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Calling Bullshit

Unilever: Making Sustainable Living Commonplace

Calling Bullsh!t October 19, 2022 364


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Our guest

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Alan Jope

@ALANJOPE

CEO of @Unilever

Making sustainability commonplace in 190 countries around the world. 

When Paul Polman took over as CEO of Unilever in 2009, he had an ambitious vision to return the company to its purpose-led roots. 

Now, CEO Alan Jope is at the helm keeping that vision alive. We sat down to discuss his approach to modernizing the 100 year old company and how he keeps all of Unilever’s many stakeholders front and center while growing the global giant.

There is no tradeoff between responsible, purposeful, sustainable business and strong financial performance. Ultimately, the need to deliver returns as a business will prevail. And so I want to prove that sustainable business is a pathway to a better financial performance.

– Alan Jope

Unilever’s BS score is

Show Notes

Episode Transcript

Hey folks – Ty here. Just a note here before we get started. The conversation in this episode was recorded before Unilever’s recent announcement that ALAN JOPE Jope will be retiring from Unilever at the end of 2023. Ok here’s the show. 

 

ALAN JOPE

Unless you’re a hundred percent crystal clear in your mind why it makes you a better business, how it will drive stronger performance, don’t start the journey. Because this is not CSR. This is not some offset, where you can buy a clean conscience by donating to a charity or having a park made next to your headquarters. Unless it sits at the heart of your business model, driving revenue growth, taking out cost, improving your employee proposition, don’t do it. 

 

TY MONTAGUE (VO)

Welcome to Calling Bullsh!t, the podcast about purpose washing- the gap between what companies say they stand for and what they actually do. And what they would need to change to practice what they preach. I’m your host Ty Montague and I’ve spent over a decade helping companies define what they stand for- their purpose. And then help them to use that purpose to drive transformation throughout their business. 

In this special episode, a positive case study, we’re doing a deep dive into Unilever with their CEO, Alan Jope, to find out how a global company of such vast scale, with such a complex history, keeps purpose front and center.

 

TY MONTAGUE (VO)

You may not have even heard of Unilever, but I bet you’ve grown up using a bunch of their products: Dove Soap, Lipton Tea, Vaseline, Ben and Jerry’s– to name just a few. Many of these brands are purpose-led in their own right. But, what if the company that owns all these household brands committed to operating under a single purpose, to make sustainable living commonplace? What if they committed to net zero carbon and regenerative farming practices? Cut their use of virgin plastics and insured fair wages for everyone up and down their supply chains?

Imagine the profound impact that could have on the future of the planet. 

 

TY MONTAGUE (VO)

Unilever has imagined that impact. And as the parent company to these famous brands and hundreds of others of other brands, they are in the unique position to bring that dream to life.

 

But, how do they pull this off? It is such an ambitious project. They have hundreds of thousands of employees, 3.4 billion customers around the globe, and over a century of complex history to grapple with. 

 

TY MONTAGUE (VO)

I had the opportunity to sit down with their CEO, ALAN JOPE Jope, for an honest conversation about the opportunities and challenges that Unilever faces, and how he plans to help Unilever continue the journey into a purpose-driven and ever brighter future.

 But first, let’s delve into Unilever’s history.


TY MONTAGUE (VO)

The story begins in 19th-century Holland, when two butter-making families, the Juergens and the VandenBergs, turned their efforts toward a new product, margarine. 

Meanwhile, over in England, William Lever was also making changes at his family business,  Lever Brothers. The resulting product, Sunlight Soap, was so popular that soon they were manufacturing 450 tons of it every week. 

Considered progressive for his time, the 20th Century, William Lever saw his company as more than just a profit engine. His mission was to make cleanliness commonplace and bring hygiene, and thereby health, to the masses. He wanted to do well by doing good, to grow his company, and simultaneously raise the standard of living for both his customers and his employees. 

With prosperity-sharing as his guiding principle, he built a village called Port Sunlight, where he offered affordable housing and other amenities to factory workers. It was here, at a time when benefits were practically unheard of, that he introduced innovations like sick leave and paid time off, and pensions. 

After years of common interests and even some collaboration behind the scenes, the Juergens and the Vandenbergs officially combined their businesses in 1927 to create Margarine Unie. Two years later, Lever Brothers joined the fold, in what The Economist called, “one of the biggest industrial amalgamations in European history.” 

 

TY MONTAGUE (VO)

In simpler terms: Unilever was born. 

