Unilever's New Global Strategy Competing Through Sustainability

Unilever's shift towards sustainability isn't merely a PR exercise; it's a deeply ingrained business strategy designed to drive growth, build resilience, and connect with a new generation of consumers who are increasingly conscious of the impact their purchases have on the planet. This strategy, often referred to as "Competing Through Sustainability," represents a fundamental rethinking of how Unilever operates, innovates, and engages with the world.

The Genesis of "Competing Through Sustainability"

Unilever's journey toward sustainability began long before it became a mainstream buzzword. Under the leadership of former CEO Paul Polman, the company launched the Sustainable Living Plan (USLP) in 2010. This ambitious plan set out a series of bold targets to:

• Improve health and well-being for more than a billion people.
• Reduce environmental impact by half.
• Enhance livelihoods for millions.

The USLP wasn't just a standalone initiative; it was woven into the fabric of Unilever's business strategy. Polman argued that sustainability wasn't a cost center but a driver of innovation, efficiency, and brand value. This philosophy laid the groundwork for the current "Competing Through Sustainability" strategy.

The evolution from the USLP to the more encompassing "Competing Through Sustainability" reflects a deeper understanding of the interconnectedness between environmental and social issues and business success. It acknowledges that companies can't thrive in a world plagued by climate change, resource scarcity, and social inequality.

Key Pillars of Unilever's Sustainability Strategy

Unilever's "Competing Through Sustainability" strategy rests on several key pillars, each designed to address specific challenges and opportunities:

1. Purpose-Driven Brands

At the heart of Unilever's strategy lies a commitment to purpose-driven brands. These are brands that go beyond simply offering functional benefits; they address a social or environmental issue that resonates with consumers. Examples include:

• Dove: Championing real beauty and challenging unrealistic beauty standards.
• Lifebuoy: Promoting handwashing hygiene to prevent the spread of diseases.
• Ben & Jerry's: Advocating for social justice and environmental protection.

By aligning their brands with a clear purpose, Unilever aims to:

• Attract and retain consumers: Consumers are increasingly drawn to brands that share their values.
• Drive brand loyalty: Purpose-driven brands foster a stronger emotional connection with consumers.
• Enhance brand reputation: A commitment to sustainability enhances a brand's reputation and builds trust.

2. Sustainable Sourcing

Unilever recognizes that its environmental impact extends far beyond its own operations. The company is committed to sourcing its raw materials sustainably, ensuring that its supply chains are environmentally and socially responsible. This includes:

• Traceability: Understanding the origin of raw materials and the practices used to produce them.
• Certification: Working with suppliers who adhere to recognized sustainability standards (e.g., Fairtrade, Rainforest Alliance).
• Empowering Smallholder Farmers: Providing training and support to smallholder farmers to improve their livelihoods and adopt sustainable farming practices.

Sustainable sourcing not only reduces Unilever's environmental footprint but also:

• Ensures supply chain resilience: Sustainable sourcing practices help to mitigate the risks associated with climate change, resource scarcity, and social unrest.
• Improves product quality: Sustainable farming practices often lead to higher-quality raw materials.
• Supports local communities: Sustainable sourcing can create economic opportunities for local communities and contribute to their well-being.

3. Reducing Environmental Impact

Unilever is committed to reducing its environmental impact across its entire value chain, from sourcing raw materials to manufacturing, distribution, and consumer use. Key initiatives include:

• Reducing Greenhouse Gas Emissions: Investing in renewable energy, improving energy efficiency, and reducing deforestation.
• Conserving Water: Reducing water consumption in manufacturing processes and promoting water-efficient products.
• Reducing Waste: Minimizing packaging, promoting recycling, and developing innovative packaging solutions (e.g., biodegradable packaging).

By reducing its environmental impact, Unilever aims to:

• Mitigate climate change: Reducing greenhouse gas emissions is crucial to combating climate change.
• Conserve natural resources: Conserving water and reducing waste helps to preserve precious natural resources.
• Reduce operating costs: Energy efficiency and waste reduction can lead to significant cost savings.

