Sustainability, citizenship and the environment | 10 June 2013 at 7.00pm
Speakers: Faisal Islam, Paul Polman and Mark Spelman
Mark Spelman (MS): Good evening ladies and gentlemen, let me introduce tonight’s session which is on Sustainability, citizenship and the environment, and this is session number 6 that we have had in this series on global citizenship and a very warm welcome to all of you and thanks very much indeed for joining us.
This whole series has been put together by three people, in particular, and I’d like to in particular recognise them. There’s: Michael Aminian from the Zamyn group who really is the inspirer and the founder behind this whole programme; Sir Mark Moody-Stuart, in front of me here, who’s the chairman of Zamyn and also Marko Daniel here at Tate Modern, who have been the three key people who have really been instrumental in putting, I think, this original programme together around global citizenship. And we’ve had five partner organisations which have been, if you like, supporting this event, Tate Modern itself, SOAS, The Africa Progress Panel, Barclays and Accenture.
And before we start, I’d just like to ask you as an audience: who’s actually here for the first time? So actually quite a lot of you, probably something like 50% of you. So what I’d like to encourage you, is that all the sessions so far have been recorded and there is a website called the zamynforum.org and if you want to go back and look at some of the sessions that have been presented beforehand, then go to that website and you will see some really interesting video clips around the previous sessions. And obviously in the booklet are the previous 6 sessions. There are two more in this series to come; there is one tomorrow which I think is going to be very interesting, looking at the whole question about what happens after the G8 meeting. There’s Ian Bremmer who has got a particular, sort of, view about G-zero; so that’s the focus for the session tomorrow. And then on Wednesday, our closing session is going to be looking at what are some of the key lessons that have come out of global citizenship and the various lecturers that we’ve had around the lessons for G8. And so if you can’t come in person then what I'd really like to encourage you to do is to look at some of those key messages and see, what I think are some of the key and interesting insights to have come out of it.
Now as far as tonight is concerned, I am very pleased that we have got two guests here with me tonight. Paul Polman who is the chief executive of Unilever, and I’ll talk a bit more about Unilever in a second as part of the introduction. And Faisal Islam who many of you will recognise as Channel 4’s economics editor. Channel 4 have worked extremely closely with us. We’ve also been talking to Jon Snow. Jon in fact was hoping to be here but he is actually out in Tehran to cover the Iranian elections, so he is not here, but is here in spirit. And in terms of format for tonight, what we’d like to do is, I’d like to set the scene for you, then Paul is going to give a key note lecture, really looking about sustainability through his lens and his eyes as one of the role models, I think, in the business world around sustainability. We’ll have a bit of a discussion up here around some of the themes that come out, and in the second hour we are very much keen to have an audience participation, so dialogue with you and talk with you.
But let me just try and, sort of, set the scene and just provide some context around sustainability, citizenship and the environment. And there couldn’t really be a more interesting theme than sustainability, when you look at it from the point of view of both global and local because sustainability and the environment transcends national boundaries. And so what makes this particularly interesting is that when you talk about being a citizen of the world, there are some very real issues about how does that impacts us as individual, sort of, citizens. And what I want to suggest as we set the scene is that there are some very important issues which operate at the level of policy making, both internationally and nationally, very important in terms of the role of multiple stakeholders business for example, civil society, but we also have a very key role around sustainability when we look at it individually, because we are all consumers and we are all citizens together.
But I wonder what you, sort of, think of when you use the word sustainability. And what I’d like to suggest to you is that sustainability is really about thinking about the way that we live and work. But it’s actually thinking about how we work and how we live in the context of our economic, our environmental and our social impact. So as we talk about sustainability, think about those sorts of roots. It's about the way we are going to work and live. And if I was going to crystallise about it a little bit more in the global context: there’s 7 billion people in the world today. There’s 8 billion people in the world in 2027 and there are more than 9 billion people in the world in 2050. And the key challenge for all of us is how are we going to live and work together, in a way that provides people with the right sort of health, the right sort of education , the right sort of shelter, the right sort of food, and the right sorts of mobility – the basic standards of living that people would expect. So I’m very keen as when with think about sustainability, it’s partly about where we have come from but a lot of it is about where we are going to.
And yes the sustainability road has been a difficult journey. You can go back to 72 – the Stockholm Declaration – you can look at what happened with the earth summit in 92, you can look at what happened last year around Rio plus 20. It is… there are some very major challenges out there. And perhaps at the biggest level, the biggest macro challenges, is where are we in terms of planetary boundaries. And if you go and talk to scientists today, if you look at some of the models that are out there, we talk about 2 degrees warming, but the reality is that we are probably closer to a path which is taking us towards 4 degrees. How do we feel about that? What does that, sort of, mean? Where are the tipping points? We don’t really know. And then we can look at some of the other sort of factors, and we look at for example the 1.3 billion people today that haven’t got access to electricity. And the predictions are it’s still going to be 1.3 billion people without electricity in 2030, because as the population grows between now and 2030, even with the weight at which electricity energy is getting improved, that is not going to improve the numbers of people without electricity. And we could look at the other statistics that exist out there in terms of the number of people who haven’t got access to clean water or access to sanitation.
But I think it is very important to say it’s not all black. There are some good news, it’s not always great news, it’s very mixed signals, but if you look at the Millennium Development Goals, and the progress we’ve made, actually, the amount of extreme poverty has come down in the last 20 years. It might not have come down enough but it has been, sort of, coming down. We have made progress on things like vaccines.
But there are some still very real challenges we face. So for example we know that hunger is a very real problem. That children’s, if you like, lives, are being stunted by failure to, sort of provide efficient access to food. And we know that the numbers of slums is growing and the number of people living in slums has continued to increase. So the thing is that today it’s a very mixed world – mixed messages. But let’s try and look forward, think about what some big drivers that are going on in terms of the world and where it, sort of, stands today. And some of the drivers are economic; we are in an economically interdependent world, and yet in many ways the politics of the world has become very local. Just look at what happened with the American elections; 9 states basically drove the outcome of the US election. Economic interdependence - politically very local. 6 billion people today though access… 6 billion people have access to mobile technology. It’s interesting; I was looking at a country like Bangladesh, 148 million people in Bangladesh; 100 million of them have access to a mobile phone; that’s in Bangladesh. Kenya – 28 million people have access to a phone out of 42 million, so it’s not all bad. Economic, political, demographic, technology - these drivers are playing through together in terms of impacting the world in which we live. Economic interdependence, political localism, demographics in terms of the growth of cities, technology which is empowering, particularly, the ordinary citizen, not just in the West but in many emerging markets.
But the real challenge with sustainability is that a lot of the benefits that come are general but the pain points are specific. And one of the questions, I think, we need to get in to, as we talk about sustainability, is who wins, and who loses? Where are the gains and where are the losses? And when you actually look forward, there are, actually, I think, many directional indicators as to what needs to be done. We know that it’s very important that we have economic development, particularly for women. We know that there are issues about the cost of externalities– carbon, water and ecosystems. We know we have to reduce greenhouse gases, we know that we need more low carbon energy; we need more low carbon mobility. We need to fundamentally improve our use of resources, probably by something like 4-10 fold over the course of the next 30-40 years. We know also that we need to half deforestation. We know we need to double our agricultural output, without increasing the land. These things we know; the question in how do we bring all those together, and what I would suggest to you is what we need to do is we need to have the politicians out there. We need to take the things like the Millennium Development Goals, we need to take them on; we need the political ambition to take them forward. We need the business world in there. Because the business world actually has many of the solutions. We need to release the power of the business world to be able to provide some of the solutions.
But we also need you. Each one of you. Because you individually make choices every single day about what you consume, what you buy. And the choices that you make all impact together this sustainable world, or lack of sustainability, as we go forward. And so what I hope that I have, sort of, given to you is that, yes, this is a very big and a very broad subject, but I hope that we can particularly look forward. We know it is difficult; we know there are some challenges. But what we‘ve got to be able to do, I think, a lot of this is around speed, it’s around acceleration, it’s about how do we make those choices, around the solutions that we know exist, in a way that is going to be more impactful, not just for the developed world, but critically also for the emerging world.
Anyway, enough from me, I want to introduce you now to a person, who I think, probably has done more than anybody I know in the business world to actually try to put forward, I think, a very proactive case around sustainability. He has lead from the front; he has developed a strategy around Unilever which has put sustainability right at the heart of that commercial strategy – and I’m sure Paul will talk a bit more about that. He has been involved in the policy level; he has been involved in term of defining some of the sustainable development goals. He was involved this weekend with some of the big discussions around nutrition, with David Cameron and the announcements there. And I think what he has done in terms of trying to galvanise the leadership team at Unilever has been particularly impressive. And in many ways, I think that in many ways it is a great privilege for us tonight to hear someone who is very much at the front end, trying to say, OK, how is it that we, from a business point of view, can really make a difference on the sustainability agenda, because it matters. It matters from a business point of view, it matters because of trust, it matters because of transparency and it matters because business needs to have a licence to operate going forward. And so with that, I am delighted to welcome Paul Polman as the CEO of Unilever and let’s give him a warm welcome. Paul, thanks very much for joining us.
Paul Polman (PP): I see Caroline there as well. So I wonder what you guys talk about at home, you know – because you are both so passionate about it. My wife is a musician so she keeps me honest by introducing me to the world of art, and I was always glad to be in the modern Tate, and Nick, I didn’t see Nick; is he here? No, but we’ve been a long time sponsor of the Tate series and the Unilever series. And the crack is still in the floor. Anytime you come into the turbine hall, and that will stay there forever I think, so there’s proof, so there you have it. Anyway, as a Dutchman, they always tell you, ‘never follow an Englishman’, because somehow you guys are amazing speakers, and Mark is showing that again. He was just explaining to you all the things I wanted to talk about. So now, you know, I’m stuck; either I’ll repeat what he said (you’re all nodding so you are convinced anyway) or we spend a little bit of time on the questions and the answers, I’ll make it a bit shorter here, and we’ll have more discussion.
I was at the airport the other day and I saw three people sitting there, and I listened in. I know it’s very impolite but I’m sure you’ve done it as well. What are they talking about, you know? And quickly I found out one of them was a doctor, the other was an engineer, and the other one was an economist. And the doctor said, ‘Hey we have the oldest profession in the world, because you go to the book of Genesis and Eve came out of the ribs of Adam, and that was probably the first successful operation that we did, so we’ve got the oldest profession.’ And the engineer said ‘I don’t think so, I think we have the oldest profession, because when there was chaos, we created the universe, order. Engineers, you know, are the ones that create order out of chaos.’ And the economist said ‘I don’t think so, I think we have the oldest profession, because who created the chaos in the first place?’
So here we are, as Mark has elegantly told us for about 10 minutes, we have to clean up the mess that the economist left behind. When I finished in the Netherlands, my father (we didn’t have much money, we had 6 children, but thanks to the government and all the other things, we could get a decent education, or at least I hope it was decent) gave me a little thing when I graduated. And it was a little porcelain thing, that had in Dutch written on it, because I did my economy studies in those days, and it said on it ‘an economist is someone who doesn’t know it either.’ And I didn’t understand the meaning of it then. That was in ’79 and I thought, ‘why did the old man give me this?’ and all that stuff. But I kept it in my desk – I have always kept it in my desk, in my house. And when I open my draw; before I need something I see that little plaque. He is long gone. But it is what we are; it keeps you a little humble. We don’t have all the answers; we need to work together to solve some of these bigger problems.
