peters interviewed Gavin Neath, Senior Vice President of Sustainability at Unilever. As Neath explained, Unilever is engaged in sustainability, “to prepare itself for a world that will be very different from the world we live in. It will be a world all of things we take for granted today, whether that’s food or water or energy, will be in very scarce supply, and therefore will have a high cost. We are preparing ourselves for that future. We’re also trying to develop products and services which will allow our consumers to adapt to a very different world. People talk a lot about things like climate change adaptation. In a real sense, part of what we’re doing in the Sustainable Living Plan is about climate change adaptation.”
Besides indicating how difficult it can be, Neath had some very useful insights on the question of consumer behavior change. “The first thing that has to be recognized is that people need to be given an incentive to change — in the end, I think there has to be something in it for them…we have placed great weight on the benefits that they will get…you need to in a very real sense try to incentivize people and answer the question, what’s in it for me.”
When it came to the question of collaboration, Neath had some very interesting responses that are relevant to many other organizations in the U.S. and around the world:
“As far as the Sustainability Consortium is concerned, we’re active participants in that [collaboration], we support its goals, and are making the contribution we can to that. Perhaps the single most important area where we are collaborating at a very large scale is under the umbrella of an organization called the Consumer Goods Forum. It brings together the world’s global retailers and their suppliers. It includes on the retail side organizations like Walmart, Tesco, and Kroger, and it also brings together their suppliers (Nestle, Kraft, L’Oreal, Procter and Gamble, Colgate, Unilever, General Mills, etc.). In fact, the companies in that organization have combined revenues of over $2 trillion dollars. That’s a big chunk of the global economy.
That organization has a sustainability workstream co-chaired by Unilever and Tesco, and when we started work on this a couple of years ago, the first thing we did was to sit down together as a group of companies and try to work out which were the areas where we could work collaboratively and non-competitively. We identified two fertile areas. One was commercial refrigeration, which is something that obviously brings together retailers and their suppliers, and the second was deforestation. The principal drivers for deforestation, whether that’s palm oil, or soya, or paper, or beef products, or timber, are all in the supply chains of big global companies.
At the Cancun conference in 2010, the Consumer Goods Forum made a very big public commitment to try to eliminate any deforestation from its supply chains by 2020. We’re working together as an industry to try to do that now. That’s really important, because the kind of commodity markets we’re talking about– whether they’re paper, or palm oil, or soya– it doesn’t matter how big you are, whether you’re Walmart or Nestle or Unilever. Your share of those markets will tend to be very small globally. Only by working together can we exert the right kind of change in these markets.”
Neath also had a warning for other companies who do not see the wisdom of collaboration:
“My advice would be that they [other companies] need to get on and do this [collaboration] very quickly. If they don’t, they will be seriously disadvantaged as businesses in the years to come. ”
Richard Matthews is a consultant, eco-entrepreneur, green investor and author of numerous articles on sustainable positioning, eco-economics and enviro-politics. He is the owner of The Green Market Oracle, a leading sustainable business site and one of the Web’s most comprehensive resources on the business of the environment. Find The Green Market on Facebook and follow The Green Market’s twitter feed.