He’s remade the consumer goods company as a model of responsibility. Can he prove his model works?
Step out of the frigid drizzle into Unilever’s factory outside Liverpool in northern England, and the brightly lit, automated assembly line gleams in stark contrast to the gloom outside. Thousands of bottles shoot down a conveyor belt with a click-clack sound, in a streak of bright purple. Look more closely, and there is an important detail. The new bottle is squatter than the older, taller style on another assembly line, with a smaller dispenser and a label explaining that this version of Comfort brand fabric conditioner is good for 38 washes, rather than the 33 of the last-generation package. The message is clear: Customers need to help save one of earth’s most precious resources—water.
This might appear to be a clever bit of marketing by one of the world’s biggest consumer product companies, and marketing it surely is. But to Unilever, its updated, concentrated liquid is also a crucial innovation. It’s one of countless tweaks underway by the Anglo-Dutch company in its more than 300 factories across the world, which churn out more than 400 brands for 2.5 billion or so customers—an astonishing one in every three people on the planet. Central to these changes is a message Unilever is determined to convey to its investors, as well as to other companies: Big corporations need to change the way they do business, fast, or they will steadily shrink and die.
To most of Unilever’s customers, the state of the world is probably the last thing on their minds as they push their shopping carts through the supermarket, tossing in Ben & Jerry’s ice cream, Dove soap, Lipton tea, Hellmann’s mayonnaise, and other Unilever products. It’s hard to imagine that eco-disasters might someday lead to those items disappearing from shelves. But to Unilever, which was born as a solution to a crisis, the potential for calamity seems real enough. The company got its start in the 1880s, right here in this picture-perfect redbrick village near Liverpool called Port Sunlight—named after the world’s first packaged, branded bar of soap and the company’s founding product. It was created in an effort to stop rampant epidemics and child deaths amid the grinding poverty and squalor of Victorian England. Nearly 130 years later, there is still an acute sense at Unilever that the world needs fixing.
The person most responsible for that feeling of urgency is 60-year-old Paul Polman, the tall, soft-spoken Dutchman who has led Unilever as CEO for the past eight years. Folded into an armchair more than 200 miles south of Liverpool, in the company’s London headquarters on the Thames River, Polman rattles off figures more commonly heard in the UN General Assembly than the C-suite of a company with $58 billion in sales. Indeed, this past November the French government pinned a knighthood on him, not for his ability to drive profits but for his vociferous global campaigning to rein in climate change.
When I meet Polman on a chilly February morning, it’s just a few days after he has released Unilever’s 2016 earnings. Yet he is not particularly interested in discussing the results. (Unilever reported $5.7 billion in net profit for the year on slowing sales growth.) The figures that seem more pressing to him are ones that he’s convinced have greater potential to put his and other companies in peril. More than 160 million children in the world are stunted from malnutrition, he says. Eight million people die prematurely each year from pollution. The world’s richest 1 billion people consume 75% of its natural resources. “We’re wasting 30% to 40% of the food in this world, whilst millions of people go to bed hungry,” he says, as if amazed that the situation is even possible. “Why do we not have the moral courage to attack that?”
Polman hands me just one document to read: a report of the Business & Sustainable Development Commission, a group of CEOs and NGOs that advocates business growth by applying the UN’s development goals. In 2012, Ban Ki-moon, then the UN Secretary-General, picked Polman as one of 26 people to craft 17 goals for the world body—the only business executive in the group. Introduced in 2015, the UN’s Sustainable Development Goals, or SDGs, include eliminating poverty and gender inequality. When I ask Polman how much time he spends on Unilever business compared with lobbying politicians and heads of state or addressing NGOs, the World Economic Forum, Stanford’s Graduate School of Business, and others, he draws a blank. “To me it is the same,” he says, sipping a cup of green tea. “I don’t separate that. I think it is an integral part of the way we run our business.”
Proving that point is now Polman’s—and Unilever’s—major challenge. There is certainly ample evidence that the world is in trouble. This century has seen an acceleration of global-warming trends, as well as an extreme widening of the gap between the world’s richest and its poorest. But it is less clear whether Polman can succeed in convincing his peers in the business world that it’s their job to fix those problems—or at least, whether he can succeed in doing that during his remaining time as CEO of Unilever. When the company named Marijn Dekkers as its new chairman last year, investors concluded that his first task would be to find a successor to Polman.
If Polman is concerned about his job status, he doesn’t show it—perhaps because he is so intent on making his development strategy work. To the CEO, his logic seems irrefutable. Environmental risks and poverty are fundamental problems for almost every part of business operations, from storing data to manufacturing laundry detergent to growing tea. More customers will begin to shun companies that fail to grasp that, he believes, while businesses that practice gender equality and environmental preservation will inevitably become more profitable. In that sense, he thinks that Unilever can play a vital role in showing other companies the best path forward. “This is not a charity we’re talking about here, you know,” he says. “We are running a business.”
Polman’s embrace of sustainability as a core management principle has helped bolster Unilever’s reputation globally. The consumer goods company ranks No. 38 this year on Fortune’s list of the World’s Most Admired Companies Top 50 All-Stars, up from No. 41 in 2016. It’s the sixth straight year Unilever has made the list, which is determined by surveying thousands of executives and analysts.