So, I’ll stand here with a certain level of humility to share with you what we are doing, but I’ll also tell you the challenges we have are bigger than we can solve alone; so this is not a Unilever story. This is a story of how we can sure that we can ensure we have a better future for all of us and our children and our grandchildren. And I don’t care really if you work for business or not, somehow I ended up in business. Believe it or not I wanted to be a priest and I wanted to be a doctor. Then in Holland, I abolished all of these things. Not the priest side, I abolished that because I discovered some other things. The doctor side was there is a lot of competition in the Netherlands and they only have so many places. And then if you don’t get in you do something else. So I ended up in economics at that time, and somehow that’s how life goes… and then you stand here running a business and having the honour to do that.
First and foremost we are all citizens of this world, and we have some responsibilities that go way beyond the small institutions that we represent. So I’m very glad that you do these series – and Michael and Nick you should be congratulated on that, with your Zamyn organisation or however you pronounce it. And I was just flicking through the book and was seeing that Mary Robinson is coming next; so you are able to attract some quite formidable speakers, and I feel a little guilty having our office across the street, that I’m only here at my own lecture, even knowing what I am going to say, so it’s kind of a bit boring for me… but not being able to benefit from it. Because, a lot of people are critical of the G8 or the G20, and I’ve be involved in many of their activities and the G8 itself you shouldn’t underestimate that, because whoever they are, they shouldn’t talk about the total world. And they have no right to, but at the same time, it’s about 50% of the global economy and it is easier to get 8 people to agree, you’d think, than 195 people. And if you are half the economy then you can do something good with it. And the same for the G20 which is actually probably about 90% of the world economy still. It is not right that is 90% but that is the reality; so you can create an enormous critical mass by leveraging them well.
One of the things I had the honour to chair in my activities in life, was to be the chairman of the Food Security Task Force for the G20 to help the people figure out how to solve the issues of food security. It is absolutely ridiculous that we live in today’s world where 870 million people go to bed hungry. And not knowing if they will wake up the next day. Among every 6 seconds a child is dying still of hunger. Then we are able to waste about 30-40% of the food in between at if it doesn’t count. And then we have on the other side 1.2 billion people obese and rapidly increasing, where the biggest epidemic of disease is obviously diabetes 2. So there is something there that the most intelligent species in this world haven’t figured out yet, that bothers me, and we ought to be able to solve that.
And it is in everybody’s interests by the way. It takes nothings; it takes absolutely nothing to solve that. The numbers we put out are 70-80 billion to solve the food crisis. In fact 1% more food in the world given to the poorest people already solves the fact that they go to bed hungry or not. And that’s why we had the summit here this weekend and we were hosting that in our office. I’ll talk about that a little bit later, but it is actually a very good thing. But the… what you are doing is right, because we have talked a lot with the UK government on how to exploit the fact that they’re now chairing the G8. As you know the previous ones were the US and there are some things that are actually leading up to the G8. One is this nutrition and food security events that we had this weekend, called ‘Nutrition for Growth’ and in the afternoon we had the heads of states of Africa; we had the ‘New Alliance for Food Security and Nutrition’ and they are obviously closely linked. And there is another event on science and innovation, it’s very important. You need growth; you need progress, and that is obviously something we need to develop further in this part of the world. And then tax and transparency. Mark was saying you are not going to use the word tax in your talk probably, and I am. I’m not even starting the talk and I have already used the word tax three times now. And I’ll say it again as tax, as first time. But it is very important that we can talk about everybody contributing its fair share to society and also to solving the issues now.
But let’s first start on the positive note, not to make this a doomsday scenario. Because I’m actually an optimist, and I’m an optimist for different reasons. But one of them is having the negative train of thought, which my mind has tried to force in me many times in life, I’ve always discovered doesn’t lead to anything. And if for the short time we are on this earth, if we don’t keep that positive attitude, I think that would be one of the main enablers to achieve the challenges we have. The negative mind of thought doesn’t lead to anything. It doesn’t mean you don’t want to be realistic but it doesn’t lead to anything.
The positive thing is that globalisation that we’ve seen – the technology that has become available, the digitalisation of society, the connectivity – has lifted an enormous amount of people out of poverty, in fact in the last 30 years about 500 million people. And indeed as Mark was saying, if you look at some of the Millennium Development Goals, we have halved the number of people living under poverty - below the $1 a day, now we are talking one $1.25 a day. That’s an enormous progress, and in fact, many of us wouldn’t be sitting here without that globalisation. Child deaths have come down by about 30%. And we were, this weekend, with Bill Gates, if you look at some of the other things like Malaria and all that... significant reductions on the Millennium Development Goals… 25%-30% there as well. Record numbers of people in school. For the first time plenty of girls and boys in schools. So there are a lot of things we can be proud of. But I think what happened in 2008, because of this interdependent world, I think it became so complex, if you want to keep it simple, that no one was even able to see the relationships anymore and the connectivity.
And when everything was going well for us, stock markets were going up every year, house prices were going up, everybody thought every year ‘I’m a little bit better’, companies were making more profit without putting in significant efforts, nobody asked themselves questions. Why should you? So when we thought we were on a little bubble, it all of a sudden started to change our mind-set of what we were doing. And what we were discovering was as we were lifting an enormous amount of people out of property - no doubt about it – but we were doing it in an unsustainable way. We were doing that by ranking up enormous levels of governmental debt, enormous levels of private debt, and frankly overconsumption. But more importantly, I think the main conclusion that we should come to is that we developed a system that was very good for few, but not for all. In a system when too many people are excluded, from the participation, or feel that they don’t get their fair share, will ultimately be rejected – just like cancer in your body. So these 1 billion people, I talk about more or less, that go to bed hungry, they’re not happy about this. If you see that the bottom billion in society only consume 1% and the top billion and a half consume 70%, that’s not a world that’s in equilibrium. If you see that 400 billion has more of a GDP than India that’s not a world that’s in equilibrium. So that’s why you get these occupy Wall Streets, that’s why you get the Arab Springs and increasingly consumers obviously are able to voice their concerns, to connect themselves; this is when digitalisation is a very positive force. But if it only becomes negative energy or frustration because they are not participating, without an ability to find the solutions, then you will have a major problem. This is what you see happening in some parts of the world where you don’t see a solution.
So this is where we come in because as a company we just started to think a little bit about, these constraints we have on, what Mark called Sustainability, on these planetary boundaries, is obviously limiting a lot of people improving their standards of life. It’s the biggest concern in China, by the way, because China understands very well… if you talk to any Chinese person in government… if they cannot keep their Chinese economy going and lifting many Chinese out of poverty, they are not going to be there for a long time. So if they want to change their system, responsibly over time, they need to attack these planetary boundaries. I don’t know if you saw it two or three weeks ago, you couldn’t even see the other side of the street in Beijing because of more than 400 particles a year. And immediately you get an iPhone, it goes across the world, ‘oh what have we done?’ And two days later they have the most stringent car exhaustion standards in the world. So you see the power of people coming through every day, every day. And in fact you also see what the failure of acting responsibly is doing now, much quicker than before. Now, trust is law in society, we all know that, and often people like to say trust is law in business, or trust is this…
But I was just thinking coming here in the car, you know, just looking at it in the past 3 months… and just let you memories go back a little bit over the last three months, reading the FT or anything. We’ve had little children being molested by some religious faiths, we have had telephones hacked by some organisations, we have had horse meat being fed in our mouths which people thought was something else, we have had people manipulating with our interest rates which we pay for our mortgages by figuring out what the best libor rate is for themselves, we’ve had governments or others filling in expense notes, making tax payers pay for things that weren’t there. Now, these things were always going on; don’t be naive about that. It’s just that we have become a society that is far more transparent. These things are immediately in the public eye and you can see it. And that accountability is aggregated now, and becomes much more transparent for everybody. And as a result you’ve also seen that companies that are not behaving responsibly have seen an enormous amount of market cap wiped off very quickly.
You know, it only took take 17 days in Egypt, with this Arab Spring, for a regime that was there 40 years, because consumers discovered that they could organise on Facebook with each other, they could communicate with each other on Twitter, they could show the world what they were doing on YouTube. And the telephone has become a more powerful weapon in this world than the atomic bomb, believe me. So they were able to do that. If they can do that in 17 days in Egypt, with a regime that was so engrained, they can do that to companies in nanoseconds. To me it’s so obvious, and sometimes I wonder why I have to explain that to people.
So, businesses have to realise, as much as anyone else, they cannot be bystanders in a system that gives them life in the first place. They have to become solution providers as much as anyone else, because they are equally part of the challenges we are facing right now. I don’t call them problems; notice that, I call them opportunities. But they are equally part of that, so they have to work together with governments and NGOs to find a solution. Business cannot be a bystander in a system that gives them life in the first place. So what we did with Unilever was very easy. We said, Unilever, if we want to be in business for a long-time to come, if we want to be successful, we just simply need to find a system that is more in sync with society. Where your exposure is less, where you are actually contributing.
When my parent grew up… (I was born in 1956)… when my parent grew up, you know, they were products of the Second World War. My Father, I don’t know if he could have gone to university or not, but he never went to university because of that and it bothered him probably his whole life. He was determined that his children would go to university. The man worked two jobs to make that possible. They were also determined to be sure we didn’t have any more wars in Europe anymore. You forget that. That is the reason why we have the European Union. Don’t let yourself get side-tracked by other political sound bites now. But they work for the common good. Somehow we forgot that. So why can’t you make a business model like how we want to live our lives? What’s wrong with that? Because businesses are made up of individuals as well. And the business model is very simply – how can you give to society, versus take? Wasn’t that the origin of business in the first place? When we were all running around naked trying to hunt the animals, didn’t we discover that being all hunter animals wasn’t a good idea – because some could walk faster than others, some were a little stronger than others? Didn’t we decide that some were going to back bread? Others were going to make shoes? And others would get the meat for us? And we introduced some efficiencies so we could feed more people and all be better off? Wasn’t business invented in its origins for the greater good?
Wasn’t Adam Smith, who is quoted so often, a professor of moral ethics? Have people forgotten that? He firmly believes that in any of these efforts to advance the course of any individuals in their business communities, the pressures of wanting to belong to, would make them conform in the overall society. That’s basically what he said in his theory, and I’m sure many of you have read that. So we said very simply in Unilever, ‘Why don’t we think about a business model where we give to society versus take from society?’ It’s the only thing. It’s a small word but a big thing. It’s not easy to do, and it’s not something you certainly can do alone.
So our business model is one of doubling our turnover – very energising. But that doesn’t get people out of bed… don’t be mistaken. Everybody puts a big number on… you forget it is like a rallying cry. It’s not something that motivates you. But the world is growing there are 2 billion more people coming. Many people living out of poverty; there is no reason why a company like ours cannot double, and we are well on our way to do that. But why don't we do that whilst at the same time reducing our overall environmental impacting and improving our social impact. So we set ourselves 50 targets. All of our products agriculturally based materials – we are a big food company - how can we source that sustainably? How can we create 500,000 jobs for small hold farmers? And actually it’s the women you want to invest in, I’ve said that before. How can we give a billion more people access to hygiene and wellbeing? That might sounds like a lot, but we happen to be a company where 2 billion people use us every day and we happen to be a company that is in 7 out of 10 homes globally. So why not use that scale that is now possible to aggregate, as a force for good? Now we also said it will take 10 years because it is a thing that is not easy to do. And we also said we cannot do it alone. Some people were worried about that '50 targets - how are you going to do this? No CEO is going to survive his job for 10 years so that's nice of you to put something out there and you don't have to deliver anyway.' Sure, there were a lot of sceptics, because it is easy to be sceptical. As I always say scepticism is probably the lowest form of taking responsibility.