Over the next half-century Unilever grew. A LOT. They continued to acquire and launch new companies and brands. And by the 1980s, they’d become the world’s 26th-largest corporation.

But through the eyes of someone looking back from 2022, the company engaged in some fairly questionable activities during this period of rapid expansion. There were some controversial marketing campaigns for skin-lightening products in the global south and human rights violations like child labor.  Over the years, parts of Unilever had definitely lost touch with Port Sunlight’s founding principles of doing well by doing good.

In the late 1990s, with their ideals off track and growth stalled, the business was in decline. And in 1999, they took dramatic action and cut three-quarters of their nearly 1600 brands. But even after shifting focus to their most successful brands, the next decade really only saw some modest returns. 

By the time Unilever was hit by the 2008 recession, it was clear that the only way forward was to get a truly fresh perspective. 

 

[SOT] PAUL POLMAN

The most important thing is that you pursue your, your purpose. Whatever you feel strong about…figure out where you want to make the difference, that’s the first thing you need to do.

 

TY MONTAGUE (VO)

That’s Paul Polman. He had steered Unilever’s rival, Nestle, through this financial storm as their CFO. This caught the attention of the head honchos at Unilever and instead of hiring from within, they decided to poach Paul Polman.  

In 2009, he became Unilever’s new CEO. First order of business? First order of business – get everybody on board with his ambitious vision.

 

[SOT] PAUL POLMAN

Because I came in from the outside, some people felt that the Trojan horse was let into the company. And I discovered very early on that it was for me to prove that I could be part of the team instead of them to prove that they could be part of my team. 

 

TY MONTAGUE (VO)

To do this, he knew he needed a better understanding of Unilever’s history, so he turned his attention to the company archives and started digging…

 

[SOT] PAUL POLMAN

And we came to some enormous values and one of them is certainly doing well by doing good. 

 

TY MONTAGUE (VO)

He had unearthed those same principles upon which William Lever built Port Sunlight.

 

[SOT] PAUL POLMAN

We took all that strength and said, can we not turn that into a business model that is desperately needed right now?  

 

TY MONTAGUE (VO)

Polman implemented what he called the ‘sustainable living plan’, which aligned their global business strategy with the well-being of employees, customers, and the environment. They also started acquiring purpose-led businesses like Seventh Generation and Ben and Jerry’s. And Paul brought a new approach to Unilever’s finances as well, signaling to investors that if they weren’t interested in sustainable, long-term value creation, that they should take their money elsewhere. 

 

[SOT] PAUL POLMAN

If you want to solve all these issues like climate change or food security or poverty alleviation, or access to clean drinking water, or education, you cannot be a victim to the quarterly reporting. So you need different business models. And Unilever, when I became CEO, we stopped doing quarterly reporting. We stopped giving guidance. We moved our compensation systems to the long term.  

 

TY MONTAGUE (VO)

Make no mistake: Polman set ambitious financial goals for the company as well– he declared that he expected the company to double revenue while cutting its environmental impact in half. To put that in perspective, Unilever had 300 factories across the world, 400 brands, and 2.5 billion customers. No small task. 

When Polman stepped down in January of 2019, he had generated a 290% shareholder return, he had expanded Unilever’s global market share and he had become a purpose-driven business legend

 

TY MONTAGUE (VO)

And the story continues with our guest today, Paul Polman’s handpicked successor and current Unilever CEO, Alan Jope. As you’ll hear, Alan Jope is a warm, engaging leader who has worked in almost every part of the Unilever business around the world. And I was lucky enough to work with him as a client when he was a senior marketer at Unilever and I was an advertising creative director. 

We sat down to discuss his approach to sustainability, and how he keeps purpose front and center while he runs a global corporation with real integrity. 

That conversation after the break.

 

TY MONTAGUE 

I am extremely excited to introduce the CEO of Unilever, ALAN JOPE Jope. ALAN JOPE, welcome to Calling Bullshit.

 

ALAN JOPE

Hi, Ty. Thanks for having me. It’s great to be here. Nice to see you after a while.

 

TY MONTAGUE 

Great to see you too. And to start out with, I thought it would be great to just have you tell us a little bit about yourself and your background.

 

ALAN JOPE

Sure. You can tell from my accent that I’m Scottish by birth. I grew up in Glasgow, went to university in Edinburgh, and then joined Unilever straight after university. Um and did the first five years in London then 14 years in the United States and 13 years in Asia. Uh my family and wife and I have lived for four years in Bangkok, five years in Shanghai, and four years in Singapore. Came back to the UK just four years ago. So after 27 years away, I’m a cultural stranger in my own country. A lot of my, a lot of my time in marketing um but then progressed into general management and plenty of interests outside of work I certainly don’t live to work, but yeah that’s a bit about me. 

