Unilever: Beating all odds to become a world leader in sustainable manufacturing

Unilever prides itself to be a company that has championed sustainable living for the 120 years that it has been in existence. “Our purpose is to make sustainable living commonplace. It’s why we come to work. It’s why we’re in business. It’s how we inspire exceptional performance,” the company says.

Unilever prides itself to be a company that has championed sustainable living for the 120 years that it has been in existence. “Our purpose is to make sustainable living commonplace. It’s why we come to work. It’s why we’re in business. It’s how we inspire exceptional performance,” says the company.

The company’s bold steps towards sustainability can however be correctly traced back to 2009, when Paul Polman was appointed CEO of Unilever. Polman inherited a company in long-term decline at the beginning of a major global financial crisis.

When you take charge of a company grappling with stunted growth, sustainability is usually not an area you would want to focus on. Your main area of concern would be how to rejuvenate the business and steer it back to profitability. Polman, Unilever’s first ever outsider to be recruited to lead the company, was however not your everyday CEO.

To the surprise of many he introduced the Unilever Sustainable Living Plan (USLP), a commitment that placed three “sustainability” goals at the core of the company’s strategy. Under his leadership, Unilever was to help 1 billion people improve their health, to halve the environmental footprint of making and using its products, and to enhance the livelihood of those in its value chain.

For a company experiencing declining growth, this was a tough sell to both internal and external stakeholders. Many environmentalists were also skeptical that the company, which manufactures over 400 brands and serves 2.5 billion customers, would make a meaningful change. Fully aware of the challenges ahead of him, Colman got to work almost immediately to translate his radically different vision into strategies and priorities that could be implemented by a global company with 170,000 employees.

The Plan delivers unprecedented success

Touted as a mere publicity stunt, Unilever’s SLP turned out to be a major win for sustainable manufacturing 10 years after its launch, in 2019.

Through the USLP, Unilever managed to reduce total waste footprint per consumer by 32% and managed to achieve “zero waste” across all its factories. The company was also able to reduce greenhouse gas emissions from own manufacturing by 65%, while at the same time achieving 100% renewable grid electricity across its sites.

The Unilever compass initiative will tackle the key challenges of our time, such as packaging and waste, gender equality, human rights and fair value

One of the core pillars of USLP was to help 1 billion people improve their health. Unilever smashed this target by positively impacting the health of 1.3 billion people through its health and hygiene programs. The company also reduced sugar across all its sweetened tea-based beverages by 23% and now boats of a food portfolio where 56% of products meet recognized High Nutrition Standards. As part of efforts to improve livelihood of those in its value chain, the company enabled 2.34 million women to access initiatives aimed at developing their skills or expanding their opportunities. 

Sustainability programs not tied to any financial success are a tough sell. French Dairy giant Danone learnt this lesson the hard way after activist investors rejected the company’s impressive plan and used their influence to kick out President and CEO Emmanuel Faber in early 2021.

ADVERT

Unilever, knowing fully well that the success of its sustainability plan relied on a strong business case, actively integrated its plan with commercial success, and the results have been impressive, to say the least. In terms of growth, Unilever’s purpose-led, Sustainable Living Brands which include popular food brands such as Knorr, Wall’s ice cream, Lipton, and Hellmann’s are now growing 69% faster than the rest of the business and delivering 75% of the company’s growth. The company also noted that through USLP, it was able to avoid over €1 billion (US$1.41 billion) in costs, by improving water and energy efficiency in factories, and by using less materials and producing less waste. 

Challenges remain

During the celebrations to mark the end of the 10-year USLP, unilver leaders were refreshingly candid in admitting that the CPG giant had fallen short of its own environmental aspirations.

The executives admitted that Unilever was unable to source 100% of its agricultural raw materials sustainably and had come to learn that measuring the actual impact of programs was extremely difficult. The Unilever executives further noted that when it came to reducing the greenhouse gas and water impacts of the company’s products, they underestimated how challenging it would be to help consumers to change their behaviors and misjudged how long it takes to do so.

