Sustainable Sourcing: Unilever Challenges Its Own Value Chain

Submitted by Guest Contributor

This week -- and leading up to the launch of Unilever's 2012 Sustainability Report later this month -- we begin a series of conversations with the leaders and executives of Unilever reporting on how the company is performing against the famously ambitious goals laid out in its Sustainable Living Plan. From sustainable sourcing to changing consumer behavior, they will lay out the challenges, report on the progress being made and offer key highlights from 2012 that helped/roadblocked the targets.

We start off with Chief Procurement Officer Marc Engel identifying the challenges and laying out the process for Unilever to reach its goal of sourcing 100% of raw materials sustainably by 2020.

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This week we announced that more than a third of our agricultural raw materials are now sourced sustainably. This is a significant milestone on our journey towards a target of 100 percent by 2020.

Currently, our sustainable sourcing figure stands at 36 percent - up from 24 percent in 2011.

We are very proud of the rate of acceleration in recent years; given that it took us 10 years to get to 14 percent by 2010, what we have achieved over the past two years is no mean feat. I am convinced that putting the Unilever Sustainable Living Plan at the heart of our business has created an evolution with 173,000 employees now striving toward the same goals.

This has been a game changer for us.

Continuing the Pace…

But with good momentum, the next challenge for us is: how do we continue this pace? 

To create real impact and move things forward at scale, partnerships are needed. We cannot move the needle alone. So bringing like-minded businesses, NGOs and governments together to drive this agenda is becoming increasingly important. And it's starting to happen.

With Cross-Sector Partnerships…

In January 2011, a global partnership to accelerate sustainable agricultural growth was announced at the World Economic Forum in Davos, Switzerland. Unilever joined 16 other companies – among them Wal-mart, The Coca-Cola Company, Nestlé and Kraft Foods – to support the New Vision for Agriculture. Backed by a coalition of businesses, governments and farmers, the partnership seeks to improve food security, environmental sustainability and economic opportunity around the world.

It's a significant mission and working with others is becoming a critical success factor: by transforming global supply chains together, we can move faster in creating critical mass and also increase awareness among consumers of the benefits of sustainably sourced products.

And Constant Introspection

However, let’s also take a step back and ask ourselves the question - how do we define sustainability? Is it just ‘green’?

With the bar continuously being raised, we see and support a shift from looking predominantly at avoiding the environmental “negatives” to actively enabling positive social impact. And to drive this without doubt or confusion, we have explicitly included this in our company vision, which is to double the size of our business whilst reducing our environmental footprint and increasing our positive social impact.

So when we look at sustainable sourcing, we look beyond our environmental impact.

Like our partnership with Netherlands-based Sustainable Trade Initiative (IDH) and the Kenya Tea Development Agency (KTDA) on co-funded farmer field schools. Between 2007 and 2012, 450,000 smallholder tea farmers were trained to the Rainforest Alliance standard [in preparation for certification]. Because of the clear impact and urgent need, in 2012, Unilever, IDH and our partners agreed to invest a further €4 million to take the sustainability initiatives to scale.

Now, this training has the potential to benefit not only farmers working with Unilever but the tea industry as a whole.

Besides, investments like this increase agricultural productivity and create better livelihoods. If smallholders have access to agronomy training, better quality seeds and fertilizer they can significantly increase their yields. This in turn leads to higher farmer income.

The next step: financial literacy training, especially for women, to help direct higher income to be spent on improving livelihoods, through nutrition, health and education.

This lifecycle approach feeds from a recent report by the Food and Agriculture Organization of the United Nations The State of Food and Agriculture 2012, which explains the benefits of investing and driving sustainability in the agricultural industry. Stepping up in agriculture would not only allow us to feed the world, but also to reduce poverty and hunger and promote environmentally sustainable practices.

A true win-win scenario.

Offering Sustainable Choices to Consumers

Every day, the future of our planet continues to be threatened. Climate change, water scarcity, reducing yields due to unsustainable farming practices, all threaten agricultural supplies and hence food security. All this, while populations continue to exponentially grow and aspire to higher standards of living. Still, one billion people go to bed hungry every day.

It’s clear that is is not viable – and that we have to decouple growth from our environmental footprint and increase our social impact.

While we're committed to use research, resources and our reach to evolve sustainable solutions for our supply chain, it is equally important to never lose sight of the value that embedding sustainability brings to many of our brands.

The trick is to find the sweet spot between the brand delivering something good for the planet or societies, while offering something good for our consumers – be this convenience, quality or price; or a combination of all. Like Lipton Tea and Magnum Ice Cream: Rainforest Alliance certification delivers benefits for the environment and quality benefits for the consumer. Or our first Knorr soup labeled to have been made with ‘sustainably grown tomatoes’.

Small examples but emblematic of the direction we are pursuing.

The challenge is huge, and we fully realize that Unilever can’t solve the issues alone. To create large-scale change we need everyone involved to be part of the solution. Our commitment is relentless, we learn everyday day by working with others, and we believe that many small actions will eventually make a big difference.

Are you in?

About the Author

Based in Switzerland, Marc Engel is responsible for Unilever's spend and delivering its target to source 100% of raw materials sustainably by 2020. Unilever Procurement has 1,700 procurement specialists who are all partnering with suppliers to deliver sustainable profitable growth tea farmers in Kenya and Tanzania.

Prior to being appointed Unilever's CPO in 2008, Marc has held a variety of roles since 1990 across the business including Regional Supply Chain VP, Ice Cream Latin America, Managing Director of the Ice Cream businesses in the Caribbean, Central America, Andina and River Plate and VP, Supply Chain for Spreads, Dressings and Olive Oil.