Capitalism is an innovation machine, and that’s why companies can and should be a catalyst for the must-needed changes in the world. We must see capitalism in a new light and not as a mechanism that is there only to generate financial wealth. It’s a system that draws the balance between dimensions such as environmental and social justice and respect for democratic organizations.
If we put sustainability at the top of the agenda and ask the right questions, companies will be able to find the right answers.
Companies impact and are impacted by the external surrounding environment. Problems such as climate change, erosion of natural resources, social divides and, more recently, a global pandemic, affect the world and the way we live.
It thus makes little sense to keep considering profit as the definite and only goal. According to Rebecca Henderson, economist and professor at the Harvard Business School, “we need to rethink the role of companies”. Companies have a huge capacity to innovate and to generate a positive impact on the planet and society. With this ability, comes the responsibility to deliver “social value”, in addition to “shareholder value”.
“Social value” means adopting a multi-stakeholder approach. Managers can no longer respond exclusively to shareholders. Rather, they must respond to all stakeholders surrounding the business – employees, consumers, customers, business partners, the planet and society.
And the resulting concept is thus “Purpose”, intrinsically linked to environmental and social sustainability – a concrete objective that goes beyond profit maximisation.
Mission, vision and values are three fundamental pillars for any business to exist, but purpose is crucial for businesses to survive in the medium-long term. Purpose must be at the heart of the business strategy.
At Unilever, the purpose was born in the company – “promoting a sustainable life for all”. However, quickly became clear that for this logic to have an impact it had to be incorporated throughout the value chain. Currently, our corporate strategy is based on three assumptions: companies with purpose persist, brands with purpose grow and people with purpose thrive.
Making this change required many changes in the way we think, decide and act. We strive to become the global leader in sustainable business, proving that future-oriented business models and a positive impact lead to top performance.
The results are actually there to prove this. Our brands with purpose grow 69% faster than the others and correspond to 75% of our total growth.
And we started including financial and non-financial results also in our annual report. The latter includes the sustainable goals we are committed to and the respective results. All goals respond to a final strategic objective, which involves improving the health of the planet and society, increase people’s confidence and well-being and contribute to a more just and inclusive world.
Setting sustainable goals and measuring results is an essential step towards change. When we publicly announce something and take responsibility for delivering results, commitment is inevitable.
We have known this since 2010 when we presented the “Unilever Sustainable Living Plan” – an ambitious and pioneering plan that materialized our purpose. For 10 years, we have worked to achieve goals in line with the Sustainable Development Goals. We are established in more than 190 countries, through our products and we impact more than 2.5 billion people every day, helping to improve their health and hygiene.
All results obtained are publicly available, maintaining transparency and the ambition to do more and better. We know that there is still a long way to go and that is why we did not stop when the “Unilever Sustainable Living Plan” ended in 2020. Since then, we have established and publicly announced new environmental and social goals, which reflect the change we want to see in the world.
An example of these is the “Clean Future” initiative, aimed at promoting the end of the use of chemical substances derived from fossil fuels in cleaning and washing products by 2030; while we find new ways to reduce the carbon footprint.
All these changes were only and are possible with the involvement of the people who make up the company. Rebecca Henderson says that “people motivated by a better future are willing to take more risks and be more innovative.”
Therefore, companies must ensure strategic alignment between all levels of the organization. A shared purpose gives meaning to everyday work and guides decision making, and this is essential to create innovation and have a positive impact.
With the right tools and motivation, purposeful companies can provide the most innovative and effective responses to environmental and social problems.