 

TY MONTAGUE 

And when you became CEO, you took over from Paul Polman who is the person who put Unilever on the path to really being a purpose-led organization. What has that transition been like for you taking the reins of yourself and also taking over for Paul?

 

ALAN JOPE

Well in terms of the continuity of our sort of sustainability journey it was relatively straightforward for a couple of reasons. First of all, it’s not a ten-year-old thing it’s 110-year-old thing. Our various founders in Unilever believed in running the business in a sustainable or purposeful uh way. This guy William Lever who founded Lever Brothers, one of our antecedent companies, did all kinds of cool things. He built a model village to house his workers. When his workers went off to fight in the First World War, not only did he hold their jobs open for them, he paid their families their wages while they were off fighting. Um he kind of invented pensions. He had an elaborate system to create libraries for those workers’ children and he back in the 1880s defined the mission of the firm as to make cleanliness commonplace and lessen the load for women. So he was a very early on to social issues and public health issues. Now over the history of the company we have generally tried to do the right thing as a business, often after exploring every other possible alternative, and sort of Paul sniffed out this DNA and did an utterly brilliant job putting it back in the center of our business strategy and our culture. So it’s something that was very easy to carry forward. Also frankly, I believe strongly in, in this mission as well and maybe that’s partly why he was uh an enthusiastic supporter of me coming into the role, but it’s not been a difficult thing to pick it up and run with it.

 

TY MONTAGUE 

Yeah. So, it’s fascinating that William Lever is an OG-conscious capitalist, I would say it sounds like.

 

ALAN JOPE

In some ways he is. There is dark sides to his history as well. So we had um we had Palm oil plantations in the Congo. Where we suspect strongly that there was a form of forced labor um in fact we’ve commissioned an academic study with the University of Liverpool to get to the bottom of that. We don’t want that to be a secret. If something bad went on back there then we want to know all about it. But the vast majority of Leaver’s activities were uh wholly positive. In fact, I found a brochure recently where for the first football match between Lever Brothers Port Sunlight Football Team versus Everton FC um Everett Everton won 5, 1 I have to admit.

 

TY MONTAGUE Okay, so pivoting to Unilever today. How do you articulate Unilever’s purpose?

 

ALAN JOPE

Yeah. We do articulate the purpose of the company as being uh to make sustainable living commonplace. We want to be a force for good as a company that through our operations and through our brands we help people to live more sustainable lives. And so I think if you ask most people in Unilever they would be able to say yeah the purpose of the company is to make sustainable living commonplace. It’s accompanied by a very clear vision. Which is we want to be the global leader in sustainable business and we want to prove that it drives better financial outcomes.

 

TY MONTAGUE 

Yeah,

 

ALAN JOPE

And I’m sure we’ll get into this in a second, but that sits right alongside our purpose.

 

TY MONTAGUE Absolutely. And, and how would you characterize the dominant system that Unilever is trying to improve upon with that purpose?

 

ALAN JOPE

I think this comes back to shareholder capitalism versus stakeholder capitalism. And I would love to go to my grave having proven two things. I’d, first of all, like to prove that there is no tradeoff between responsible purposeful sustainable business and strong financial performance. Anytime we get into a discussion of well how do you trade off between financial performance of the company and the sustainability uh mission that you’re on, then we’re doomed. Because ultimately the need to deliver returns as a business will prevail. And so I want to prove that sustainable business is a pathway to a better financial performance.

 

ALAN JOPE

And the second thing I’d love to prove is that we have multiple stakeholders, they’re all important, but I think there’s a priority of sequence. If we look after our people, the employees of Unilever, they’ll look after the business. They’ll be the people who will make sure that the actions we take don’t have an adverse effect on the planet or society. And in doing so they will ensure that our shareholders are better rewarded. So those are the two dominant systems I’d love to have an impact on. One is this stakeholder model which ends up rewarding shareholders better. And the other is scorching this notion that there’s a trade-off between sustainable business and financial performance.

 

TY MONTAGUE 

Yeah, I love that. And um I I, I wonder if you could talk a little bit about the compass. Which is the name for your business strategy. Can you explain what the compass is and how it works? 