But we did some things; we stopped giving guidance; we stopped doing quarterly reporting; we changed our compensation system for the long-term. The first thing we did, was five years ago when I become CEO, is to create the right environment for people to behave the right way. The crisis of 2008, above all, was a crisis of morality, not many people went to jail, but a lot of the loss of morality, the interest of the common good, the dignity of the individuals – those were the laws that were violated. So how do you create an environment around you so that people can behave the right way? And then, obviously, we put this business model out there. We also said we can't do it alone. And by saying we don't have all the answers, we can't do it alone, we actually show some humility, and actually some authenticity - whatever you want to call it. And all of a sudden a company – a big, global, multinational monster becomes a little bit more open. And we said 'why don't you come and help us?' You think we should all do this; we agree. We are there at the service of society. Why don't you help us on the journey? Instead of being only fixated on the end point, become part of the challenges of getting there.
And that actually also changes the dynamics of NGOs. We had before that, quite some NGOs climbing the buildings or trying to tell you to do this or that, dressing up like monkeys or gorillas, or I don't know what (any suit, I think, has paraded around our offices at one point or another) and now they are coming in and working with us together to see what we can do to make this a better world - and using the scale and size of a company like ours; sometimes to give an example, sometimes to give other people a bit of courage, sometimes to be the tipping point. You know there are… only about the top 100 companies in the world use 15% of the world's resources. If you get these top 100 companies… for us that would be tea. We have 22% of the world's tea supply – with brands like Lipton, PG tips and all that stuff. So, if you get companies like ours, you can really move the tea market to sustainable tea. Some other company like Palm Oil, happens to be us as well, but some other companies, some other materials. So how do you get to these 100 companies and get them to... Don't be fixated on the end point; be fixated on what it needs to get the tipping point. And that's basic.
And if you look, there are about 60,000 companies in the world that make up all the market cap of all the stock exchanges (believe it or not, sounds low), 600,000, I'm sorry. I said 60 - 600,000 companies. But it is only the top thousand companies that account for more than half of them. Focus on those! And help them. So I’ve come to believe you only need the coalitions of the right 20-30, whatever these coalitions are, to get to these tipping points. And it is in the interests of all of us to get these societies to function. If society doesn’t function, business cannot function either. And businesses, like ours, like to be around for the long-term, so you want to work on these longer term solutions. It sounds so obvious (hard to do) but sounds so obvious. So I give you two examples of how these coalitions are playing out, and why I am optimistic about it. And then I'll give you some of the things we need to focus on.
One of them is what we did this weekend, as we mentioned before, 'Nutrition for Growth' or the 'New Alliance of Food Security and Nutrition' – two projects to really solve the issue of food security. The heads of state were here from… at least 12 heads of State from the African countries were in town this weekend. We had the governments here. We had the NGOs here, the Bill Gates of this world were here. Some of you might have seen him in Hyde Park with the ‘If’ campaign. And we spent the whole day… it happened to be in our offices because we were hosting it… in bringing people together. The issue of food security and sustainable sourcing, the small hold farmer jobs you want to create, the capability building you need to do, to train the women etc. in Africa; nobody can do that alone. In fact if someone could have done that alone, the issue would have already been solved.
A company like ours, even today, has to input 30 or 40% of its materials for the products we sell in Africa, from outside of Africa. That can’t be right. It’s also not efficient. Why should an African in the Ivory Coast pay more for Flora Margarine than someone in Rotterdam? Why should someone in Kinshasa pay more for Lifebuoy soap to wash their hands than someone in Brazil? So getting sourcing in Africa, and supplying our products with the growth of African content and potential sounds like a normal business thing. We also need to get the security of the supply. How can we do that by employing people in a continuous way? Then these communities grow. Isn’t that after all what Henry Ford had as his starting principle? But we need governments to function. If you have corruption, you don’t have rule of law, you don’t have access to legal systems. If women don’t have right to participate, then society only pulls at 50% versus 100%. It’s not going to work. If our truck gets ten times stopped because someone wants corruption it’s not going to work either. But who is going to train these 50 or 100 thousand small hold farmers on a specific project? We don’t have that capability. We would be bankrupt. So we need the rainforest alliance or Oxfam or any other ones to work with us. So it’s these coalitions that get you to these solutions.
This weekend 4.1 billion was pledged just on the nutrition part alone. And 19 billion was pledged on issues like water and sanitation, to stop the 170 million children from being stunted, which by the way, in some countries, is about 10% of their global economy… globally 2-3%, that’s a cost on the economy. We have to worry about that – also as business people. It only takes 7-10 billion a year to solve that. Without any doubt we spent 50-100 billion to bail out Greece. I don’t say that’s wrong. We have to do that perhaps. But if we can spend 100 billion to bail out Greece, can we spend 7-10 billion to give everyone the minimum right of dignity? To have the right to food? Or to have their brains developed to the fullest potential, like we all have? Isn’t that the minimum we all have a responsibility for? And as we do this, we obviously also have more possibilities to sell our products.
The other one is an alliance we created with the industry. So this is a case where the industry decides that by working together it is better for all of us than not working together. And obviously within the competitive laws and all the rules and regulations that are out there. We created the global consumer goods forum with companies like Tesco, Wal-Mart, Carrefour, including companies including manufacturing companies like ours, or Craft or Pepsi. So about 3 trillion in consumers here. These big companies went together and said, ‘wouldn’t it be right if we just take a very strong signal and say by 2020 we stop selling all products that come from illegal deforestation?’ Illegal deforestation – half of it is driven by food. The need for soy, for beef, for palm oil. So the food supply companies, like ours, have to take some responsibility. But you can’t do it alone.
So we create, we send this signal that we want to do that. Then governments come on board. We want to be part of that. We now have the US government, the UK government, the Norwegians, the Dutch, the Indonesians; there is a big conference in three weeks in Jakarta. Funds are coming in. Norway has paid 1 billion to help them with transitions. The World Bank is now coming in. I’m convinced that we can solve it for a great way, by the timing we’ve set ourselves. Because we have taken the risk away from politicians, we’ve created these alliances of the right 30, if you want to call it that way, and you get to a tipping point. And that’s a better business for all of us. Sustainable palm oil has a higher use, over time, it is a secure supply. The costs are lower, but who’s going to pay for the training, the development, helping indigenous tribes, alternative things that need to be solved? That’s why you need to work together. So that’s these very simple coalitions.
I always like to quote Viktor Frankl, who wrote his book ‘A man’s search for meaning’, where he said very simply in his book, when they built the Statue of Liberty on the East Coast of the United States, ‘they forgot to build a statue of responsibility on the West Coast.’ And he was right. You cannot run companies of this size, or have this skills and this liberty to operate in places in all places in the world, like we do, if you are not willing to take the responsibilities here – the core responsibilities. But it is also clear to all of us that the challenges we face, the challenges of food security, water, access to energy, alleviation of poverty, maternal rights, and I could go on and on and on… you cannot… these problems have been created. You cannot solve them in the same way as these problems have been created.
It was Einstein who said that the definition on insanity is to try to do the same thing over and over and expect different results. If we really want to solve these challenges, we also have to work at a different level. We have to work together across these coalitions. That’s why you have a global compact that Mark is leading. You have 7,000 companies with the human Global Compact, and many of the world businesses councils for sustainable development, and many of these other organisations. Now, what is the biggest challenge? Look long-term - I talked about. The second challenge is to create these partnerships - you need trust.
Stephen Covey in his book ‘7 habits of highly effective leaders’ said something very perceptive. You cannot talk yourself out of something you have behaved yourself into. You cannot talk yourself out of something you have behaved yourself into. It is true with everything in life. It’s also true for the way companies have behaved, governments. So we have to work to build the trust that comes with transparency. And then you need something that is a very scarce commodity which is courageous leadership. Because the forces against change will always be spending more and will be more vocal, because they have more to lose than the forces that benefit from change. And you need to be driven by an enormous sense of purpose. (Ah sorry, am I messing up the whole thing? [microphone] I’m getting too excited.) And you need to be driven by an enormous, an enormous, sense of purpose to not let yourself get derailed. So it’s about that purpose, it is about that passion, if you want to, and it’s about partnership. And if you have those things together, I am convinced, I’m convinced, that bringing the right people together, we can create a better future, not only for ourselves but for many generations to come. And isn’t that what life is all about? Thanks for your time.
Faisal Islam (FI): Thanks Paul for that tour de force, racing through the statue of responsibility – Chinese air particle pollution standards. What else? The Arab Spring, horse meat, libor, and tax – which we will mention later because you didn’t get to talk about that. But you have presented me with a problem, as a cynical journalist, because I want to be really cynical, but you are infectiously enthusiastic about this and it is affecting my cynicism, which I find to be a dangerous place to be. So I am now going to make up for the fact that I’m being sucked into ‘Planet Polman’ and be even more aggressive than I really want to be. Because it sounds really cool what you are doing now. I’m just joking…
PP: You’re still young, so that’s OK.
FI: Listen, I’m going to fire, 2 or 3 quick-fire questions at you before we bring Mark in, about how this actually works on the ground. How it works, if you like, when push comes to shove, when you have to make a tough business decision, because this sounds amazing and it sounds brilliant, but on the one hand you’re, like, you know, holding up the standard for many other giant companies around the world, so I‘m sure they’d want to know, seriously what… I mean the first thing, you mentioned when you gave you’re new strategy, when you arrived on the scene and you gave your new strategic initiative of which this was a key part, a central part, and you… part of that was telling your shareholders that you weren’t going to give them, you know, guidance, quarterly, that they’d have to see this out, all this sort of thing, how this was going to work. How well did that go down at first? How convinced were they by this? And how applicable therefore is this approach across other large businesses that aren’t doing this?
PP: No, I think it is applicable to many businesses and we are not the only ones, so don’t make this… I don’t want to make this a Unilever story alone because there are many others. But the challenge we had with… the two things I learnt was obviously it is not a surprise when our business is not doing as well as it could have been doing.
When I came I was the first CEO coming in from the outside but I also thought there is only one window of opportunity to change things. And I’ve said before my thinking was, the day they hire me, they can’t fire me. So that’s when I did it. But unfortunately because the business results weren’t that strong, the first reaction on the markets was that there must be something really bad that they are trying to tell us, and the stock price went down 8%, which gets you to this point of you can’t talk yourself out of things that you have behaved yourself into. Subsequently, our share prices have been the best performers in the last two years in the Netherlands, the Dutch Stock Exchange, because we are a dually listed company, it has more than doubled. Because we don’t do the quarterly reporting anymore, it saves me from explaining to people that Ramadan is a week early or the weather was bad for my ice cream, or that Easter fell: things that I’m not too enthusiastic on spending too much times on. And people forget that the 90 days is minus the weekends, it’s only 76 days; I mean you go to bed, you wake up and it’s another quarter.
So our communications with the Shareholders have become more strategic. That has allowed us to better think through our own communications with them, our strategies. We have spent a lot of time on attracting other shareholders. So I have also been sometimes too vocal, I wouldn’t do that again perhaps as much, but about what shareholders we want and not to get… be driven by the shareholders itself. There are many shareholders out there… and if as I believe… too many CEOs cater to the wishes if the shareholders, and then drive you nuts because so many shareholders have so many different objectives in your business; so you need to be very strong with your own strategies. I’ve found it easier to get rid of shareholders than to attract new shareholders – surprise, surprise. But, but, at the end of the day, if you deliver, and you deliver consistently, your value will be reflected anyway.
