YPO.org
   

Social Impact, Capitalism and Life After Unilever: A Conversation with Paul Polman

More than 500 global leaders joined a recent conference call organized by YPO’s Social Engagement Network to listen to Paul Polman, who stepped down from his position as CEO of Unilever in January 2018. During his 10 years of leadership the company’s shares significantly outperform competitors and the FTSE 100 index. At the same time, Unilever led the way to a new business model that has become an inspiration for global social enterprises seeking profit with a wider economic, social and environmental impact.

Described by the Financial Times as a “stand-out” CEO of the past decade, the engaging discourse proved that, while Polman’s Unilever years have come to an end, his leadership years in the service of others is far from over.

Best of times, worst of times

“I feel like I might already be talking to the converted,” says Polman as he began his talk to YPO leaders, many of who are leading global social enterprises of their own.

Quoting Charles Dickens in A Tale of the Two Cities, Polman described the present moment as the best of times and the worst of times.

“I think it is a little bit where we find ourselves. It’s a good time to be born in this world. People are living longer and healthier lives,” says Polman. “But at the same time, we see an enormous level of over-consumption and private or government debt in many systems in the world. We are leaving too many people behind.

In any system where you leave too many people behind, it will ultimately rebel against itself. The yellow vests on the streets in France is a manifestation of what many people feel across the world.”

But for Polman, global issues like growing inequality, climate change and cyber security provide an opportunity for the private sector to step up and deliver the right mechanisms to meet the challenges.

“We cannot just count on governments anymore. And I don’t think that it’s going to change over the next 10 years,” he says. “I have always felt that the reason that we, as businesses. are around is to help serve society. If after all, we cannot explain what we do positively for society, why should society keep us around? Business was invented first and foremost, to find solutions that would cater to the needs of the world’s citizens.”

Global challenges and solutions

Polman prioritizes climate change and the need to decarbonize the global economy as the most pressing global challenge for business leaders to address followed by growing inequality.

“Unfortunately, we are at the point of a negative feedback loop right now, where in some of these areas like oceans or forests, they risk becoming carbon emitters instead of carbon sinks and pushing more people back into poverty. And it is obviously the poorest that suffer most,” he says. “We are carbon junkies, exceeding many planetary boundaries and using resources well beyond the capabilities of this planet to recover. Plastics is a good example where we’re on a trajectory to have more plastics in the ocean than fish by 2050.”

To meet this challenge, business leaders, according to Polman, need to move their companies and help shift the economic system from a linear to a circular system, ensuring, for example, that more plastic packaging has the best possible opportunity to be reused or recycled.

Another issue close to Polman’s heart is income inequality: “We have an economic system that although functions for a few people, does not function for many … Even in the United States, the majority of young people feel that capitalism is not working for them.

Addressing these issues, according to Polman, requires moving the financial market to create longer-term value.

Long-term value creation

Even before joining Unilever, Polman had long been a strong believer in the negative effect of short term investing on the long-term health of companies.

“We have created so many financial instruments that are removed from the real economy – well beyond what is needed. Meanwhile businesses are chasing returns, increasingly taking risks and increasingly becoming shorter term. And that’s not a healthy thing,” he says, adding that this approach also shifts focus on shareholders and quarterly reporting away from serving society. It’s about value and values.

Early into his tenure at Unilever, Polman’s focus on long-term value creation led him to stop publishing quarterly profit updates; an approach that for many shareholders still remains controversial.

“We need to go back out of the shareholder primacy to a longer-term multi-stakeholder model. And actually, that is an increasingly more profitable model. The people will reward companies that behave and increasingly punish companies that don’t. “

“YPO members have the potential to move markets through their global reach, power of advocacy, particularly with governments, and above all by living life with purpose and humility.” Paul Polman, Former CEO of Unilever

Validating the connections between profit and sustainability

While business leaders may become overwhelmed by the agenda to make a difference, Polman remains an optimist in their collective power to make a difference while still delivering profit.

