Fortune • Unilever Ceo Paulpolman Has Remade His
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FORTUNE UNILEVER WORLD'S MDST ADMIRED RANK: NO. 38 2016 REVENUES: S58 BILLION 2016 PROFITS: S5.7 BILLION EMPLOYEES: 169.000 NUMBER OF BRANDS: 100+ • UNILEVER CEO PAULPOLMAN HAS REMADE HIS COMPANY AS A MODEL OF RESPONSIBLE CAPITALISM. SELLING BUT CAN THE CONSUMER GOODS POWER• HOUSE GROW FAST ENOUGH TO PROVE THAT HIS NEW MODEL WORKS? COAP BYVIVIENNE WALT AND SAVING THE WORLD 122 F0RTUNE.COM // HAR.01.17 A PHOTOGRAPH BY JULIAN EDELSTEI FORTUNE THE QUESTION IS, 'DO YOU RUN THIS FOR SOCIETY OR NOT?'" SAYS POLMÄN. "THE REAL PURPOSE OF BUSINESS HAS ALWAYS BEEN TO COME UP WITH SOLUTIONS." STEP OUT OF THE FRIGID DRIZZLE into Unilever's factory outside not particularly interested in discussing the results. Liverpool in northern England, and the brightly lit, automated (Unilever reported $5.7 billion in net profit for assembly line gleams in stark contrast to the gloom outside. the year on slowing sales growth.) The figures that Thousands of bottles shoot down a conveyor belt with a click-clack seem more pressing to him are ones that he's con• sound, in a streak of bright purple. Look more closely, and there vinced have greater potential to put his and other is an important detail. The new bottle is squatter than the older, companies in peril. More than 160 million children taller style on another assembly line, with a smaller dispenser in the world are stunted from malnutrition, he says. and a label explaining that this version of Comfort brand fabric Eight million people die prematurely each year conditioner is good for 38 washes, rather than the 33 of the last- from pollution. The world's richest 1 billion people generation package. The message is clear: Customers need to help consume 75% of its natural resources. "We're wast• save one of earth's most precious resources—water. ing 30% to 40% of the food in this world, whilst This might appear to be a clever bit of marketing by one of the millions of people go to bed hungry," he says, as if world's biggest consumer product companies, and marketing it amazed that the situation is even possible. "Why do surely is. But to Unilever, its updated, concentrated liquid is also we not have the moral courage to attack that?" a crucial innovation. It's one of countless tweaks underway by the Polman hands me just one document to read: a Anglo-Dutch company in its more than 300 factories across the report of the Business & Sustainable Development world, which churn out more than 400 brands for 2.5 billion or Commission, a group of CEOs and NGOs that ad• so customers—an astonishing one in every three people on the vocates business growth by applying the UN's de• planet. Central to these changes is a message Unilever is deter• velopment goals. In 2012, Ban Ki-moon, then the mined to convey to its investors, as well as to other companies: UN Secretary-General, picked Polman as one of Big corporations need to change the way they do business, fast, 26 people to craft 17 goals for the world body—the or they will steadily shrink and die. only business executive in the group. Introduced To most of Unilever's customers, the state of the world is prob• in 2015, the UN's Sustainable Development Goals, ably the last thing on their minds as they push their shopping carts or SDGs, include eliminating poverty and gender through the supermarket, tossing in Ben & Jerry's ice cream, Dove inequality. When I ask Polman how much time soap, Lipton tea, Hellmann's mayonnaise, and other Unilever prod• he spends on Unilever business compared with ucts. It's hard to imagine that eco-disasters might someday lead lobbying politicians and heads of state or address• to those items disappearing from shelves. But to Unilever, which ing NGOs, the World Economic Forum, Stanford's was born as a solution to a crisis, the potential for calamity seems Graduate School of Business, and others, he draws real enough. The company got its start in the 1880s, right here a blank. "To me it is the same," he says, sipping a in this picture-perfect redbrick village near Liverpool called Port cup of green tea. "I don't separate that. I think it is Sunlight—named after the world's first packaged, branded bar of an integral part of the way we run our business." soap and the company's founding product. It was created in an ef• Proving that point is now Polman's—and fort to stop rampant epidemics and child deaths amid the grinding Unilever's—major challenge. There is certainly poverty and squalor of Victorian England. Nearly 130 years later, ample evidence that the world is in trouble. there is still an acute sense at Unilever that the world needs fixing. This century has