So we find ourselves in a good space now, where people understand what we are doing. And actually shareholders understand that. People will tell you that. The companies that are ESG investors… are impact investing… is going up enormously. There is more and more evidence now, that it has a higher chance of getting a better return. The questions at shareholder meetings now… I did a study the other day – 25% of questions at shareholder meetings are related to sustainability things. We can now, with the internet, look at our websites and what people look at, it’s not anymore the top and the bottom line, because they understand, better than anyone else as I was saying, that it’s amount risk management, it’s about creating an environment where people can rise to their biggest challenge, it’s about effective use of resources. Take this month… take every day, every week, but you have to Czechoslovakia flooding, you have the Turkish turmoil, so last year alone, we reckoned, all these things, from the droughts in the US to hurricane Sandy to flooding here, and you know every week nearly, it cost us 3-400 million. By building into our business models a different thinking about the use of our resources, all of our factories are zero waste, all of our energy is green energy, all these things, save us well over 300 million. So by thinking about it, we can mitigate risk. And investors increasingly understand that.
And then the last thing which is not the most difficult to understand is, if you want to be a solution provider to some of the toughest challenges, you need to set the bar on innovation higher. Some of our fastest growing products right now are waterless shampoos, because lots of people in parts of the world don’t have access to water, or our bar soaps, or our Dove where we have women’s self-esteem. So ever of our brands now, has a more defined, or a better defined social mission, that obviously connects better with consumers, and as a result, you accelerate your growth. So you have to be able to want to walk the journey, but what I’ve found actually easier than I had thought it was, if your purpose is strong enough, it’s actually easier to align the organisation than I thought.
FI: Did you need fundamentally that space though, from getting rid of the quarterly reporting?
PP: It absolutely helps behaviour. If you look at about 3-4 months ago, Roger Martin, from the Russian School wrote a book which was called ‘fixing the game’. I was actually reading, and what he tried to advocate, you know, you don’t have to support everything he is advocating, but what his thought there was is, we’ve basically become an expectation management society versus a reality society. The newspapers report if you miss versus guidance or you don’t miss versus guidance, they don’t talk about the actual thing anymore. There were in some quarters that Unilever was growing 10% but the market for some reason thought we would be growing 11%. Competition was growing 1 or 2%, but the headline will say ‘Unilever misses market expectation’. So we’ve become this expectation society versus this reality society.
And he compares this G.E. under Jack Welch. He was a great business leader, but when Jack retired he said market shareholder value alone in isolation is… shareholder value was probably the dumbest thing I did. Unfortunately he only discovered it after he retired; I don’t know why it took so long. But of his 40 quarters… he had 40 quarters… he only missed 2 of them, and he only missed them by 1 penny. If he had 40 quarters where he hit the estimate, and only 2 of them he missed by a penny, he missed his vocation, because he should have been in Las Vegas. He would have made much more money. So the whole system, not surprisingly when he left, the share price went to half. And Jeff Immelt had to clean up the mess. In the US there was a study that Al Gore shared with me the other day, that 75% of the CEOs would postpone the right decision for their company, if it meant they would miss their quarterly guidance in the company. But think about that – how sad it is.
FI: This town is built on shareholder value and guidance and…
PP: I am not advocating abolishing shareholder value. I am saying that a business really needs to go back to really focussing on its purpose in a responsible way. And if you do that you will maximise shareholder value as well. If you maximise your value to society in a responsible way, shareholder value will also be maximised. But it is not the purpose of business. We did not go into business to build our share prices to the highest levels; we go into business to serve a purpose. When Lord Lever invented in the 1870s or the 1880s Sunlight bath soap it was because there was cholera in Britain and 1 out of 2 babies didn’t make it past year 1. That’s why he invented it. He didn’t invent it to maximise shareholder value.
FI: So just lastly then, in this part of the chat, can you just describe a situation when you are round the board table, where there’s a bottom line to a business decision you have changed because of sustainability issues.
PP: Absolutely. We have example said we want to go to sustainable palm oil and by 2015 for ourselves. And the market wasn’t totally ready for that. And we ended up buying 75% of the sustainable certificates and that cost us about 15-20 million a year. And some people were saying ‘yeah but we could save just 15-20 million just by not buying sustainable certificates just like others companies are doing’. But then you don’t help galvanise the system of change. And as a CEO you have a responsibility, as I said, that comes with this size, to invest in some areas, to galvanise that change, and then you make some savings on other areas. And as long as the total adds up, it’s fine. That’s how you manage your business anyway. How much do I invest in training? How much do I invest in IT? Those are all long-term decisions. How much do I invest in capital? Well, also start asking yourself, how much do you invest in some of these externalities. How much do you invest in living wages or social compliance in your supply chain? How much do you invest in paying some fair share of taxes in some places or another? How much do you invest… and if you make these very balanced… when we run our factories on zero waste, we save about 50 million dollars a year, for a company our size for not having to bring our products to the waste... to the dump… whatever you call it… the landfill.
So my thinking is, instead of saying, ‘here is 50 million more for your shareholders’, which is very easy to do, you say, ‘here is 20 million more for your shareholders’ and with the other 30 I prepare for an even better future so the shareholders also have something for tomorrow and the day after tomorrow. So the compromises you have to make are not as high as you think, if you look at it holistically with the size of the business that we have.
FI: So Mark, when you look at that, how… sort of, how applicable is that model? I mean Unilever is dealing with the biggest companies in the world. What lessons are there for, you know, the whole gambit of the world’s biggest multinationals?
MS: I would look at it in two levels. One is the external world and the other is the internal world. If you look at the external world, I think one of the things that Unilever is trying to do is consumer proposition, which is trying to, sort of, present, if you like, sustainable products to consumers. And Paul talked about for example Dove, and it is about how you, sort of, build sustainability into your propositions. And I think that this core of, as part of if you like, being part of a sustainable organisation, going forward.
I think the other dimension which is really important is that you can have people like Paul out there, preaching the word, but at the end of the day if your organisation, particularly your middle managers particularly, don’t get it then you get a different internal alignment within the organisation. So I think it is really important that you understand, if you like, the power of sustainability, you have to bring your people along with you. And it’s about, not only making them aware; but it’s about engagement and commitment. How do you get people in the organisation committed to understanding, if you like, the real value of, not just the environmental side of it, but also the economic and the social side of it? That to me is part of the trick here.
FI: So that’s quite interesting, particularly, as I say, in this town that we all seem to live in here; we know about how bonuses, very brutal monetary bonuses, incentivised highly short-term and ultimately damaging behaviour. Can you actually factor this into the remuneration structures of middle management? Can you say, ‘doesn’t matter if you don’t make this financial target, but if you help increase the, I don’t know, the literacy rate, I don’t know how you do it, has anyone managed to make that work?
MS: Well I think we are beginning to see that work. So a good example would be, let’s suppose you are running a plant. And let’s suppose it produces 100 tonnes of carbon per annum. If you can actually reduce that from 100 tonnes to 96 tonnes, there is some value in that; you can provide some incentives. I think one of the things that is very important here is that, actually, we’re not trying to, if you like, create something that is sustainability, which is aside from the economic realities. I think the more you can get some of the alignment there, I think you can get some real power in the motivation. And I think you can begin to get the right sort of performance measurements. Because if you look at it from the point of view of – what are we trying to do at the corporate level? What are we trying to do at the personal level, and how does that link back to your individual performance? It is ultimately a portfolio of approach. Not all… not every company has done that, but I think certainly a number of companies are doing that. And if you look at some of your critical objectives, particularly around things like – how do we reduce our carbon footprint, what are we doing in terms of some of the social impact – and you can look at it out there in a number of companies today who are looking at the global reporting initiative, who are trying to come up with a much more balanced score card approach. I think that is the end tray into having a much more balanced approach to performance management.
FI: So how do you do that then? Do you actually give people alternatives to, kind of, stakeholder metrics?
PP: So there are a few things that you touched on. First of all, on the compensation system. First of all, the stronger your purpose, the less you have to worry about your compensation system. I’m not an exception, but it is very seldom I think about my salary. Then people say, ‘yeah because you are paid enough anyway’. So I understand that. But if that drives you, you shouldn’t have these jobs in the first place. And boards are smart enough to see that through. I think it was Warren Buffett that said, ‘when the waves come down, you can see who wears a swimming suit or not’. And you see a lot of CEOs hooking off now because they are not able to live with the higher standards that are being put on society now. The debates that banks say, ‘I cannot attract the right people, when I don’t pay them so much’, is to me, ludicrous. If you join Unilever you get paid a good amount of money but significantly less than the banks, but we are able to attract the best people in the world. We are, in most places the preferred employer, because we have a deeper purpose. So what we do with our compensation system, which is equally important, is that it has to be transparent, it has to be linked to performance. We changed our company compensation system at all levels, by having our short-term bonuses. You only gain your long-term plans if you invest your short-term bonus. Put your word where your mouth is. Then you have to hold it for a certain period of time. Things that I wish any of the financial sectors would have looked at, but unfortunately, no one has done yet. So I think these things are very important for us.
We are working now with Richard Branson and Jochen Zeitz from Puma and others on what is called the B team, getting about 50 people there. Mohammed Yunnis of… and Mary Robinson, you can ask her when she is here, the day after tomorrow (she was with us this weekend). How can we change the incentives system? How can we change the reporting that mark is referring to? And how can we change the leadership that is required. On the reporting, I’m equally optimistic, because here, a lot of companies are starting to do carbon reporting. About a quarter of the big companies have sustainability reports. The companies that sign up to the UN Global Compact and the principles of the Global Compact that Mark is very capably leading, there is a movement there which is obviously linked to that transparency, which is obviously growing. But we have to figure out another way, to count for things that we don’t value currently. Currently, a dead tree is valued more than a live tree. That’s not good. That’s not good for this world, that’s not good for the long-term.
So we are all Capitalists. I'm not sitting here as a Socialist or a Communist, don’t get me wrong, don’t misunderstand me. But a Capitalist is probably best placed to optimise what we have right now – we have defined that as the return on capital. And that is what the profit and loss statement is and all that. But if you give social or environmental values a price, then the capitalists will be best placed to optimise them.
FI: You see, this is, kind of where, people solve… square the circle – as it were - incentivising multinationals to ‘do good’, you put a price on the externality and you solve it. I mean I just wonder, and it’s a nice… everyone can just smile and walk away from this very happy, but we got examples, you know, of that just totally failing already with the Carbon trading market in Europe – it’s a total failure.
PP: Well, yeah. Absolutely. And not everything we do is a success or the way we want it. And it again boils down to, what we were talking before; the world has become so interdependent, that if we don’t figure out a system, that works for all of us, not just a for few... Also in Europe, you cannot have Europe do one thing, then lose its competitiveness, because then we are screaming again for unemployment. The European economy has gone down so much, so there is no need for these carbon credits because the production has gone down, so you have to be careful there about what these drivers are. But it shows you why you have to work together, more on a global level to tackle some of these biggest challenges. There is absolutely no doubt about it; we don’t disagree with you there. And that is what we are obviously trying to do.
FI: I just wonder, you sort of manoeuvre though, into an area of quite subjective moral judgement over matters that are political, as the head of a multinational. So you know, some people care more about carbon efficiency, some others care more about hunger alleviation and you know, and in the glorious world, you know, you just do the same policies, and everything will be solved. Sometimes, they come into conflict and I just wonder how you begin to make those decisions when you’re obviously not a politician. Maybe you have to become a kind of politician. But that must be a rather difficult place to be.