4. Promoting Health and Well-being

Unilever recognizes that its products have a direct impact on the health and well-being of consumers. The company is committed to developing products that are nutritious, safe, and promote healthy lifestyles. This includes:

• Reducing Sugar, Salt, and Fat: Reformulating products to reduce the levels of sugar, salt, and saturated fat.
• Fortifying Products with Essential Nutrients: Adding vitamins and minerals to address micronutrient deficiencies.
• Promoting Hygiene and Sanitation: Developing and promoting products that improve hygiene and sanitation.

By promoting health and well-being, Unilever aims to:

• Improve public health: Providing nutritious and safe products can help to improve public health outcomes.
• Empower consumers to make healthy choices: Providing clear and accurate information about its products helps consumers make informed choices.
• Expand into new markets: Developing products that address specific health needs can open up new market opportunities.

5. Enhancing Livelihoods

Unilever recognizes that its business activities have a direct impact on the livelihoods of millions of people around the world, from farmers and suppliers to employees and consumers. The company is committed to enhancing livelihoods by:

• Providing Fair Wages and Working Conditions: Ensuring that employees and suppliers are paid fair wages and work in safe and healthy conditions.
• Empowering Women: Investing in programs that empower women and promote gender equality.
• Supporting Small Businesses: Providing training and resources to help small businesses grow and thrive.

By enhancing livelihoods, Unilever aims to:

• Reduce poverty and inequality: Creating economic opportunities can help to reduce poverty and inequality.
• Build stronger communities: Investing in communities can help to improve their social and economic well-being.
• Create a more sustainable business model: A thriving and equitable society is essential for a sustainable business model.

The Business Case for Sustainability

Unilever's commitment to sustainability isn't just driven by altruism; it's also a sound business strategy. The company has consistently demonstrated that sustainability can drive growth, reduce costs, and build brand value.

1. Driving Growth

• Attracting new consumers: Consumers are increasingly willing to pay a premium for sustainable products.
• Entering new markets: Sustainability can open up new market opportunities, particularly in developing countries.
• Driving innovation: Sustainability challenges can spur innovation and lead to the development of new products and services.

2. Reducing Costs

• Energy efficiency: Reducing energy consumption can lead to significant cost savings.
• Waste reduction: Minimizing waste can reduce disposal costs and improve efficiency.
• Sustainable sourcing: Sustainable sourcing can help to mitigate the risks associated with climate change and resource scarcity, reducing supply chain disruptions and price volatility.

3. Building Brand Value

• Enhanced reputation: A commitment to sustainability enhances a brand's reputation and builds trust.
• Increased brand loyalty: Consumers are more likely to be loyal to brands that share their values.
• Attracting and retaining talent: Employees are increasingly drawn to companies that are committed to sustainability.

Challenges and Opportunities

While Unilever has made significant progress in its sustainability journey, the company still faces a number of challenges:

• Complexity: Implementing sustainability initiatives across a global organization with complex supply chains can be challenging.
• Cost: Investing in sustainability can be expensive, particularly in the short term.
• Measuring Impact: Accurately measuring the impact of sustainability initiatives can be difficult.
• Greenwashing: Avoiding accusations of greenwashing is crucial to maintaining credibility.

Despite these challenges, Unilever also has a number of opportunities:

• Innovation: Sustainability can drive innovation and lead to the development of new products and services.
• Collaboration: Collaborating with other companies, governments, and NGOs can amplify the impact of sustainability initiatives.
• Consumer Engagement: Engaging consumers in sustainability efforts can build brand loyalty and drive positive change.
• Technological Advancements: Utilizing new technologies can help to improve sustainability performance.

