Will Unilever wash clean?

Many in the business world who are driven by the principle of the triple bottom line – people, profit, planet – look to Unilever’s chief executive as a source of inspiration. For Paul Polman to have committed his company to doubling in sales whilst halving its environmental impact by 2020 I imagine needed a fair amount of grit and determination, not just because both goals are very ambitious but because the second one doesn’t chime with many of his investors or indeed resonate with many of his critics.

He’s aiming for Unilever, which has amongst its portfolio Ben and Jerrys, Marmite, Sunsilk and Vaseline, to not just be carbon neutral in its manufacturing but to becoming carbon positive by eliminating fossil fuels from their energy mix, switching to 100% renewable energy and as they state on their website: “we intend to directly support the generation of more renewable energy than we consume, making the surplus available to the markets and communities where we operate.”

But Unilever is no angel of a company in the way it operates. Under Polman’s watch, in 2011, the company had to close the world’s biggest thermometer manufacturer, after Greenpeace exposed how 5.3 million tons of mercury waste was dumped in a south Indian scrapyard, said to be highly toxic.

In 2008 Greenpeace again knocked again at Unilever’s door, this time over its practices in buying palm oil from suppliers in Indonesia, where 2% of its rain forests were being lost every year, a higher rate than any other country largely due to extracting for palm oil. By burning down forests to clear way for palm oil producers to keep up with world demand, Indonesia had become one of the world’s greatest direct creators of greenhouse gas emissions.

There’s an industry-led regulatory body that is supposed to weed out such practices, The Roundtable on Sustainable Palm Oil, and guess what – Unilever chairs it.

So with a reported 60% of his shareholders, according to the recent Bernstein poll, telling him to just cut costs and build profits on one side and Greenpeace whistle-blowers on the other, Polman must find himself in a quite lonely place.

Yet he continues on his mission.

He’s understood to be weighing up the prospect of changing the company into a B Corporation – a relatively new arrival to Britain but growing stronger in America of a movement of businesses that change their articles to allow them to do more than deliver returns to shareholders but also allow them to use company resource to make social and environmental impacts.

It may be the final straw for his investors who haven’t bothered to go on that journey that embeds purpose into profit.

In a tiny, tiny microcosm of what he’s facing, I experienced something similar a couple of years ago meeting with a string of private equity houses to back me to acquire a couple of successful restaurant brands and grow them. Most of them were keen to buy into the 97 page business plan, the third page of which was titled “Our Values” committing the company to a series of measurable social impacts whilst delivering healthy returns to our backers and I. Our corporate finance advisors tried to push the page to the end of the memorandum and I had to keep putting if back to where I wanted it.

It was clear from meeting after meeting that the investment directors just fleeted over that page and that set alarm signals off in my head – if I signed up with any of them, the first thing I imagined they would call for would be for me to cut that out and just focus on making them (and of course me) as much money as possible as quickly as possible.

I challenged one group who’d come to see me what it was about them that would make me want to make them richer than they already were. They were taken aback by a question no-one had ever posed to them before. “What is about you,” I asked, “what is about your values that would make me want to deliver this plan with you?”

In the end, I decided to carry on getting investment from high net worth individuals who largely and increasingly understand the role they can play in shaping the world not through hit and miss philanthropy but through mission-driven businesses.

Of course we hope Polman succeeds – it would send a fantastic message to us all. In the meantime, small and medium sized businesses can take encouragement from the ever growing band of impact investors. For us, we can increasingly marry shareholder value with our and a shareh

About Iqbal Wahhab

Founder of Roast Restaurant, Borough Market.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply