Unilever’s outgoing CEO, Paul Polman, proved that rather than impeding profit growth, corporate sustainability objectives can support it.
Paul Polman has held the top job at the Anglo-Dutch consumer goods group for 10 years. He was expected to retire in 2019, but on November 29 Unilever announced his retirement at the end of December. The announcement came just two months after an investor row over plans to move the group’s headquarters to the Netherlands. UK-based shareholders strongly objected, as the move would have meant Unilever leaving the FTSE, forcing some to sell.
With Unilever already setting its CEO succession plan in motion, it’s possible the timetable was accelerated. Apart from his recent clash with shareholders, Polman’s emphasis on corporate sustainability has made him a polarizing figure at times. On the one hand, he is often praised for his dedication to business ethics and corporate responsibility, and credited with transforming Unilever into an environmentally conscious and ethical organisation. Others, however, have been irked by what they considered a “preachy” style, said Bernstein analyst Andrew Wood.
Central to Polman’s philosophy was the importance of running companies for the long term. He scrapped the practice of reporting quarterly profits on his first day as CEO. He says that businesses return too much to shareholders, rather than investing for the future, and has advocated judging fund managers’ records over a period of three to five years, rather than quarterly. This would allow them to back companies with long-term investment plans, The Economist explains.
In 2010, Unilever launched its Sustainable Living Plan, a corporate responsibility initiative with ambitious goals such as cutting its environmental impact by half by 2030, and improving the health and well-being of over one billion people by 2020.
Even shareholders who do not share Polman’s zeal on corporate sustainability cannot argue with success: Over the course of his tenure, Polman has delivered a total shareholder return of 290%. He also expanded Unilever’s presence in emerging markets, and successfully blocked a $143 billion takeover attempt by Kraft-Heinz in 2017.
Polman has also made good on one of the most important duties of a chief executive: putting a solid CEO succession plan in place. He will be replaced in January by Alan Jope, President of Unilever’s Beauty & Personal Care business, the group’s largest division. Jope has been with Unilever since 1985, and has been successful in his current executive role with the global consumer goods giant. Polman will remain with Unilever for six months to assist with the transition.
Polman was ahead of most in recognizing that consumers identify with the brands that they buy, and care whether they share their values. Similarly employees are more inclined to work for companies with shared values. Still, any executive wanting to follow his lead should proceed with caution. Running a company on the basis that stakeholders such as workers and consumers matter as well as shareholders is sound thinking. But shareholders must be a willing part of the solution.
