At the end of 2010, Unilever launched a series of ambitious targets under the banner of its Sustainable Living Plan. The man driving that plan is Unilever chief executive Paul Polman

Most chief executives have their “sustainability” patter these days. They can talk as confidently about Scope 3 carbon emissions as they can about discounted cash flow valuations and the like.

Yet few understand the subject as much as Paul Polman. Under his watch (he’s been chief executive of Unilever since January 2009), sustainability has found its way to the very heart of Unilever’s decision-making and strategy.

With the launch of Unilever’s Sustainable Living Plan in 2010 and his personal trumpeting of “decoupled growth” – doubling economic growth while halving environmental impact – Polman has really laid down the gauntlet. So how is the company faring?

The Dutchman’s verdict is measured. “Good progress across the board,” he says. He cites a few early wins. Sustainable agriculture, for example. Nearly one-quarter (24%) of all the agricultural materials bought by Unilever are now sustainably sourced. That’s up from one-tenth when the plan was launched.

Or take palm oil. By the end of 2011, 64% of all Unilever palm oil purchases were sustainably sourced. The figure should hit 100% by the end of 2012, three years ahead of Unilever’s target date.

Campaigners such as Greenpeace dispute this, however, pointing out that the body that runs the standard for “sustainable” palm oil, the Roundtable on Sustainable Palm Oil, does not yet meet the standards of, for example, Nestlé’s arrangement with Golden Agri Resources, a supplier that has gone way beyond RSPO standards and committed to a no deforestation policy on a much tighter timeframe than Unilever’s 2020 target.

Polman is not one for boasting, though. That’s partly a character thing. He’s refreshingly self-effacing; not one of your stereotypical alpha-male chief executives. His job, as he sees it, “is to make everybody else successful”.

But his note of caution goes beyond natural modesty. There are timescales to consider for one. Unilever is only 12 months into a ten-year commitment. Polman is conscious that there’s still a long way to go. He also knows that eking out environmental efficiencies will be a whole lot easier in Year One than Year Ten.

Big commitments

The sheer size of Unilever’s commitments weighs on him. To meet the company’s goals on health, for instance, Unilever will need to annually incorporate 50 million new people into its highly successful handwashing awareness programme. “I don’t think we’ve had ever had a year where we've added 50 million people,” he admits.

There’s one other salient fact that keeps Polman’s rhetoric understated: he knows he can’t act alone. Sure, the Sustainable Living Plan gives Unilever much to be getting on with internally. Within five years, for example, the company’s 171,000 employees have pledged to send zero waste to landfill. But the “key changes”, Polman says, will only ever happen “when working with others” on the macro issues.

For the Unilever head, a collaborative approach is “obvious”. That’s not to say it’s easy. Take deforestation. Polman set out Unilever’s stall back in 2009 by calling for a global moratorium on tropical rainforest deforestation. For that to happen requires governments, multilateral organisations, business groups and individual citizens to get on board. That means working with people “at different levels of speed and under different constraints”. Banging heads, in less diplomatic language.

Polman knows the difficulties of coalition-building only too well. For a decade or more, Unilever has been a leading proponent of “sustainability roundtables”. Some, like fisheries and tea, have made ground. Others, such as soya and sugar, are taking their time. 

Nothing will shake Polman’s conviction that partnership is the way to go. “How do you feed a billion people who are still going to bed hungry?” he asks. Answer: not by any one company going it alone. “It is very clear that … we need to work at industry level across the total supply chain for solutions.”

The approach is paying off. Indonesia, for example, has recently signed up to a two-year moratorium on deforestation. A number of global commodity traders have also expressed their support for the temporary ban. Campaign groups, of course, are sceptical that it will be enforced.

Keep moving

Not that Polman’s happy to let things tick along. Unilever currently runs a host of award-winning child health programmes with Unicef and Save the Children in Africa, for instance. Even so, tens of thousands of Africans are still dying every day from infectious diseases. “That’s totally unnecessary,” Polman says. He went to Africa to see how the company’s partnership efforts could be scaled up.

Polman’s mild manner and talk of participative approaches should not be mistaken for a lack of ambition. At heart, he’s a visionary. Yes, he believes strongly in grounding sustainability in the everyday. “It's important to do the things that you are able to deliver on,” he says. Yet he acknowledges that sticking within the bounds of existing knowledge won’t redress the world’s most pressing problems.

In that sense, Unilever’s sustainability plan is intentionally designed to “stretch” people. “Audacious” is the word he likes to use most: “It goes beyond what many companies would call ‘CSR’. It’s really about [building] an equitable and sustainable business model,” he adds.  

