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Profile of a Sustainable Brand Leader, Part Three: Unilever and The Power of “And”
November 27, 2012
The theme of this week’s SB London conference is The Power of “And”; one venerable company with prominent presence at the event is demonstrating that power, by showing how a dramatic shift from business as usual in favor of environmental stewardship and social innovation can increase value for a company and all of its stakeholders.
Unilever has spent years showing how traditional ways of doing business, which often focused on the “or” (jobs or environment, quality or price) do not work. Through the power of “and” — design and behavior, responsible and profitable, sustainability and marketing — Unilever is proving that companies can thrive at a time when the world is confronted with a growing population, more expensive energy and fewer resources.
Unilever’s economic, environmental and social initiatives, which ramped up in 2007 and accelerated with the launch of the company’s Sustainable Living Plan, quickly had a positive effect on the company’s overall performance. For several years prior to the rollout of its sustainability plan, Unilever had lagged in the food, beauty and personal care sectors compared to its major competitors. In fact, from 2002 to 2008, the company lost market share each consecutive year. And while Unilever executives interviewed for this series say it is too early to determine a true correlation between the company’s financial performance and its sustainability agenda, the improvements in the company’s business since its undertaking are still worth noting.
Since the company announced the Sustainable Living Plan in 2010, its stock has been on an overall upward trajectory. Analysts, including those at the financial research firm Sanford C. Bernstein, are currently bullish on Unilever’s stock, rating it as an “outperform” equity. Despite the volatile global economy, 2011 witnessed a strong performance for the company’s overall sales with a 6.5 percent increase over the previous year. In October, the good news continued for Unilever as it exceeded its quarterly sales forecast, in part because demand for its personal care and housecleaning products in China outperformed those of competitor Nestle. In emerging markets, the company enjoyed double-digit growth in South Africa, Indonesia and Vietnam with continued growth in India, Turkey and China. In fact, 54 percent of Unilever’s revenues come from emerging markets, where many of the consumer goods giant’s most ambitious targets under its Sustainable Living Plan are unfolding.
Unilever’s resurgence has benefited its brands’ equity, too: After years of discounting its products’ prices to court consumers who felt affected by the global recession, Unilever will end that practice, a tacit endorsement of its bolstered brand equity. And with those brands’ bolstered strengths comes a revitalized purpose because of the company’s commitment to sustainability and corporate responsibility. According to Marc Mathieu, Unilever’s SVP of Global Marketing, the company’s drive towards becoming a more sustainable business has inspired employees who know they are improving the company’s financial performance and making a great social and environmental contribution to the world. The evidence is in several of the impressive statistics Unilever has already achieved in the early days of its Sustainable Living Plan.
The company may only be two years into this agenda, but with its employees’ renewed vigor, Unilever’s brands are making a difference in global health, environmental awareness and consumers’ standard of living in developing countries. The global results are most significant when taking a look at the company’s ongoing progress on health and hygiene initiatives. As of 2011, 48 million people have learned the benefit of washing their hands with soap and water at key times. Another 44 million have improved their oral health due to the company’s various toothpaste’s and mouthwash brands’ programs. In addition to personal health, Unilever’s impact on the planet’s health has been net positive, too. Throughout the company, metrics and numbers tell the story.
On the environmental front, over 20 percent of the company’s energy now comes from renewable sources. Last fiscal year the company generated 575,000 fewer tons of CO2 from its total consumption of fuel – a 50 percent decrease from three years ago. Unilever in part achieved that figure by exceeding its goal of purchasing climate-friendly refrigerators for stores carrying its ice cream product lines by over 50 percent – an important improvement as the world’s largest ice cream manufacturer. And as Unilever rolled out more reformulated cleaning products made with less water, the company improved water efficiency throughout its operations by reducing its water consumption by 11.7 million between 2008 and 2011. Meanwhile Unilever is in the early stages of developing a strategy to include more small farmers — many of whom will gain sustainability certification — within its entire supply chain, a move that would improve farming practices and boost economic opportunities for hundreds of thousands agricultural workers worldwide. From farm to bottle, Unilever is changing how it approaches its business across every segment of its value chain.
Design is another aspect of Unilever’s focus on sustainability. On the personal care side of the business, Vaseline rolled out a new plastic jar that annually saves 113 tons of resins, reduces energy consumption by 13,000 megawatts and scored customers’ approval because the redesigned package is easier to open. And across all of its brands, Unilever will eliminate PVC (polyvinyl chloride) from all packaging by the end of this year; as of 2011 the company had removed 95 percent of PVC from its portfolio. Watch for Unilever’s brands to score increased brand affinity, due largely in part because of the innovation fostered by the company’s sustainability agenda.
Two years into the Sustainable Living Plan, many of Unilever’s goals still face an uphill climb. Nevertheless, the collaboration between the company’s employees, NGOs and other stakeholder groups has entrenched the company as a global sustainability leader and pacesetter. On the financial side, Unilever has rebounded and outperformed its competitors. The company’s transparent communication with its customers and other stakeholder groups, especially the frank discussion of its progress on environmental and social goals for this decade, demonstrate the power Unilever’s brands have to change the world for the better. Transforming the business practices of a $60 billion company that employs 170,000 people is no easy feat; Unilever’s path, however, proves that a holistic integration of sustainability within the company’s overall strategy can spark increased customer loyalty, innovation and shareholder value. And from a business perspective, Unilever will serve as a compelling study of how brands can spearhead positive change while fostering economic growth.