Paul Polman: A radical CEO

Paul-Polman-chief-executi-005“We’re the world’s biggest NGO,” Paul Polman, the chief executive of Unilever, sometimes likes to joke.

Literally, he is correct: “We’re a non government organization. The only difference is, we’re making money so we are sustainable.”

Lots of money, in fact. As one of the world’s biggest consumer products companies, with such brands as Dove, Hellman’s, Axe and Ben & Jerry’s, Unilever generated about $67 billion in revenues and $7.2 billion in profits last year.

But while Polman has led a turnaround at Unilever since becoming CEO in 2009, he is best known because he is outspoken about his belief  that “business should serve society.” He sounds more like the leader of an NGO like Oxfam or Greenpeace than your typical CEO. He’d rather blather on  about the Millenium Development Goals than boast about his company’s earnings.

More important, Polman’s Unilever uses its global to work for change, around a set of big issues, ranging from curbing climate change to eradicating poverty to deforestation.

That’s why the Center for Global Development, a DC think tank, honored Polman the other night with its “Commitment to Development: Ideas in Action” award. Previous winners include Global Witness, the One Campaign and Oxfam. Polman is the first business guy to get the award, as best as I can tell.

One reason: Unilever’s strong commitment to reducing deforestation, which helped drive the decision late last year by Wilmar, the world’s largest palm oil producer, to sign a “no deforestation” pledge. Wilmar’s commitment has the potential “to create a global revolution in how we grow food,” Scott Poynton, executive director of The Forest Trust, wrote last month in Guardian Sustainable Business. Palm oil is used in a variety of foods, as well as personal care products, like soap.

At the awards dinner, Nancy Birdsall, president of the Center for Global Development, said of Polman:  “He is surely the most outspoken and effective advocate for reducing the amount of deforestation that takes places to produce consumer goods.”

I went to the award ceremony not because I hadn’t heard Polman before — we spent time together last year when I profiled him in Fortune, under the headline Unilever’s CEO has a green thumb — but because he is such an outlier in the business world and I wanted to hear what was on his mind.

He didn’t disappoint. Some highlights from his remarks:

On the need for government policy to curb climate change: “We need to have the business community in the US speak up more, and then the Republicans will have to listen.”

On the urgency of dealing with global problems: “First and foremost, I am a businessman. I like to get to action. This worldis very long on words and very short on action.”

On the importance of sustainable development: “It is desperately needed that we build a new economic world order where we live within planetary boundaries.”

On global inequality: “The top 1.2 billion people consume 75 percent of the world’s resources. That is a system that is not in equilibrium.”

On the exploitation of garment workers in Bangladesh, who are paid 11 cents an hour“That’s as close as you can get to modern-day slavery.”

On the opportunity to have an impact: “In the next 15 years, we as a generation have the opportunity to be the people who eradicate poverty in a meaningful and sustainable way.”

On the need for business to step up to deal with social and environmental issues: “If you don’t make a positive contribution, you will be rejected…I  don’t understand why more CEOs don’t see this.”

Comments

  1. Marc,

    The CEO of an $116B company imposes “rules” about agricultural practices that run roughshod over the sovereignty of third world countries, ignore democratic ideals, and raise barriers to new competitors all under the auspices of being green. And is does this with the collusion of NGOs, who in conjunction with Unilever, determine what is and is not sustainable with little to no transparency.

    Wonderful,

    Stuart

  2. Marc Gunther says:

    Stuart, what you are seeing here are free markets at work. If I choose to buy organic cotton or rooftop solar power because I believe those products are good for the world, that’s my choice. Similarly, Unilever has the perfect right to insist that the palm oil (and other commodities) that it buys are produced under conditions that are in accord with its values, i.e., which include protection of the world’s tropical forests (which do a lot of good, albeit good that isn’t captured in today’s financial accounting.) No one is forced to sell “sustainable” palm oil to Unilever. No one is forced to buy its soap or soups. There’s nothing undemocratic about any of this.

    As a libertarian, I’d expect you to applaud this way of protecting forests since no government coercion is involved.

    • You write, “No one is forced to sell “sustainable” palm oil to Unilever. No one is forced to buy its soaps or soups.”