PP: Well the first thing is you need to… you don’t have a right to tell others what to do so that’s why, as I say, you have to work with a high level of humility. And that’s why you have to work in partnership. And there is not a day that goes by now, and I deliberately say a day, that I don’t talk directly with one or another NGO or with people in the government. And what you try to do is come together, in defining solutions to things. But you have to be very careful that the size of your company, or the skill, or visibility that you have, doesn’t give you a right to have the right answer. But it certainly is clear that we have to be part of those solutions. And when jobs have to be created, business has to do that, unfortunately, in this world; that’s the system we still have figured out as the best thing that exists. When challenges of sustainable consumption, or there still needs to be products that deliver that, and business as ever will have to pay them. So, being part of that solution is what we are advocating, not… we are not there advocating our solution. That’s not what I’ve said, that’s not what we will ever say.
FI: Mark, how does a good business, as it were, cope with the fact, or deal with the fact that not all these initiatives go in the same direction? Some of them require acute, delicate, political judgement… how do you begin… you know… one man’s poverty alleviation is another man’s, kind of you know, road building horror, I guess.
MS: Well, I think, what we can see is there are a number of fairly important pathways, that you can sort of begin to map out. There are some things that around, as I mentioned, around economic development and education, things around, sort of… I think carbon is very important, transport. So I think you can only look at it through the lens and the prism of where you are coming from as a business and for example, I was out in Peru 3 weeks ago – big discussion there about the role of mining there for example, in terms of what it is doing there, in terms of, you know, infrastructure, in terms of supporting, sort of, local development there. So I think you just have to understand, and today I think context, understand the context in which you’re operating.
I think Paul’s been very good in emphasising things like, you have to think about your responsibilities, your licence to operate within the context which you are given. If you are a company operating in Peru, you need to understand what is your social responsibility in that context. Yes there are some aspects of how do you develop, for example, silver mines in Peru, in a responsible way, but at the same time you also have to think, ‘what does that mean in terms of environmental, sort of, adaptations, mitigation actions. What are you doing in terms of the social? What are you doing in terms of the infrastructure?’
And I think the other critical thing is time frame. And I think what you have to do is think very carefully about what you are doing over the short-term, medium-term and long-term. And I think one of the big challenges for business, particularly is the medium-term. It’s quite easy to think about what you do in the short-term; it’s also easy to think what’s going to happen in the longer-term. But it’s how do you manage that medium-turn. And the reason why I think it is so important to talk about the coalitions is because at the end of the day, you have to work with governments, both central and local. You have to be working within civil society, to work out what are the right ways to actually, I think get the right actions in place to deliver across those three dimensions of economic, environment and social. So I think that’s the way I would look at it.
But, for me, I think that one of my key messages today is, post 2008 you have to understand context. And not enough people I think, particularly in business… they've been to hunkered down, focussing down, delivering to the bottom line, and understanding the context of where we are, how we are operating, and what it means to be responsible, is, what I think, the name of the game is going to be, going forward.
PP: I see if I can build on that Mark, because with the tenure obviously of you being 3 and a half years and with the economy being as tough as it is, there is an enormous demand that proves that pulls you down, and also keep your head down and under the water instead of above the water for many of them, and whilst we actually need the opposite. And so... then encouragement or giving of confidence is 10 times more important. One of the reasons, that we work so much on the post 2015 Million Development Goals, is to get to your question that you were just posing; the world is not that simple anymore, that one issue can solve the world, it has become so interdependent.
One of the good things about the Million Development Goals are, it’s an overall goal that is a morality that goes across the world to end poverty in all its forms irreversibly. Then it has 12 specific interrelated goals on how to do that. Water is linked to food, and food is linked to energy, and energy is linked to education, and education is linked to maternal health. So these Million Development Goals are in fact the moral framework that have been put together with all the countries, to have a standard, that every individual country cannot do anymore. And we are now in the process because they finish by 2015. So we are now on the process to developing the next Million Development Goals. And what is absolutely key, is that, we, as citizens, ensure that the individual members states, that are now starting to negotiate that, don’t water it down to the lowest common denominator, as we have seen in Rio. But we have put all of our energy behind it to ensure there is some courageous goal, to change this world. This is a unique opportunity that we all have, and it comes together with the climate change agreements, and that's another benefit if we do that well.
FI: We are going to go to some questions in a couple of minutes. I'm just, you know, I've discussed this with a friend, we had this, kind of, theory that many, this is perhaps not the case with your company, but some of your colleagues in the FTSE 100 - chief execs - they tend to alight upon climate change and carbon alleviation, because it's measurable, there's almost like a tyranny of measurement. Because it's easy to measure, you go with that, there's a big tick, it's kind of less controversial. But some of the kind of more difficult issues, they can, kind of, afford to park. I mean they call it green wash don't they. I'm going to try and pin you down on three ethical issues that are currently, vaguely in the news. And clearly you are Unilever - big brands – advertising. Branding and advertising is clearly about getting people to consume stuff that they may not need? Is there a way that a sustainable company will change the model of branding or advertising?
PP: First you have to change the word 'advertising' and make that more communication, and the second thing you have to make... ‘consuming’ is not necessarily the right word here. So we are working with many of these things. What... what we do with our brands is to be able... you take for example the bar soap brands. In many of the emerging markets, in Africa, only 4% of people wash their hands after defecation or before they prepare food. As a result of that many people die of infectious diseases. So you need to communicate how you do your hand washing... and why you do that... and create habits. We spend a lot of money on hand washing campaigns in schools that takes obviously a certain amount of time to make that a ritual and get that engrained. We have to specifically focus on schools and on girls - teenage girls because they are the most influential in their families coming home again. We work there with governments.
So you call that advertising or not. It is a very important thing to do. So how you spend your money is... you see often we judge… so the reality is… if I may be honest, 80% of the people in the world in one generation will live outside Europe and the US. And we try to discuss all of this and solve all of these problems from a European angle. If you work in the other 80%, where, in fact, most of the activity is now happening, people are desperately in need to connect and to communicate to find out what these brands do, and how they do that. And if do that responsibly, you will grow. And you call it advertising or not, that doesn't matter to us.
We spent quite a lot of money on Dove and women's self esteem. Only 4% of women in the world feel that they are beautiful. This audience is obviously way above that. But there is not one teenage girl anymore that wants to participate in a swimming class or anything because anybody you see on television has a computer doctored body that doesn't exist. There is not one normal face of a beauty star that is a real face. So Dove is about real people, real bodies, real feeling good about yourself, inner beauty, outer beauty. And not surprisingly the Dove self esteem campaign... the latest campaign ‘Police Sketches’ it’s called had 170 million people watching it. It had the most, what you might call, ‘advertised’ (we don't spend any money on it) but it is the most branded campaign. In fact I forgot to show you something. Can you give me 2 minutes? 3 minutes? Or am I overtime?
FI: Yes - I got a nod there.
PP: Why don't you look at this for 3 minutes, which I wanted to show during my talking, but with my enthusiasm and passion, I totally forgot about it. Can we show that?
FI: I still have the tough question; I'm not going to forget about them.
PP: Well look at this first...
FI: Don't try and distract me...
PP: Well look at this first and the questions will be softer, but you have to look. I hope we can see it. You will call this advertising.
PP: What's your question?
FI: I'm now trapped, because I've been advised to go to questions - other questions now, so it will look like I've wimped out, so I have an incentive to ask you a hard question. No - we will come back to the hard questions later. The hard questions will come from the audience, then I'll come in from behind.
PP: You know, every time I see this I still get a lump in my throat; my wife cried because this is what we do for a living. If every of the brands can become a cause for social good, you're in sync with society, you’ll be very successful, and by the way your shareholders as well. If you call this advertising or not, I don't care. But what we now do in India, we have the perfect villages 70,000 ladies to distribute them, to give them water, health sanitation, food. We bring these ecosystems to life, that give every child a chance - what's wrong with that?
FI: Great. OK let's take some questions. The gentlemen in the orange jumper just here, and there is a gentleman in the back in the blue jumper. Let's take two together. Just if you could identify yourself.
Audience 1: Great, good evening. My name is William Wong. Just a general question for the panel and something more specific for Mr Polman. How do we explain sustainability in jargon free language to an 8 year old? And I think this is critical, because so many people outside of here you can ask them what's your view on sustainability and I bet most people say 'what's that?' And more specific for Mr Polman, you mentioned sustainable palm oil just now. Now that being a critical resource in your supply chain, we all know, the plantations remain a serious threat to biodiversity, so how do you square that dilemma? Thanks very much.
FI: Thanks William. The gentleman at the back.
Audience 2: Edward Davy, Prince of Wale’s office. Just a quick question. Paul, how can we get the CEOs of the major oil companies of the world to replicate the ethical leadership that you have so powerfully shown?
FI: Oil of different descriptions. So why don't we talk... Paul why don't you ask about... answer about palm oil and crude oil?
PP: Yeah. You know there are two groups in the world that you need to focus on. And I'm absolutely passionate about the young and I'm happy to be here and see this young passionate audience because in these emerging markets this 80%, and perhaps that is the part of the world you grew up in? I don't know. Where are you from originally?
Audience 1: I spent my childhood in Hong Kong
PP: Hong Kong. So you know what I am talking about. But 80% of the population lives in these emerging markets. Half of that population is below 25 years old. They understand better than anybody else, anybody else, that they are half today and 100% tomorrow. I was in Liberia, I was with Mrs Sirleaf, part of the panel in Monrovia… 56% of the country is below 15 years old. You don't have to ask them what they think about their sustainability. What they think about sustainability is to have a job, to have food, to be sure they have it also tomorrow, and to not steal the resources that belong to others. And that universal concept is very well understood with people that live in a world of increasing scarcity. Especially in that part of the world that you know.
The people that we need to focus on, are the young, they are digitally connected, they care about the future, and the other group is, what I call, the concerned, care givers, which are the mothers with children. Mothers understand it; that's why it's so important that you invest in women in everything that you do. If you invest in agriculture and women you get about 30% more productivity. They take their money home; they invest it in their kids and nutrition on top of it. The guy, when he has some money, first stops on the corner, to celebrate the fact that he had some money. So important... absolutely important to focus on those two groups, and frankly, you have a very high return for any responsible business person and for any shareholder as well. 1 dollar invested in nutrition gives you 3 for society. Any business man would love to have such a rate of return. The issue of palm oil and biodiversity is a very important thing because obviously, illegal deforestation, the slash and burn techniques that are happening, the enormous demand and that comes from China and India, we have to stop that. We are finally, because a lot of people look at that and taxing and negative incentives, we finally have convinced the government of India to lower the tax rate of sustainable palm oil. We are trying to do that here in the UK, in Europe the same thing. So that there is a positive incentive for that and helps change behaviour.
Politicians usually think their role is to regulate and to tax; they are very uncomfortable with positive incentives. You call it marketing or not, but a consumer company... the best thing that works is positive incentive not negative incentive. And we can do a lot more if it is positive incentive.
We ran an experiment with a big department, where everybody could see everybody's electricity bill, and all of a sudden they discovered that they were above the average, or on the average or below the average. All the people above the average started cutting down on their electricity bill, because they didn't want to be above the average, just by making it public - positive incentive. So it's very... it's not easy to do but it is very... it's a much better force than anything else.
