Let us not mourn the recent announcement that Unilever is scaling back its sustainability goals. Let’s celebrate.
Late last month, Hein Schumacher, the consumer products giant’s CEO, unveiled in an investor call his company’s plan to refocus its sustainability goals to make them less ambitious and more tangible. Some of his and other companies’ long-term goals, he noted, have not been particularly effective.
“In recent years, the debate over the sustainability and purpose of brands has arguably generated more heat than light,” he said.
In the future, Unilever will abandon objectives that do not align with a particular brand or product in favor of objectives that have a material impact on the company and its stakeholders.
It turns out that the maker of Hellmann’s mayonnaise’s extensive sustainability commitments may have been spread a little too thin.
“We have too many long-term commitments that have not had enough impact in the short term,” Schumacher said.
Unilever’s move is a tacit admission that the world has changed when it comes to sustainability and a company’s purpose. The volatility of today’s world, both financial and otherwise, along with the anti-woke pushback that companies on both sides of the Atlantic have received, is forcing companies to take a closer look at the extent to which sustainability supports profits and productivity. Where it is not, it is questioned and, in the case of Unilever, reimagined.
The era when companies could make bold commitments without specifying how and when they will deliver them is coming to an end.
Unilevers stated purpose is ‘making sustainable living commonplace’. That verbiage is a legacy of the Sustainable Living Plan that the company launched in 2010 to much fanfare (among sustainability leaders) and more than a little headache (among analysts and business leaders). The plan set out 10-year business goals for everything from carbon emissions and water use to global nutrition and poverty.
The project has helped strengthen the sustainability leadership of Paul Polman, who was CEO from 2009 to 2019. Since stepping down, Polman has become one of the leading voices in the sustainable business world, most recently focusing on how companies can become ‘net positive’. and how leaders can become ‘braver’ when it comes to tackling the world’s biggest environmental and social challenges.
In many ways, Unilever’s move is not unexpected. After Polman, the company is under increasing pressure to demonstrate how its focus on sustainability benefits shareholders, including a growing chorus of vocal activist investors. Last year, when Reuters spoke A dozen of Unilever’s largest shareholders praised the company most for putting sustainability issues at its heart, although half said they hoped the company’s leadership would provide more clarity on how it would balance sustainability with financial performance.
From grandiose to greenwash
Schumacher’s new focus on tangible, shorter-term goals may, paradoxically, be the right move at a time when companies are accused of short-termism. Too many companies have committed to 2040 or 2050 targets without sufficient accountability for what happens between now and then. Some of these long-term goals rely on technologies that are variously unproven, unreliable, or uneconomical, leading many activists to view them as grandiose greenwashing.
Moreover, the era in which companies could make bold commitments without specifying how and when they will achieve them is coming to an end. Where such ambitious commitments were once seen as laudable – Apple’s vision to one day source 100 percent of its metals from recycled sources is a prime example – such ambitions are viewed much more skeptically when companies cannot show realistic targets and timelines.
Under the new regime, Unilever will focus its sustainability initiatives on four pillars, including climate, nature and biodiversity, plastic waste and the livelihoods of its customers, communities and suppliers. Rather than setting company-wide goals, individual division heads and brand owners will need to determine what metrics, if any, they should use to assess progress.
That could complicate reporting and transparency, especially if the end product is a hodgepodge of metrics that cannot be easily compared or aggregated for use by the various NGOs, reporting services, investors and regulators interested in such data.
Schumacher’s plan raises questions important not only to Unilever, but also to other major companies, especially those with diverse and expansive product lines and supply chains: In pursuing sustainability, should companies strive to get a few things right? do, or do they have to do everything right? for all stakeholders? Should goals be centralized or set and measured by those closer to the front lines? How should companies balance short-term and long-term commitments?
Schumacher’s new roadmap shows that goals, ambitions and metrics may need to be reprioritized, even as companies are pressured to meet increasingly ambitious and comprehensive targets. It also represents the maturity of the sustainability field and the need for companies to fully focus on the material impact that drives both financial and sustainability results.
And it can cause reflection among executives whose companies have drawn up long to-do lists — or been given such lists by customers, investors or activists. It may be time to roll back these broad mandates if they are inconsistent with a company’s actual operations and impact.