Unilever’s willingness to set themselves specific and quantifiable targets makes this a defining moment in the sustainability revolution

16 11 2010

A recent Harvard Business Review article argued that we are currently experiencing an industrial transformation – the sustainability revolution – to rival that of the major industrial transitions of recent times like globalisation, and the information age.

All periods of dynamic change are punctuated by defining moments, and one that comes to mind for me when thinking about sustainability was a week in 2007 when Tesco and Marks&Spencer vied to out-do each other when announcing comprehensive agendas for organisational change on sustainability – this was the birth of M&S’s Plan A, a detailed set of over 100 targets to be achieved by 2012.

The past week is perhaps another “moment” that people will look back on when telling the story of the sustainability revolution. Last week FMCG giant P&G announced a comprehensive package of sustainability targets and yesterday Unilever Chief Executive Paul Polman, joined by two of the intellectual architects of the sustainability revolution Jonathan Porritt and John Elkington, outlined Unilever’s sustainability strategy for the next ten years with some eye-watering commitments the organisation has set itself to achieve by 2020.

I came to the event in Unilever’s London HQ with three questions at the front of my mind: would there be anything new today? Was it real or just greenwash? And what might the broader implications be for others?

Unilever already has a strong pedigree on sustainability, this is the organisation that has been improving health and wellbeing for over a century with products like lifebuoy soap and Flora/Becel margarine. In 1997 Unilever worked with WWF and others to create the Marine Stewardship Council, and in 2007 made commitments to sustainably source all its palm oil, and all the black tea in Lipton and PG Tips, by 2015 – not insignificant commitments from an organisation that buys 3% of the world’s palm oil and 12% of the world’s black tea. Hence the first question I came with: would there be anything really new today? Would the announcement live up its billing as a step change or would it just be more of what we’ve heard before?

Well, what I think stands out Unilever’s announcements – like M&S’s Plan A a few years ago – is how comprehensive these commitments are, how long term they are, and how specific and quantifiable they are. Yes, Unilever has been able to showcase some great examples of sustainable behaviour from some of its brands in the past, but yesterday they announced targets that mean all brands right across their portfolio will be meeting a consistent level of performance. In aggregate, the announcements appear to represent a genuine effort to transform markets because of the influence they will have on the decisions others will make, rather than just window dressing to defend corporate reputations as earlier generations of corporate responsibility activities have often done. To give a flavour of yesterday’s announcements, they included commitments to:

  • Help 1 billion people improve their hygiene habits by 2020, and bring safe drinking water to 500 million people by 2020
  • Double the proportion of the food portfolio that meets particularly stringent nutritional standards
  • Halve the greenhouse gas impact of Unilever products across their lifecycle by 2020 (including the impact of production of raw materials and use by the consumer) as a contribution to meeting the United Nations requirement to reduce greenhouse gas emissions by 80% by 2050
  • Source 100% of agricultural raw materials sustainably by 2020, addressing both environmental impacts and livelihoods of producers and workers (moving beyond just palm oil and tea to all Unilever’s top ten agricultural raw materials – paper&board, soy, sugar, fruit&veg, sunflower, rapeseed, dairy and cocoa – and beyond)

The second question I came with was: how credible would this set of announcements be? It all might sound good, but was it about real change or just good PR?

This question was put to Polman in a variety of ways, and his answers were interesting. At one point, citing Stephen Covey’s Seven Habits of Highly Effective People, Polman argued “It’s difficult to talk yourself out of things you’ve behaved yourself into” – from small and pioneering first steps, Unilever has been taking bigger and bigger steps towards systemic change over more than a decade, which has created its own momentum within the organisation which will be hard to reverse and gives Polman confidence that the organisation will step up to the challenge these new targets represent.