So on one of the high level penal goals, one of the goals that we have now proposed is in fact biodiversity – which is a very important thing obviously for the equilibrium of this fragile mother earth, and that is exactly why we want to stop the illegal deforestation. Every year, half the size of the UK, half the size of the UK (1 acre an hour) disappears still on illegal deforestation. And if we can for that reason, stop this illegal deforestation, we bring back these biodiversities that you are talking about. It's probably the biggest thing we can do. Consumers, which we have not succeeding in... how can we make consumers value, that our, let’s say, our margin that was made for part in sustainable palm oil or our toilet soaps are worth more to them as they make these contributions. That's still a big challenge. That's still a big challenge. The best power is the power of the wallet.
FI: And on the oil major chef executives?
PP: Well we have some very good executives in the major oil companies. I know there is a lot of baggage and old tape etcetera. But again you need to have everybody. Energy is a very important thing in this world, and the demand for energy as the population grows, goes up enormously. People cannot lift themselves out of poverty if they don't have access to energy either. So we need to obviously build more sustainable energy, and make this energy more affordable. There are many subsidies going on right now... the energy subsidies in this world which are actually not even benefiting the poor, ah sorry, the question came from there, they are benefiting the middle class more. These prefer these. If you were to abolish those, like Nigeria is trying to do would actually save far more money than what you need to solve the food supply issue. So with the energy companies we are looking at a lot of these subsidies and abolishing those which is a good thing. All of the big energy companies have signed up to a major initiative from the UN called 'energy for all' How can you double the efficiency of the energy, how can you get a certain percentage of the sustainable energy...
FI: This is quite interesting…
PP: So these are great initiatives.
FI: …some of the NGOs won't back that at all will they, because in Nigeria poverty will go up and people will be very angry...
PP: Well, in fact, people in Nigeria have proven as well that a lot of that is not benefiting the poor that is why...
FI: Oh OK...
PP: …that's why you have to be careful what you read and what the reality is and I go quite often to Nigeria, and I talk to the finance minister Ngozi and you talk to the people on the ground and you look how it works. It’s quite different right now. So that whole system of these subsidies that has been created has resulted in a bizarre behaviour that doesn't benefit anyone, except a few people.
FI: Mark, do you want to come in here about the oils and also trying to explain sustainability to an 8 year old.
MS: A consultant trying to explain language to an 8 year old is probably really not my forte, but I do think that that thinking about the young, the digital is very important. I also think that thinking about... thinking too much about those that are in cities versus those in the rural and, I think, if I was trying to appeal to an 8 year old, I would be thinking a lot for example around what an 8 year old experiences. Looking at the schooling, thinking about what type of... what’s going on in the school, do they have for example, sort of, any computers, do they have a schoolroom, do they have a… what's the experience like, and then what happens in terms of what sort of food do they eat and what is happening in terms of their health? So I think that you have to appeal to people at where they’re at, in a language that they understand. Cities versus rural - more developed less developed.
I was very struck by two things: if you looked at when the whole question came up with Mali, look at the average age of Mali; it’s about 16. And we had actually last week, we had the UK Ambassador from Mozambique here. And Mozambique average age: 19. So these are the... so it's not just that half the population is under 27, in some of these counties it’s really very sort of young and we have to be able to work with those people in those situations as well as working in more well healed cities like London and Paris, but also looking at some of the more deprived areas as well. So I think you've got to be able to tailor the messages - that would be my, sort of, my key point there.
I think on the energy side, that's a very important area because, I think we’ve got to look very much at how we reinvent the energy system going forward, there are lots of issues there on what we do on the supply side around how we sort of move to the more low cost energy, how do we, sort of, move in that sort of direction. But there’s a lot that can be done, in terms of, I think, how we help people to understand energy efficiency better. And there is a huge job to be done, in terms of educating people about the costs of energy and how people can be more efficient in terms of the ways they use energy, going forward. And I know that is not exactly, sort of, totally in the province of the chef executives. But if you look at what we need to do going forward, if by 2030 we are going to need 40% more because of the population growth, we have got to be able to convince people to use energy more wisely.
FI: Let's bring in some more questions or points. Yes, there’s a lady just there, and maybe the gentleman just in front yeah, after that.
Audience 3: I was interested to know a bit more about Unilever's expansion strategy. You said emerging markets were one of the main means in which you are expanding. I was wondering how sustainable or how responsible that is in terms of the economic growths of the markets that you are moving in to. By brining big western brands into those markets, are you in some ways restricting the competition for local SMEs to grow within the markets themselves?
FI: And question. The gentleman in front if you could? Yep.
Audience 4: Yeah so my question is: to me it seems quite obvious that the traditional accountability structures of the private sector, public sector and third sector are converging and with that come efficiency and collaboration and joint innovation perhaps. But there is also a risk that it hurts accountability because everyone is working towards the same goal, but who is actually scrutinising that direction and keeping people accountable - other than perhaps hard metrics? Who’s actually looking out much more broadly and keeping everyone in check? And Faisal for you perhaps, as I think the media is probably part of that machine as well.
FI: The Chair does not answer questions! OK, I'll think about that. Paul!
PP: The question is who keeps the media in check?
FI: Yeah you can come onto that later!
PP: That's a further discussion I agree with you.
FI: For another time! So Paul... On… I've lost my train of thought. The whole notion of you going into these emerging markets... clearly Unilever has had a long history in these emerging markets, and probably not emerging markets for your company. Sort of drowning out or crowding out indigenous businesses.
PP: So there is not just one emerging market anymore with 80% of the world being outside Europe and the US there are many different markets in many different states of development. From fragile states in Africa to Latin America, to many countries like Korea that are very well developed, or increasingly big pockets of China – you take Shanghai, you have economies that are better than any European country. So we have to be very careful with these definitions of emerging markets now. We obviously have a long history in these emerging markets, because Unilever had at least had its fortune, if you want to, of merging the Dutch and the Brits – two of probably the most formidable colonial powers, so we find ourselves in a situation that we have we have about 80% - sorry 60% of our business in emerging markets. All of our growth is in emerging markets. By the end of this this decade, if I like it or not, 75-80% of our business will be in the emerging markets, even if I would go to bed and wake up then. Obviously, our presence there, which has been a long presence (we were the only company in India that never got nationalised). And it brings you back to the philosophy of the company that we just work for the long-term interest of every country that we are in. For us it doesn’t… the concept of being a Dutch or a UK company doesn’t exist. My management team is from Zimbabwe, to India, to Latin America, it’s probably the most diverse way of running a company. We run the world in eight clusters. Our head office here is a very small building for a company our size. And we focus on doing what is right for the countries. Now we have a strategy in which categories we want to compete in, which products, but those products are basic necessities everywhere. People have hygiene needs, they have clean water needs, they have sanitation needs. And open defecation is 2.4 million people, so one of our goals is to build 400,000 toilets. There is nothing wrong with that. Everywhere in the world, people would like their dignity to be able to goal to their own toilet. And then we happen to have sustainable toilet cleaners then that’s fine. Because then they can keep it hygienically clean – it’s not a problem. Bar soap is a universal need.
So if there are local companies, often they might not have the technology or the skill, but over time, as these companies actually develop, what you will see is the same as here, that the toughest competitors, rightfully so, which is good for the economy, is our local competitors. They are often more agile, they are closer to the consumer. There are more patents being invented now in China than the US or anywhere else. So that competitive level… that’s actually good because brands can compete. We would actually advocate that because when brands can compete, consumers are always better off. Where brands don’t have the right to compete and consumers don’t have choice, the consumer suffers. And that’s universal. There’s no exception.
FI: Can I just… there is an allied question that I wanted to ask both of you – which is… there is a lot of pressure, on western so-called multinationals to do this stuff. But I do notice that in the developing world, that some of the local companies don’t quite feel that same pressure on ethics. Are you seeing any difference? Obviously China is multinational, some Indian multinationals, Indian oil companies for example, you’d never hear them going on, or even pretending they cared, about climate change and things like that. I just wonder if you reflect on that. Whether you see that… is it a disadvantage for you?
PP: The question, if I may rephrase it, is if local companies have the same ethical standards as we do? Is that the question?
FI: More or less, yeah.
PP: More or less. That makes sense. The, no, the… what you find is in young emerging economies, institutions need to be built, standards need to be set, and often it is the reasonability of companies like ours to help set those things. We cannot justify, I could never justify treating a Chinese working in a factory differently from an American worker or French worker or a Bangladeshi worker. You can put cameras in all of our factories and we have the same equipment and the same way of working.
FI: I’ll take you up on that
PP: You can. We recently did a study with Oxfam on that because we wanted others to do that, not ourselves. So it is absolutely important that you have the same standards. The UK obviously has a bribery act which we were way above that, but you are now liable if you have different behaviours in that respect in other counties. Rightfully so. So we drive standards. In China we produced the first green LED, they call it, factory. We have a biomass for our energy and that has become a sure factory for the Chinese authorities. Yeah, we invest a little bit more in there, but when China… when they were surpassing the carbons emission standards, because the Chinese are all engineers, they cut off the energy; the only factory that was running was our factory because it was biomass. So increasingly people see the way we do business makes a lot more sense. And you lift these standards up. If your questions is have you ever had a handicap by having these high standards in these countries, versus the local competitor, my question is an outright ‘no’ for businesses that want to be around for a long time.
FI: And do you…
MS: Well I was just going to pick up one angle on that. I think in the west, we sometimes forget that actually we use the word branding in relation to product. But in fact when you go to a lot of emerging markets… if I can use that word, particularly if you go to places like India, the employee brand of the company is actually extremely important. It‘s the talent, if you like, the dimension. And people are very concerned about where their children or where their family are working, and the reputation of that company. And so I think that one of the things that we are actually learning in western multinationals from a lot of the sort of local companies, is the importance of, if you like, the involvement with local community, the in value of employee brand as much as the value of market brand. And I think that’s where in fact, we in the West have been learning a few lessons from what some of the local companies are doing. And I think, this is part of understanding, certainly the West hasn’t got it all right, and there are things we can learn from emerging market multinationals. Because in many ways they have been very close to their local markets, and that is what has made them very successful.
FI: Do you find though… I mean there is a classic example, and I won’t name companies but I’ll name markets, I’ll name an industry type… I think that there are… there was a study of car safety standards, that showed that in Latin America, South America, that car safety standards were much lower and people were dying from crashes, that they would not die of in Germany. I don’t know that’s very… There is another example of mobile phone companies, famous ones, European ones, that in India… I mean you can’t prove this, I tried to prove it… but they know that a certain proportion of their custom can’t read. And low and behold they get bombarded with nonsensical texts messages, which they press the button and they get charged a rupee and they are standing outside the phone Walla saying ‘why do I have no credit left?’ And they say ‘well you keep answering Bollywood trivia questions.’ I mean that’s a serious example. We couldn’t do a story on that. And I won’t name the company but it strikes me as that, yes, this is the good side of everything that you are describing but there is a slightly darker side to all this which is this differential treatment that some, frankly, poorer countries get.
PP: Where it is the case, and the reasons are not justified, we should work hard to take them in the away. The same that in this part of the world we still treat women and men differently; it’s unacceptable. There is still the same… we don’t give access to education to everybody in this world, in this part of the world… is unacceptable. So when we see this… that is why I say the most important values are dignity for the individual, respect for the individual and common good. So all these examples, wrong or right, is not really important to me. We should fight to take them away. Often, unfortunately in some of these emerging markets, the rules, the laws the regulations, might not be totally there. The purchasing power might not be there. We put our standards on there, as we have to write an article for the 9 o clock deadline, and this sounds very interesting. So these things have reasons. But where it boils down to reasons that violate these two principles – we have to fight hard for that. But all of our products in these emerging markets are the same as what we sell here. But we sell more products there without bells and whistles. So, because some of these people don’t have that purchasing power. And there is absolutely nothing wrong with that because, as they climb up out of their misery, they will be able to do more and that is a good thing.
