Burgess COMMENTARY

If I compare this post by a Unilever executive in 2013 with what might have been put out 50 years ago in 1963, there is clearly progress. If I compare our ability to do amazing metrics in 2013 with what was possible in 1963, I am less impressed. Only a tiny part of what is possible has been embraced by the CFO community, and there are impressive filters to ensure that transparency is managed. As a former corporate CFO I understand some of this dynamic, and I feel it is time that this gets seriously addressed.

The corporate business model has been all about maximizing profit, and this has become pretty sophisticated as a result of business school education and the internal management information and accounting that supports the profit agenda. Most important, it is clear who gets the financial information and its use ... that is the C level staff, the Board and the Investors. These groups are identifiable and they have important influence on business behavior.

I argue that productivity has been very good for profits, and very sophisticated marketing and PR also is good for profits. This is not a new issue. It has been the business norm as long as I can remember.

The various environmental metrics are a big step in the right direction, as well as the SKU data ... but who is actually going to change their purchasing behavior as a result of the existence of these metrics. How can these data be organized so that customers get to understand directly the impact of their decisions. My view is that there needs to be a way of aggregating data so that people are able to identify with the data and their contribution to important change.

And how is Unilever going to address the productivity issue which at its most fundamental is less and less people producing more and more goods so that organization profit goes up and people and place go down. This is a core problem that has been getting worse for workers for the past 50 years and still does not seem to be understood. There is accounting for people and place that needs to be done for every old industrial town in Europe and North America to start understanding how much of corporate wealth has been extracted from all these places over the past few decades.

It is exciting how much work is going on in this space ... but I believe the underlying paradigm is still to improve profit performance of the organization, and what happens to people, place and planet is secondary.

Peter Burgess, TrueValueMetrics

Embedding & Measuring Sustainability: Unilever's Sustainability Chief Addresses Its Stakeholders 'Putting sustainability at the heart of our business model means that all key functions within our company need to drive the strategy.'

First of all I want to thank all who participated in our #SustLiving Twitter chat on May 17th. It was great to see so many people joining the debate and willing to drive positive change with us. Together we made #SustLiving a trending topic worldwide.

Since there were so many good questions that we could not cover within the hour, I will personally respond to most of these questions via a blog series here on CSRwire Talkback. The questions fall in roughly three thematics:

• Embedding and measuring sustainability
• Value chain challenges and opportunities
• Partnerships and policies

One of the questions that caught my eye was by @mbauerc, who asked: How is #SustLiving transforming Unilever's brand portfolio? Where do you see the biggest changes happening in the future?

We strongly believe that the only way to guarantee long-term prosperity is to grow businesses in line with the needs and aspirations of the communities they serve. This is not new to Unilever. Our sunlight soapcommitment to being a responsible and sustainable business was embedded in how we did business in the 1890s when William Hesketh Lever, founder of Lever Bros, wrote down his ideas for Sunlight Soap – a revolutionary new product that helped popularize cleanliness and hygiene in Victorian England – 'to make cleanliness commonplace, to lessen work for women, to foster health and contribute to personal attractiveness, and that life may be more enjoyable and rewarding for the people who use our products.'

A lot has happened over the last two centuries.

For example, we began our work on sustainable agriculture in the 1990s and on nutrition in 2003. Sustainability is now at the heart of our business strategy. The thinking, which has underpinned this move is based on looking at the long-term trends which are impacting our business: growth in Asia, Africa and Latin America, increasing resource scarcity, rising commodity costs and last but not least the enormous health and hygiene issues around the world.

@Casilda asked: How do you demonstrate to external stakeholders that sustainability is integrated into operations?

Putting sustainability at the heart of our business model means that all key functions within our company need to drive the strategy, from finance, human resources, marketing, communications to supply chain. We have many sustainability champions across the world embedding sustainability within the business, and we are not only building delivery into workplans but we are incentivizing everyone to get involved.

For example, factory employees can apply for investment to take their ideas to reality through a ‘Small Actions, Big Difference’ initiative, through which 600 ideas were identified in 2012, of which 100 will be implemented this year. Regarding demonstrating this to external stakeholders, we believe that our results need to show the progress, and facts like 256 sites around the world which are zero waste to landfill, show delivery.

@ctwigg asked how we engage our finance personnel in the Plan and to what gain?

Ah, good old finance! I must tell you that we have had a major breakthrough here in the last year. We now have a program that is being led through finance – championed by our CFO – to help us deliver unilever plantat each stage of the process… assessing projects, building robust cases for change, helping us to monitor our progress etc.

Movements for Social Change, Led by Brands

At the same time, one of the main drivers for change will, of course, come from our brands' movements for social change.

Our vision of creating a sustainable business is motivating for employees, but it is not always clear to them how to apply it to their role. We integrate sustainability into existing training and have created bespoke training. For example, new brand managers engage in a weeklong sustainable marketing challenge during their foundation course.

