Submitted by Sally Uren on Wed, 23/11/2011 - 07:30

A year ago this week, Unilever launched its Sustainable Living Plan (USLP), one of the most ambitious strategies that a global company has ever embarked on. Pioneering a bold new business model, the company pledged to double in size at the same time as halving its environmental footprint, setting out to achieve a series of concrete targets by 2020.

One year on, the company that touches 2 billion people a day with products that range from Persil to Marmite - announces strong financial results that outperformed their competitors, despite the recession. Could sustainability be the secret of Unilever’s recent success?

For us at Forum for the Future, the symmetry between commercial success and bold targets isn’t a coincidence, but demonstrates that a sustainable business is a successful business. Paul Polman, Unilever’s CEO, is also unsurprisingly of this view. Back in July, I interviewed Unilever’s dynamic CEO to get his views on sustainability, and how he sees the Unilever Sustainable Living Plan as a key driver of success for Unilever. I’ve drawn on this interview, and Forum’s wider work with other pioneering businesses, to suggest 6 steps for businesses to take to succeed through sustainability.

1. Ask the right question – from my world to our world

Unilever has not just asked – ‘how can I be sustainable?’ Critically, in drawing up the USLP, their main question was, how could business contribute towards a sustainable future. In Paul Polman’s words,

“Most businesses operate and say how can I use society and the environment to be successful? We are saying the opposite – how can we contribute to the society and the environment to be successful?”

For me, this is the difference between the standard business case for sustainability – doing the right thing if it is profitable, and the leadership business case - making the right thing profitable. This distinction is crucial, as it shows that a business has considered the profound implications of big sustainability challenges on the business, and has a plan to respond to these challenges in a way that works for the business and the world around it. Unilever, and others, recognise the interdependence of a business and the system around it.

So, the first step towards succeeding with sustainability is to ask the right question. Not how can I make my business sustainable, but how can I make our world sustainable?

2. Think long term

It is perfectly possible, today, to be commercially successful and think short-term. Many businesses are in this camp – fuelled by a fascination with short-term profit maximisation. But this short-termism means that businesses are missing out on an opportunity to build resilience into the business, and secure its medium and long-term success. What happens to the business model when oil reaches $300 a barrel, when stringent legislation comes crashing onto the statute books to secure dwindling supplies of natural resources, from water to wood. If a business hasn’t thought about the impact of these long-term trends, some of them very certain in their nature, then its ability to deliver long-term value creation is seriously compromised.

Unilever has worked through the longer term implications of global trends for its business. The USLP targets are responses to these implications and are designed to ensure that Unilever is in business next year, and into the next decade.

3. Accept that no business is an island - create new networks

Unilever is clear that it can’t deliver a sustainable future on its own. Paul Polman is consistently clear on this, “the issues that we are facing, issues of food security climate change obviously are issues that cannot be solved at the level that they have been created; we really need a step change…companies like ours…need to work with multiple stakeholders”.

Unilever has long recognised the importance of partnerships, from helping establish the Marine Stewardship Council in 1997 to working with the Rainforest Alliance; to certify the tea it sells across multiple geographies, Unilever has pro-actively engaged with others to accelerate progress towards sustainability.

The trick for any business is to be clear where collaboration is necessary, and possible, and where space can be left for a bit of healthy competition. What is clear, is that in an increasingly complex, and resource-constrained world, leading businesses need to be willing to collaborate much more willingly, and create new networks to deliver new solutions to old problems.

4. Embed sustainability into the business – accept this is a journey of cultural transformation

Unilever has also started to translate and embed the USLP targets into its core working practices and procedures. Across the business, Unilever has also started to provide its people with the tools, skills and knowledge to be able to deliver the USLP. Crucially, the influential ‘Categories’, that own and innovate the brands, were involved in developing the overall USLP targets and now have their own specific targets and scorecard for tracking progress against the USLP. The USLP is also giving the business renewed purpose and enthusiasm. In Paul Polman’s words,
“it also gives a tremendous purpose to what we are doing as a business that creates an enormous energy here and employee engagement that I’m sure will explains half of the growth that we will be producing”.

This all sounds really obvious stuff, but too many businesses think that the production of a cutting-edge strategy is enough, its employees will suddenly intuit the change in direction, and work out for themselves what they need to do differently. Or, possibly worse, organisations set about telling everyone everything about the new sustainability targets, leaving a trail of confusion and inaction.

Step 4, then, is about embedding sustainability thoughtfully and appropriately in the business, and understanding that this will take time, and in the end is about changing the culture.

5. Don’t wait for the pull – push sustainability out to consumers

A common barrier to progress towards mainstreaming sustainability is deciding to wait until consumers demand more sustainable products and services. Paul Polman, quite rightly, has decided not to wait, and sees taking sustainability pro-actively to the millions of people that buy Unilever products as a real priority. And he thinks this is the right time, “but they are ready for it I can tell you, increasingly so, and it’s no longer a developed market phenomena - it’s rapidly becoming a global phenomenon…We are basically trying to turn this company over to the consumer at the end of the day.”

Trends such as ever-increasing consumer demand for transparency, as well as resource scarcity, mean that sustainability will be mainstreamed in the next few years (see the finding’s from Unilever, Sainsbury’s and Forum for the Future’s recent Consumer Futures study). So, step 5, taking sustainability to your customers, today, will also secure success tomorrow.

6. Change the system

Finally, Unilever realises that it can only so far on its own before it reaches the constraints of the unsustainable systems in which it operates. As any leading business knows full well, a common barrier to progress can be the mainstream investment community, who are still struggling to reward sustainability practices, and are too focused on the short-term. By dropping quarterly reporting, and yet still delivering commercial success, Unilever is trying to change the external system in a way that, in the end, will reward sustainability.

“I am on the record for saying I don’t really work for the shareholder I work for the consumer and the customer, but I firmly believe that in doing so we will have a business model that is successful and that will benefit the shareholder long term as well. It’s the only way; if I was only focused on the short term shareholder return I think I would undermine this business model.”

Paul Polman is clear, Unilever needs to influence and engage suppliers, consumers and legislators to create the conditions where a sustainable consumer goods industry is possible.

Step 6 is being willing to change the system, not accept the current barriers, but remove them.

Of course, Unilever isn’t perfect. There are still products in the portfolio which on the face of it, don’t seem that sustainable (Pot Noodle anyone?), there are still those advertising campaigns which do not appear to be promoting fairness and equality. But it is a business in transition, and a business with a big plan. And quite frankly, given the absence of coherent government action, and consumer ambivalence on sustainability, is one of the few positive forces out there right now for sustainability. Other big brands and businesses would do well to follow its lead.

Could businesses change the finance system? 

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