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The Polman doctrine

unilever

Unilever likes to talk about its extraordinary reach around the world. With over 400 global brands, the world’s second largest consumer-products company is used by close to two billion people a day. Like many European corporations, the company is now finding an increasingly important customer base in developing countries. Over 50 per cent of sales now come from emerging markets, but CEO Paul Polman doesn’t just see this as a business opportunity: It’s a chance to help improve the health and well-being of a billion people. “The only way to guarantee prosperity over the long term is to grow our businesses in line with the needs and aspirations of the communities we serve,” said Polman during a speech on responsible capitalism held last month in Toronto.

In the age of corporate social responsibility (CSR), this sort of talk has become commonplace among chief executives. The difference is that Polman believes this is just one part of a new, more sustainable form of capitalism. Dismissing current CSR initiatives as corporate window dressing, he believes that companies must pursue business models that are in line with the planet and society. Climate change is already costing the company over €200 million a year. “The firms that won’t accept this will become dinosaurs – outdated, outmoded and soon to be out of business,” he warned his audience.

Born in the Dutch city of Enschede, along the border with Germany, Polman has been exposed to different worldviews throughout his life. After considering entering the priesthood or becoming a doctor, he attained two graduate degrees from the University of Cincinnati. Polman certainly knows his competition better than most, having worked at Unilever’s two biggest rivals. He began his career at Proctor & Gamble, where he spent 27 years moving through the ranks. Nestle was next, where he worked for several years as CFO.

Even from his first day on the job at Unilever in January 2009, it was clear that Polman was not going to institute a typical corporate strategy. Buttressed by a still-unfolding financial crisis – blamed in part on short-term financial decisions taken by the business community – he declared war on what he describes as “the tyranny of quarterly profit reporting.” Unilever’s move to ban quarterly reporting attracted the ire of London money managers, but it did reduce hedge fund ownership from 15 per cent to less than 5 per cent. The eventual goal is to attract long-term investors that support the vision of a sustainable future for the company.

The next step was introducing the Unilever Sustainable Living Plan in late 2010. It establishes four key goals by 2020, starting with a reduction of its environmental impact by half. All agricultural raw materials are to be sourced from sustainable sources, including the ever-controversial palm oil used in a myriad of Unilever products. A concerted worldwide health and nutrition campaign will be taking place at the same time, partnering with NGOs such as Oxfam and UNICEF to improve living standards for over a billion people. To make things even more difficult, this will all occur while attempting to double the size of the company.

As a member of the United Nations Global Compact board, vice-chairman of the World Business Council for Sustainable Development and director of Conservation International, Polman has unusual exposure to development work occurring around the world. He’s also currently serving on the UN High Level Panel on the Post-2015 Development Agenda, establishing what should replace the Millennium Development Goals when they expire.

A CEO who doubles as an outspoken critic of our current form of capitalism, Polman has gained increased recognition in the sustainability community. This has been reinforced by the strong performance of the company under Polman, with the stock price rising over 60 per cent since he took the reins. The Harvard Business Review even went so far as to designate him “Captain Planet.” At the same time, it has earned him some angry detractors. An article in the Financial Post, a business-friendly Canadian newspaper, described Polman after his recent speech in Toronto “as perhaps the world’s foremost peddler of global salvationism.”

The question remains as to whether or not a company experiencing rapid growth in a world with finite resources can coexist with a sustainable development model for the future. When asked this question by Corporate Knights, Polman was adamant that this expansion must occur to move billions of people out of poverty. “The growth will be there, and if it’s responsible growth then we’re very happy with it,” he said. “It is so important that we do it in a different way, and make it sustainable growth from the start.”

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