seen an acceleration of global- The person most responsible for that feeling of urgency is warming trends, as well as an extreme widening 60-year-old Paul Polman, the tall, soft-spoken Dutchman who of the gap between the world's richest and its has led Unilever as CEO for the past eight years. Folded into an poorest. But it is less clear whether Polman can armchair more than 200 miles south of Liverpool, in the com• succeed in convincing his peers in the business pany's London headquarters on the Thames River, Polman rattles world that it's their job to fix those problems—or off figures more commonly heard in the UN General Assembly at least, whether he can succeed in doing that dur• than the C-suite of a company with $58 billion in sales. Indeed, this ing his remaining time as CEO of Unilever. When past November the French government pinned a knighthood on the company named Marijn Dekkers as its new him, not for his ability to drive profits but for his vociferous global chairman last year, investors concluded that his campaigning to rein in climate change. first task would be to find a successor to Polman. When I meet Polman on a chilly February morning, it's just a If Polman is concerned about his job status, he few days after he has released Unilever's 2016 earnings. Yet he is doesn't show it—perhaps because he is so intent 12M fORTUNE.COM // MULT? World's Most Admired Companies Top 50 All-Stars, up from No. 41 Workers test new shampoo formulas in a lab at Unilever's facility in Port Sunlight, England. The com• in 2016. It's the sixth straight year Unilever has made the list, which pany spends more than $1 billion annually on R&D. is determined by surveying thousands of executives and analysts. But in the unsentimental world of markets, Unilever's good in• tentions count for little compared with its bottom line. And over the on making his development strategy work. To the past 12 months, the company's stock has slipped by more than 2% CEO, his logic seems irrefutable. Environmental while the S&P 500 has soared 25%. "A minority of investors I speak risks and poverty are fundamental problems for to give two hoots about Unilever's Sustainable Living Plan," says almost every part of business operations, from Jefferies analyst Martin Deboo in London, referring to Polman's storing data to manufacturing laundry detergent signature blueprint for Unilever, dubbed USLP. Polman introduced to growing tea. More customers will begin to shun the plan in 2010, and it now informs every aspect of the company's companies that fail to grasp that, he believes, sprawling worldwide operations. The dizzying array of 50 goals in• while businesses that practice gender equality cludes stopping all nonhazardous waste going to landfills, training and environmental preservation will inevitably 5 million women, and halving the water waste in its factories. become more profitable. In that sense, he thinks As a stagnant global economy has hit Unilever's growth during that Unilever can play a vital role in showing other the past two years, Deboo says, some investors have begun to ques• companies the best path forward. "This is not a tion whether the strategy should trump other factors. Unilever says charity we're talking about here, you know," he 80% of its investors see the approach as boosting long-term value. says. "We are running a business." Still, Deboo suggests that there's a sense Polman has morphed into Polman's embrace of sustainability as a core the classic Davos Man, more intently focused on fixing global prob• management principle has helped bolster Unilever's lems than the nitty-gritty details of operations. Indeed, Polman reputation globally. The consumer goods com• says as much. "I am really more interested in development," he pany ranks No. 38 this year on Fortune's list of the says. "And there is no better way than using companies like this to 125 • PHOTOGRAPH BY PETER DENCH rORTUNC.CON // MRR.Bl.l? FORTUNE UNILEVER • ONE PLANET, UNILEVER IS RETHINKING EACH BRAND UNDER ITS SUSTAINABLE MORETHAN LIVING PLAN, WHICH DEMANDS IT HALVE ITS WATER USE AND 400 BRANDS CARBON EMISSIONS, STOP SENDING WASTE TO LANDFILLS, AND HELP FIGHT DISEASES. HERE ARE FIVE EXAMPLES: BEN 8 JERRY'S LIFEBUOYTOTAL DOVEBODYWASH COMFORTDNE RINSE SDRECOMPRESSED SAVE OUR SWIRLED 10 HANDWASH Unilever says the new A newly released AEROSOLDEODORANT The company invented The hand-soap brand MuCell technology it version of the fabric Unilever says It this marshmallow is central to Unilever's uses to make its bot• conditioner uses redesigned the product flavor to mark the global handwashing tles requires 15% less 20% less water than In 2013 to use 50% global climate talks in campaign to help pre• plastic.