Under CEO Paul Polman, Unilever offers a large-scale study in corporate social responsibility – one that could soon be put to the test.
Dutch consumer goods multinational Unilever is Europe’s seventh-most valuable company, worth $176 billion. Its more than 400 FMCG brands line store shelves worldwide. And like a growing number of forward-thinking executives, CEO Paul Polman is a firm believer in CSR. Running the business sustainably, investing and making healthy products with minimal environmental impact is integral to his vision. He contends that adhering to such principles is better for profits in the long term, and need not run counter to the interests of shareholders.
Unilever has come to be seen as a standard-bearer for corporate sustainability. Since Polman was appointed in early 2009, the company’s emissions, water usage and waste, per unit of production, have fallen by 43%, 38% and 96% respectively. Investment has increased from 18% to 20% of sales, The Economist reports. Simultaneously its global market share has risen from 16% to 18%, according to investment firm Alliance Bernstein. This is at a time when multinationals in the FMCG sector are struggling to compete with smaller local firms, often gobbling them up instead.
Polman’s beliefs were tested in February when Unilever received a $143 billion takeover bid from American food conglomerate Kraft-Heinz, controlled by Warren Buffett and 3G Capital. Kraft-Heinz has been criticized for a lack of CSR engagement, though earlier this year it announced an expansion of CSR commitments. Nevertheless, the company is known for slashing costs and keeping a laser focus on shareholder wealth, adapting the performance culture of an investment bank.
The courtship came to an end before long, but there are signs that Unilever has not seen the last of Kraft-Heinz. The near-takeover threw differences between the two companies into sharp relief. Some have gone so far as to liken the clash to two different models of capitalism. Unilever’s CSR culture could be put to the ultimate test within the next two years, when Polman is expected to step down. He wants his successor to be an insider. Even so, the question is raised of whether Unilever can remain CSR-focused when the man who drove it is no longer at the wheel.
