Abstract

The case discusses global FMCG giant Unilever’s radical refocus of its sustainability strategy that included extending deadlines for taking action as well as reducing the scale of its targets for environmental, social, and governance (ESG) measures to focus on growth. Amidst years of disappointing growth and dwindling stock performance and under pressure from shareholders to cut costs and generate profit, Hein Schumacher (Schumacher), who assumed the role of CEO in July 2023, introduced a revised and more focused ESG strategy. The new strategy involved structuring the company's sustainability around four pillars – climate, nature, plastics, and livelihoods – with division heads and brand managers setting progress metrics. As part of the revamped strategy, Schumacher axed a range of ESG targets, including pledges to halve food waste, hire more disabled staff, and cut the use of plastic. The consumer goods company also walked back its previous commitment to slash its use of virgin plastics by 50% by 2025, with the updated target focusing on a 30% reduction by 2026. Unilever’s downgrading of its ESG commitments received mixed reactions. While some people commended the shift, others expressed disappointment. Going forward, the challenges ahead of Schumacher include the tough task of building upon his predecessors’ sustainability legacy while striking an appropriate balance between purpose and financial success, maintaining profits, and boosting growth.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Analyze how Unilever integrated sustainability into its business.
• Comprehend the interrelationship between Purpose and Profits.
• Understand the concept of rational sustainability.
• Analyze the revised sustainability strategy adopted by Unilever.
• Identify the issues and challenges faced by Schumacher with regard to Unilever’s revamped ESG commitments.

Keywords

Purpose-led Brand Strategy; Corporate Sustainability, Responsible Leadership; Conscious Capitalism; Profit vs Purpose; Rational Sustainability; Realistic Sustainability; environmental, social, and governance (ESG); Sustainable Development Goals