“The key to addressing the world’s social and environmental challenges is using the power of markets and building coalitions,” he says, citing the Sustainable Development Goals (SDGs) as the framework to guide the transition.

“The SDGs, adopted in September 2015 by 193 countries, are designed to achieve a ‘more sustainable and equitable future for all’ by 2030, which, by extension, will enable a better business environment,” says Polman. The Business and Sustainable Development Commission has estimated that meeting the SDGs could add some USD12 trillion and 380 million jobs to the global economy by the end of the next decade.)

An ambitious vision

While the recognition of the benefits of sustainability in business is gaining momentum, Polman pioneered this movement when, in 2009, he introduced the Unilever Sustainable Living Plan, a blueprint to bolster the company’s social, environmental and economic performance. Goals included strengthening the health and wellness of over a billion people, and reducing the environmental footprint associated with the production of their products, leveraging Unilever’s resources and global brands.

“We have done all of this with nearly a 300 percent return over 10 years and a 19 percent return on equity, demonstrating that it is possible to employ a development-focused agenda that delivers for shareholders and stakeholders,” says Polman who also set Unilever’s ambitious vision to decouple its growth from overall environmental footprint and increase its positive social impact.

He adds, “We find ourselves now in a situation cynically, that the cost of not acting is becoming higher than the cost of acting. Climate change, for example, is already costing this planet billions of dollars a year. And we see that number going up, obviously at a staggering rate.

“Besides that, it’s probably the biggest intergenerational crime that we are committing while also sending eight million people per year to premature deaths just by air pollution alone.”

Life after Unilever

Despite some progress on the SDGs over the past three years, Polman believes things are not moving fast enough.

“Last year again, deforestation was up 51 percent. We lost a forested area the size of a country like New Zealand. We are at a very delicate period of time that we risk getting into a negative feedback loop instead of a positive one. So we have to reverse that trend,” he says, emphasizing that while companies can outsource their supply chain, “they cannot outsource their responsibilities.”

So for Polman, the job is far from over. He continues to advocate, working with governments in hotspots like Indonesia and Brazil, while helping create big alliances and global networks of business executives, scientists, policymakers, investors, and farmers.

He was asked recently by French President Macron to help on the G7 Summit and by the U.N. Secretary General to play a key role in the upcoming climate summit. He is also continuing his roles as Chair the International Chamber of Commerce, Chair of BTeam and Vice-Chair of the U.N. Global Compact.

”We know what we need to do but are just not moving fast enough at scale to bridge the development gap. Leaving no one behind requires different partnerships and efforts” he says.

Polman’s new venture “Imagine” plans to start with Beacon Institute founder Velerie Keller and others to address that. “At the end we plan to unlock the power of true leadership to achieve these goals.”

“I’m terribly, passionately driven by helping people that can not help themselves and get involved in too many things. I wanted to be a priest and a doctor. I ended up with some serendipity in business and then I discovered the force of business and how you could be a force for good,” says Polman.

“I would not have been in Unilever if I could not have used it for more transformative changes out there. There’s still a lot of work to be done for all of us and I will passionately fight for that.”

As for final tips for YPO leaders, Polman says there is no magic formula to success in social enterprise, adding, “The world has an enormous leadership deficit and YPO members have the potential to move markets through their global reach, power of advocacy, particularly with governments, and above all by living life with purpose and humility.”

Rola Tassabehji began her career as a marketing trainee in Unilever Arabia and from there moved into several management roles within the marketing and communications function in Unilever global and regional teams, including brand development manager, Dove, Unilever Africa, Middle East, and Turkey and communications manager, Unilever North Africa and Middle East. Following ten years with Unilever, she relocated to Abu Dhabi, U.A.E and joined the team that launched INSEAD campus in the Middle East as external relations director. Rola completed her undergraduate degree at McGill University in Canada, has a Masters degree from the American University of Beirut and a post graduate degree in journalism from London School of Journalism.