Perhaps the biggest failure was the company’s inability to reshape the use of plastics, which is a major cause of environmental pollution globally. Embracing the successes and failures, current CEO Alan Jope said, “The Unilever Sustainable Living Plan was a game-changer for our business. Some goals we have met, some we have missed, but we are a better business for trying.”

Making sustainable living a common place

The shortcomings of USLP did not dampen Unilever’s sustainability goals, if anything they have only fueled the ambitions of the company to even become better at its game.

“As the Unilever Sustainable Living Plan journey concludes, we will take everything we’ve learned and build on it. We will do more of what has worked well, we will correct what hasn’t, and we will set ourselves new challenges,” Jope said.

To up its game on sustainability, Unilever has launched a more ambitious successor to the USLP dubbed the “Unilever Compass.”  According to Unilever, the Compass will be “fifteen multi-year priorities that cover the full spectrum of our business and wider ecosystem.” It will be centered around three core beliefs: to drive purpose and encourage behavior change through more brands; to embed sustainability further into every part of the business; and to do more to actively bring others along.

Jope says that the new initiative “will tackle the key challenges of our time, such as packaging and waste, gender equality, human rights and fair value – plus, of course, climate change and social inclusion.”

Included in Unilever’s compass is a more ambitious goal to become net zero within its own operations and halve the greenhouse impact of its products across its supply chain by 2030. The company has also embarked on a journey to become a net-zero business by 2039, 11 years ahead of the Paris Agreement on Climate Change.

To achieve these goals, Unilever plans to invest US$1.5 billion in a new climate fund that will focus heavily on making the activities that better the environment. Part of the funds will be used to protect and regenerate 1.5 million hectares of land, forests, and oceans by 2030.

The company also hopes to implement water stewardship programs in 100 locations in water stressed areas by 2030 while at the same time achieving 100% sustainable sourcing of key agricultural crops. Still on making the environment better, Unilever has committed to achieving a deforestation-free supply chain in palm oil, paper and board, tea, soy, and cocoa by 2023.

The company also plans to invest heavily in empowering farmers and smallholders to protect and regenerate farm environments. Unilever also wants to ensure that everyone who directly provides goods and services to Unilever will earn at least a living wage or income by 2030.

The world cannot be better if plastic packaging – some which bear names of brands belonging to Unilever – end up in landfills or in a worse scenario, the ocean. To prevent this from happening, the CPG major has committed to collect and process more plastic than it sells and achieve 100% reusable, recyclable, or compostable plastic packaging by 2025. It further plans to halve its virgin plastic use by half, including an absolute reduction of 100,000 tonnes in four years’ time. To further the world-without waste agenda, Unilever plans to halve food waste in its operations by 2025 while still maintaining a zero waste to landfill record in its factories.

The compass strategy goes beyond lofty commitments to reduce plastic waste and reforestation. It also touches on sustainable food production.

In this area, the company mainly focuses on plant-based foods and plans to grow its plant-based meat and dairy alternatives to annual sales of €1 billion by 2027. To Unilever, sustainable food also means healthy food. This makes sense as unhealthy foods leads to a surge in lifestyle diseases, putting at risk the health of consumers globally.

To better feed the world’s population, Unilever plans to double the number of products sold that deliver positive nutrition by 2025 while at the same time increasing the percentage of its portfolio that meet WHO-aligned nutritional standards to 70% by 2022. It goes further than that. The company is targeting sugar and salt in its products and plans to ensure 95% of packaged ice cream contain no more than 22g total sugar per serving by 2025. By 2022, 85% of Unilever products are also expected to help consumers reduce their salt intake to no more than 5g per day.

A healthy planet, a healthy business

The Unilever Compass is certainly a more ambitious plan than the USLP. It broadens the company’s sustainability scope even further than many had anticipated.

From a point of no knowledge, one could be forgiven for thinking the plan is unattainable. But Unilever has a solid 10-year experience in sustainable manufacturing. Their ability to achieve most of the goals in the USLP certainly gives us confidence that the Unilever Compass, ambitious as it may be, is certainly achievable. We shall be tracking Unilever’s activities and hoping for the best for the company, because what is good for the planet, is certainly good for us all.

This feature appeared in the May/June 2021 issue of Food Business Africa. You can read the magazine HERE

Other Posts Worth Reading

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.