 

ALAN JOPE

Sure look, four years ago we had two documents in the company. We had our business strategy and we had our sustainability strategy. And we felt that didn’t make a lot of sense. And so we rewrote our business strategy and uh it has five pretty simple elements to it which is some choices that we’ve made around high-growth spaces we want to take our portfolio into, like hygiene and skincare and prestige beauty. We’ve called out the US, China, and India as particularly important markets to win in. We’ve called out e-commerce as a must-win channel. We’ve talked about the organization and culture that we want to build. But the first of those, first choice is win with our brands as a force for good powered by purpose and innovation. And then dropping immediately below that are uh three areas where we think we can bring our commitment to sustainable living to life. One is improving the health of the planet. Another is improving people’s health and well-being, and the third is contributing to a fairer, more socially inclusive world. And again underneath that there are 38 specific commitments that we’ve made. So the the two sides of the coin are sustainability uh strategy and our business strategy are fully, fully integrated.

 

TY MONTAGUE 

And are all of Unilever’s brands, do all of them have a defined purpose, or are you somewhere along the journey of defining all of those individually? 

 

ALAN JOPE

We’re on a journey. We’re on a journey. Let me, first of all, say how we define it. You’ll be

 

TY MONTAGUE 

Sure. Yeah. Please.

 

ALAN JOPE

Be familiar with the idea of continuous tracking, looking at our brands, and the competitor brands, and the attributes and how we score on those attributes in the eyes of consumers.

Well, we now have a standard question, in, for all categories, in all countries where we ask, does this brand make a positive contribution to society or the planet? And when in that country, a consumer scores our brands as well above average on an index we say okay, that brand in that country is a purposeful brand.

And at the moment, to be precise, 60% of our turnover now comes from brands that the consumer says are doing something a little bit more for a society and the planet. Some of our brands are almost entirely seen that way, like Dove or Ben and Jerry’s. And others are are finding their way. You can’t really superimpose a purpose.

Most of our brands’ purposes, we find by excavating archeology of their DNA and where they’ve come from. It’s very hard to suddenly force fit. 

 

TY MONTAGUE 

In terms of the journey that you are on. Is the goal to be a hundred percent at some point?

 

ALAN JOPE

Yeah, I suppose it’s an ambition. It happens a little bit organically. And the reason I say that is our brands that score highly on purpose are growing twice as fast. Actually, it’s a little as close to three times as fast now as the rest of the portfolio.

And so there’s a very natural migration of our portfolio into that space. So yeah there will be some brands that never quite get there, but so long as, you know, 60% of our brands are are scoring highly on purpose and are growing three times faster than the rest of the portfolio, organically the vast majority of our portfolio will soon be seen as more purposeful by the consumer.

 

TY MONTAGUE 

Right. I was listening to an interview of you at a recent Goldman Sachs conference where you said that we found that setting audacious goals, um, goals we’re not sure how we’re going to meet, is a very effective way of driving change in our company. And I just wondered if you could talk a little bit about that, for instance, how do you set those goals? 

 

ALAN JOPE

Probably the easiest way to answer this is not in the abstract, but with a specific challenge, which was, we were looking at our, decarbonization of the company. Let me maybe just set it up by saying we’re not an NGO, Ty, we’re a business. We’re not doing this because of the moral imperative, we’re doing it because think it makes us a stronger business with it.

We’ll have a more successful long-term future. Um, and there are dimensions of the business case around growth- I’ve touched on some, our brands are growing faster Uh, when they embrace sustainability, there’s a dimension around cost. We actually think it should take cost out of the organization. It lowers risk, a planet underwater or on fire is not a great place to be a consumer products company. But on this point of cost, there will be a price on carbon. So today carbon is treated as a free good and there’s very few places where there’s a tax or a price on carbon of any sort. There absolutely will be. So, both because we care about climate change, but also because it makes good economic sense to reduce the carbon footprint of Unilever, we wanted to lay out our plan to decarbonize Unilever.

And um I suggested to our board that we put it to shareholder vote. And this caused a few sweaty moments in in the, our board meeting ’cause were worried that some of our shareholders might say what you’re going far too far. And others might say, you’re not going far enough.

But we wrote this carbon transition action plan and we put it to a shareholder vote last May at our AGM. And now coming to actually answer your question, it has some big, hairy goals in there. One of which is to be net zero as a company by 2039. Now we’ve got milestones along the way. So for instance, we want a hundred percent reduction in scope one in two carbon by 2030, we want a 70% reduction in all emissions by 2025.

