Unilever’s Paul Polman: Pushing the boundaries of sustainability

Paul Polman in the store in Unilever house for the employees.More than any other big-company CEO, Paul Polman is serious about sustainability. Polman is serious about pretty much everything, actually. He’s serious about a vast array of problems facing the world, ranging from climate change to malnutrition to obesity to water scarcity to inequality to human rights to global governance, and he’s serious, of course, about his company and its long-term financial performance and especially about its ability to help solve any and all of those problems. He can, and will, pontificate about topics like the UN Millenium Development Goals, the important message of Global Handwashing Day, the social mission of brands like Dove and Lipton and Ben & Jerry’s.

A fun guy? Not really. A fascinating guy? Yes.

I spent time with Paul Polman, as well as other executives at Unilever–including US president Kees Kruythoff, global marketing head Keith Weed, sustainability honchos Gail Klintworth and Jonathan Atwood–while researching a story on the company for FORTUNE. It appears in the June 10 issue of the magazine, under the headline Unilever’s CEO Has A Green Thumb. (The story is behind a pay wall, for now.)

I thoroughly enjoyed getting to know Unilever, which takes a uniquely expansive view of its role in the world. Far more than IBM, GE, Walmart or any other big company, Unilever puts sustainability at the core of its business — its strategy, its operations, its R&D and its marketing. (Patagonia, a much smaller, privately held firm, strikes me as similarly driven by broad concerns.) Polman’s theory, put simply, is “to put the challenges facing society smack in the middle of the business.” So Lifebuoy soap helps prevent the spread of disease in poor countries. Dove stands for the self-esteem of women. Lipton’s sustainable supply chain will help tea growers earn a livelihood. Operations, of course, are efficient, and the global supply chain of tea, tomatoes, onions, etc. aims to become sustainable.

In Port Sunlight, a tidy little suburb of Liverpool where the company got its start back in the 19th century, I visited a research and development lab where some of the scientists are focusing on coming up with laundry soap that can clean clothes using very small amounts of water, at any temperature. Much of the R&D at Unilever, in fact, revolves around planning for what the company expects to be a resource-constrained world.

Will the strategy pay off? So far, Unilever under Polman has done very well, outperforming consumer-products giant Procter & Gamble. But whether the firm’s financial results are driven by its focus on sustainability is very much an open question; more likely, it’s a result of the fact that Unilever has a strong commitment to emerging markets, which have been growing more than the US and EU.

There is, however, one way in which I’m convinced that Polman’s determination to make Unilever a better company has paid off on the short run, and that is with its employees. People I met, as best as I could tell, come to work at Unilever with energy and a strong sense of purpose.  That’s invaluable. As Polman told me, proudly, Unilever is one of the five most searched-for employers on LinkedIn, behind Google, Apple, Microsoft and Facebook. That’s impressive.

Here’s how my story begins:

Paul Polman calls himself a “hard-core capitalist.” Sometimes you have to wonder. The day he became the chief executive of Unilever in 2009, Polman said the consumer products giant would stop providing earnings guidance and quarterly profit reports. “I figured that the day they hired me, they can’t fire me,” he says, “so that was probably the best moment to do that.” The stock fell and analysts grumbled. Not long after came word from the CEO that Unilever, whose brands include Dove, Lipton, Hellmann’s, and Ben & Jerry’s, was determined to tackle big social and environmental problems like climate change, disease, and poverty. “If you buy into this long-term value model, which is equitable, which is shared, which is sustainable, then come and invest with us,” Polman told investors. “If you don’t buy into this, I respect you as a human being, but don’t put your money in our company.” Shareholder return, he insists, cannot and will not trump nobler aims. “Our purpose is to have a sustainable business model that is put at the service of the greater good,” he says. “It is as simple as that.”

