Thunderbird Student Voices

Unilever, Addressing the World’s Social Problems One Product at a Time

Corporate social responsibility (CSR) initiatives have become a hot button issue in boardrooms. Companies such as Walmart, Nike and Whole Foods are continuously finding ways to improve market share, increase revenues and build a believable marketing story on the back of a strategic corporate social responsibility program. Consumer goods giant, Unilever, is no different as its Chairman Niall Fitzgerald points out, “CSR is inherent in everything we do.”

On November 15, 2010, consumer goods global giant Unilever, which owns brands such as Lipton, Ben & Jerry’s and Dove, announced a new sustainability plan with very ambitious goals. The firm is seeking to reduce the environmental impact caused by the manufacturing and usage of its products by 50% over the next 10 years. In addition, they will be seeking to improve the health and wellbeing of more than a billion people world-wide. Although the company has several other goals as part of its overall corporate social responsibility plan, four specific key initiatives including nutrition, waste, sustainable sourcing as well as health and hygiene center on these two goals.¹

Nutrition

The first social issue that Unilever is addressing is the growing obesity rates seen throughout countries worldwide. Unilever is tightly aligning this social concern with its corporate strategy. The company is focusing on improving the nutritional value of its food and drink products to help curb growing obesity rates, comply with government relations and enjoy first mover advantages. Developing products that address obesity concerns common in both developing and developed nations Unilever is displaying product leadership as well as concern for society and the consumer. To achieve this goal Unilever is focusing on reducing four key ingredients in its packaged food lines. These ingredients include salt, sugar, saturated fat, and trans fat. By focusing on making products more nutritious Unilever is hoping to provide healthier food to its consumers.

As governments worldwide have become increasingly concerned about the health effects of obesity various laws have been enacted and enforced to make processed foods more nutritious. By positioning Unilever’s products to be compliant even before laws go into effect the company is capitalizing on first mover advantages in being able to comply earlier than the competition.

By reducing salt levels eliminating trans fat, reducing sugar and saturated fat along with increasing essential fat levels Unilever is heeding the guidance of nutritionists and doctors when shaping product contents. This is in effort to reach acceptable government target levels. Unilever is investing in R&D, product sampling activities, marketing activities, and educational events to hit nutritional targets easily, making healthier products a reality as well as commercially viable. The investment to reduce salt and sugar for instance is large because these two ingredients alter the flavor profile tremendously. Investing in finding alternatives or recipes that reduce these will take years to accomplish and cost millions of dollars.

If the goal was simply to improve nutrition it would be unlikely that Unilever would invest in this initiative, but by integrating this CSR goal into its strategy the company can focus on improving its products along with reducing obesity rates. By implementing this initiative the company is strategically advancing its products for the enjoyment and wellbeing of future consumers.

Waste

In seeking to reduce its environmental footprint, Unilever does not need to look very far because on any given day, two billion people around the world use a Unilever product.² Plus, every year, Unilever purchases two million tons of packaging.³ This makes for an exorbitant amount of waste produced by a single company.

As part of Unilever’s Sustainable Living Plan, the company set an ambitious goal of cutting the waste associated with the disposal of its products in half by 2020. To achieve this target, Unilever will implement the trusty three R’s plus an E – reduce, reuse, recycle and eliminate.

Consumers can already experience some of this waste cutting through the newly designed Dove, Rexona and Sure deodorant packs. This new pack is said to use 18% less plastic in each pack³. However, with over 400 products in its portfolio, Unilever has a long way to go to make its product more sustainable.

On its path to less waste, Unilever will face other challenges as well. Unilever needs outside help to cut in half product waste by 2020, either through NGOs, governments or new technologies.³ These outside relationships will not always come easy as Unilever products are sold in 180 countries, with a significant portion of these countries being emerging and developing markets that do not have the most favorable DEEPLIST (demographics, economics, environment, political, legal, informational, social, technological).

Furthermore, through this waste cutting process Unilever needs to remain ethical and not cut corners elsewhere to ensure higher profits. Back in April, Unilever, along with its main rival P.&G., were fined €104 million and $306 million respectively for price fixing laundry detergents in which their packages had recently been ‘greenified.’ The European competition commissioner, Joaquin Almunia, stated “They [Unilever and P&G] agreed to protect their respective market shares, they agreed also not to decrease price when decreasing the size of the packages, and afterwards they even agreed on a price increase.”⁴

For a company that boasts responsible and sustainable practices, this type of behavior could be severely damaging to its reputation. For this reason Unilever needs to recognize the need to play fair in the waste conservation arena.