But that endpoint target of net zero by 2039. We have no clue how we’re going to get there. It will require innovation. It will probably require a reshaping of our portfolio. It will require us to take as much carbon as we can out of our operations.

It will require us to advocate for a de-carbonization of electrical grids around the world. Because the biggest carbon footprint that Unilever has is the energy that’s used in heating the water that’s used to wash your skin, wash your hair, wash your clothes, cook your food. That’s our single biggest, uh, footprint.

 

ALAN JOPE

So and only when we’ve done all that, we will probably need to do a little bit of offsetting at the end. So that would be an an example of where we’ve set a goal with no idea how we’re going to get there. But I can tell you most people in the company have a feeling that it’s the right thing to do. And that by setting the goal, we’ll start taking the actions that we need to take.

 

TY MONTAGUE

I love that. The thing that I think that’s really interesting about that is that in traditional shareholder capitalism companies have been conditioned to externalize cost. It would be rare of a company, I think, to actually think about the carbon footprint of heating the water that people use to bathe as a part of your responsibility.

It’s really inspiring that you think about it that way.

 

ALAN JOPE

Well two footnotes. We were the first company in the world to put our carbon transition plan, our climate transition action plan to shareholder vote. Many have now followed. So we’re delighted to see many people now writing their plans. And the second footnote is that it squeaked through the shareholder vote with 99.6% shareholder support. 

And actually, that’s a great statistic to understand that the capital markets are starting to care about these types of matters.

 

TY MONTAGUE Absolutely. That’s, really positive. You’ve already made tremendous strides as a company over the last decade. And as you look at the challenges that lie ahead, the things that you want to take on What are those challenges?

 

ALAN JOPE

Well… there are lots of problems in the world right now. But our view is that there are three that are bigger than the rest. The first is the climate emergency. The impact of climate change on everything is hard to overstate. It’s going to be a major, major, problem for the world. Even if we do the best possible job that we can and manage to get to one and a half degrees above pre-industrial levels, it’s still going to cause a major failure of the world food system.

It’s going to cause massive migration, from hard-hit areas. So we better be dealing with that. The second, and it’s related, is the degradation and loss of nature. A combination of climate change and us chopping down large swaths of, forest, putting in monocrop agriculture, smashing biodiversity.

And then the third is the dramatic increases in inequality that we’re seeing, country by country.

Interestingly, because China has lifted hundreds of millions of people out of poverty, net inequality in the world is not going up. But if you look at it on a country-by-country level, the tremendous, situation of inequality and it’s getting worse. And those are three of the things that we hope our business can play a role in addressing. A lot of what Unilever uses, as input materials are agricultural raw materials. Not just in our foods business, but much of what we use in our, personal care products, like soap uses agricultural raw materials.

And what we’ve said is that by 2030, we want a hundred percent of our agricultural raw materials to come from regenerative agriculture. Where the farming practices leave the land in better place. Let me give you a really simple example.

 

TY MONTAGUE 

Great.

 

ALAN JOPE

We buy soybean oil that’s grown in the U S. And, uh, a soy field generates about 350 kilograms of carbon per acre. If you plant cover crops, so low rise, plants that can be harvested in amongst the soy, that’s being farmed. That reduces the carbon output, uh of that acre by 500 kilograms.

So it goes from 350 kilograms carbon emissions to 150 kilograms of carbon sequestration.

That example of regenerative agricultural practices- We can maybe have a chat about Palm oil, so that material we use a lot of. And it’s a demonized material. But actually, I’d like to make the case for Palm oil at some point, 

 

TY MONTAGUE

Yeah. Well, let’s, let’s talk about that now. I know Palm oil was, mentioned in the context of, the history of, of Unilever in the Congo, but so it’s long been an ingredient in, in many of your products. where does Unilever stand with Palm oil today? 

 

ALAN JOPE

There have been horrible things done to nature and the animals that live in virgin forests, through the clearing of forests to grow palm oil. It’s shocking actually. If you fly over parts of Malaysia, you can see these huge parts of the country that have just cleared and, and replaced by palm plantations.

 

ALAN JOPE

However, palm is an exceptionally productive material. And if you were to try and replace the Palm oil, that is used, to make actually some very healthy foods, and a lot of things like soap and other types of surfactants with rapeseed, or soy, it would require eight times the acreage. So, here’s our view. Were we to shift away from palm we would end up, destroying large parts of the world with crops that need more acreage and there is perfectly sustainable ways of growing palm right now, where you use much less fertilizer, where you don’t clear virgin land. Instead of using pesticides, we introduce owls onto the, the palm plantations, and the owls keep the rodent population down. Which is a sort of romantic notion but it, interestingly, what it requires is technology. It needs real-time geo-mapping coupled with cell phone tracking of truck drivers, coupled with some advanced AI technology. And we are very confident now that something like 98% of our Palm comes from certifiably sustainable plantations. That last two, or that last one or 2% is we’re working hard, spending a lot of money on figuring out how do we get that out of our supply chain? 