This sounds like the boilerplate that fills corporate responsibility reports, but Unilever, which has headquarters in London and Rotterdam, has gone beyond big U.S. Companies like GE, IBM and Wal-Mart by putting sustainability at the core of its business. In a 2010 manifesto called the Sustainable Living Plan, Unilever promised to double its sales even as it  cuts its environmental footprint in half and sources all of its agricultural products in ways that don’t degrade the earth by 2020. The company also promised to improve the well-being of 1 billion people by, for example, persuading them to wash their hands or brush their teeth, or by selling them foods with less salt or fat.

The Fortune story goes on to talk about Polman’s background (he once wanted to be a priest), the company’s paternalistic past and Unilever’s commitment to a water-purification product called Pureit that has little chance of ever making a profit. I hope you’ll find a copy of the magazine and enjoy the story.

Mark Tercek: The business case for nature

Tercek-Adams-Natures-FortuneThe value of nature is astonishing, when you stop and think about it. Marshes protect coastlands. Urban trees clean the air. Forests provide timber. Oceans give us seafood.  Snow-capped mountains store drinking water. Some might say nature is priceless.

Not Mark Tercek, the former investment banker at Goldman Sachs who became CEO of The Nature Conservancy in 2008. His new book, Nature’s Fortune: How Business and Society Thrive by Investing in Nature (Basic Books, 2013), argues that nature provides enormous economic benefits to society, business and consumers, and that, if we can figure out how to value and pay for those benefits, we can slow down and even reverse the degradation of nature that threatens our well-being.

It’s an important and potentially controversial argument, as Tercek acknowledges. While the 20th century conservation was all about protecting nature from people, Tercek and some of his allies in the environmental movement would like the future to be about protecting nature for people. If nothing else, he argues, recognizing the economic value of nature will expand the base of the environmentalist beyond the white, college-educated and relatively affluent folk, the backpackers and hikers and birdwatchers at its core. [click to continue...]

Taxing carbon at Disney, Microsoft and Shell

urlMany economists, left and right, favor a carbon tax. Requiring companies and, ultimately, all of us to pay when we generate greenhouse gas emissions would deliver many benefits. By raising the costs of fossil fuels, a carbon tax would help drive efficiency and conservation. It would stimulate investment in low-carbon sources of energy, and encourage research into new clean-energy technologies. It would, of course, reduce the emissions that cause global warming; right now, anyone is free to dump the equivalent of garbage into the atmosphere without paying a penalty.

More broadly, economists say, governments should impose taxes on things that we want less of, like alcohol, tobacco and pollution–these are known as Pigovian taxes–and try to reduce the costs of the things that we want more of, like jobs, which, unfortunately, cost more to create when government burdens employers with payroll taxes and health care mandates.

What impact might carbon taxes have on business? In my latest story for the Guardian Sustainable Business, I look at three companies — Disney, Microsoft and Shell — that have decided to impose carbon taxes on themselves. They also favor government action to regulate carbon emissions.

Here’s how the story begins:

Visitors who climb aboard the steam trains in the Disneyland resort in southern California need not worry about their carbon footprint. The trains are powered by soy-based cooking oil recycled from the resort’s kitchens.

It’s a Mickey Mouse gesture, really, when set against the millions of miles that park visitors travel by car and plane to reach Disneyland. But it’s driven, in part, by an innovative and forward-thinking tool that Walt Disney, which posted revenues of $42.3bn (£27.8bn) in 2012, uses to regulate its greenhouse gas emissions. A self-imposed carbon tax.

It’s not just Disney. Although most of the world’s governments have declined to put a price on carbon emissions, a handful of global companies, including Microsoft and Shell, have chosen to act on their own. They have established internal carbon prices in an effort to reduce emissions, promote energy efficiency and encourage the use of cleaner sources of power, just as a government tax or cap-and-trade program would.

You can read the rest of the story here.

