DRIVING BUSINESS SUCCESS
With 7 billion people on our planet, the earth’s resources can be strained. This means sustainable, equitable growth is the only acceptable model for our business. We believe growth and sustainability are not in conflict. In fact, in our experience sustainability drives growth. See Our Strategy.
The diagram below represents our virtuous circle of growth. It summarises, simply, how we derive profit from the application of our business model.
Making sustainable living commonplace for our consumers is helping to drive profitable growth. By focusing on sustainable living needs, we can build brands with a significant purpose. By reducing waste and material use, we create efficiencies and cut costs. This helps to improve our margins. By looking at product development, sourcing and manufacturing through a sustainability lens, opportunities for innovation open up. And we have found that by collaborating with partners including not-for-profit organisations, we gain valuable new market insights and extend channels to engage with consumers.
Sustainable Brand Growth
Brands that are integrating sustainable living into their core purpose all performed well in 2013. For example, Lifebuoy, Dove, Comfort One Rinse and Pureit all grew by double digits. This is well above the company average.
We are accelerating the integration of sustainability into more of our brands. Currently, our leading brands are developing their ‘USLP Ambition’. This sets out how they will grow the brand while contributing to the Unilever Sustainable Living Plan and ultimately, helping to make the world a better place.
Brand teams take a 360-degree view of the social, environmental and economic impacts of their brand. They also factor in external expectations of important stakeholders. As of 2013, 11 of our 14 billion euro brands have created their USLP Ambition.
One example is Knorr, Unilever’s largest brand, which has chosen sustainable sourcing as its key focus. Knorr already sources some of its vegetables sustainably and has recently introduced an on-pack logo. This helps consumers choose products with sustainably sourced ingredients. In Knorr’s largest market, Germany, these changes are being rewarded with improved brand equity.
See Sustainable sourcing.
Encouraging consumers to change habits
Our Five Levers for Change methodology is helping our brands motivate consumers to adopt new behaviours. We have recently deployed this behaviour change approach to help people improve their eating and exercise habits.
Our Becel and Flora pro.activ brands developed a three-week challenge to help people with raised cholesterol adopt a healthy diet and lifestyle. The challenge includes eating Flora or Becel pro.activ, which contain plant sterols that have been shown to lower blood cholesterol as part of a healthy eating plan and regular exercise. The challenge, called It Takes a Village, has so far been launched in villages as far apart as Australia and South Africa. More than 3,500 people have had their cholesterol tested. 500 have taken part in the challenge, 89% of whom have successfully lowered their cholesterol.
Persil Small & Mighty laundry detergent has recently introduced a higher performing laundry liquid which cleans well using quick wash cycles. This is the latest development in a long running campaign from the brand to actively encourage consumers to shorten their washing machine cycles, whilst guaranteeing faster stain removal. The number of consumers using quick cycles is increasing fast, along with understanding of the environmental benefits.
In 2013, UK consumers claimed that one in five loads were cleaned using shorter cycles. This is a substantial increase from just 9% in 2003. If all 26 billion washes done by consumers in Europe each year moved from a two-hour standard cycle to a 30 minute wash, this would save 40 billion hours of machine time. It would reduce energy use by around 30%.
See Encouraging Behaviour Change.
In November 2013 we launched Project Sunlight. This initiative brings together the sustainable living ambitions and campaigns of our brands into a single, global movement. It motivates people to live sustainably by painting a positive picture of the brighter future our children can inherit.
See Project Sunlight.
Innovation and collaboration are critical to achieving our sustainable living goals. By looking at product development, sourcing and manufacturing through a sustainability lens, opportunities for innovation open up.
The UK launch of smaller, ‘compressed’ deodorant sprays across three of our well-known brands – Sure, Dove and Vaseline – is just one example of how more sustainable innovation is helping to drive business growth. These sprays use half the propellant, around 25% less aluminium packaging and take up a third less road transport capacity.
This means that the carbon footprint per can is approximately 25% lower. People find the smaller pack size more convenient and easier to carry, and have the added satisfaction of knowing that the environmental impact is reduced. More than 9 million cans have been sold since launch.
By collaborating with partners including not-for-profit organisations, we can pool resources and leverage skills, capabilities and networks that complement our own expertise. During 2013 we developed a co-investment partnership with the Children’s Investment Fund Foundation (CIFF). This aims to reduce the mortality of children under five.
The partnership will implement Lifebuoy’s handwashing programme in Bihar, India. Lifebuoy provides co-investment, staff resource and expertise to run the direct contact programme. It also invests in mass media to raise awareness of the importance of handwashing with soap. CIFF is providing significant co-investment alongside staff resource and expertise to optimise the programme’s effectiveness. The five-year initiative will reach 9 million schoolchildren directly. It will also impact 50 million people as a result of children influencing members of their family.
Working with our customers
Many retailers have sustainability goals of their own and need the support of suppliers like Unilever if they are to achieve them.
For example, the Living Project in China is a collaboration between Unilever and Walmart. It includes brands like Omo, Comfort, Lux, Dove and Clear. Through a simple in-store message of “Save Money, Live Better”, shoppers are inspired to save money through small everyday actions to help them live more sustainably. For example, promoting the use of Comfort easy-rinse fabric conditioner helps consumers save on domestic water use. By the end of 2013, 380 Walmart stores were participating in the Living Project. The initiative has helped drive sales growth for both businesses.