Sustainable Sourcing

As Unilever continues its social responsibility efforts to protect the environment, another area of focus has been sustainable sourcing of raw agricultural materials. With its diverse product line, Unilever is one of the largest purchasers of specific raw materials worldwide, purchasing 12% of the world’s black tea in 2010. Unilever has set a corporate goal of 100% sustainable sourcing by 2020, and has set benchmarks along the way, to make sure the initiatives are headed on the right track. Among these products and goals are:100% sustainable palm oil by 2015, 75% sustainable paper by 2015, 100% by 2020, 100% bagged tea sourced from “Rainforest Alliance Estates” by 2015, 50% of top 13 vegetables and herbs from sustainable sources by 2012 and move towards 100% cage free eggs for all products.

For a company of Unilever’s size there are some significant challenges in moving to sustainable sourcing. Approximately 20% or the resources the company uses will be difficult to source sustainably, due to low volumes and unique growing environments. Additionally, this plan does not include the company’s non-agricultural raw materials. While Unilever has made a point to publish this information in its annual reports, consumers will have to wait and see what happens over the next few years. This new direction may give the multinational corporation the support it needs to grow and succeed in the current market.

Health & Hygiene

Unilever is understands the power of clean. Every year 3.5 million children die from diarrhea or acute respiratory problems often caused by poor hygiene. A way to decrease these numbers is to stop the spread of infectious diseases. The easiest way is to simply wash your hands. Unfortunately, in developing countries throughout the world soap and clean water is not prevalent. Basic sanitation and hygiene standards are low.

With strong global brands such as Dove, Pepsodent, Cif and Lever 2000 Unilever continuously strives to aid in personal hygiene on a global scale. The company is working everyday to improve health and wellbeing throughout the globe by increasing awareness of its health and beauty products. To aid in this initiative Unilever has created worldwide hygiene awareness programs. By 2020 Unilever hopes to help more than a billion people to improve their hygiene habits.

From the beginning founder William Lever understood the market demand for good hygiene products. In 1980 the brand Lifebuoy soap was launched in Victoria England. This brand is now a market leader in developing nations like India where Unilever has instituted the hygiene education programs to teach the importance of good hygiene and hand washing.

Unilever is accomplishing this challenge through a three-pronged CSR initiative. The organization is focused on reducing diarrheal and respiratory diseases, improving oral health and building the self-esteem of young people. In order to meet these goals Unilever is using a combination of education classes and products to spread the knowledge of personal hygiene initiatives. These initiatives not only promote healthy habits but also build an affinity in developing markets. This ensures Unilever emerges as brand leader as countries develop. Generating new revenue streams and changing the world for the better is no small feat.

Conclusion

Unilever has set the bar high for the implementation of its corporate social responsibility initiatives. The plan has helped the company to clearly define its goals, which in turn support its business strategy of doubling sales in this same time period. Though many companies still struggle to see the link between society and business, Unilever approaches this idea of shared value with open arms. CEO, Paul Polman touts that, “We do not believe there is a conflict between sustainability and profitable growth.”

It will be critical for Unilever to develop partnerships with governments, NGOs and suppliers to achieve these goals because the company alone does not possess all the resources to accomplish such large feats. Most importantly, Unilever will need help of its consumers. “Ultimately we will only succeed if we inspire billions of people around the world to take the small, everyday actions that add up to big differences – actions that will enable us to all life more sustainably..”

If Unilever is successful in engaging its stakeholders over the next 10 years, the company will be able to not just make a large and significant global impact, but also drive customer preference for its brands. Through these initiatives, Unilever is developing new and innovative ways to solve both societal concerns as well as corporate business concerns. These initiatives will help Unilever regain a competitive advantage in an intensely contested consumer goods industry in both the developed and developing countries.

References

(1)<http://www.unileverusa.com/mediacenter/pressreleases/2010/Unilever_Unveils_Plan_to_Decouple_Business_Growth_from_Environmental_Impact.aspx>. 2011. Web. 8/18/2011.

(2)<http://www.unilever.com/sustainability/?WT.GNAV=Sustainability>. 2011. Web. 8/18/2011.

(3)<http://www.uslp.unilever.com/wp-content/uploads/2010/10/UnileverSustainabilityPlan2.pdf>. 2011. Web. 8/18/2011.

(4)<http://www.nytimes.com/2011/04/14/business/global/14cartel.html?_r=1&ref=unilevernv>. 2011. Web. 8/18/2011.