Reference no: EM131193061

Assignment

Unilever's Sustainable Living 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.

Unilever's Sustainability Plan

Talking about sustainability is one thing; doing it is another. In late 2010 one company, Unilever, took action by unveiling its global Sustainable Living Plan. Launched simultaneously in London, New York, Amsterdam, and New Delhi, the plan will affect all of Unilever's stakeholders worldwide-customers, 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

How will Unilever accomplish its sustainability goals? Technological advances will enable the firm to achieve some. The company is 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.

The company will accomplish other parts of its plan by requiring that suppliers meet sustainability goals.

Finally, Unilever will meet some goals by changing consumers' habits. For example, by 2015 Unilever aims 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 intends 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 next 10 years while doubling its revenue. The major challenge the company faces is to increase sales without also increasing its environmental footprint. Dave Lewis, President of Unilever America, recognizes this dilemma: "We cannot choose between growth and sustainability. We have to do both."

Critics of the plan point out that much of its success depends on changing consumer behavior, which is largely beyond Unilever's control. Probably more important, critics question whether the adoption of the plan will 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 claims it will use its Lifebuoy brand soap to encourage more hand washing in an effort to reduce diarrhea and respiratory diseases spread by germs. It will use its fluoride toothpaste and toothbrush brands to encourage brushing twice a day, which will reduce tooth decay in children by 50 percent compared to brushing once. It will make safe drinking water available to 500 million people through its affordable Pureit in-home water purifier. Through its Dove Social Mission, Unilever intends 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 non-governmental 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 has endorsed many NGO recommendations. For example, Unilever will use eggs from 100 percent cage-free chickens in all of its products-a common demand from animal rights NGOs. All Lipton tea will be purchased from Rainforest Alliance certified suppliers. Even Ben and Jerry's ice cream will be made from ingredients that are fair-trade certified.

In rural India, Unilever plans to link 500,000 small farmers into a unified supply network to improve their farming practices. The farmers will be required to adhere to Unilever's Sustainable Agriculture Code and for the first time will benefit from economies of scale that can improve their lives. What's in it for Unilever? It will gain 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?