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CSR and Sustainability

Some difficult questions for Unilever about sustainable growth – and some answers

Lifebuoy soap
 So last week Unilever said it was revealing “growing evidence that integrating sustainability into its business is driving growth, cost efficiency and resilience for the future.”They sent me the below highlights. Which sound very good.I had a few questions, which you can find underneath the headline results just below, and the responses from Unilever.

Their headlines:

  • Many of Unilever’s brands that have led the way on sustainable living (including Dove, Lifebuoy, Ben & Jerry’s and Comfort) are achieving above average growth, with high single and double digit sales over the past three years.
  • These brands accounted for half the company’s growth in 2014 and grew twice as fast as its other brands.
  • Within the Company’s supply chain, there is promising progress with more than 55% of agricultural raw materials now sustainably sourced, reducing the risk to supply – more than half way to its 2020 target of 100%.
  • Unilever has achieved its target of zero non-hazardous waste to landfill across its factory network, and is making significant reductions in CO2 from energy and water in manufacturing, reducing them by 37% and 32% per tonne of production respectively since 2008.
  • Unilever has made cumulative cost avoidance of over €400m through eco-efficiency measures in its factories since 2008.
  • In addition to this, last year (2014) Unilever made over €200m of savings through manufacturing, logistics, material efficiencies and research and development which can be attributed to the Unilever Sustainable Living Plan.
  • Unilever confirms that it is on track to meet most of the Unilever Sustainable Living Plan goals, which they set in 2010 – as it looks to decouple its environmental footprint from its underlying sales growth and increase its positive social impact.

My questions and their responses:

1) How do you link sustainability with brand growth? Can that really be done?

“Research by Havas Media shows that meaningful brands outperform the stock market by 120%.

From our side, we have found that our brands with purpose – our ‘sustainable living brands’ – which include Dove, Lifebuoy, Ben & Jerry’s and Comfort – are achieving above average growth, with high single and double digit sales over the past three year – and accounted for half of Unilever’s growth in 2014.

Here are some examples of how sustainability has driven brand growth:

  • Dove continued to grow strongly in 2014, with its Self-Esteem Project contributing to its performance.
  • Lifebuoy has enjoyed four years of sequential double-digit sales growth.
  • Moving to sustainably sourced tomatoes has helped propel Kissan tomato ketchup to #1 in its category in India.
  • Domestos has led our efforts on sanitation in partnership with UNICEF, supporting the Community Approaches to Total Sanitation (CATS) programme which aims to eliminate open defecation through behaviour change and increased access to sanitation. Domestos sales continue to grow strongly and were up 7.3% in 2014.

2) How do you convince investors of this link?

Investors are increasingly aware of the risks and opportunities of steering businesses successfully in a world where resources are finite and where interdependencies are complex and unpredictable.

Research shows that the market and consumers are moving this way too – and being at the leading edge places us at an advantage in learning how to build on this for future growth.

Nielsen studies have shown that 55% of consumers said they were prepared to pay more for ethical brands.

We also know that millennials (21-34s) are twice as responsive to sustainability credentials as 35-49 year olds and four times more than 50-64 year olds. Companies that do the right thing and that plan for the long term will be rewarded.

3) With regard to agricultural raw materials, where’s the most success, and where are the challenges, in terms of specific commodities?

More than 55% of our agricultural raw materials are now sustainably sourced, reducing the risk to supply. This means we are now more than half way to our 2020 target of 100%.

To achieve that, we need to drive change to entire systems. We are focusing on key commodities such as tea and palm oil where we have the most influence.

Soy, fruits and dairy have been areas of success over the last year.  For example in North America, we have promoted sustainable soy by working in partnership with Field to Market, our supplier ADM and ADM’s farmers, the Iowa Soybean Association and WWF.

We expanded from our first pilot of 44,000 acres in 2013 to 160,000 acres in 2014 to create a supply of sustainable soy for Hellmann’s.

We were also the first company to make a commitment to sustainable soy in Latin America and are being recognised for these efforts.

For example, Hellmann’s has been commended by Walmart in Brazil for its commitment to sustainable soy as part of Walmart’s Sustainability End to End programme.

The commodities that have been particularly challenging are sugar and palm. For sugar, the challenges are around industry alliances for two feedstocks – beet sugar and cane sugar.

We are always working towards a common and pre-competitive sustainable sourcing approach.

In cane this exists through Bonsucro, and in beet this has resulted in the implementation of the Farm Sustainability Assessment, developed through the SAI Platform, which the European sugar industry has embraced and is starting to use. This represents a significant step forward.

On palm, our vision is that, by 2020, we will achieve a transformation of the palm oil market so that the entire industry will move to 100 percent sustainable palm oil.

We have made good progress towards our own targets – all of the palm oil directly sourced for our European food business is now traceable to certified plantations – but we cannot end deforestation by ourselves. We need governments, business and the entire industry on board to drive this system-wide change.

We are pleased to see organisations working together – for example the Consumer Goods Forum whose members (including Unilever) have committed to helping achieve zero net deforestation associated with four commodities: palm oil, soy, paper and board and beef by 2020.

We have since extended this commitment to our tea businesses and supply chains. We are also a signatory of the New York Declaration on Forests, which saw over 170 organisations come together at the UN Climate Summit to pledge to halve deforestation by 2020, end it by 2030 and restore 350 million hectares of degraded land.

4) Does Unilever believe the RSPO can remain credible in the face of so many challenges from influential NGOs? What is your role in reforming it?

We will continue to support RSPO certification. As part of our drive to transform the palm oil industry, Unilever will continue to call for a commitment to NO new developments on peat areas, regardless of depth or extent and zero net emissions from land use change.

We recognise that the RSPO needs to be strengthened and we are very committed to working with the other members to make necessary changes. 18% of global production is currently RSPO certified; this is just over 12 million tonnes. RSPO members have the potential to increase this production to 40% of total production volume.

We believe that a profitable and sustainable palm oil sector must achieve the right balance of social, environmental and economic objectives. This is a shared responsibility between governments, the private sector and civil society. This is why we are working with industry leaders and NGOs, to move towards a collaborative solution.”

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