Unilever’s social role for ice cream, soap
MAGNUM SI: Chef Kamini Pather at a Magnum pop-up store in Cape Town’s Cavendish Square WHEN Paul Polman took over as Unilever’s CEO in 2009, one of the first things he did was to abolish quarterly financial reporting, and he stopped giving guidance to the market on the group’s results.
It was an early salvo in Polman’s campaign to shift the group from short-term to longterm thinking. He wanted to get away from “stupid conversations” and communicate with the market twice a year on more strategic, longer-term issues.
The Unilever share price initially lost 8%, but Polman said he figured it would recover and that the group’s shareholder base would become less highly linked to short-term moves in its share price.
Since then, shareholders had seen a return of about 200% and more than 70% of them had been with the group for six years or more — unusual for a company of that size, Polman said.
His approach to financial reporting is a small part of the zeal which Polman has brought to Unilever, which in 2010 launched its sustainable living plan.
It has also been working to ensure that its brands, from Lifebuoy soap to Magnum ice cream, have a strong social purpose — and that business is “a force for good”.
Polman talks about the need for the global economic system LIFE BOY: Paul Polman, CEO of Unilever to evolve and to focus on the long term. And he is not shy to criticise his peers, too many of whom run their businesses “by the light of the passing ships”, he said. “We do better to be guided by the light of the stars.”
Polman’s zealotry about business as a force for good harks back to Unilever’s early days, when Lord Lever built a model garden village in the late 19th century. Port Sunlight near Liverpool in the UK was built to accommodate the workers in Lever Brothers’ Sunlight soap factory, in line with his vision of “shared prosperity”.
It included strict rules for workers — no smoking, for example — but Lord Lever, who died in 1925, is credited with innovations such as the introduction of pensions in the UK.
Polman said that as the first CEO to come into the group from the outside, it was important to “go back to the roots” to change Unilever’s outdated business model.
Unilever’s vision underlying the sustainable living plan is “to grow our business while decoupling our environmental footprint from our growth and increasing our positive social impact”.
The group, which reaches two billion consumers daily in 190 countries, has targets to reduce its environmental impact and improve health and wellbeing as well as to create jobs.
In Johannesburg this week, Polman’s language was all about sustainability and development goals as he hailed 2015 a landmark year in which countries reached agreements on the sustainable development goals and the climate change goals of COP21.
Colleagues say he talks a harder financial language to investors.
It is tempting to be sceptical about the “brands with a purpose” language. It’s not that hard to see the utility of Lifebuoy, which the group considered dropping but has rebranded as part of its “helping children reach the age of five” campaign in developing countries including South Africa — just as it linked its Domestos toilet cleaner brand to a campaign for better sanitation.
In South Africa Domestos is building 25 000 toilets in schools and Polman admits this will increase demand for the product, but that doesn’t detract from the principle of brands serving a higher purpose.
What possible social purpose for ice cream, though?
Polman pointed to the 3 000 street vendors Unilever has set up to sell its ice creams.
It has plans to create 100 000 such jobs globally, and the ice creams are linked to a “caring dairy programme” that benefits farmers.
Polman said Unilever had become one of the most desired companies to work for globally. In South Africa the brands with the strongest purpose had grown the fastest, he said, among them Lifebuoy, Knorr, Sunlight and Dove soap.
Unilever in South Africa, which is 25% owned by Remgro, has invested R3.5-billion over the past three years, opening two new factories last year, including a new R600-million icecream factory in Midrand, Unilever’s first in Africa.
“The South African economy is not in its finest moment but our business continues to grow ahead of the growth of the economy,” said Polman.
“We have been in South Africa for 100 years, in good times and bad times, and we continue to invest for the longer term.”