Unilever’s New Global Strategy:
Competing through Sustainability
Anubhav Das
Aparna Vishnubhatla
Bipin Kumar
Kishan Khandelwal
Business, Government and Society 12th September, 2018
Contents
• Introduction
• Behind the change: Unilever’s Rich History
• New CEO, New Directions
• Implementing USLP: From Aspiration to Action
• Reinforcing the mission: New Leaders, New Initiatives
• Adapting and Adjusting: Transformational Partnerships
• Looking Back to Look Ahead: Next Steps
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Introduction
• In January 2015, CEO Paul Polman announced Unilever’s financial
results for 2014.
• Despite outperforming competitors, the company’s 2.9% sales growth
was its lowest in a decade, and had actually slowed to just 2.1% in the
final quarter.
• This already challenging situation was complicated by the fact that
the company was in the midst of implementing a transformational
strategy driven by the USLP.
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• One problem was that in order to achieve the expected long-term positive
impact, USLP’s shift to a sustainability-focused strategy typically required
Unilever’s businesses to make significant upfront investments that could be
recouped only in longer term.
• USLP was well off-target on two key metrics(GHG impact and water usage).
• Against its target to halve the entire environmental footprint of making and
using Unilever products by 2020, GHG impact per consumer had actually
increased 4% since 2010, and water use per consumer had fallen by only
2%.
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Behind the Change: Unilever’s Rich History
• After becoming Unilever’s CEO, Polman realized that, as the first
outsider ever brought in to lead this venerable consumer goods giant,
he needed to understand the company’s rich culture values as well as
its long history of adaptive struggle.
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Birth and Evolution: From Global Growth to Static Stall
• In the Netherlands in the 1870s, two butter merchants, Jurgens and Van
den Berg, both decided to expand into margarine, a new butter alternative.
• A decade later, William Lever started making an inexpensive household
soap that he hoped could reduce sickness and disease in the crowded cities
of Industrial Revolution.
• These young companies first encountered each other on global commodity
markets as they sought of their common ingredient, palm oil.
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• On Jan 1, 1930, Unilever was established, pursuing William Lever’s
founding beliefs that a business would prosper only if it operated ethically
and responsibility.
• After World War 2 OpCos used that independence to respond to
fast-growing local markets, driving Unilever’s growth through the 1950s
and 1960s.
• In 2004, as market share and financial performance continued to
deteriorate, the company issued its first-ever profit warning.
• Finally, for the first time in Unilever’s history, the board decided to bring in
an outsider to lead the company.
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New CEO, New Directions
• In Jan 2009, when Paul Polman become Unilever’s new CEO,
observers expected a major shakeup.
• In 27 years at Procter and Gambler, he had reached P&G’s most
senior level before joining Nestle in 2006 as CFO.
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Shaking the Tree: Challenging the Culture,
Changing the team
• Polman froze salaries and cut overseas travel.
• He initiated a management shakeup, replacing the Chief Financial
Officer, the Chief Marketing Officer, and the Global Head of Floods,
Home, and Personal Care. Within a year, he had changed a third of
the top 100 executives.
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Redefining the Strategy: Committing to Sustainability
• One of Polman’s commitments was to double the size of Unilever’s
business.
• Polman announced a Compass Vision that aimed to double the size of
Unilever’s business while simultaneously reducing its environmental
footprints and increasing its positive social impact.
• In November 2010, the company unveiled the USLP which was the
key to achieve its new Compass Vision.
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• Unilever’s own manufacturing activities generated less than 5% of its
product’s total greenhouse gas(GHG) footprint.
• Its suppliers contributed 21% .
• Consumers of its products accounted for 70%.
• Accepting responsibility to halve that entire footprint represented a
huge undertaking.
• https://youtu.be/cpYhgqPRivw
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Communicating the Vision: Aligning Support,
Allaying Skepticism
• The broad goals not only gave credibility to Unilever’s new corporate
purpose “to make sustainable living commonplace” but were also
translated into its operating business model that it depicted as “A
Virtuous Circle of Growth” with sustainable living at its core.
• Polman knew that USLP required a radical new way of thinking not
only from Unilever’s 165000 employees, but also by 5 million people
in supply chain, and eventually by the 2 billion people Unilever users
worldwide.
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Implementing USLP: From Aspiration to Action
1. Leveraging History, Building Momentum
2. Consolidating Power, Focusing Responsibility
3. Delivering Results, confronting Shortfalls
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Leveraging History, Building Momentum
• In 2006, its Corporate Social Responsibility(CSR) group has initiated “brand
imprint” workshop to help all brand leaders examine the environmental,
social, and economical impact of their brands.
• Unilever’s “doing well by doing good” philosophy meant that the seeds of
USLP were planted in fertile soil.
• Realizing that not all brand managers had responded to the “brand
imprints” initiative, Unilever’s category head commissioned a team to
measure the environmental footprints of the company’s entire product
portfolio.
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Consolidating Power, Focusing Responsibility
• In 2010, Polman named Keith Weed to a new role he created on the
Unilever Leadership Executive(ULE), combining the role of Chief
Marketing Officer with responsibility for the leadership of both
communications and sustainability.
• Weed described how he saw the role and said “we wanted to signal
that sustainability was not about ‘corporate social responsibility’ as
an isolated activity. It was everyone’s responsibility.
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Contd…
• Internally, the new CEO and the management team held meetings,
hosted forums, and visited operations to outline the vision, answer,
questions, and celebrate early achievements.