In 2013, we are also accelerating the integration of sustainability into our brands with each brand developing their own “sustainability ambitions” as part of their brand positioning statements – for example Knorr has chosen sustainable sourcing of their vegetables as a key area where they can partner with farmers and chefs to not only help to create the demand for sustainably sourced ingredients but also to show how this helps to deliver better taste.

@susanheaney asked how we achieve buy-in and integration of sustainability principles across our brands.

We use our Brand Imprint model to help us, which enables us to take a 360-degree view of the social, environmental and economic impacts of brands and – among other outputs – triggered Lipton’s knorr soupdecision to source its tea sustainably. We are now applying the methodology to help brands make a sustainable business contribution in line with an aspect of their positioning.

@missionmeasure brought up a great question: What's the next big brand on deck to echo success of the 'Lifebuoy Handwashing Program'?

While very few brands will have a full-blown ‘social mission’ such as Lifebuoy soap, we do expect all our brands to identify how they will contribute to the Unilever Sustainable Living Plan through concrete action plans.

For example, Magnum ice cream is sourcing its cocoa through the Rainforest Alliance certification, which enhances its quality credentials with consumers.

Other examples include:

• Dove driving female self esteem through the Campaign for Real Beauty.
• Ben & Jerry fighting social causes around peace and justice
• Pure-it providing clean drinking water
• Hellmann's improving child nutrition through its Real Food program
• Knorr driving sustainable agriculture through its Sustainability Partnership
• Domestos providing basic sanitation through its Toilet Academy and initiatives like World Toilet Day

Measurement is inextricably bound up with embedding sustainability in the business. The targets in the Unilever Sustainable Living Plan, for example, have been developed together with key functions throughout the business: marketing, R&D, supply management and supply chain.

[@svnickbarg asked: What rubrics, process & incentives are used (if any) for brand management Unilever sustainable living planteams to innovate on sustainability?] Each product category team has specific targets across their product portfolio for water, waste and greenhouse gases, and in addition our foods categories have targets for the four priority nutrients.

Internally, the Unilever Leadership Executive, our most senior executive body, receives quarterly reports on progress. Externally, we are committed to an annual update covering both progress and problems encountered as well as periodic engagement opportunities like the Unilever Sustainable Living Lab and #SustLiving Twitter chat to grow the dialogue and learn from the challenges together.

Developing Environmental Metrics That Matter

Before I explain how we measure our environmental impact, however, I would like to take a step back and ask the question - how do we define sustainability? Is it just ‘green’?

We see and support a shift from looking predominantly at avoiding the environmental “negatives” to actively enabling positive social impact – a 360-degree view at sustainability. This is also reflected in our company vision: to double the size of the business, whilst reducing our environmental footprint AND increasing our positive social impact.

We got several questions about measuring our footprint. From @britter03 who asked what tools we use to assess our environmental footprint and how we prioritize opportunities that come out of 400 sustainability metricsbrand categories, to @peggyatkc who asked if we are conducting life cycle assessments on core products or focusing on areas where we will have regional growth.

So, let me explain the process we used to develop our environmental metrics.

To understand our full impact on the environment, we wanted to measure the most significant environmental impacts of our product portfolio across the lifecycle. This includes multiple steps, from how we source our raw materials to how our consumers use our products and dispose packaging. By 'significant,' we mean impacts most relevant to our business and to society.

We therefore developed metrics for the following priority impact areas:

• Greenhouse gas emissions (GHG) which covers the full lifecycle
• Water used by consumers in countries where water scarcity is an increasing problem
• Waste, which covers product leftovers and packaging that goes to landfill.

Then we took each of the three metrics and applied them to a representative cross-section of our products: In summary we:

Analyzed 1,651 stock-keeping units (SKUs) covering all our product categories and key product formats. Together, these are representative of our total product portfolio of 30 000 SKUs. Covered 14 countries that together represent our regional footprint namely: Brazil, China, France, Germany, India, Indonesia, Italy, Mexico, the Netherlands, Russia, South Africa, Turkey, United Kingdom and the U.S.

This analysis enabled us to measure the absolute and per consumer use impact of each of our product categories for greenhouse gas emissions, waste and water use:

• Our average greenhouse gas impact is 50 grams per consumer use,
• Average water use is 8 litres per consumer use, and
• Average waste impact is 1 gram per consumer use.

But, coming back to positive social impact, we also want to make sure that our Unilever Sustainable Living plan has a lasting effect on livelihood improvement. Nowhere is this more urgent than with the 1.3 million smallholder farmers who are linked in to our agricultural supply chain.

Many of you are aware of the very high costs of impact studies, which make it difficult to measure impact at scale. In 2012, we consulted with NGO and supply chain partners on how to develop a livelihood assessment methodology, which is simple, quick and affordable. We need to further develop and test this methodology in 2013

If we crack this, it will be a very helpful addition to our arsenal of sustainability knowledge.

Hope this gives you valuable insights into how we are driving sustainability at the heart of our business. In the next blog post, I will focus on the challenges and opportunities of our value chain approach.

Meanwhile, please continue to share your ideas and perspective on Twitter with #SustLiving