Polman gave a wry smile when the point was made that CEO’s terms in office are becoming shorter and shorter, and change on this scale required more than just CEO leadership, it required a fundamental change in organisational culture. Ashridge Business School’s research lends weight to this argument: 92% of the CEOs and senior executives participating in Ashridge’s 2009 study with the United Nations and EABIS believe that change in organisational culture is required to effectively meet the challenges and opportunities of sustainability. That study documented some of the very specific steps that Unilever has been taking to provoke and accelerate culture change through a range of interventions led by the HR function, including innovative leadership development programmes, and the ‘brand imprint’ workshops led by Unilever’s in-house marketing academy for example. Ashridge is hosting a major conference on sustainability and organisational change in June 2011 that will explore these trends in greater detail.

A number of other challenges were made during the Q&A to Unilever’s central thesis that it was possible to double the size of the business at the same time as reducing material consumption.

On the barriers presented by the investment community, Polman was bullish: ‘We know this is the right way to manage our business for the long term, if you buy into this, come invest in us, if you don’t, then don’t’ was the gist of his response.

On consumers: “Consumers do want us to be taking this approach, even more so in developing countries which is where our future growth will come from, and the major retailers as market gatekeepers are really driving change through the whole supply chain. The trick is to innovate to be able to meet this demand without increasing price”.

On the role of government: “We can’t wait for governments to fix these problems, witness the failure of Copenhagen. Industry needs to step up”.

On integration with broader corporate strategy, Polman talked about the role of sustainability specialists in the due diligence process during acquisitions: “Will new acquisitions fit with this new business model in the long term is the key question we will be asking of them” he argued.

It wasn’t all plain sailing, there was some visible squirming when directly asked for the second time how much of Unilever’s marketing budget would be spent on promoting behaviour change rather than selling more products, and there wasn’t a good answer to a question about whether Unilever was really challenging the underlying ideology of consumerism that has dominated commercial thinking for half a century. But to be fair Unilever was upfront about many of the unknowns still to be navigated on the road ahead and overall this came across as both a sincere commitment, and one backed up with real intent.

So what, then, of my third question: what are the broader implications of all this? What are the implications for other organisations? It seems to me to be this: yesterday we saw another clear signal that lends credence to the notion that markets are changing, the rules of competition are changing, and a handful of organisations are playing a leading role in defining what these markets and rules of competition are going to look like in the near future. If you’re not already seriously engaged in this agenda for real change, you need to be.

What will be the next defining moment in the sustainability story? I think we’ll continue to see leaders in different sectors stepping up and announcing similar kinds of substantial long term targets for change that will signal the direction of change in their sectors. How soon, then, before we see coalitions of organisations from the same sector making joint declarations on long term targets for their sector as a whole?

Matt Gitsham is Director of the Centre for Busieness and Sustainability at Ashridge Business School


Earth Overshoot Day: Business and Business Teaching Must Respond

16 08 2010

The fact that Earth Overshoot Day arrives one month earlier this year should be a wake- up call for Boardrooms and business schools alike.

We are trapped in a web of our own making, a web of concepts, beliefs and practices that  places the entire world in service of the economy: but the economy is a sub-system of society, and society is a sub-system of the bio-sphere. A subsystem just can’t grow beyond the capacity of the total system of which it is a part. To make policy as if it can is, to quote Jonathan Porritt, is “as close to biological and thermodynamic illiteracy as it is possible to get.” 

Business thinking and most business school teaching sees humans as separate from the living world, operating “on” the world and having an instrumental relationship to it. This fallacy of “separate from” allows us to view the living world as “resources”, legitimising the “take, make, waste” processes of the way business works.

There is an alternative framing available, seeing the entire earth as a living process of which humans are one interwoven thread, but this perspective has little currency in the world of business or in most business teaching.

We need business schools to be much more rigorous about what is taught and with what consequences. Leading academic Sumantra Ghoshal wrote that “bad management theories are destroying good management practices”. He might have added that they are denuding the planet too. In trying to make management into a science we have stripped out ethical responsibility by simplifying the role of managers into the empirically testable proposition that management’s role is to maximise shareholder value.

This is too small a role and too small a way of studying business. We need business schools to expand their ways of looking and their ways of knowing and to bring in insights from many fields into the management curriculum. We need less scientific management papers and more honest explorations of people experimenting with better ways of working in practice with the complexities of really being a sustainable organisation.

