Sustainability, like diversity, is an easy thing for a CEO to say they believe in, but actions speak louder than words. For every business making real progress, there’ll be another ten whose ‘sustainability efforts’ consist of glossy press shots of their employees spending an hour a year cleaning plastic from a beach.
One company you can’t accuse of that is Anglo-Dutch conglomerate Unilever. In 2010 the FMCG giant launched its Sustainable Living Plan, an ambitious 10-year, nine-pledge strategy in pursuit of three overarching goals; improving customer health and wellbeing, reducing the company’s environmental footprint by half and enhancing the livelihoods of the millions employed in its wider supply chain.
While certainly good for its image - the company regularly scores highly in corporate reputation rankings – this approach also been great for business: sales have grown at an average of 3.3 per cent over the last five years, which the company says puts to bed the myth that sustainability has to come at the cost of performance.
The man behind the plan is Keith Weed, who stepped down last month as the group’s Chief Marketing and Communications Officer, a role created by former CEO Paul Polman to bring greater cohesion to the company’s marketing and sustainability efforts.
It’s so easy for businesses to pay lip-service to sustainability, but what does a truly sustainable business actually look like?
"People often ask me what's the business case for sustainability. I'd love to see the business case for the alternative, the business case for destroying the societies we're serving or wrecking the planet we live on. Show me that business case."
"We don’t just make the case for growth, we also make it for cost. Since beginning the plan we've saved €600m in eco efficiencies in our factories. By aiming for zero waste, we’ve made financial savings because we don’t have to pay fees from waste.
"Then it’s just good old trust and reputation. Unilever’s reputation in this area is world leading – every year two million people apply for jobs at a business that employs 160,000."
So what is it about Unilever’s approach that has been so successful?
"One of the first things I did when I came into this role was close down our corporate social responsibility department, because I think it sends the wrong message. If you have a group of people over there ‘doing CSR’ then by definition they’re doing good, therefore all of us can carry on doing the bad because they can negate it. I wanted a mainstream sustainability plan at the core of the business model.
"A lot of companies report on how much water, electricity or greenhouse gases they use. We do that too, because it’s the bit that you can most tightly control, but we also report our output across the whole supply chain.
"So when water goes into a tomato dripper during irrigation we count that as part of our water footprint. We look at the whole – it’s a bit like the car industry taking ownership for the output of the oil industry - though I don’t think they would.
"We’ve made progress throughout our extended supply chain because we can work in partnership with them. For example in 2010 we told all of our suppliers that by 2020 we will source 100 per cent of our palm oil sustainably. So we gave them 10 years’ notice that if they want to continue to be a supplier to Unilever they would need to sort it out.
"We've made least progress in changing consumer behaviour – while 25 per cent of our footprint sits within the extended supply chain, 60 per cent is with consumer use and disposal. It's very hard to get people to change their daily habits. We've learned that the only real way to change behaviour at scale is to innovate with products. If you can design the product to use less water, your customer will use less water."
But is that a luxury only for businesses like Unilever, with 2 billion end users and the largest ad spend in the world?
"There are probably more suppliers out there who will listen to us, but having said that, there are still a lot of little suppliers that will listen to medium-sized businesses. It’s much easier if you’re a small business because you can get you arms around it – you have the advantage of being able to trace the source of your product to the farm 10 miles away.
"The biggest unlock, regardless of size, is having a strategy from the top of the business. Once you commit to it, you'd be surprised how many people are out there to help you. The Sustainable Living Plan could not have been done without the leadership of the CEO: Paul Polman has been a very strong champion of sustainability and has ensured that it has filtered throughout the business. If you half commit to it, you get into greenwashing territory and you’ll quite rightly have a hard time."
What developments do you see happening in the near future that businesses should be preparing for?
"Unilever has been using shadow carbon pricing as a way to start pricing externalities. If you don’t, there’s a strong change you’ll make the wrong decisions – for example, if you’re building a factory, factoring in the total price of its carbon emissions might cause you to build it in a totally different place.
"Right now ‘carbon’ for businesses is free, but it certainly won’t be in the future and I think we’ll see other natural resources coming under similar scrutiny. It may be three or five years away, but in a relatively short period of time shadow carbon pricing will be a requirement."
Image credit: Courtesy of Unilever