The CSR Newsletter is a freely-available resource generated by the authors of the textbook, Strategic Corporate Social Responsibility: Stakeholders, Globalization, and Sustainable Value Creation, as a dynamic complement to the text.

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Wednesday, March 23, 2011

Strategic CSR - Unilever

In November, Unilever launched its “sustainable living plan” (http://www.unilever.com/sustainable-living/):

We have ambitious plans to grow our company, creating jobs and income for all whose livelihoods are linked to our success – employees, suppliers, customers, investors, and thousands of farmers around the world. But growth at any cost is not viable. We want to be a sustainable business in every sense of the word. So we have developed a plan – the “Unilever Sustainable Living Plan” – that will enable billions of people to increase their quality of life – without increasing their environmental impact.

The plan was received well by the CSR community (e.g., http://tobywebb.blogspot.com/2010/11/unilever-raises-sustainability-bar-but.html) due to specific targets that build on Unilever’s ongoing commitment to CSR. In particular, the firm commits by 2020 to:

Help more than 1 billion people improve their health and well-bring. Halve the environmental impact of our products. Source 100% of our agricultural raw materials sustainably.

As the article in the url below highlights, Unilever sees this as important for business:

Unilever has a long history of doing well by doing good. William Lever, one of its founders, created Lifebuoy soap to encourage cleanliness and reduce infectious diseases in Victorian Britain. Today, in the developing world, 3.5m children under five die from diarrhoea and respiratory infections. Teaching children to wash their hands is a way of reducing this toll. The company sees opportunities to save lives and sell soap.

What was striking about the announcement, however, was the framing of the document by Unilever’s CEO, Paul Polman. Rather than focus on the cost savings to the firm in an attempt to justify the plan to investors, Polman instead issued a challenge:

Unilever has been around for 100-plus years. We want to be around for several hundred more years. So if you buy into this long-term value-creation model, which is equitable, which is shared, which is sustainable, then come and invest with us. If you don't buy into this, I respect you as a human being, but don't put your money in our company.

Importantly, Polman stuck with this line, even in the face of a lukewarm reception by investors. In the period shortly after the announcement:

“… the Financial Times reported his company's shares were lagging behind both competitors' and the market. Analysts gave Mr Polman credit for six quarters of year-on-year volume growth, raised margins and greater cash generation. But they doubted his ability to maintain this pace.

Rather than present any cause for concern, however, Polman responded by reinforcing his underlying message, while also stopping the issuing of earnings guidance to investors:

We certainly don't want to attract the investor base that wants higher and higher and quicker results against targets that we put out every 90 days.

The decision to frame this announcement in an absolute moral argument, rather than a relative business argument, was refreshing, made all the more so by how unique it was. While acknowledging this, however, the article’s author feared this put the CEO at risk:

Even the most patient investor eventually needs a decent return. If Mr Polman fails to deliver that, he may run short of supporters who understand his language.

This concern was counteracted by a more positive message in the Ethical Corporation Magazine’s coverage of the launch (http://www.ethicalcorp.com/communications-reporting/unilever-sustainable-living-planned):

Ultimately, Unilever’s pledge points to a new model of doing business: one in which economic growth is “decoupled” from negative social-economic costs. One company, however large, cannot shape the system. But it can signal the way.

Take care
David


Instructor Teaching Site: http://www.sagepub.com/strategiccsr/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/


Long-term corporate plans may be lost in translation
By Michael Skapinker
761 words
23 November 2010
Financial Times
Asia Ed1
13
or