E-135: Corporate Sustainability Strategy

Unilever, Leader in Social Responsibility

(Case for Week 7, Oct. 10-16, 2016)
Unilever’s history dates back to the 1890s, when William Hesketh Lever, founder of Lever
Bros company, stated his vision for Sunlight Soap – a product he hoped would
revolutionize Victorian England and bring about a new era of cleanliness and hygiene.
He hoped “to make cleanliness commonplace; to lessen work for women; to foster
health and contribute to personal attractiveness, that life may be more enjoyable and
rewarding for the people who use our products” (Unilever, 2016a).

Today, Unilever’s more than 400 brands are used by over 2 billion people on any given
day, according to the company’s website. Their portfolio of products includes Vaseline,
Lifebuoy, Lipton, Dove, Hellman’s, Suave, Ponds, and even Ben & Jerry’s (Unilever,
2016b).

Yes, it was Unilever who bought Ben & Jerry’s in 2000, when it also acquired SlimFast. It
was a match made for commentary. Both were closely held companies at the time,
and even though SlimFast was the much larger company, the acquisition of Ben &
Jerry’s was the one that created a stir, at least in the environmental community. But
even though the purchase brought Ben & Jerry’s under the umbrella of Unilever,
agreements were made that conserved some of the original vision of Ben & Jerry’s
founders. These included purchasing milk from Vermont dairy farmers at a higher than
market rate, and donating 7.5% of the ice cream company’s pretax profit to charity
(Branch & Beck, 2000).

Unilever is one of the most highly respected companies in the world today, listed at the
top by far in the GlobeSpan and SustainAbility survey from 2015 (GlobeScan &
SustainAbility, 2015). It is recognized for its leadership in sustainability and its ethical
behavior. William Lever’s original vision has been expanded, and its corporate purpose
now states that the company’s success requires "the highest standards of corporate
behaviour towards everyone we work with, the communities we touch, and the
environment on which we have an impact" (Unilever, 2016c).

How has Unilever achieved this success? What management tools and systems has it
used to facilitate its rise? What organizations and companies has it partnered with to
embed its systems throughout its supply chain? How has it made a business case for its
investments in local communities and environmental resources? How has it improved its
stakeholder engagement? These are some of the questions we will investigate this week
as you delve into Unilever’s various engagements around the world.

And there is good news for you! Unilever has published extensive information on its
website regarding sustainability. There are two smaller overviews of their sustainability
plan available for download, and the rest of their information is linked throughout their
website. Their GRI reporting section has a link to a downloadable PDF, Unilever’s GRI
Index, that contains links to various areas on the website or other documents dealing

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with specific topics. This helps the reader get right to the section they are interested in,
and also provides an overview of the reporting topics (Unilever, 2016d).

This is relatively new trend in sustainability reporting, allowing the reader to quickly drill
down to particular areas of interest rather than having to “thumb” through pages of a
sustainability report PDF searching for the topic. You will have an opportunity to
compare this method of GRI reporting this week versus the more formal sustainability
report compiled by Alcoa last week. Which do you prefer? Advantages of the online
system allows for constant updating, but are there also advantages to having
everything in one document? It will be interesting to see how companies continue to
enhance their reporting and search for the right solution for their particular group of
stakeholders.

Unilever’s Sustainable Living Plan aims to “decouple” its growth from its environmental
impacts while increasing its positive affects upon society. They speak of facing the
challenges of climate change while still providing for human development, striving to
help people live comfortably while staying within the limits of the natural world, and
making sustainable living “commonplace.” To achieve this, they have developed
strategies to integrate sustainability into their products and their supply chain. They
have made public commitments to integrity and good governance, and they are
reporting on their progress in regular intervals (Unilever, 2016d).

However, they have not achieved all of their goals. Just as other multinational
companies struggle with labor issues in their supply chain so has Unilever. We saw in the
week on stakeholder engagement how Levi Strauss worked with local NGOs and
companies to help resolve its supplier issues. Unilever has also engaged with other
organizations, and a 2013 report by Oxfam (Wilshaw, Unger, Chi, & Thuy) explains the
some of the issues and challenges in depth regarding labor issues in Vietnam.

Despite codes of conduct and policies prescribed from the top management and
audits in the field, problems persist. Oxfam found that the local managers lacked the
knowledge and capacity to ensure that the guidelines specified by the company were
followed, and Unilever’s goals for fair treatment were not met. For example, workers in
supplier factories were found to be hired on a temporary basis to avoid the minimum
requirements set by Unilever, and overtime hours were well beyond the legal limits.
Keeping workers on a temporary basis avoided the right to collective bargaining and
other benefits.

Unilever partnered with Oxfam on this report, and it is a testament to their commitment
to improvement that such transparency was present. Indeed, Unilever’s VP HR of Global
Supply Chain recognized the importance of employee welfare when he stated,
“Unilever’s analysis shows that where there are good conditions and empowerment of
employees, the factory has the best results.” (Wilshaw, Unger, Chi, & Thuy, 2013, p. 14).
The Oxfam report contains recommendations for proactive stakeholder engagement
and management priorities to achieve these goals, as well as a commitment from
Unilever to study the problem in depth and implement appropriate procedures to
achieve fair working conditions throughout the supply chain.

