News & Views

Opinion / Ethics at the Heart of Business

by Contagious Contributor
Paul Polman has been CEO of Unilever since 2009. Under his leadership, Unilever has a clear objective: to double in size while reducing the company’s overall environmental footprint and increasing its positive social impact

Almost every aspect of the world we know is changing. Rapid population growth, the digital revolution, lack of global governance in an increasingly interdependent world and stress on the environment are just some of the factors causing business to operate in an increasingly volatile, uncertain, complex and ambiguous environment.

We have created prosperity, but too many are still being left behind. As we should know from nature, a world not in balance will ultimately be rejected. The latest progress report on the Millennium Development Goals shows that 1.2 billion people are still living in extreme poverty; 2.5 billion people lack access to adequate sanitation facilities; one in five children fail to make it to the age of five; and global greenhouse gas emissions continue to rise.

While the human and environmental logic for change is overwhelming, the political process is gridlocked. We have the financial resources available, but money is lost on perplexing subsidies, geopolitical conflicts and wars, or inefficient bureaucracy. That means the role of business is important: business creates jobs and livelihoods by producing solutions to complex problems, and can have an enormous impact at scale by capitalising on its partners and stakeholders.

Indeed, business can be part of the answer, but it has a responsibility to do it right. To succeed it must come out of the grip of short-termism and self-service. Business needs to put itself, first and foremost, at the service of society, not just shareholders. At Unilever, we strongly believe that business should give and not take from the societies and environments on which it relies in the first place.

Crisis of ethics

What we have experienced over recent years is not so much a crisis of capitalism, but a crisis of ethics. Initiatives like the Blueprint for Better Business can help by providing the right guidelines for businesses to put purpose and sustainability at the heart of their operations and earn the trust of those they seek to serve in the first place.

Trust in business was at an all-time low after the 2008 recession. The 2014 Edelman Trust Barometer suggests that business is recovering, having made demonstrable strides in transparency, supply chain and product quality. There is now an opportunity for business to demonstrate its longer-term commitment to change.

Long term thinking

At Unilever, we are backing words with action. We have aligned management incentives and invested heavily in R&D and people to build our pipeline of innovations and our organisation for the long term.

In addition, we have moved away from quarterly profit reporting. Since we don’t operate on a 90-day cycle for advertising, marketing, or investment, why do so for reporting? In 2010, we launched the Unilever Sustainable Living Plan (USLP). Some doubted our ability – and my state of mind – when we set out our ambition to grow the business but in a completely novel way – totally decoupling our growth from environmental footprint and increasing our positive social impact.

The USLP is driving innovation and growth, reducing costs, increasing engagement and making Unilever a preferred employer. It is helping us create brands with purpose, connecting meaningful solutions with the needs of everyday consumers. Domestos is helping to improve access to basic sanitation (see video, above); PG Tips and Lipton are supporting sustainably sourced tea; Knorr works to source key ingredients in a sustainable and traceable way through a network of landmark farmers, and Dove’s Real Beauty mission promotes self-esteem. All these brands facilitate a movement for change.

Small actions = big difference

Nonetheless, I challenge you to ask yourself: do people really care about this enough to change their buying behaviour or even their consumption pattern? Consumers can be schizophrenic. On one hand, as citizens, we value responsible brands and products. On the other, as individuals, we make buying decisions that are often inconsistent with our role as citizens.

That’s where Project Sunlight comes in. We launched this platform in 2013 as a means to engage directly with consumers on our sustainability. Through Project Sunlight, we want to motivate people to live sustainably by taking small actions that make a big difference.

Using our size and scale to pro-actively transform markets is not only right but also exciting. However, we can’t do it alone. That is why we’re working with others in partnerships like the Tropical Forest Alliance, the UN Scaling Up Nutrition Initiative, the World Business Council for Sustainable Development Action 2020 programme and the New Vision for Agriculture. Through these types of transformative partnerships we can drive change at scale.

And yet this is still not enough. We need the right long-term framework and we need more companies to join us on the journey. Fortunately, more are. The key will be greater transparency in all we do and enhanced tools of integrated reporting, including for environmental and social capital. It will also help to identify the free-riders, those unwilling to join and take responsibility. Finally, we need governments to create appropriate frameworks for sustainable economic growth. If we get this right, we can mobilise, scale and make a real difference.

This article originally appeared in Contagious X, Contagious' 10th anniversary edition. The issue is available to view online and as a free pdf download until 31 January.