• Externally, Polman gave interview to the media, met with analysts,
and spoke at meetings from UN conferences to the World Economic
Forum at Davos.
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Delivering Results, Confronting Shortfalls
• 3 years into USLP’s rollout sustainably sourced 48% of its agriculture
products, up from 14% in 2010.
• The company was also on the track to meet the goal of doubling the
proportion of its food products meeting the highest globally recognized
nutrition standards, with 31% of the portfolio by volume already meeting
that standard.
• Its effort to improve the health of a billion people had reached 303 million
with hand-washing, oral health, and safe drinking water programs.
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Contd….
• USPL’s more than 50 specific defined targets, at the end of 2013 only
five were regarded as being “off-target”.
• Having accepted responsibility for the whole value chain of its
product, USLP’s early analysis had calculated that consumer use
accounted for 68% of Unilever’s GHG impact and 85% of its water
footprint.
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Reinforcing the Mission : New leaders, new initiatives
• Although USLP’s early successes were impressive in many
programmes, they were concerned about a lack of initiative,
innovation and engagement in other parts of the organization.
• They felt a need to reinforce the resources and capabilities dedicated
to support USLP.
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New CSO: Refreshing USLP’s mandate
• In 2012, when Gail Klintworth was appointed as the Chief
Sustainability Officer, she faced many challenges.
• Lack of acceptance of the concept shifting of advertisements from
product-oriented to utility-oriented.
• She launched an initiative called “USLP Refresh”.
• Assigned tasks to the leaders of the “seven pillars” of USLP.
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• A review of three levels of sustainability-linked opportunities:
• Must do opportunities
• Growth or cost-cutting opportunities
• Opportunities where Unilever could take leadership on important
environmental or social issues.
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New marketing SVP: Linking Brands to Purpose
• The newly recruited Senior Vice President of marketing, Marc Mathieu
initiated a program called “crafting brands for life”(CB4L)
• It had three principles:
• “We put people first, recognizing them as individuals, not just consumers”
• Then we aim to build ‘brand love’ so people identify with our brands, not
just purchase our products.
• “we want to unlock the magic-not just the logic-in our execution”
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• The Brand key that had long defined each brand’s competitive
positioning was adapted to become a Brand love key that embodied
what the brand stood for.
• The CB4L workshops were followed by Brand deep dives to engage
marketers with end –users in their homes.
• This influenced many other brands.
• Mathieu acknowledged that some brands were “more challenging”
than others. (AXE)
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New VP of social impact: Broadening USLP’s ambition
• UN Secretary General Ban Ki Moon invited Polman to join the board
of the UN Global Compact.
• He also appointed the Unilever CEO to an elite group of 27 global
leaders . He was the only corporate representative present.
• Polman felt elated and the company brought in Marcella Manubens
as its first VP of Social Impact.
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• In 2013, her focus led to three new USLP commitments
• To drive fairness in the workplace
• To advance opportunities for women
• To develop inclusive business
Thus, USLP expanded from seven to nine pillars, bringing in a new set
of challenges.
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Adapting and Adjusting :- Transformational partnership
•Uniliver’s continuing struggle to meet GHC and water usage
targets reinforced the belief of the ULE leadership team that
many USLP objectives could not be achieved without
changes in the wider system.
•It led to significant evolution in Unilever’s sustainability
agenda.
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New Partnerships: Collaborating for change
• Unilever realised that they have to work in partnership with governments,
NGOs, suppliers and others to address the big challenges.
• Partnership became imbedded in USLP’s implementation.
• For example “partner to win” program resulted in hundreds of agreement
being signed.
• They also partnered with retail chains like Tesco and Walmart.
• They also partnered with different NGOs including Oxfam, Unicef, Save the
Children, WWF, and Rainforest Alliance.
• Many of these partnerships played key roles in developing USLP strategies
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Strategy Adjustments : Leading Systemwide
Transformational Change
• Unilever committed to take leadership role to make a “transformational
impact” in key areas relevant to its businesses.
• They decided to leverage its scale, its influence, and its resources to bring
about a market transformation and engage other companies to take
broader responsibility.
• The first target for transformational change was deforestation.
• In September 2014, they obtained the commitment of 170 governments,
companies and NGOs to cut forest loss by half by 2020, and eliminate it
completely by 2030.
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Contd..
• Unilever’s Second transformational agenda was to champion sustainable
agriculture and development of smallholder farmers.
• The third area was in Health and hygiene. Unilever believed that it could
lead changes in the broader system in this sector.
• It created Toilet Board Coalition. Its mission was to develop commercial,
Scalable toilet facilities for the world’s 2.5 billion people without adequate
sanitation.
• It trained entrepreneurs to supply, install and maintain 50,000 toilets in
India and Vietnam by 2015.
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Looking Back to Look Ahead.
• Measuring the business impact of USLP strategy.
• Analysis of all product to see if they have contributed measurably to
USLP objectives.
• Outcome
1. Sustainability Living brand.
2. Performance to Date : Achievement and Challenges.
3. Decision Time: Possibilities and Priorities.
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Questions
• Whether a sustainability strategy can sustain profitable growth?
• Critics point out far too often the hypocrisy in Unilever’s sustainability
strategy.
https://www.google.co.in/amp/s/www.forbes.com/sites/econostats/2017/0
3/15/unilever-and-the-failure-of-corporate-social-responsibility/amp/
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Thank you
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