An odd couple? HR and sustainability

savitz(5)Today’s guest post comes from Andrew Savitz, the author of a new book called  Talent, Transformation and the Triple Bottom Line: How Companies Can Leverage Human Resources to Achieve Sustainable Growth (Wiley 2013). As you can guess from the title, Andy argues that employees are the key to creating sustainable companies, but that they–and their colleagues  in human resources–are often overlooked when companies embark on environmental programs. I think he’s onto something. I’ve long thought that the single biggest business driver of corporate sustainability initiatives is the way they help better companies attract better people and motivate the ones they have.

Andy has been his career working with companies on social and environmental issues. A lawyer by training (and before that a Rhodes scholar at Oxford), Andy has been a congressional staffer, the general counsel for the Massachusetts Office of Environmental Affairs and head of the environmental advisory practice at PriceWaterhouseCoopers (PwC). Since 2005, he has led a consultancy called Sustainable Business Strategies.

Here’s our online conversation:

Marc: You say that you’ve written the book “in large measure to bridge the gap between sustainability and HR.” HR? Really? Why do we need human resource people to get involved with sustainability? They don’t know anything about carbon emissions, say, or LED lighting, do they? [click to continue...]

Can a solar-powered plane help curb climate change?

solar-impulse

If you are among those who believe that the environmental movement needs more upbeat and inspiring stories, and less gloom and doom, you will want to hear about Bertrand Piccard, Andre Borschberg and their solar-powered airplane, Solar Impulse.

Solar Impulse is an engineering marvel. Its has the wingspan of an Airbus A340 — it’s 208 feet across — yet weighs only about 3,500 pounds, about the same as mid-sized family car. Powered only by the light of the sun, which is captured in nearly 12,000 solar cells (built by US manufacturer SunPower) arrayed on the wings, it can reach an altitude of more than 27,000 feet and stay aloft for more than 24 hours, day and night. In May, Piccard and Borschberg, the Swiss adventurers who founded and built Solar Impulse will fly the plane from California to Virginia.

Piccard, left, and Borschberg

Piccard, left, and Borschberg

This is very cool. I’m not a tech geek, but I was intrigued enough to take the opportunity to meet Andre Borschberg when he visited Washington early this week. Piccard, who is the better known of the duo, comes from a family of explorers; his grandfather August was the first person to pilot a balloon into the stratosphere, and see the curvature of the earth with his own eyes. He’s a psychiatrist by profession. Borschberg, by contrast, is a 60-year-old MIT-trained engineer and entrepreneur, who led the team of engineers, physicists, software designers and who have spent nearly a decade (and about $120 million) designing and building several versions of the aircraft. A round-the-world trip is planned for 2015. [click to continue...]

Turning JP Morgan green from the inside out

Matthew Arnold

Matthew Arnold

Can Wall Street become a friend of the earth? For nearly a decade now, most of the big investment and commercial banks have had chief sustainability officers, but it’s never been clear to me what they can and cannot do.

To find out, I spoke recently with Matt Arnold, the head of environmental affairs for JP Morgan Chase, who I’ve known for years. Matt, a lifelong environmentalist, was refreshingly honest.

In my latest column for the Guardian Sustainable Business website, I report on what I learned. Here’s how the story begins:

Deep inside the belly of the beast known as JPMorgan Chase toils a lifelong environmentalist and former Eagle Scout named Matthew Arnold who is trying to help turn the bank, if not green, well, a bit greener. It’s a daunting job.

Arnold, 51, joined the company in autumn 2011 as head of the office of environmental affairs because, he says, of the sheer scale of the opportunity; last year, the bank booked $99.9bn (£64bn) in revenue and $21.3bn (£14bn) in profits, providing credit and raising capital of more than $1.8tn, for everything from home mortgages to credit cards to corporate bonds and IPOs. The bank manages another $1.4bn in assets (as of September 2012) for clients. If Arnold can help steer even a slice of that towards more sustainable ventures – for example, towards wind and solar energy and away from coal – he will be doing his part to make Wall Street a friend of the earth. But can he?

“The position I’m in now has the greatest potential for impact of anything I’ve done,” Arnold says. “Yet there’s no manual for this. There’s not a clear roadmap.”

