Unilever's Sustainable Living Plan: Putting Sustainability at The Center of Business Strategy
| Case Code: BSTR624 Case Length: 16 Pages Period: 1929- 2021 Pub Date: 2021 Teaching Note: Available |
Price: Rs.400 Organization: Unilever Industry: Conglomerate Countries: United States Themes: Socially-responsible Business Practices, Sustainability, Competitive Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Unilever Brand and Global Expansion
Before the formation of Unilever, Lever Brothers had managed to expand overseas by purchasing two factories in the US – one in Boston and the other in Philadelphia. In the 1930s, Unilever continued to grow its business by promoting its products in Latin America. To continue its growth, Unilever implemented a new strategy during the 1940s by broadening its business areas and creating new areas like a particular food and chemical manufacturing business unit. Unilever realized that what was more important than broadening business are as was the association between marketing and research and it was that it had to emphasize. Therefore, Unilever expanded its operations by making two important acquisitions in the US – the Thomas J. Lipton company, manufacturer of tea, in 1937 and the Pepsodent brand of toothpaste in 1944. In 1957, Unilever associated with UK frozen food maker Birds Eye, and in 1961, with US ice cream novelty maker Good Humor..
Path to Growth Strategy 2000-2010: Growth Through Acquisition
In February 2000, Unilever launched a five-year strategic plan called Path to Growth, designed to accelerate top-line growth and further increase operating margins. The strategy focused on a series of initiatives to focus on fewer, stronger brands to accelerate its growth. It was subsequently amended, following the acquisition of Best Foods, which was completed in October 2000.As part of the Path to Growth strategy, Unilever committed itself to delivering by 2004 an annual top line growth of 5-6%, operating margins before exceptional items, and amortization of goodwill of more than 16% compared to 11% at the start of the Path to Growth plan, and continued to secure low double digit earnings per share growth through to2004..
Unilever’s Sustainable Living Strategy
Besides Unilever’s immense success, there were also some social and environmental issues that impacted the company. The manufacturing, supply, and labor processes of the company had resulted in damage of various kinds. Unilever was the world’s biggest buyer of palm oil. It turned the palm oil into products such as detergents, cosmetics, bio-fuel, and soaps. Unilever’s actions of cutting down palm oil trees in the most area of Kalimantan, Indonessia was destroying the habitat of the Orang-utan, an endangered species which lived almost everywhere in the rainforest of Kalimantan. This action resulted in the extinction of the Orang-utan species in Kalimantan. Over two million acres of the rainforests in Kalimantan were cut down annually. This action also damaged Indonesia’s rainforest, leading to a severe climate change. Unilever created its products to help people in their daily life; ironically, in the process, it was responsible for other endangered animals. In 2008, Unilever was criticized by Greenpeace UK because of these actions. In November 2009, Unilever cancelled and stopped buying palm oil from the Indonesian company, PT Smart, citing environmental reasons. In April 2010, Unilever secured the GreenPalm certificate..
Unilever Sustainability Program
The USLP aimed to decouple its growth from its environmental footprint while increasing its positive social impact. It planned to create sustainable growth through its purpose-led brands, cut business costs, reduce risk, and help the company to build trust. “I’ve talked many times about the need to move from corporate social responsibility to responsible social corporations,” said Polman. “[The USLP] had to be a net positive for the company to succeed and it had to show it would have a positive impact on society.”..
Unilever SLP Program Impact
As part of the Unilever SLP, from 2010 to 2014, 397 million people were covered under the hand washing, sanitation, safe drinking water, oral health, and self-esteem programs (example, Lifebuoy hand washing campaign helped to reduce diarrhea and respiratory diseases, reaching 257 million people in 16 countries). Further, as part of the Unilever SLP of Nutrition, 33% of the portfolio by volume met the criteria for highest nutritional standards. (example, salt, saturated fat). Greenhouse gas impact per consumer use increased by around 4% by 2014 since 2010. Water impact per consumer use reduced by 2% since 2010 (example, laundry, washing). Waste impact per consumer use reduced by around 12% since 2010..
Future Outlook
Unilever’s work toward making sustainable living commonplace for the world’s 8 billion people continued after completion of the USLP. The company launched Unilever Compass, a new, fully integrated corporate strategy, in May 2020, on the eve of 10th year anniversary of the USLP to guide further progress in sustainability. Jope stated,..
Exhibits
Exhibit I: Unilever’s Business Divisions as of 2020
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