The truth is that no one yet knows what a sustainable economy is and we need business schools that develop people to explore creatively to find out. The Ashridge MSc in Sustainability and Responsibility is based on the principles of Action Research – asking leaders to question their assumptions and reflect on the consequences of their actions. This form of management education opens the way for a creative exploration of possibility that is not bound by blind acceptance of commonplace assumptions about the purpose of business and the role of managers.

Swedish State Secretary for Energy, Enterprise and Communications presents Ashridge Sustainable Innovation Award

3 12 2009

The winners of the 2009 Ashridge Sustainable Innovation award have just been announced. The award is an essay competition run in association with the European Academy of Business in Society (EABIS), Hewlett-Packard (HP) and WWF.  Jonathan Alexander, a Masters student from the University of Bath, was awarded first place, with Luc Petit from Ashridge Business School placing second and Srikanth Madani from the University of St. Gallen in Switzerland coming third.

The award seeks the best ideas from MBA and other post-graduate students on sustainable innovation and creating value from the shift to a low carbon economy. Jonathan received the top prize for his entry: €7,000, a six-month mentorship with HP and career advice from Spencer Stuart. Luc and Srikanth also receive career advice from Spencer Stuart as well as €5000 and €3000 respectively. All three winners were presented with their awards by Jöran Hägglund, Swedish State Secretary for Enterprise, Energy and Communications, on behalf of the Swedish Presidency of the European Union at the EU Presidency conference ‘Eco-efficient Economy – Towards Innovative and Sustainable Competitiveness’ held in Linköping, Sweden on 2 November 2009.

Presenting the prizes, Mr Hägglund said “To successfully transition to a low carbon economy, we need to harness and focus the creative and entrepreneurial energies of today’s and tomorrow’s leaders. The focus is frequently on the importance of technological innovation, but a necessary precondition for this innovation to occur is that we change the way we think, and see not problems but opportunities, and focus our creative energies in this direction. Europe’s business schools have a crucial role to play in making this happen. This is why the European Union is supporting organisations like EABIS and why I’m delighted to present this award on behalf of the Swedish Presidency of the European Union.”

Matthew Gitsham, Director of Ashridge’s Centre for Business and Sustainability, added “As we’ve celebrated our 50th anniversary at Ashridge this year and look to the future, we believe the role of a business school in the 21st Century is to be an incubator of creativity and innovation, and to be focusing the entrepreneurial energies of today’s and tomorrow’s leaders on the challenges and opportunities of sustainable development. We are therefore delighted to have been able to work in a unique partnership with HP, WWF and EABIS to create the Ashridge Sustainable Innovation Award.

“HP is delighted to support the Ashridge Sustainable Innovation Award,” said Gabriele Zedlmayer, Vice President, HP Global Citizenship and Social Innovation, speaking to coincide with the ceremony. “We believe it is very important for students not just to think about the sustainability challenges that await them when they enter their professions, but also to recognise the opportunities that they have to actively contribute to a low carbon economy.”

The winners were chosen by an independent panel of judges including Sir Paul Judge, Benefactor of Judge Business School, Viscount Etienne Davignon, Vice-Chair, Suez-Tractebel, Eric Cornuel, Director General, EFMD, Jeanette Purcell, Chief Executive, Association of MBAs, Della Bradshaw, Executive Education Editor, Financial Times, Kai Peters, Chief Executive, Ashridge, Dennis Pamlin, Policy Advisor, WWF, Tom Dodd, Policy Advisor, European Commission, Gabriele Zedlmayer, Vice President, HP Global Citizenship and Social Innovation, Anthony J Vardy, Spencer Stuart, and Rachel Jackson, ACCA.

As part of this award WWF visited key partner universities of HP and EABIS in the Czech Republic, Egypt, France, Germany, Hungary, Poland, Switzerland, Turkey and the United Kingdom in winter 2008 and in 2009  to engage tomorrow’s leaders in discussions about innovation for a sustainable future. Around 500 students participated in the workshops that have taken place to date.

The winning and shortlisted entries have been published by ACCA, and can be downloaded from www.ashridge.org.uk/SustainableInnovation