 

ALAN JOPE

So I touched a bit there on, the climate crisis and some of the things we’re doing. Some of the things we’re doing on nature and the degradation of nature. On we’ve got, uh, a lot of programs running, but I think one that we’re very proud of is, there’s a concept of a fair living wage. It’s more than a minimum wage.

It’s enough money a family of four could feed, clothe, house, educate and transport themselves. and Unilever of course, pays a fair living wage already to, anyone working in our business. But that’s only 150,000 people. There’s about 5 million people in our supply chain. And what we’ve said is that by 2030, anyone who’s not able to prove they’re paying a fair living wage to their employees will not be a supplier to Unilever.

And that, we think, is the single biggest redistributive action that we can take to try and address, inequality through our own operations.

 

TY MONTAGUE I love that. Once again, just, most businesses don’t think about the world that way. And obviously, I agree with you, like the fact that you’re getting ahead of it is great. But you’re getting ahead of it because it’s better business, right. That ultimately operating in an unsustainable manner puts a time horizon on your survival, essentially as a company. Yeah?

 

ALAN JOPE

You know, we’ve got a pretty good feel for what that time horizon is. And it’s because of different attitudes amongst different age cohorts in society. So baby boomers at least are honest. They don’t really claim that they change their brand choices according to sustainability considerations. I just creep into gen X and we’re worse.

We say that we care about sustainability, but don’t actually modify our purchasing behavior. So we’re dishonest. Gen Y Millennials, to make gross simplifications, Millennials care about sustainability, but are not prepared to pay more, and won’t accept it if the product performs more poorly as a consequence. Gen-Zeniels, the kind of next-generation consumer coming into the consumption classes, practically the only thing driving brand choice is the values of the brand and the values of the company behind the brand. And so this is simply about relevance for the future. And if you want to be a brand, that’s still, a company that’s still a healthy, successful thriving company, 10, 20, 30 years from now, you better be modifying your business practices in a way that are acceptable to the gen-zenials that are coming through the population right now.

 

TY MONTAGUE 

It’s so important. In fact, we’re called Calling Bullshit because such a huge number of young people in particular are just calling BS on shareholder capitalism. An entire generation of consumers is calling BS and it’s a clarion call, right?

If you want to run a business, if you want to sell a product in the future, you had better pay attention to this.

 

ALAN JOPE

Could not agree more, and when I get challenged about, uh, “Hey, why are you so obsessed with putting purpose in your brands? You know, are you some sort of woke capitalist?” The answer is, “Hell no.” I just want to make sure that our brands remain relevant for the generations that are coming through into society today.

 

TY MONTAGUE 

Yeah, exactly. Okay, so I’d love to pivot again and talk a little bit about, your leadership and purpose-led business. One of the things that I really believe is that no company is perfect. That being purpose-led is, a journey, right. And, and every company is somewhere along that timeline.

 

TY MONTAGUE 

I, first of all, do you agree with that?

 

ALAN JOPE

You know, I mentioned earlier that we’ve got these 38 specific targets and commitments that sit in our compass. Our executive team looks at progress on those, every quarter. And in the last review, which was a couple of weeks ago, all of those 38, 6 were green. Most of the rest were red. And so, so we are a massively, a work in progress and I guess it goes with setting somewhat stretching ambitions. But we’ve got so much hard work ahead of us. It’s a little daunting. that last 2% of Palm oil that we were not sure it’s sustainable is going to take tons of hard- we’re going to have to co-invent technology with Microsoft to fix that. 

I’ll tell you one that’s really haunting me at the moment is our plastics commitment. We’ve said that by 2025, which is just around the corner, we will have reduced our use of virgin plastic by 50%. some of that is going to be by using recycled material and some is through an absolute reduction, or replacement with other materials like aluminium or, wood even, can you believe wooden toothbrushes are selling quite well at the moment?

 

TY MONTAGUE 

I actually own one. 

 

ALAN JOPE

There you go. So, I’m kind of got trembley knees about this plastic commitment because there’s a worldwide shortage of recycled plastic. The premium for recycled plastic over Virgin material, perversely, is rising, and so that’s an example where Ty we’ve got our work cut out. I’m not exactly sure how we’ll get there, but we’re very much a work in progress.