You can read the rest of the column here.

On Wednesday, by coincidence, at the GreenBiz Forum in New York, I’ll be interviewing Matt and Erika Karp, who is head of global sector research at UBS, to talk about the role of Wall Street in promoting sustainability. Matt and Erika will also be joining us this spring at Fortune Brainstorm Green.

 

 

John Mackey: Hippie, libertarian, CEO

imageThe top executives of big publicly-traded US companies, in my experience, tend to be rather drab fellows (nearly all are men) who choose their words carefully, hew carefully to the middle of the road in their thinking and rarely say (or do) anything outrageous.*

Not John Mackey, the founder and co-CEO of Whole Foods Market. For better and occasionally for worse, Mackey is an original, who doesn’t run his company by any conventional management book.

Instead, he has written his own book, called Conscious Capitalism: Liberating the Heroic Spirit of Business, with co-author Raj Sisodia, an academic affiliated with Bentley University. It’s a good read, especially because of the insights it delivers into the unusual culture and practices of Whole Foods, as well as into Mackey’s own evolution.

Some examples from the book: [click to continue...]

Patagonia helps to save….Patagonia

A merino sheep ranch under Ovis XXI management in the Patagonian Steppe ecoregion of Argentina’s Neuquén Province. The Conservancy is working with Ovis XXI to protect Argentina’s temperate grasslands by promoting best practices in sustainable grazingThe more I learn about Patagonia Inc., the more impressed I am with the way that Yvon Chouinard and his colleagues run their business. The outdoor gear and clothing company supports what it calls the “silent sports” of climbing, skiing, snowboarding, surfing, fly fishing, paddling and trail running–none of which require a crowd or a motor to be enjoyed. It’s an enterprise that lives up to its mission: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.

Until recently, though, Patagonia did no business in Patagonia–a remote region of South America that includes temperate grasslands of Argentina, about 400 million acres (nearly three times the size of California) that are said to be among the most threatened, most damaged and least protected habitats in the world.

Now the company has embarked on an unusual partnership with a network of Argentine ranchers and The Nature Conservancy that is intended to build a sheep-grazing business that will not only protect, but restore parts of the Patagonian grasslands.

It’s a test of an intriguing idea–that a company that sells stuff to people can not only do less harm to the earth, but use the power of business to do environmental good.

“Can a company ever be regenerative?” asks Jill Dumaine, Patagonia’s director of environmental strategy. “We aspired to it, but we couldn’t envision what that would look like.”

[click to continue...]

John Mackey, and the paradox of profits

conscious capitalism_book coverI’m reading an advance copy of new book  called Conscious Capitalism: Liberating the Heroic Spirit of Business by John Mackey, the founder and co-Ceo of Whole Foods Market, and business school prof Raj Sisodia. It’s very good, with useful insights on almost every page so far. (I’m only 70 pages in.)

Mackey was a liberal hippie. He’s now a libertarian entrepreneur and cheerleader for capitalism. He’s also a vegan who meditates and practices yoga. Not your typical CEO of a FORTUNE 500 company.

One reason I like the book is that I agree with much of what Mackey says. This passage, about what Mackey and Sisodia call the “paradox of profits,” comes  from a chapter about how purpose, and not profits, is what drives all great companies:

Just as happiness is best experienced by not aiming for it directly, profits are best achieved by not making them the primary goal of the business. They are the outcome when companies do business with a sense of higher purpose, build their businesses on love and caring instead of fear and stress…

If a business seeks only to maximize profits to ensure shareholder value and does not attend to the health of the entire system, short-term profits may indeed result; perhaps lasting many years, depending upon how well its competitor companies are managed. However…without consistent customer satisfaction, team member happiness and commitment, and community support, the short-term profits will proved to be unsustainable over the long term.