      As you are aware, it is a bit more complicated than that. If entrenched, market dominant companies, work together and say they will only accept certain practices that they define as sustainable, local farmers and local governments are hard pressed to ignore the demands of these companies regardless of how they feel about their worthiness. The Indonesian farmer can’t offer his palm oil for sale to me directly. Even worse to my mind, is that there is virtually no transparency regarding what actions should be defined as sustainable and even less scientific rigor of the basis of these definitions.

      If people want to spend $500 for a Patagonia jacket rather than $40 at Wal-Mart, that is fine and it doesn’t hurt anyone. Potentially raising the cost of food and dictating land usage to an independent country is a different matter.

  3. Marc, I too was very impressed with Paul Polman. In particular his articulation of the role of business as a sustainable force for change precisely because it includes a financial driver. But also his willingness to step beyond the accepted concept of shared value, which in my mind limits the role of business to delivering social and environmental good as long as it can also demonstrate financial benefit. By stating clearly that business was invented to serve society Polman creates the potential for a broader role for business in society. If we in business lay out the possibility, and if society wants it enough, the measure of business contribution need not be confined by the financial component.

  4. Guys, I believe that the approach of Polman is a great step forward. Kevin has a point in that we do not purchase palm oil from an Indonesian supplier directly and thus that large firms (e.g. Unilever) are in between. However, that has always been the case. I advocate comparing realistic alternatives, not comparing a situation to a theoretical best-world that does not exist. And in that respect I view the Unilever approach as a much more appealing and sustainable approach – admittedly imperfect also – than business carried out as usual (or up to now). That is a major step forward…

  5. Marc,
    Thanks for joining us for the presentation of the CGD/FP Commitment to Development Award and for this excellent write-up. I think it’s pretty clear from the quotes you have selected and from Polman’s speech, that he really is challenging how the business community approaches development and sustainability. Now of course, it happens that Unilever is a consumer goods company, and a very big one at that, so it’s perhaps less difficult to articulate a business case for doing the right thing for Unilever than for, say, Exxon. Successful development would be good for Unilever, no doubt, because more people could afford soap and other Unilever products. Is that such a bad thing? Those of us who want a fairer, safer world should delight in celebrating outspoken, influential champions in the corporate sector whenever and wherever we find them. I’m delighted that CGD and FP were able to do so in the case of Paul Polman.

  6. Sr Paul Polman há que levatar barreiras as novos empresários e tudo sub os auspicios verdes Comercio justo e de soluções de sustentabilidade dendro dos paises subdesenvolvimento

  7. Shakeb Afsah and Kendyl Salcito says:

    You have written of Unilever that “No big company is doing more to limit its environmental footprint, while improving health and well being and growing its business.” By the numbers, I’m not sure that’s true. For four years, now, Unilever has earned failing ratings for environmental performance in Ghana, based on the nation’s EPA monitoring reports (link: http://www.epaghanaakoben.org/rating/manufacturer/20-5 for 2012 ). The low marks result from reporting failures and emissions exceedances that result from necessary but neglected treatment system at their Tema facility.
    Make no mistake, Unilever has taken important steps to limit its environmental footprint worldwide. Given the company’s enormity, its charitable works have improved health and well being on a massive scale. But a good deed in one arena does not cancel out neglect in another, and Unilever’s self-reporting is rarely subject to independent evaluation. In Ghana, where there is such a regulatory review as part of their national environmental rating and disclosure system called the AKOBEN Program (www.EPAGhanaAKOBEN.org), Unilever’s good faith efforts are not on display.
    Multinationals often perform poorly on environmental issues when their site-level emissions data are closely scrutinized (while some, like Cargill, have good performance). In Ghana, even brand names like Nestle, Cadbury and Coca Cola have poor environmental performance. Yet these companies are often recognized through awards in OECD countries—CGD’s recognition of Unilever is an example. This discrepancy between site-level performance in developing countries and corporate level recognition in OECD countries shows how far we have moved away from hard data-based assessment to a more PR and perception based system of awards and recognition. We plan to address this through a more detailed analysis in the coming months.

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  1. […] expert Marc Gunther chose for his story on the CGD/FP award presentation, which he titled “Paul Polman: A Radical CEO.” Indeed, much of what Polman had to say in his wide-ranging speech you are unlikely to hear […]

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