Ethics CaseUnilever's Sustainable Living Plan

Unilever's Sustainability Plan

Sustainability is all the buzz in business and is quickly becoming a mainstream topic. Governments as well as customers have been urging corporations to make themselves sustainable; but what does that mean?

What Is Sustainability?

Sustainability is acting to meet the needs of the present generation without compromising the ability of future generations to meet their own needs. For individuals it is a life style that attempts to reduce an individual's or society's use of Earth's natural resources. The European Union has adopted sustainability as an official policy, urging companies to follow sustainable practices as a means of achieving their corporate social responsibility goals to contribute to a better society and a cleaner environment.

Talking about sustainability is one thing; doing it is another. In late 2010 Unilever took action by unveiling its global Sustainable Living Plan. Launched simultaneously in London, New York, Amsterdam, and New Delhi, the plan would affect all of Unilever's stakeholders worldwidecustomers, suppliers, investors, employees, and the local communities where Unilever products are sold. It's not unusual for a company to try to reduce its CO₂ emissions or to reduce waste and water usage in its own manufacturing facilities. But Unilever's plan goes far beyond its plants. According to the company's management, more than two-thirds of greenhouse emissions and half the water in Unilever products' life cycles come from consumer use. Therefore, extending the plan to include consumers is a commitment on an unprecedented scale.

Accomplishing the Company's Sustainability Goals

Technological advances would enable the firm to achieve some of its sustainability goals. The company was developing products such as laundry detergents that work at lower temperatures and bath soaps that reduce the amount of hot water needed in showers and baths.

Company management intended to accomplish other parts of its plan by requiring that suppliers meet sustainability goals.

Finally, Unilever management planned to meet some goals by changing consumers' habits. For example, by 2015 Unilever aimed to change the hygiene behavior of 1 billion consumers across Asia, Africa, and Latin America by promoting the benefits of hand washing with soap at key times. Though this may seem rudimentary by Western standards, every year more than 3.5 million children die before age five due to diarrhea and acute respiratory infections. Much of this is from poor hygiene habits.¹

Overall, through its ambitious sustainability plan, Unilever management intended to (1) improve the health and well-being of more than 1 billion people; (2) purchase 100 percent of its agricultural raw material from sustainable businesses; and (3) reduce the environmental impact of everything it sells by one-half over the following 10 years while doubling its revenue. The major challenge the company faced was to increase sales without also increasing its environmental footprint. Dave Lewis, president of Unilever America, recognized this dilemma: We cannot choose between growth and sustainability. We have to do both.

Critics of the plan pointed out that much of its success depended on changing consumer behavior, which was largely beyond Unilever's control. Probably more important, critics questioned whether the adoption of the plan would contribute to Unilever's bottom line. Being green and socially responsible are all well and good, but a public company needs to make money. A company that is not financially successful is not sustainable, good intentions notwithstanding.

Integrating Business Strategy and Sustainability Strategy

What makes Unilever's plan so intriguing to many is the way it integrates business strategy and sustainability strategy. Let's take one example: health and hygiene. Unilever claimed it would use its Lifebuoy brand soap to encourage more hand washing in an effort to reduce diarrhea and respiratory diseases spread by germs. It would use its fluoride toothpaste and toothbrush brands to encourage brushing twice a day, which would reduce tooth decay in children by 50 percent compared to brushing once. It would make safe drinking water available to 500 million people through its affordable Pureit in-home water purifier. Through its Dove Social Mission, Unilever intended to use one of its best-known brands to enhance the self-esteem and thus improve the mental health of young women around the world.

Large companies are often criticized by nongovernmental organizations (NGOs). In the past, as a company headquartered in Europe where NGOs are particularly active, Unilever has been a target of such criticism. A common corporate strategy is to fight back. However, with its Sustainable Living Plan, Unilever endorsed many NGO recommendations. For example, Unilever would use eggs from 100 percent cage-free chickens in all of its productsa common demand from animal rights NGOs. All Lipton tea would be purchased from Rainforest Alliance certified suppliers. Even Ben and Jerry's ice cream would be made from ingredients that are fair-trade certified.

In rural India, Unilever planned to link 500,000 small farmers into a unified supply network to improve their farming practices. The farmers would be required to adhere to Unilever's Sustainable Agriculture Code and for the first time would benefit from economies of scale that could improve their lives. What's in it for Unilever? Relationships with a vastly expanded network of sustainable suppliers producing products at competitive prices. Building an adequate source of supplies is especially critical in a world where food shortages may become more common.

Critical Concerns and Responses

Is Unilever simply using the sustainability mantra as a device to increase its profits? To its critics, Unilever's motives are suspect. They claim it is pursuing sustainability, not because it is the right thing to do, but because it is good business. But are these two goals mutually exclusive? Can a firm's strategy seek to be profitable and sustainable? What's wrong with doing well by doing good? Nothing, according to Unilever management. They intend to lead the way in being a profitable, sustainable corporation.

Discussion Questions

1. Should Unilever's stockholders endorse its sustainability plan? Why or why not?

2. Are there business advantages to using sustainable or green suppliers? If so, what are they? If not, do you think a traditional return on investment analysis captures all possible benefits of going green?

3. Are there any ethical criticisms of Unilever's sustainable living strategy? If so, what are they?