MS: Sorry, two quick points…
FI: Can we just try and address the really interesting point there, but also about this merger of accountability between the 3 different sectors; I find that fascinating.
MS: Yes OK. So, so 3 quick points. One I think is that you are going to get differences in standards in different parts of the world. But actually part of the benefits of economic interconnectedness, is that now we are now finding out where those differences are and they are getting communicated more quickly. So I think just be very aware of that. The second one, in which I think the NGOs have a critical role, is capacity building, because certain counties just haven’t got the capacity to develop the infrastructure, the institutional frameworks. And I think we have a responsibility, from policy makers through to business to really transmit the best practice.
And I really do think the convergence issue, which is this bringing together of policy makers, business and NGOs in sort of collaborative ways is really critical. And I think what Paul was pointing to, which I think is really the big opportunity, is that if you can start link the targets around particularly sustainable development goals, targets become the basis for accountability. And I think one of the reasons why the Millennium Development Goals were so successful was because they set some clear targets. You can disagree about the targets, but I think targets, helping to clarify accountabilities, and if going forward from 2015, in the post-development era, we can get greater alignment between what we are trying to achieve at a global level around those sustainable development goals, link that to policy objectives and what, I think, business can achieve. I think that gives us a framework in which you can have meaningful collaboration across both the public, private and civil society.
FI: It’s interesting. The question, I found very fascinating because in your sector, maybe this line of accountability, is clearer and easier than… you know… when you are helping people’s satiation – you are saving lives. That’s not very controversial. If you are saying, something like finance, if a big city bank goes into India and offers emancipating microcredit to all, but actually it is what we would call subprime in another circumstance, these are you know… and some would argue that is exactly what happened in America, these ethical questions and these questions for accountability get much more difficult. I mean I know we all want to, in this forum, talk about where everybody is on the same page and we can all just hold hand together and celebrate but these are difficult ethical, political problems and you know, I just want you to talk about that.
PP: No, no, absolutely and I don’t disagree with that. But I think we are entering in a very good space about what we were talking about tonight in terms of the transparency, in terms of the consumer power, that a lot of the things that would not live up to the standards we expect everybody to behave in are much quicker exposed right now. That doesn’t mean that individuals or institutions or whatever, are driven by other objectives; I don’t disagree with that. We are not, and I certainly don’t want to give you the impression that we are, naive Utopian hippies in Unilever. There is a real world out there. There’s a real world out there – what we are only saying is ‘let’s make the force for good as big as we can so that we get the others with it’. And where we see trailers, because there are many free riders, also in our industry even in consumer goods, we try to put pressure on, or publically shame, or work with consumer groups, we have no problem with that either, to see if we can get the right critical mass. And as a result, you drive it higher.
FI: So where you are working with an NGO, if that NGO, spots something it doesn’t like about your business and says… and goes public with it, what would you do in that situation?
PP: Oh it depends on the NGO, obviously, because there are so many NGOs. And often there are some very good NGOs but there are also some that have approaches that aren’t actually constructive for anybody to solve things. So it’s like all your shareholders with different opinions. So you have to… it’s a very broad question that you're asking.
PP: But what we do is we work with all of the major NGOs to try and solve the enormous issues we have in front of us. We’ve created the Unilever foundation, not long ago – about 3 years ago – and we deliberately decided to take out the world food programme. We supply about 20 million meals a year. Oxfam, Save the Children, PSI, and UNICEF, (did I mention that?) so 5 of them. And we work with them on scalable programmes because we thought that it was better to work with fewer NGOs, which is a difficult choice, but to scale things with real impact globally, leveraging Unilever’s scale than working with many, many NGOs. And there are some NGOs that are so absolutely passionate for some issues or another, that unfortunately we don’t want to… not that we don’t want to, but we don’t have that capacity to work with them now. So that’s a difficult choice, but I think at the end, we only have 24 hours a day and limited resources.
FI: Is there anyone from an NGO here that’s worried about this kind of co-option, or this borderline between corporations and NGOs. So let’s take 2 questions on that line. Yep.
Audience 5: Andrew Ward from the Prince’s Youth Business International. We’re an NGO and we are a global network of organisations in 42 countries, helping young people set up business, creating jobs on average about 3.4 per entrepreneur. My question to you, Mr Polman, I'm pleased with the work you are doing – it’s extremely good – and particularly obviously in the hygiene and the nutrition, helping young people start a life, but we do have this major, major problem in the world, a global problem, and this is youth unemployment. Nearly 75 million young people aged 18 – 24 unemployed, and we’ve seen in counties, just even like Spain, what happens when young people don’t have jobs. And we are in a situation now where not only young people haven’t got a job but young people haven’t got a job, they never had a job. And that’s a big shift that we have to change. It’s a challenge for us around the world. So I really would welcome the opportunity to converse with you at a later stage on how we can work as an NGO in collation with yourself to make things happen and I’m glad to see that Accenture and Barclays are two of our global partners. And I would hope that Unilever would be able to join that. Because you are helping up to 2020 500,000 farmers. Well that’s a great start but it is only a start. I was recently in Kenya and the youth unemployment is 65% it’s 80% in Uganda. These countries, yeah fine in Germany it’s 7% in this country it’s 20%, but the fact is there are a lot of people in a lot of poor countries that need our help and the only way that can be done is working in a local context but with international support.
FI: OK, why don’t you start answering that and if you could just pass the microphone…
PP: I’m nodding violently yes. I agree with that. You say 500,000 is a start but don’t set the bar at a level that we cannot deliver as a company. We are only 1 company. 500,000 new jobs being created in small hold farming – no one has ever done that. I talk a lot with the prince himself, because I have great respect for the work that the prince’s trust does. We are involved in many projects in sustainable farming and many other things. One of the big supporters of the Cambridge Institute – so all my respect, honestly for all the efforts that you and him are doing. And the youth employment schemes here in the UK were part of the… the apprenticeship scheme… were part of.
I just want to point out one thing that Europe needs to do. I stuck out my neck and we had the first strike in the history of our company here in the UK. And people were saying ‘here you are, Unilever’s Sustainable Living Plan, wanting to improve the wealth, and yeah we have a strike because you are cutting pensions from people.’ Well, the Unilever employees are living longer than anybody else in this world. Their pensions were on the top 1% of the UK. And all we were asking was ‘why don’t we do a little less so we can invest it in youth employment schemes’. I thought that was quite normal. The unions are tremendously focussed on preserving the status quo, in Europe as well, which I protected. That’s why the 50+ party in my country, the Netherlands, is one of the fastest growing parties. Don’t take away. So, the transitions that we all need to make to help this major issue that is going on, that is a major concern to me as well – the youth unemployment, especially in southern Europe. Yeah we want to solve that. We can’t solve it alone but we want to be part of that solution.
I went to Greece; deliberately I saw the prime minster, who is always happy to see a businessman because nobody is visiting him, except Brussels to ask for more money. And, you know, we have the leading olive oil brand, you know, the leading olive oil brand. And that’s an ideal crop to create jobs, because these little islands, you cannot put a factory therefore Europe – it’s not economical, it can’t compete. But olive oil, you pick by hand, you can create a lot of jobs. So we have 15,000 Greek people working for us because of the olive oil. I said, ‘why don’t we sit together and see if we can create another 15,000?’ That’s the type of discussion we need to have. And that is what the role of business is. But for that he needs to put in, perhaps not the tax system that he has currently, to try to solve his other problems. He needs to help with export facility. And other things. You need to do that together, instead of saying ‘oh yeah but that’s only for Unilever’s benefit, you make money on it and you do it.’ We are talking about lives of people. So I agree with what the Prince’s trust does; I agree with your questions. Some of these terrible situations in Africa, where I am quite often myself as well. But in due respect, due respect, the 500,000 target that we have set ourselves, we currently have a hard time reaching it because the capacity building on the ground isn’t even there.
FI: The gentleman over there. Yep.
Audience 6: Yeah so I had a comment about, oh sorry, I had the microphone.
FI: Go on.
Audience 6: Yeah I had a comment or a reservation. You were asking about reservations on NGO partnerships and I’ve been working in one of the 5 that Paul just mentioned, but I won’t say which. I do think that there is a concern that when everybody is working together, in a partnership, when funding streams start to get mixed, when friendships start to get developed, I do worry about whose place it is to take the critical positions and go out on a line and criticise what needs to be criticised. So that’s the reservation I expressed. And I also have a question which is, I find it striking that Paul Polman started talking about growth, about sustainability while doubling turnover. And I wondered if Unilever had managed to get to a point where they questioned the priority on growth.
PP: Priority on what?
FI: On growth. If you could just bring the thing down to just here… the microphone. Paul…
MS: Let me just make one point on the NGO collaboration issue. I think it is very important that we… if you come back to a lot of the sustainability – it’s about scaling, it’s about acceleration and it’s about finding best practice. And one of the things that Paul mentioned is that we waste an incredible amount of food in the food chain. And I have seen a fantastic example of where a comms company, and NGO and a fertiliser company essentially have been working together to help farmers, in East Africa, understand better what are the prices for their food and for their products, and therefore be able to help product to market and eliminate some of the waste. And that is a really good example of where I think tri-sector collaboration has worked very effectively. And I think as we go forward is to highlight examples like that of best practice, and then really be able to, sort of, see how we can scale that more broadly. So how do you take that model and take it to India or take it to a Bangladesh or take it somewhere else. So that I think is part of what we have to try and do, and when we see an example of things not working so well that we take lessons from it. But I think a lot of the way to scaling by being really clear about practice, where things work, why they work, and then being able to move things forward.
FI: And if you just want to answer those questions.
PP: We could not work with NGOs if they were not critical. That does not interest me, because if we all become like minded because one feeds the other etcetera then you defeat the purpose of reason for being. So it’s very important that we keep that alive because the NGOs are aggregations of citizens, and if they are responsible on that we want that critical voice. We are now working on the debate on what is the living wage and what is social compliance standards in the value chain. And I cannot solve that myself. I don’t have any idea on that topic. But working with several NGOs, challenging us, pushing these boundaries. And we actually perhaps running a bit faster or further than we otherwise would, is a very important thing for us to stay alive. So… and on top of that… for that reason for example, one of the WWFs or others, we give limited funding, because we want the NGOs to find their funding by what they do but then we also work together on the projects and the money goes to achieving what we are trying to achieve. And we do that, not because we are mean and lean, but we do that to help the NGOs maintain their role, that you rightfully say they have to play. It’s a very important point that you bring up there.
On the second point on growth and long-term. Just going back to the gentleman from the Prince’s Trust, who is going to solve the unemployment? Everyone is concerned, not just the CEOs, but everyone in society – including the young people. From all the research we do and others do, a job is the first thing they are worried about. And for that you need to create opportunities to have a job; that is growth. You go into the emerging markets and you see the same thing. You see an enormous desire to improve their standards of life. And for that it’s growth. We have to define growth slightly differently from just GDP, in the same discussion as the PML versus SPNL or EPNL, environmental accounting or social accounting, we also need to have a broader definition of GDP. And it’s starting to happen. Where education is part of that, where pollution or absence of pollution is part of that, where quality of life is… the GDP measure is really a too narrow measure there as well. But ultimately you need growth to create the jobs. 200 million unemployed now, 250 million jobs more need to be created in the next 10 years.