 

TY MONTAGUE

So that, that leads to another question, which is, do you think that leading a purpose-led business is harder? For instance, you have so many more stakeholders to think about, than the CEO of a traditional shareholder-led business.

 

TY MONTAGUE 

Is it, is the job harder?

 

ALAN JOPE

I don’t think so really. No. Tell me a business leader who doesn’t care about her employees, her customers, her consumers, her business partners, the societies that you’re doing business in, the planet. And I think I’ll be able to show you a business leader that’s not getting good results. Or doesn’t deserve to get good results. 

So it’s not unnatural to care for those different stakeholders and make sure their interests are being looked after. And if you do it with deep conviction, that the shareholder will be better rewarded at the end of the day. Now we’re also work in progress on that, by the way, our financial performance needs to step up to prove this model. But we’ve got a little bit of momentum. We just did our fastest year of growth for nine years. 

 

TY MONTAGUE 

Yeah, you’ve done well in the past year.

 

ALAN JOPE

Things are, things are coming along. We have a theory of change, a model that we use on pretty much all the big issues that we’re trying to address. Whether that’s climate or or gender or inequality.

Let me use gender as an example. Think of four concentric rings and the innermost ring is our own operations. So my job one is to make sure that there’s proper gender representation inside Unilever. And we’ve gone over the last eight years from a position where 38% of our managers were women, to now 51% of our managers are women. We’ve got nine non-execs on our board, five women, four men. So we’re okay on that. 

Then the next string is what we call our value chain. Are we making sure that um, there’s good gender representation in our suppliers, in our distributors, and in some of the business models that we involve third parties in. That’s the next impact that we can have. Then we go to the next level when we think about the impact that our brands can have.

We go from reaching millions of people to tens of millions of people when Dove gets busy helping girls not carry unrealistic um images of beauty. Or when Sunsilk’s creating opportunities for women to set up their own hair salons. And then the outermost ring is what we call advocacy, and that’s where partnerships come in. And we work with civil society, government, academia to try and change the system.

 

ALAN JOPE

And I think those first three rings, most business leaders have to deal with, we have an unusually active advocacy program and that is a little bit of extra work. In fact, I just came from a board meeting of the World Business Council for Sustainable Development. But you know what, it’s very rewarding and worthwhile work.

So yeah it’s a little bit of extra work, but not really.

 

TY MONTAGUE 

But you love it. Yeah. It’s satisfying, feeds the soul. So are there other leaders of purpose-led businesses that particularly inspire you?

 

ALAN JOPE: Oh, lots. Yes. Lots and lots. To me, the iconic one is Patagonia and you know, Yvon Chouinard and everything that he has set up there and which has been carried on by his successors. And you know, there’s a survey comes out every year of opinion leaders and their views, on companies, and whether sustainability is at the heart of their strategy, I’m embarrassed by the fact that Unilever for the last few years scored number one in Patagonia, number two. Because I don’t think we deserve it at all. Compared with the deep, remember Yvon Chouinard discontinued his, his metal pitons which was the core product in his business because he felt they were damaging the very rock that he was so in love with. And, 

 

TY MONTAGUE 

Yeah. People were leaving ’em stuck in the rock. It was like no.

 

ALAN JOPE

So I really admire almost everything that and they keep reinventing themselves, making fleeces out of, PET bottles, encouraging people not to buy a new jacket, come and get it repaired,

Their sourcing policies. They’re just fantastic. Another one is, Jasper Borden who runs Ikea have done such deep work on understanding the, climate and social footprint or say the planetary and social footprint of their business, their supply chain, their stores. And then

I’ll give you more that you may never have heard of a food company that grow fruit and vegetables around the world called Olam. They were founded by a guy called Sunny Verghase. Sunny lives in Singapore and he has built one of the world’s leading agricultural, production companies and he’s done it with extraordinary attention to purpose and sustainability. So there’s one and then of course there’s a whole other list, but there’s three that I particularly admire.

 

TY MONTAGUE

Today there are so many more purpose led businesses that actually, started with a purpose. So a lot of young companies begin that way, but a lot of older companies sounds like unlike Unilever, didn’t begin that way and are now trying to figure out how to make that transition.

What advice would you have for other CEOs who are beginning that purpose-led journey?