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The current information from Unilever recognizes the continuing challenges of labor
rights in countries where laws and governments are not as protective as they are in
developed countries. For issues such as child labor, they are working toward
incentivizing their suppliers to do better, rather than emphasizing compliance. They are
working toward building capacity for their suppliers and promoting and rewarding best
practices to encourage more suppliers to perform better rather than competing with
one another for low prices (Unilever, 2016e). This sounds very similar to what we saw with
Levi Strauss’s approach.

An updated publication from Oxfam in 2016 reports significant progress from Unilever on
many of the labor issues recognized in 2013, but many challenges remain. In particular,
they made progress in Vietnam, increasing trust between workers and managers, and
improving the grievance procedures. Suppliers are also more aware of expectations,
and excessive labor hours have been reduced. However, there are still some key
unresolved issues that were addressed in the report: convincing more suppliers of the
business case for fair labor treatment; ensuring fair compensation across the board and
empowering women; and addressing systemic issues of child labor, slavery and gender-
based violence – issues in the supply chain that affect others besides Unilever (Wilshaw,
Unger, Chi, & Thuy, 2016). This is a very tough problem, as you have begun to see, and
you will be able to address it from another perspective this week through the lens of
Unilever.

We have provided links to various Unilever webpages on this week’s page, and also
given you a link to the two Oxfam reports. This should give you a start on examining
Unilever’s activities. You should have an interesting week learning about this company
and how it impacts the world’s social systems.

References
Branch, S., & Beck, E. (2000). Unilever buys Ben & Jerry’s, SlimFast for Over $2.5 billion. The
Wall Street Journal. Retrieved from:
http://online.wsj.com/news/articles/SB955522850788928066
GlobeScan & SustainAbility. (2015). The 2015 sustainability leaders; A
GlobeScan/SustainAbility survey. Retrieved from:
http://www.globescan.com/component/edocman/?view=document&id=179&Itemi
d=591
Unilever. (2016a). Who we are: Our history. Retrieved October 1, 2016 from:
http://www.unilever.com/aboutus/ourhistory/
Unilever. (2016b). Who we are: About Unilever. Retrieved October 1, 2016 from:
https://www.unilever.com/about/who-we-are/about-Unilever/
Unilever. (2016c). Who we are: Purpose, value and principles. Retrieved October 1, 2016
from: https://www.unilever.com/about/who-we-are/purpose-and-principles/
Unilever. (2016d). Introducing our plan. Retrieved October 2, 2016 from:
https://www.unilever.com/sustainable-living/the-sustainable-living-plan/
Unilever. (2016e). Fairness in the workplace. Retrieved October 2, 2016 from:
https://www.unilever.com/sustainable-living/the-sustainable-living-plan/enhancing-
livelihoods/fairness-in-the-workplace/
Wilshaw, R., Unger, L., Chi, D. Q., & Thuy, P. T. (2013). Labour rights in Unilever’s supply chain:
From compliance towards good practice; An Oxfam study of Unilever’s Vietnam

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operations and supply chain. Oxfam. Retrieved from:

http://www.unilever.com/images/rr-unilever-supply-chain-labour-rights-vietnam-
310113-en_tcm13-355788.pdf
Wilshaw, R., Unger, L., Chi, D. Q., & Thuy, P. T. (2016). Labour rights in Vietnam: Unilever’s
progress and systemic challenges. Oxfam. Retrieved from:
https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/rr-unilever-
vietnam-progress-challenges-040716-en.pdf

Questions for this week:

NOTE: Remember that this is a virtual exercise. No contact should be made with any of the
case companies you are investigating.

1. Social Responsibility Thread: Why has Unilever been recognized as a leader in social
responsibility? What types of issues stand out from the perspective of the readings on
social responsibility we have provided this week? How are they improving their
performance? Who are their most important stakeholders, and how are they
engaging them in this effort? What are some of the challenges they are facing – are
they transparent about these challenges or do you have to find out about them
elsewhere? Can you find the business case for their efforts in improving social
impacts?

2. Sustainability Living Plan Thread: Take a look at Unilever’s Sustainability Living Plan.
What are the most material issues from a social responsibility perspective, and how
have they selected them? How does improving their performance in these areas
affect their performance overall? Are they cooperating with other organizations or
companies to learn about best practices, or are they the leaders in most cases? Are
there differences in various brands or regions, or are there universal tools and
guidelines used throughout the company?

3. Oxfam Thread: Take a look at the Oxfam reports mentioned in this case. What tools
and methods does Oxfam recommend to Unilever to improve the labor conditions in
its factories in Viet Nam? Looking at the second Oxfam report, what kinds of progress
has Unilever made, and how did it accomplish that? What do you think are the
toughest challenges, and how might those be resolved? Can you find similarities or
contrasts with the Levi Strauss stakeholder engagement on this issue?

4. Standards and Performance Thread: The Oxfam reports also mention international
standards and the need for better governance in the countries where Unilever and
other major companies operate. How is Unilever using these standards to address
the labor challenges it faces in Southeast Asia? Does this help to distinguish Unilever
among its peers? How does their strategy and implementation compare with other
multinational companies in a similar industry, such as Proctor & Gamble or L’Oreal?
How does it compare with companies such as Levi Strauss or Alcoa? For graduate
students, how does it compare with your own case company for your final paper?

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