Unilever's Progress Report Provides Important Lessons in Mainstreaming Sustainability

Earlier this week, Unilever released its second Sustainable Living Plan progress report. Comprehensive and rich in detail, this report provides not just an update on the progress of Unilever two years into its ten-year sustainability plan, but also an opportunity to learn about the state of mainstreaming sustainability in business from one of the most advanced “labs” in the world.

So how is the sustainability work so far for Unilever? The answer, according to the report is two-thirds positive, one-third not so much. The company has made solid progress on two out of three main 2020 goals: to help more than a billion people improve their health and well-being and to source 100 percent of its agricultural raw materials sustainably.

Unilever, however, still faces big challenges with its third goal: to double its sales whilst reducing its environmental footprint by half. The challenge wasn’t so much with sales that rose in 6.9 percent comparing to 2011, but mainly with changing consumer behavior in order to reduce the carbon footprint of Unilever’s products. This doesn’t work yet for Unilever.

The report provides many lessons for those who follow Unilever and the efforts to mainstream sustainability in business. Here are four lessons we find most important:

1. Creating shared value successfuly – last week we mentioned how Nestle succeeds in adopting the shared value concept. This report shows that Unilever also becomes a successful example of creating shared value.

I believe it all starts with the fact that the company approaches social issues such as poor sanitation, water scarcity and under-nutrition both as a moral duty and a business opportunity. In the report, Unilever reports that it reached 224 million people with programs to reduce diarrhoeal disease through handwashing with soap, provide safe drinking water, promote oral health and improve young people’s self-esteem.

The results of creating shared value can be seen for example with brands like Lifebuoy soap which reached 71 million people in 16 countries in 2012 – five times as many people as in 2010. It is also one of Unilever’s fastest-growing brands – it has achieved double digit-growth over 2010-12.

In all, sales in emerging markets grew in 2012 by 11.4 percent (comparing to 6.9 percent in general), now representing 55 percent of Unilever’s turnover,

2. The hidden benefit - innovation – from the report it’s clear that Unilever’s plan helps the company to become not just more sustainable but also more innovative. “Innovation is critical to achieving our sustainable living goals. We are committing a significant proportion of our R&D budget to finding sustainability-led technologies…we have found that once we start looking at product development, sourcing and manufacturing through a sustainability lens, it opens up great opportunities for innovation,” the company explains.

One example is dry shampoos such as TRESemmé and Dove that don’t require hot water. This small change results in 90 percent fewer greenhouse gas emissions compared to washing hair in heated water. Another example is Flora/Becel margarines, where using technological innovation, the biggest of its kind for 60 years, Unilever has been able to reduce saturated fats by around 25 percent and calories by 20 percent.

3. This work can’t be done alone – Unilever is already a champion of collaborations, but reading the report you get the feeling that the company puts even more effort into it now, understanding not only that the problems it addresses are too complex for any single company to tackle alone, but also that it won’t be able to meet its own goals working solo. From increasing the supply of sustainable agricultural raw materials to finding the best ways to change consumer behavior, Unilever needs the help of others and it’s not afraid to admit it.

Nevertheless don’t confuse Unilever’s understating of its inability to solve big problems alone with a search for a way out of its ambitious goals and vision. On the contrary, even when it looks for a group effort, the company still seeks to assume a leadership role. As Paul Polman, Unilever’s CEO explains “with scale comes responsibility – so we must continue to play a leadership role in seeking solutions for global transformational issues like climate change, food security and poverty alleviation.”

4. Will consumers join? – just like last year, Unilever’s main unmet challenge remains reducing the hot water used with its soaps, shower gels and shampoos - since consumer use is 68 percent of its total carbon footprint, the company needs to find ways to change consumer behavior to achieve its goal of reducing its carbon footprint per consumer by half.

“We need to provide consumers with more products and tools which motivate them to use less water. But material change will require wide-scale decarbonising of energy grids, effective carbon pricing and courageous government policies,” the company writes in the report.

With the ongoing difficulties to change consumer behavior it’s not clear when consumers will be willing to take greater responsibility on their carbon footprint, so it might be the time for Unilever to start thinking on new ways to reach its goal. Carbon pricing, for example, as the company itself mentions is an effective wide-scale tool to drive material change and therefore Unilever might want considering greater involvement in the efforts to pressure governments to start enacting carbon pricing. It’s not an easy task but it might still be easier than convincing people to take shorter showers.

[Image credit: Unilever]

Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and Parsons the New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.