Some of Unilever’s brands – Flora, Lipton, Pond’s, Mimosín, AXE, Skip, Hellmann’s, Maizena, Dove, Rexona, Signal. Source: Unilever/Flickr
Unilever is aiming to source 100% sustainable raw materials by 2020, why was this important to Unilever and how do you plan to do this?
Food security is increasingly under threat and there is an urgent need to source sustainably. Sustainable agriculture means growing food in ways which sustain the soil, minimize water and fertilizer use, protect biodiversity and enhance farmers’ livelihoods. Depending on the crop, sustainable farming has the potential to increase yields considerably. For the world to feed 9.5 billion people and mitigate the effects of climate change on agriculture, the widespread adoption of sustainable agriculture and elimination of deforestation is crucial. 70% of the world’s food is produced by smallholder farmers and three out of four people in developing countries depend on agriculture for their livelihoods. So if we can help smallholders to adopt sustainable farming practices, it will help us secure future supplies of raw materials in developing and emerging markets from where much of our growth will come, help the world achieve food security and lift hundreds of thousands of smallholder farming families out of poverty.
What are the biggest challenges in developing sustainable business? Where do you see solutions coming from?
The most challenging thing is that there is no roadmap – we are in new territory – it’s a new business model. For solutions we need to create partnerships with other actors in the supply chain, governments and NGOs. We can’t do it alone, we need partnerships to reach scale to drive real transformational change. That’s why we partner for example with the Ellen MacArthur Foundation to unlock the value of the circular economy in the hope that it will lead the whole FMCG industry. And we need political will and leadership from politicians. We need to rethink the use of new materials, re-design packaging, use recycled waste etc, but when we get it right, the potential is phenomenal. McKinsey suggests that net savings from materials could reach $1 trillion a year if the circular economy goes mainstream. 2015 will be a crucial year. The upcoming discussions on climate in Paris and the finalization of the debate on the UN Sustainable Development Goals could build the right conditions for a fundamental change on how industry organizes its productions processes.
Can business pursue growth and still be sustainable?
Unilever’s vision for 2020 is to develop new ways of doing business that will allow us to decouple growth from our environmental footprint and increase our positive social impact. For companies to be successful in the long term in this volatile, complex world with finite resources, there is only one viable way forward – new business models that are both sustainable and generate returns. The business case for sustainability is clear; consumers demand it, it drives innovation, it helps us cut costs, and it reduces our business risk in this new landscape, future-proofing our supply chains, so we can continue to serve our consumers’ every day needs for the next 130 years too and beyond.
What’s your take on the circular economy? Do you think it’s possible?
The sluggish economic recovery in Europe is the consequence of a business model that is no longer delivering in a context of slow demand growth coupled with higher costs and price volatility for resources, including energy. A circular economic model builds resilience to price increase and volatility, it’s the right thing for the planet and consumers increasingly seek responsible brands. It can be done. Unilever has saved €480 million by reducing raw materials and using eco-efficiency measures. For example converting Surf detergent product from carton board to flexible pouches, has helped us to save per annum approximately 3,400 tons of packaging. In our factories we have cut water use 29% per ton of production over the past six years and we have cut CO2 in our factory sites by a third in absolute terms, despite a 30% growth of overall business.
What are the biggest changes consumers can expect in a circular economy?
In a circular economic model, the role of the consumer is as important as the role of the producer. Consumers can create a more resource efficient society through their consumption behavior. Choosing sustainably sourced tea and concentrated laundry detergents is a small act that will have a big difference when extrapolated to the two billion consumption occasions of Unilever products every day! In addition, the consumption phase of products is an important element in the overall environmental footprint of the product. Choosing water saving shower heads, and energy efficient water boilers, has a direct impact on the overall environmental impact of our soups and shampoos. Making consumers aware of their role in building a more resource efficient world is absolute key in creating the right pull factor.
Who is responsible for supporting sustainable business – customers or governments?
The producer can make it happen at micro level, government regulation can support to scale up to a macro-economic level by setting the right regulatory framework and the consumer can turbocharge it to a mainstream level by choosing a resource efficient consumption pattern. If we want to achieve true transformational change, public and private stakeholders need to team up.