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Unilever has pioneered sustainable business for the last decade. But has it done enough?

The corporate world's sustainability darling is the biggest buyer of palm oil and among the worst plastic polluters. Eco-Business looks at what it has achieved much over the last 10 years of its Sustainable Living Plan, and where could it do more.

In 2010, the maker of household brands such as Lifebuoy soap, Ben & Jerry’s ice cream, Lipton Tea, and Surf laundry detergent set out to make “sustainable living commonplace for 8 billion people”.

At the time, no company had set sustainability targets that reached so far beyond its own operations.

Along with that goal were 50 time-bound targets that the company deemed critical to its business and the world, “not because we knew if, or even how, we could achieve them”.

Last week, Unilever revealed the progress it has made on the landmark Sustainable Living Plan (USLP) it launched a decade ago, conceding that the sourcing of controversial commodities such as palm oil and reducing the emissions of consumers were among a number of missed targets.

The impact of the Covid-19 pandemic on the consumer goods industry has not dented Unilever’s commitment to sustainability goals. Chief executive Alan Jope said in a statement on Wednesday: “While we don’t really know what the world will look like post-Covid-19, I am convinced that there will be no future unless we double down on our commitments to look after people and the planet.”

We’re doing really badly on helping consumers reduce emissions.

Thomas Lingard, global sustainability director, climate and environment, Unilever

Much has been achieved in 10 years. Unilever, whose products are used by 2.5 billion people every day, has cut its waste footprint by almost a-third, and cut fossil fuels from its energy supply completely (where clean energy is scarce, it buys renewable energy certificates). It has also reduced the sugar content of its sweet drinks by almost a quarter. More than half of its management team are women. 

Crop failure

But some targets have been missed. One is the pledge to source 100 per cent of the agricultural materials it uses from sustainable sources.

Though the proportion of sustainably sourced crops has increased from 14 per cent in 2010 to 62 per cent in 2020, Unilever says it still lacks “full visibility” over its supply chains, making weeding out issues such as deforestation and human rights abuses difficult.

“Many of our crops we don’t source directly, so it’s very hard for us to make an impact,” said Ilaria Ida, Unilever’s global sustainable sourcing senior manager in a video showcasing the company’s 10-year sustainability story. 

Some 88 per cent of Unilever’s 12 key crops—which include palm oil, paper and board, soy, sugar, tea, rapeseed, cocoa, and vanilla—are now sustainably sourced, including 99.6 per cent of palm oil.

Unilever is the world’s biggest palm oil buyer, consuming about 8 per cent of global production. Aida Greenbury, a sustainability advisor for the Indonesian Oil Palm Farmer Union, commended Unilever’s initiatives in supply chain transparency, but said they do not go far enough for a company with so much influence over suppliers.

“More than five years ago, Unilever said that they could not map out their [palm oil] supply chains. Now, they still say that they do not have full visibility over their supply chain, despite their 2016 commitment to full traceability of all palm oil and derivatives,” she said.

Consumer goods companies should invest more in traceability systems and use their buying clout to push their suppliers to fulfill their traceability requirements, Greenbury said.

Unilever should put a price premium on responsible brands, such as deforestation-free products, to incentivise more smallholder farmers—which makes up a large part of the palm oil supply chain—to farm sustainably, Greenbury added.

Many western consumer goods companies have amassed their wealth from selling products created by massive destruction of nature in the tropics for many years. It’s time they gave more back.

Aida Greenbury, sustainability advisor, Indonesian Oil Palm Farmer Union

Unilever started a programme to help thousands of smallholders get certified by the Roundtable on Sustainable Palm Oil (RSPO) in 2018, but Greenbury said more investment was needed to motivate smallholders to farm according to no deforestation, no development on peat and no exploitation (NDPE) standards.

“Many Western consumer goods companies have amassed their wealth from selling products created by massive destruction of nature in the tropics for many years. It’s time they gave more back.” she said.

Asking consumers to consume less

By far the hardest target Unilever set for itself in 2010, which was unprecedented at the time, was to reduce not just its own environmental footprint, but that of its entire value chain, including consumers. 

While Unilever has cut the greenhouse gas emissions of its own factories by 65 per cent since 2008, the emissions of its value chain have grown by 2 per cent since 2010. And while the firm has reduced the water use of its factories by almost half since 2008, water consumption per consumer has grown by 1 per cent since 2010.

“Trying to persuade people to change their habits has been incredibly difficult,” said Sarah McDonald, sustainability director, personal beauty and healthcare. “People love long hot showers.”

Unilever has a high level of engagement with its value chain—29 per cent above the global average, according to a corporate supply chain report from environmental footprint measurement non-profit CDP. But Unilever will need to work harder to engage consumers to change behaviour, said CDP’s regional director, Pratima Divgi.

“Companies need to go beyond talking about which products consumers should use, and work on driving behaviour change collectively. That will only come through partnerships,” she said. This trend is emerging in the electricity sector, with companies working in collaboration with local governments to curb consumption, Divgi noted.

Unpacking the future

Unilever uses 2 million tonnes of plastic a year, and is routinely ranked among the world’s biggest plastic polluters. Under pressure to do more about ocean pollution, it adjusted its waste target in 2017 and 2019. Halving the amount of virgin plastic it uses, and raising the proportion of recycled plastic in its products to 25 per cent, are among the latest 2025 targets. The company’s recycled plastic content ratio is currently less than one per cent, according to data from the Ellen MacArthur Foundation.

The single-use plastic sachets it introduced to developing countries is a particularly thorny legacy issue. First welcomed as an innovative way to provide low-income families with affordable product volumes, the unrecyclable multi-layer sachets devastate marine ecosystems. Unilever set up a recycling plant in Indonesia to recycle the sachets in 2017, but the plant remains in the trial phase. 

Looking to the next decade and beyond, Unilever is rolling out a new strategy, named Unilever Compass, with the aim of being a world leader in sustainability—socially, environmentally and economically. Though the details have yet to be revealed, the company plans to continue to use its size, scale and brands to drive change through the value chain.

Pat Dwyer, founder of sustainability consultancy, The Purpose Business, said that she expects Unilever to try to transform the way consumers consume. “I am looking forward to a more transformative approach to the business strategy. We may not get rid of the multi-layer flexible single use sachets in developing countries altogether, so we need to see more recycling plants that they invest in,” she said.

“Rather than selling numerous condiments, maybe it’s about selling selected, high quality, high nutrition food that is affordable to everyone. I’d like Unilever to imagine the consumer in 2035 – and then lead us to deciding to shop that way – prioritising health and reducing impact on the environment, all for an affordable price.”

Divgi said she wanted to see Unilever’s strategy to have an impact beyond its big rivals, and raise the bar for more companies in this region. “Smaller companies need to stop looking at sustainability from a cost perspective, and recognises it as a market opportunity,” she said. Unilever’s fastest growing brands are also those with the strongest sustainability credentials.

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