The No. 1 competitive advantage of purpose driven companies (or values-driven companies, if you prefer) is that their workers are engaged, as I wrote in my own book, Faith and Fortune: The Quiet Revolution to Reform American Business, back in 2004. Mackey and Sisodia put it this way:

The difference in business impact and personal happiness between a team member who is inspired, passionate, and committed and one who merely shows up for a paycheck is enormous. The blame for this does not lie with ‘lazy and unmotivated’ workers but with companies that fail to create workplaces in which people are given the opportunity to find meaning, purpose and happiness…

They note that people devote enormous amounts of time, money, and effort to causes that often have nothing to do with their narrowly defined self-interest, and say:

To tap this deep wellspring of human motivation, companies need to shift their emphasis from profit maximization to purpose maximization. By recognizing and responding to the hunger for meaning that is a quintessential human companies, companies can unlock vast sources of passion, commitment, creativity and energy that lie largely dormant in their team members.

Makes sense, no? People who care a lot about food, health and the environment can pursue their passions at Whole Foods or Stonyfield Farm. People who love the outdoors can be fulfilled at Patagonia or REI.

Of course, a strong sense of purpose isn’t, by itself,  enough to assure profits. (Look at the newspaper industry.) But it  helps.

This book reminds me that there’s a big opening out there for a bank that is really, truly committed to serving its customers and workers.

What a long strange trip it’s been: How the Social Venture Network changed business in America

Ben Cohen, of Ben & Jerry’s renown, is asking me for money, and he’s not selling ice cream. I give him a dollar bill, he stamps it in red ink — NOT TO BE USED FOR BRIBING POLITICIANS — and returns it to me. It’s part of his new crusade to get corporate money out of politics.

“Corporations are not people, and money is not free speech,” Cohen declares.

The 61-year-old ice-cream mogul sold Ben & Jerry’s to Unilever in 2000.  (He’s on the left, without his trademark beard, next to his longtime pal Jerry Greenfield.) The T-shirt says: “Stamp Money Out of Politics.” These days,  as “Head Stamper” at StampStampede, Cohen is working for an amendment to the US Constitution to get money out of politics.

It sounds improbable but no more improbable than this: That a gathering of about 70 people, including Ben and his partner Jerry Greenfield, at the rustic Gold Lake Mountain Resort not far from Boulder, Colorado, Colorado back in 1987 could spawn a movement that has changed the way millions of Americans think about and do business. The Gold Lake get-together led to the creation of the Social Venture Network (SVN), a group of business people, investors and philanthropists, many of them shaped by the political and cultural movements of the 1960s, who believe that business can change the world for the better. About 700 SVN members, friends and family gathered last week in New York for a 25th anniversary dinner and celebration–a time to assess how far their movement to remake business has come, and how far it needs to go.

The dinner was a star-studded affair, at least for those of us who pay attention to businesses that aim to build a more just and sustainable economy. On hand along with Ben and Jerry were Eileen Fisher of the eponymous clothing company, Gary Hirshberg of Stonyfield Farm, Drew and Myra Goodman of Earthbound Organic, George Siemon of dairy co-op Organic Valley, Jeffrey Hollender, formerly of Seventh Generation, Chip Conley, founder of Joie de Vivre Hotels, Roger Brown and Linda Mason of Bright Horizons, Amy Domini of Domini Social Investments, all of whom were named to the SVN “Hall of Fame.” Spotted in the crowd of 700 or so were Gifford Pinchot III, president of of Bainbridge Graduate Institute, my friends Seth Goldman of Honest Tea and author Mark Albion (More Than Money: Questions Every MBA Needs to Answer), Danny Kennedy of Sungevity–the closest thing to a power elite of the sustainable business movement.

None of them, to be sure, run FORTUNE 500 companies. But the movement birthed by SVN powered the field of corporate social responsibility, opened up new possibilities for entrepreneurs, raised expectations that big companies now need to meet and helped shape the way companies ranging from Google (“Don’t be Evil”) to Walmart do what they do. [click to continue...]