‘Too many companies playing not to lose rather than to win’

Radical approach to social and environmental issues can boost business in the long run

“This is ultimately not a crisis of climate change, biodiversity loss or food security. This is a crisis of greed, apathy and selfishness that needs to be attacked.”

When such sentiments are expressed by those who are radical and anti-establishment, few would bat an eyelid. When the speaker is a man who spent the 10 years up to 2019 running one of the largest fast-moving consumer goods companies in the world, it’s time to take notice.

Paul Polman, the former chief executive of Unilever is speaking to The Irish Times shortly before the launch of the book Net Positive, his manifesto to convince companies that taking a more radical approach to social and environmental issues won't cost them in the long-run but, rather, will enhance their financial performance.

The core idea of Net Positive is that reducing climate impacts to zero isn't a sufficient end goal but merely a crossing point on a journey to making a better world. In this vision, a business doesn't just do no harm, it also acts as a driving force for good, making communities and customers healthier.

You don’t just collect your own garbage in other words, you also clean up the mess others have made, not just because is it the right thing to do but because humanity now requires it.

Enlightened business

This is not a utopian dream, he maintains, but a rather a model in which enlightened businesses can make healthy long-term sustainable profits by earning the trust of citizens and enriching their lives and the planet.

He is not above scaring the horses in the process and talks of "bending the curve of capitalism". Milton Friedman, the champion of neo-liberalism, is dead, he declares, saying we must kill the old philosophy if we want to survive and thrive.

“I don’t think the world can function if we don’t live in harmony with planet Earth and our fellow citizens. You cannot be a bystander. If business wants its licence to operate, it needs to show it has a positive influence in this world; otherwise why would citizens put up with it?”

Polman has credibility here. In his decade running the Anglo-Dutch behemoth, he delivered a 290 per cent shareholder return, reversing a decline in sales to grow turnover from $38 billion to $60 billion (€32.75 billion to €51.7 billion).

More remarkably though, his sustainable living plan also simultaneously delivered on its aim to halve the corporation’s environmental impact and treble its social impact.

On one of his first days in office, he famously told the markets that he was abandoning quarterly reporting. Free from short-term pressures, he set about a radical purpose-driven approach that won plaudits as well as profits.

The Dove brand became synonymous with empowering women, for example while Domestos has been very active in global initiatives around sanitary hygiene such as helping to build millions of toilets in developing regions.

Polman successfully fought off a hostile $143 billion takeover bid from Kraft Heinz in 2017 that would have enriched shareholders with an 18 per cent market premium but which, he says, would have stolen its soul, in a passage in his book he calls "Why Mayo (Hellmann's) beat Ketchup".

Ultimately, shareholders did him in, however, in 2019, when he failed to convince those based in the UK to eliminate London as a joint HQ. Polman’s thinking was that a Rotterdam-only headquarters would protect it from further hostile bids. He bowed out shortly after and, while he is widely regarded as a hugely influential and visionary leader on social and environmental issues, he says today he regrets not achieving more in this area during his Unilever tenure.

Sustainable development

Polman was the first private sector individual to sit on the United Nations team on sustainable development goals (SDG) in 2013. Representatives from national governments and the UN did not trust business up to that point but the Dutch and UK governments pushed Polman's candidature because they trusted him and argued that the world was unlikely to achieve the SDGs without business getting involved.

His mission continues. Today he is a driving force behind a group called Imagine, an initiative that aims to mobilise action on environmental and humanitarian issues through collaboration. Imagine's purpose is to be a powerful ecosystem of decision makers and power brokers linking businesses with governments, international institutions and NGOs with the aim of implementing net positive goals.

Building alliances is key, he says but consensus is often hard to achieve.

He recalls a meeting of one of the big sectoral trade associations of which he was formerly a member and how it was very difficult to get 50 chief executives to agree to sign up to a pledge on humanitarian issues. “You have to ask, ‘does that mean you allow your children to be in the sex trade or slave trade’ and if the answer is ‘no’ you have to fight it.

“Too many companies are playing not to lose rather than playing to win. Too many only want to play by themselves and feel uncomfortable or exposed if they play with others. Too many companies set targets that they know they won’t miss but that they also know are not sufficient.”

Polman was born in the Netherlands in 1956. “I always thought it was a long time after the second World War but the longer I go on, the more I realise how close it was,” he says. His father was only 15 when the war started and, deprived of his own education, worked two jobs to provide for and educate his family of six children while his mother worked as a schoolteacher.

Growing up in the 1960s and early 1970s in Europe, he was exposed to a growing sense of social consciousness, which he admits may explain his latest interest in broader societal issues.

He considered the priesthood and later medicine but the Dutch lottery system for entry to medical school proved unlucky for him, so he studied business, graduating with an MA and MBA from the University of Cincinnati. A career in Procter & Gamble followed, including a spell responsible for managing the business in Ireland as well as Britain.

Socially conscious

Subsequently, as the boss of Unilever, he felt the hand of Lord Lever, the socially conscious founder who built houses for his workers at Port Sunlight before opening his factory in the late 19th century and paid wages to wives while their husbands went off to fight in the first World War.

Purpose is a crucial element in the net positive philosophy, he says.

"Many companies including [what became] Unilever started by addressing societal problems and had founders who had values that permeated their businesses. Lord Lever talked about shared prosperity and introduced pensions in the UK.

“Unilever lost its way for a while because of pressure from the markets so I had to bring it back to its origins. Great companies understand that significant value comes from something deeper than just profit.”

As he explains in the book, there is no future for companies that do not get this but he agrees that an alarming number still don’t. “Many companies are not willing to take responsibility for Scope 3 [indirect emissions linked with their operations] on climate change, saying, at best, that they will take responsibility for their own carbon emissions. Some take the view that I’m outsourcing my supply chain, so I’ll outsource my responsibilities with it.”

Climate change represents an existential threat and progress on issues like carbon reduction is painfully slow. The political process is gridlocked, multilateralism hasn't worked. All the more reason why businesses need to step up.

Yet he remains optimistic. Tipping points can be achieved with about 20 per cent involvement of businesses and many are moving in the right direction. There’s an increasing realisation by corporates that sustainable practices ultimately drive profits.

Markets as catalyst

Markets get it too. Environmental and socially orientated funds are outperforming peers in many areas, he says, and this enlightened self-interest is significant, he says.

“Financial markets will be one of the key catalysts for change, more than people realise. They may not get the credit for it for different reasons but they are certainly moving.”

Technological progress is helping too. He says that 90 per cent of the technology required to solve the world’s problems already exists and that progress in area such as driving down the cost of clean energy has been much quicker than experts had earlier predicted.

Consumers and social activists are driving change on many issues. He is assisting Irish woman Caroline Casey, for example, on her initiative to raise the issue of the under-representation of people with disability in the workforce, at corporate board level. "Disabled people represent 15 per cent of citizens. How many companies employ that percentage?" he asks.

Gender balance, rights for minorities, human rights, and a living wage, amongst others goals, form part of the net positive agenda too. Ultimately, he says, it comes down to the choices we want to make.

“The solutions to decades long crises lie in empathy and compassion, in systems thinking and in collective action.”

  • Net Positive, How Courageous Companies Thrive by Giving More Than They Take by Paul Polman and Andrew Winston is published by Harvard Business Review Press.