Examples of Unilever's Sustainability Initiatives in Action

To illustrate how Unilever's "Competing Through Sustainability" strategy translates into tangible actions, here are a few examples:

• Sustainable Palm Oil: Unilever is committed to sourcing 100% of its palm oil sustainably. The company works with suppliers to ensure that palm oil is produced without deforestation, respecting human rights, and supporting local communities. They have invested heavily in traceability and certification schemes to ensure compliance.
• Reducing Plastic Waste: Unilever is working to reduce its plastic footprint by minimizing packaging, promoting recycling, and developing innovative packaging solutions, such as refillable containers and biodegradable packaging. They are investing in technologies that can recycle mixed plastics that are typically difficult to process.
• Water Conservation: Unilever has implemented water-saving measures in its manufacturing facilities and promotes water-efficient products, such as concentrated laundry detergents. They are also working to address water scarcity in water-stressed regions through partnerships and community programs.
• Fair & Lovely (now Glow & Lovely): While initially criticized for promoting colorism, Unilever rebranded Fair & Lovely to Glow & Lovely, removing terms associated with fairness and focusing on promoting healthy skin. This reflects a commitment to evolving its brand messaging to be more inclusive and responsible.
• Lifebuoy Handwashing Program: Lifebuoy has a long-standing commitment to promoting handwashing with soap to prevent the spread of diseases. The brand runs educational programs in schools and communities around the world, teaching children and adults about the importance of hand hygiene.

The Future of Sustainability at Unilever

Unilever's "Competing Through Sustainability" strategy is not a static plan; it's a constantly evolving framework that adapts to changing circumstances and new challenges. The company is committed to continuing to push the boundaries of sustainability and to working with others to create a more sustainable future.

Looking ahead, Unilever is likely to focus on the following areas:

• Circular Economy: Embracing the principles of the circular economy, which aims to minimize waste and maximize resource utilization.
• Regenerative Agriculture: Promoting regenerative agriculture practices, which focus on restoring soil health and biodiversity.
• Climate Action: Accelerating efforts to reduce greenhouse gas emissions and mitigate the impacts of climate change.
• Social Justice: Addressing social inequalities and promoting human rights throughout its value chain.
• Transparency and Accountability: Increasing transparency and accountability in its sustainability reporting.

Criticisms and Controversies

Despite Unilever's ambitious sustainability goals, the company has faced criticisms and controversies:

• Greenwashing Accusations: Some critics argue that Unilever's sustainability claims are exaggerated or misleading, a practice known as greenwashing. For example, while Unilever promotes recycling, the vast majority of plastic packaging still ends up in landfills.
• Palm Oil Sourcing: Despite its commitment to sustainable palm oil, Unilever has faced scrutiny over its palm oil supply chains, with allegations of deforestation and human rights abuses.
• Fair & Lovely Controversy: The Fair & Lovely brand (now Glow & Lovely) has been criticized for promoting colorism and perpetuating harmful beauty standards.
• Supply Chain Issues: Ensuring ethical and sustainable practices throughout its complex global supply chain remains a significant challenge. Instances of labor exploitation and environmental damage in its supply chain have been reported.
• Profit vs. Purpose: Balancing sustainability goals with the pressure to deliver profits to shareholders can be a challenge, leading to compromises that undermine its sustainability efforts.

These criticisms highlight the complexities of implementing sustainability initiatives in a large, multinational corporation. Unilever needs to continuously improve its practices, be transparent about its challenges, and engage with stakeholders to address these issues.

Conclusion

Unilever's "Competing Through Sustainability" strategy represents a bold and ambitious vision for the future of business. By integrating sustainability into its core business strategy, Unilever is demonstrating that companies can be a force for good in the world while also driving growth and creating value for shareholders.

While challenges remain, Unilever's commitment to sustainability is a significant step in the right direction. The company's efforts serve as an example for other businesses to follow and demonstrate the potential for companies to play a leading role in creating a more sustainable and equitable future. The journey is ongoing, and continuous improvement, transparency, and stakeholder engagement are crucial for Unilever to achieve its sustainability goals and maintain its credibility as a leader in sustainable business practices. By consistently striving for improvement and holding itself accountable, Unilever can solidify its position as a company that truly competes and thrives through sustainability.