But growth, and this is also what we put in the report on the high level panel, has to be sustainable, has to be more equitable. So we call it inclusive in the report. So the way we grow has to change. Now, there’s no problem growing, but people are going to say, ‘but where are all these resources coming from and how do we do that?’ This is exactly why I tell you in our model we need to de-couple that growth that comes from environmental impact. We are consuming more music now than ever. We had the big records, then it became the CDs, and I thought ‘well that’s the end of it because nobody can invent something better.’ Now all the music is digital. We’ve created an ability to consume, if you call it that way, or to enjoy at a higher quality of noise than ever before, an access than ever before. Yet the stress on the earth… the earth’s resources are less. It’s a great example.
FI: Just there.
Audience 8: Thank you. Tanya Barron from Plan International UK. I very much liked your last question. It was a great invitation from us who are NGOs. We work very closely with Barclays on a big programme. We’ve just got 500,000 into village savings and it’s a great thing to have these corporate civil society partnerships. There are ways in which I think the NGO world is becoming more businesslike, and that’s a good thing. But there are also special things that we can bring to the table and for us in this project… I mean we are to do with village savings, for young people to start up their own small business start-ups. And we bring the young people, because that’s what we are good at. So Barclays are helping people who are unbanked to have access to banks and we are very good at bringing young people, so we will have at least 100,000 of those people will be people under the age of 25.
PP: That’s very good. Thanks for sharing.
FI: There’s a… there’s a… yes. Can we be quite quick? We’ve only got 2 or 3 minutes left.
Audience 9: Hi, it will be very quick. Graham Randal from the New Economics Foundation. I was also going to ask the growth question, perhaps you can explain Paul… it’s been very inspirational so far, but how can you create the innovation to create jobs, create the kind of growth you are talking and reduce the environmental impact you are talking about in Western countries, where there is much more of a problem and that problem is overconsumption.
FI: OK, we’ll take another couple. Have you got the microphone. Yes, OK.
Audience 10: I would like to ask about the UN Global Compact. Does… will this work? Because it is not legally binding. Big companies like Google don’t even pretend to pay lip service to it. So how… is this realistic? Will it work?
FI: Good question. And there was another one down here. And if you could make it quick we can go to this lady down here as well.
Audience 11: Thank you. Paul, I really enjoyed your talk, I think it was brilliant. You talked a lot about the alliance for food security. I’m here [laughs]. But I have read today, a fair bit of criticism already about this partnership and some comments that some countries are not signing up to it. Partly… from the likes of Friends of the Earth, Grain and George Mobio’s column has just come out. Criticism based on things around it not really allowing seed sharing in Mozambique, some comment around liberalisation of land deals in Ethiopia, and that running counter to recommendation including from the Committee for Food Security, which you mentioned you had been involved in. So I’d be really interested to hear your response to that because that upsets me a bit because it sounds like that was a good progress, but some quite good people saying not.
FI: Go on, over here.
PP: I actually also read the friends of the earth article coming over here, so it’s good that you mentioned it.
Audience 12: Very quick one. Thank you very much I found it really inspirational. In terms of positive incentives, thinking about the post 2015 goals, how’s the panel suggesting that we work together to ensure that the nation states do sign up to some very positive targets.
FI: OK, so how do split this up. UN Global Compact and the post 2015 goals, Mark, and final comments.
MS: OK, I think UN Global Compact – again a lot of it is about peer pressure. I think that’s very important. Paul mentioned about the coalitions of the willing, and I think, actually the real issue here is leadership. I think the challenge around a lot of the sustainability companies is that you have a lot of Chief Executives who say ‘sustainability really matters’ the key issues is execution and we really need to hold them to the fire on execution. But I keep coming back to good best practice, examples becomes very important in that world.
I also think, another subject, but I really think there are some genuine competitive advantages that you can gain by being responsible, environmental, and I think there is an opportunity to really demonstrate leadership in that context. That also links in to where we are going in terms of the environmental, the STGs. I think that it is a critical stage that we are at. This is a decade of transition in my opinion. I think again, it’s very important – no one country can drive it on its own – so I think it’s very important to look for coalitions again, around sort of political leadership. No reason in my opinion why we can’t be reasonably ambitious.
But what I would say to all of you is, that you’ve all got a role to play as well. This is all about big stuff, STGs, political… but you can still... all the digital empowerment… you can still play a role, so I encourage you to… sort of… if you feel strongly about it, get in there, send the messages, make sure it happens.
And I’d just say one point over here; I do think innovation in the environmental space is key. We haven’t perhaps talked enough about that. But I do think there is an opportunity, going forward. If you look at the speed and scale which things are moving the opportunity for business to continue to innovate, whether it is through the customer end, whether it is the environment technology, all of those, are very important. Thank you.
FI: OK, Mark down here, has said please come to the talk on Wednesday and we can talk about the UN Global Compact a lot more. Shall I pass that on?
FI: Any other messages? Any tweets?
PP: You know, the key thing on the post development goal is probably the most important question, because I’m thinking a bit and writing down and I was just looking at my blackberry to get some information because we have a window of 2 years and now we have the open working group on the STGs, because unfortunately we are on a trajectory from Rio, where you have the MDG high level panel that I was member of, David Cameron was a co-chair with President Yudhoyono and Mrs Sirleaf. We produced a fairly courageous report that was, overall, well received. Although 10% had the same comments as what you are now referring to, but that’s the world we live in. But overall well received.
And now we need to be very clear that this is what the world wants. We had 500,000 people that reached out and many millions more because they were represented by organisations from Actionaid to PSI, to the Young organisation, so we need to capitalise on that. So one of the things we are trying to see is can we form the networks of the young? There is Nik Hartley Partly here in the UK is the Restless organisation, there is the Young African Movement which has been incredibly vocal. We are going to South Africa in 2 months time – Desmund Tutu, Bono, others on the One Young World and really see if we can use the young to keep pressure on because the politicians even today might not be there tomorrow. So you have to do that. There is the website we've created 'the world we want'. We want people to participate.
September, we have the big event coming up in New York, which is very important. The Global Compact will be there as well, focussing on the Millennium Development Goals, looking at Africa specifically. Yesterday, I was talking to David and Justine Greening to see… the event that we organised and the reason we got involved to be sure that it was organised, that we maintain a few events, between now and 2015. So that activity system is very important.
And then we are working with, unfortunately I have to use the word as we end this thing, with an advertising agency, to see how we can communicate and reach the people, to aggregate and create that momentum. And we are happy to spend money on that and that's what we call advertising and we are proud of that. So that is what we do for a living.
FI: And just on the specific point made by Amy about the...
PP: Yeah the Friends of the Earth. So, it's like in anything. In Holland you say where there's smoke there's fire. But the way we need to do it is very important. We are very mindful of that in terms of land rights, women, sustainable agriculture, issues of bio fuel, subsidies it’s not that easy. Issues of seed rights, they are coming up in every article. So everybody understands that. To not show up, to not participate, then to have your block out with all the things, to me is not acceptable. We are there to try and find compromises to feed the world. We have 12 heads of state coming in, who spent not only the weekend but 1 or 2 days... We have 4.1 billion of pledges. A lot from the European Union, by the way, that we want to put to good use in a responsible way together. You can continue to write these blogs, but fortunately what I have discovered wwith the web is, it's easy to google these blogs and come out on your desk, but the web is now a more sensible system of self-editing and auditing to increasingly makes it the voice of the minority. So you have to be very careful. So I say to these people with due respect, 'come join us with practical solutions.' Practical is a big word on that.
And I think on the innovation - really quickly - what we do on our innovation funnel is all of our brands now have a solution mission. We are not there yet, but my goal in life is... not that... but my vision is every brand has a billion fans, that’s it’s a movement for change. Like Lifebuoy is a movement for hand washing and hygiene. Dove is a movement for women's self-esteem. If all these brands are a movement of a good cause, these brands will do well. I'm not actually worried about that, so how do you create these positive movements so every brand has a social mission? And it's part of a movement that belongs to the broader society - you have to steer it. In our innovation programmes, we look at everything through a green funnel, as we call it. We take the responsibility for the total supply chain. So, for example, from agriculture, to sustainable living, we call it sustainable sourcing to sustainable living. Don't forget about our factories and our travel and our offices - they are important - but we do more than any annual report. But unfortunately it is only a small impact. So if we can get people to take less showers, or cook differently or work differently on the water usage in their homes, we have a much bigger impact that we can all do ourselves. So we work with our innovation programmes, our communication programmes to look at a total value chain impact.
Our plan that we put out that makes it a little bit more unique, in that sense, when we talk about total decoupling, we talk about total decoupling for the world, not just what we can control and make these numbers sounds big. So every hour of our activity systems, our reward systems, our measurement systems are geared towards that. But only on activities that drive our growth. Because we don't have to compromise on that. There is no need to compromise on that. And that's why some people don't understand. Also, only when it's really profitable. Not really profitable in the big sense, but profitable when it’s sustainable. Because, our profits, which we are very proud of, by the way, which have not increased that much since I'm CEO (the growth has, but the profits have more or less stayed the same, share prices have doubled by the way, so someone seemed to care that much about making it too big).
But all of our profits, people don't understand, only go to 2 things in Unilever. We pay dividends, but that is the pension of a lot of people. That's the pension of millions of people. We provide that. It doesn't come from governments. They don't create anything - they redistribute. And the other part of our money goes to building the factories in the emerging markets to give people more access to our products. We've grown 10 billion turnover in the last 3 and a half years. 10 billion turnover in a part of the world where people have one rupee or one RMB is 10 cents or 25 cents. Those are the 10 billion turnover, 30 - 35 billion acts of purchase, of people that don't have any money, who have decided to part with their scarce, hard-earned money, often spending 70-80% of their income on these types of products. And they have chosen by themselves to buy ours, because the solutions that were provided were better than what anybody else could provide, including their governments. That's why we've built the 30 factories and will continue to build the 30 factories. And in our accounting system, that has to come out of profit. So be it. Call it whatever you want. But that is the other part of sustainability that we don't need to be ashamed of and have to be able to confront people with and educate people on including the French by the way, but that's a separate story. Thank you for your time.
FI: We'll get onto that another time. Well listen, I'm... obviously Jon Snow would never have let this go 10 minutes over, so that's another reason for regret Jon's absence. I'll just take that question about the media on and answer it head on. Which is, yeah, frankly I don't think we take these types of issues, given the interest and importance, not just at high level governments, multinationals but also amongst the youth and the young, we don't take these on enough. And maybe it is because, cynically, there isn't enough of an angle and a story. But the beauty of social media is that all of you here can make this stuff really important. It is amazing how much, if all of you tweeted at a boss at channel 4, why don't we have a special programme about, you know, social enterprise business, what impact that would have.
And one last little anecdote. I do know that one of Paul's fellow FTSE chef executives... if you... I'll tell you now - it's Barclays - if you tweet anything @Barclays, it comes up in his room. Right, so you could actually have some fun with that one day shall we say? That is absolutely true. So what I'm saying is, it's in your hands. But we, you know, the media needs to step up as well and we can change these things.
But listen I just wanted to thank Mark Spelman for introducing the discussion and contributing so much, and I wanted to thank Paul Polman for his time - for his extra time - 11 minutes extra time. We were offered a fascinating insight into how a big business deals with being a corporate citizen in the 21st century. And we wish you luck in helping to create a better world to inspire more of your colleagues in other businesses to do the same. Thanks both of you for a fascinating evening. Thanks to Zamyn for organising it. Thanks to you all for coming.