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Unilever Improves Supply Chain, Faces Challenges with Customer Behavior

Raz Godelnik
| Friday April 27th, 2012 | 0 Comments

On Tuesday, Unilever released its first year’s progress report on the progress it made to meet its Sustainable Living Plan targets. The results so far are mixed. The report shows significant progress in many of the targets as well as real difficulties in others. For example, Unilever reports that sustainably sourced agricultural materials grew last year from 14 to 24 percent on the way to reach 100 percent in 2020. On the other hand, there was no progress in Unilever’s ambitious plan to halve its carbon footprint by 2020.

It’s not really surprising to see these mixed results given the fact that Unilever deliberately gave itself very challenging targets in the first place. “Many of our goals look as daunting now as they did when we announced them, but you have to set uncomfortable targets if you are to really change things,” explains its CEO, Paul Polman in the report. So taking into account the high bar Unilever set up in this plan, with goals like doubling its sales while halving its carbon footprint by 2020, my impression is that the Sustainable Living Plan is so far a success story.

The plan, published in November 2010, broke new ground by committing to take responsibility for the company’s impacts throughout the value chain, from the sourcing of raw materials all the way through to the consumer’s use of its products to cook, clean and wash. Looking at the progress report you can see a clear division in the value chain – while Unilever has made good progress in its supply chain and within the company’s operations, it had difficulties moving forward on changing consumer behavior.

The areas where Unilever made genuinely good progress included:

  • Sustainable sourcing – 24 percent of total agricultural raw materials now being sourced sustainably, versus 14 percent in 2010. Unilever made a significant progress with its two main raw materials – 64 percent of palm oil and 60 percent of paper and board are coming now from sustainable resources.
  • Nutrition – over 90 percent of Unilever’s leading spreads now contain less than one-third saturated fat.
  • Renewable energy now contributes 20 percent of Unilever’s total energy use and 100 percent of electricity purchased in Europe is now from renewable sources.
  • Safe drinking water – 35 million people have gained access to safe drinking water from Pureit water purifier since 2005.

Unilever reported a little less success in the areas of health and hygiene: The goal was to help more than a billion people to improve their hygiene habits and bring safe drinking water to 500 million people by 2020. By end 2011, Unilever had reached over 135 million people – 48 million with Lifebuoy, 44 million with its toothpaste brands, 8.5 million through the Dove Self-Esteem Fund and 35 million people with safe drinking water. There were also few areas where Unilever reported on real difficulties to make progress, especially regarding targets that require consumer behavior change, such as reducing the use of heated water in showering and washing clothes, or encouraging people to eat foods with lower salt levels.

It’s interesting to see that Unilever is aiming to reach this broad set of goals with collaborative efforts. In its global supply chain it collaborates on climate change, water and agricultural issues to create new standards, new frameworks and new forms of governance. When it comes to consumers, Unilever cooperates to change consumer behavior in issues such as health and hygiene, nutrition and recycling. The idea is not just to create better solutions, but as Paul Polman explains, to drive concerted, cross-sector change because he believes that even if Unilever meets its goals, it will still consider it a failure if no one else follows.

This approach is reflected not only in the vast number of collaborations in which Unilever is participating, but also in the openness of its innovative process. Unilever adopted a crowdsourcing approach, inviting all stakeholders, not just NGOs and governments, to take part in the effort to find the ways to meet its goals. A few weeks ago, for example, Unilever unveiled a new Open Innovation platform to gather and assess ideas from external resources, inviting “anyone who has a fresh, serious approach to new thinking” to pitch in. Another example took place on Wednesday, when Unilever initiated the Sustainable Living Lab, a 24-hour online dialogue aimed to create and inspire a discussion about the challenges Unilever is facing, co-create new ideas and share good practices.

The online discussion focused on several specific issues, including consumer behavior change, which is one of the most important keys to success. After all, consumers’ use of Unilever products represents 68 percent of the company’s carbon footprint – there is no way for Unilever to halve its footprint without getting consumers to reduce their own. But how do you do it? How do you convince people to wash their clothes in lower temperatures or use less water when they shower? And in addition, how do you integrate Unilever products into the process of shifting consumers to a more sustainable behavior? These are very difficult questions and from what I saw on the online discussions no one in or outside Unilever has yet to come up with a good answer.

Still, even with this sort of challenges, Unilever is proving in this report it knows not only to draw an impressive road map, but also to follow it.

[Image credit: Unilever]

Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.


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