We have also found ways to create greater efficiency in distributing goods to and from customers while cutting costs and reducing the greenhouse gas (GHG) footprint at the same time. In Hungary we are working with retailer Tesco on ‘backhauling’. After Tesco’s trucks have delivered Tesco deliveries to the store, they are loaded with Unilever goods for their return journey.
Working with our suppliers
In 2011 Unilever launched a programme called ‘Partner to Win’. This enables us to work more closely with our key suppliers, including on sustainable practices.
In North America, where we source over two thirds of our soy, we have worked together with our supplier Cargill to develop sustainable sources. In 2013, we saw a significant acceleration: 44,000 acres of sustainably cultivated land where no soy had previously been cultivated.
Cutting costs in our operations
By reducing waste in energy, raw materials and so on, we create efficiencies and cut costs. This helps to improve our margins. Since 2008, we have avoided costs of €200 million by cutting raw and packaging materials and disposed waste.
Developing innovative new packaging technology is one of the ways we achieve this. We have been working closely with packaging technology experts Micelle and Alpha, to develop a technique which allows us to inject gas while blow-moulding bottles. This cuts plastic use by up to 15%. This brand new technology is now being used for our Dove Body Wash bottles. We estimate savings of up to 27,000 tonnes of plastic resin a year once this technology is fully applied across our portfolio of products. In future years, this could deliver potential cost savings of up to €50 million.
75% of our manufacturing sites now send zero non-hazardous waste to landfill. That is a total of 186 manufacturing sites in 38 countries. The scale and speed of reduction has been achieved by making sites more aware of their waste streams and identifying opportunities to eliminate and reduce waste at source, leading to significant savings.
See Waste & packaging
Helping our people drive sustainable growth
Sustainable, profitable growth can only be achieved with the right people working in an organisation that is fit to win. It also needs a culture in which performance is aligned with values. We are increasingly an agile and diverse business with people motivated by doing good while doing well. We are building capability and leadership among our people and attracting some of the best talent in the market place.
Our vision of creating a sustainable business is motivating for employees. However, it is not always clear to them how to apply it to their role. In 2013 we developed an online knowledge hub, called the Sustainable Living Lab. This provides daily news on the latest brand and business activities, tools to help managers apply sustainability insights to their brand, and a collaboration space to share ideas and seek advice from experts. Open to all managers, it is specifically designed to make it easy for our thousands of marketers across the world to find sustainability-driven growth opportunities for their brand.
We have sustainability champions covering every key function, category and country. They help the leadership team to select the priority areas to focus on in order to drive sustainable growth. They also help to review progress quarterly against targets.
Many employees have sustainable business ideas of their own. Our manufacturing team has set up a ‘Small Actions Big Difference’ budget to make them happen. The €15 million fund encourages staff to develop their ideas. In 2013 we invested in 50 of the best projects suggested to reduce water abstraction by manufacturing sites around the world. These yield an average payback time of less than two years and have helped us achieve reductions in abstracted water.
We continue to link progress on sustainable business goals to reward through the remuneration of a growing number of managers. This includes the CEO and several members of the Unilever Leadership Executive.
Established in 2012, Unilever Foundation’s mission is to improve quality of life for communities through the provision of hygiene, sanitation, access to clean drinking water and basic nutrition, and by enhancing self-esteem. Working with five partners – Oxfam, PSI (Population Services International), Save the Children, UNICEF and the World Food Programme (WFP) – the Foundation is developing programmes designed to grow the business and support our goal of helping more than 1 billion people take action to improve their health and well-being. In the first year, the Foundation positively impacted the lives of more than 14.5 million people.
Through the Foundation’s support of UNICEF’s Community Approaches to Total Sanitation (‘CATS’) programme, an estimated 600,000 people will be living in open defecation free communities. Nearly 1 million people will be reached with hygiene programmes and/or communication.
The Foundation is partnering with the WFP through Project Laser Beam (PLB). This public–private partnership aims to address child malnutrition holistically by tackling both direct and underlying causes. Through the programme, over 12 million school meals have been distributed.
The Unilever Foundation and PSI, a global health organisation, are working together to avert preventable deaths. They are teaching people about the importance of handwashing, and increasing access to clean drinking water, in parts of Africa and Asia respectively. Through this partnership over 1 million people will be reached with handwashing behaviour change programmes. 75,000 people will receive access to free safe drinking water.
Working with partners
Global issues such as deforestation, food security and access to sanitation are too large and complex for any single organisation to tackle alone.
We are stepping up our engagement to work with governments, NGOs and others in our industry to drive fundamental change to whole systems. That’s why Unilever is playing a leading role in such important global initiatives as the UN Post-2015 Agenda, the World Business Council for Sustainable Development’s Action 2020 and the Global Task Force for Scaling up Nutrition.
We are also working with young people, who have been hardest hit by the global economic slowdown. Today’s young entrepreneurs are tomorrow’s business leaders. We are supporting youth enterprise and sustainability leadership through initiatives such as:
The Unilever Sustainable Living Young Entrepreneur Awards in partnership with the Cambridge Programme for Sustainability Leadership.
The World Economic Forum’s Engaging Tomorrow’s Consumer Project which is about engaging millennials (people aged between 16-30 years) in sustainable lifestyles.
One Young World’s annual Summit for young people who want to drive positive change.