To make that model a reality, Unilever has a checklist of the people it needs to persuade. First off are employees. As Polman puts it: “If you don't have your employees on board, it's very difficult to make it [sustainability] successful outside.”

Most seem to need little convincing. Unilever ran an employee survey in the wake of its Sustainable Living Plan launch. The jump in its “organisational health” outstripped all the other 8,000 companies in its benchmark group.

Next come suppliers. The big players pose few problems. Most are huge companies in their own right. And Unilever’s buying power is such that most are quick to fall into line. Goals such as sustainable packaging and product redesign won’t happen overnight, Polman admits, but happen they will.

Beyond tier 1

Much harder is engaging the tens of thousands of small suppliers further down Unilever’s supply chain. Three-quarters of the world’s population still works in agriculture or related services. Working with the likes of the Ethical Tea Foundation and Rainforest Alliance, Unilever is experimenting with production models in its tea operations that are both “economically viable” and socially advantageous for small producers.

Consumers, meanwhile, present an additional array of challenges. For starters, they’re a fickle bunch. They profess a preference for ethical products, yet it’s price, quality and value that govern their shopping decisions.

Polman has no illusions in this regard, saying: “We all understand that when a consumer buys something, the product needs to perform.” It’s all very well saying that our ice-cream cabinets have natural refrigerants, he says, but the company’s Magnum still needs to be priced right and to taste good.

“Consumers are not willing to take a lot of extra steps to figure out how to live better,” he says. “You have to make it easy for them.” With that in mind, Unilever has designed a consumer-engagement approach it calls ‘Five Levers of Change’. The levers in question are intended to make sustainability understood, easy, desirable, rewarding and ultimately habit-forming.

Polman is also a big fan of contextualised communications when it comes to consumers. The company is currently marketing a series of products in South Africa that require less energy to cook. “We don’t talk so much about carbon emissions,” he states. “Instead, we talk about saving so many rands on your energy bill.”

That just leaves investors. Many a chief executive’s resolve has wilted in the face of this sceptical breed. Not Polman. Arguably the real test of his commitment to sustainability has been his ‘like it or lump it’ attitude to Unilever’s shareholders.

“There are so many shareholders out there and with many different objectives, and for any CEO to try to please every shareholder is not likely to result in a successful enterprise,” he says.

Polman works Unilever’s Sustainability Living Plan into almost every investor meeting. He refuses to be bullied by the “ridiculous” short-termism of the market. As a result, Unilever no longer issues quarterly forecasts.

Not that investors are complaining. Under Polman’s leadership, Unilever has delivered a total shareholder return of 68% over the past three years. With figures like that, he could wear a bright purple suit to work and no one would worry.

That’s unlikely to happen. Polman is a steady pair of hands. His future vision for sustainability may be hugely ambitious, but his approach is methodical and free of bluster. This soft-spoken Dutchman knows what makes business tick, both today and tomorrow. Others in the CEO club would do well to listen.   

Paul Polman: biography

Paul Polman, 55, became chief executive of Unilever in January 2009. Netherlands-born, before joining Unilever as CEO he was chief financial officer and head of the Americas at Nestlé. Before that, he worked for 27 years at Procter & Gamble, rising to the position of group president for Europe. He was elected to Dow Chemical’s board of directors in February 2010. He is married with three children.

Unilever: in brief

• Unilever is one of the world’s biggest suppliers of fast moving consumer goods with operations in more than 100 countries and sales in 190.
• Consumers buy 170bn packets of Unilever-made goods every year, and its products are used more than 2bn times a day.
• It has more than 171,000 employees, and generated sales of €46.5bn in 2011. 

Unilever’s Sustainable Living Plan

Launched in November 2010, the Unilever Sustainable Living Plan commits to about 60 targets between now and 2020. Key targets include:

• helping more than one billion people improve their health and well-being;
• halving the environmental footprint of the making and use of its products;
• sourcing 100% of its agricultural raw materials sustainably. 

Highlights: Unilever’s Sustainable Living Plan’s progress report

• Sustainable palm oil: target of 100% covered by Green Palm Certificates to be reached in 2012, three years ahead of schedule.
• Sustainable sourcing: 24% of total agricultural raw materials now being sourced sustainably, compared with 14% in 2010.
• Nutrition: more than 90% of Unilever’s leading spreads now contain less than one-third saturated fat.
• Renewable energy: 100% of electricity bought in Europe is now from renewable sources. 
• Safe drinking water: 35 million people have gained access to safe drinking water from Pureit water purifier since 2005. 

----------------

The Ethical Corporation Awards 2013 are open for entry - for full details on this year's categories and judges, please visit http://events.ethicalcorp.com/awards