 

ALAN JOPE

The, first point I would make is entirely predictable which is, unless you’re a hundred percent crystal clear in your mind why it makes you a better business, how it will drive stronger performance, don’t start the journey. Because this is not CSR. This is not some offset, where you can buy a clean conscience by donating to a charity or having a park made a, a park, built next to your headquarters.

Unless it sits at the heart of your business model, driving revenue growth, taking out cost, improving your employee proposition, don’t do it. Cause then it’s not sustainable. And the second is you don’t have to go from zero to perfect. Just get started with a few initiatives and it’s so rewarding economically and emotionally. It’s such a strong thing to build a company culture around that, I believe, it’ll snowball and catch momentum and take off. So you know, it has to be authentic, but it doesn’t have to be perfect.

 

TY MONTAGUE

Let’s use that as a pivot to company culture, because it’s such a huge part of it. How would you describe, the Unilever company culture?

We want our company to be human, to be purposeful, and to be accountable. Unilever does have a culture where we treat each other with respect.

 

ALAN JOPE

If you get the job done, but you’re an asshole and you leave a kind of a trail of, people who, would love to meet you in a dark alley. 

 

TY MONTAGUE

Need first aid or therapy afterwards, right?

 

ALAN JOPE

Exactly. Then I think our company would uh tissue reject you like a badly matched organ quicker than the average company. Being human, and with that comes, a lot of friendships. Not too hierarchical.

I mean, every company has got some hierarchy. But we’re not too hierarchical. So that’s the human. The second is purposeful. We, believe that, this is a bit a slogany, but we do believe that brands with purpose grow, that companies with purpose last, and that people with purpose thrive. And we’ve put now 50,000 people through, purpose workshops to try and understand, is the thing that makes them tick well aligned with the work that they’re doing at Unilever. And when people find that alignment, my goodness, it cements their, commitment to the company. You can see job satisfaction scores that are through the roof. And so that’s the purposeful part of our culture. More human, more purposeful. And then the accountable bit is, we want people who are prepared to take risks. We want people who are prepared to have a goal. For people who understand that, you know, poor performance plus a good excuse is still poor performance. And, and those are the kind of three ways we describe our culture. I think there’s one thing it doesn’t capture, which is we are extraordinarily international.

There is no dominant nationality in our business. And I love that. I’m sort looking out my office here and I can see a melting pot of, uh, different nationalities.

And typically a French company would be full of French people and American company full of Americans and so on. Truly global. And are there certain things that you look for in a new employee? Is there a Unilever type?

You know, we’ve, over the years I’ve been trained on all these different competency frameworks, and what to look for. I’ll reference two that have stuck with me. One is, very simple. It’s that, people are successful in our company, tend to be strong masters of their inner game. So they’re very self-aware, they control their emotions reasonably well and they operate out of a sense of service and purpose. And that is a precursor to mastering your outer game which is your expressed leadership, your drive for business performance, your passion for consumers and customers.

 

ALAN JOPE

I think it’s an interesting concept that, you have an inner game and an outer game. And both need to be performing at a high level for someone to do well. The simple kinda ALAN JOPE Jope, criteria, after 30 odd years of hiring people is, I want people who are smart, got a bit of EQ and a bit of IQ. Who are quite driven.

They’ve got, they can show that, they get round obstacles. And the third, nice kind people that other people want to be around. And I could just think of my, kind of, leadership team, they are all bright. They are all driven. And they’re all someone you’d want to have a beer with.

 

TY MONTAGUE 

Yeah, yeah. One of the criteria I use is if I were stuck in an airport with this person for an unexpectedly long period of time, would that be a good thing or a bad thing?

 

ALAN JOPE

Exactly. Exactly.

 

TY MONTAGUE

One of the things that you touched on that I’d love to just talk about a little bit more is talent. And, the effect that being purpose led has on your ability to attract talent. 

 

ALAN JOPE

Yeah. We measure our attractiveness as an employer for undergrads coming out of university in a 44 countries around the world. In 42 of them, we’re the employer of choice in our sector. And 10 years ago that was 17. So, we have no problem attracting really high-quality graduates coming out of university.

In fact, we get 2 million job applications a year, across the company. But I think what’s maybe more interesting is, we’ve been able to attract some really senior executives, and indeed board members, who would have the pick of the places they could work.

And the universal reason is because they want to understand or be part of a company that is operating in a responsible fashion. Whether you call it purposeful or responsible or sustainable, it’s the same thread that is acting to attract senior and junior folks. And we’ve got really hard data on this Ty. I was surprised to hear that we’re the third most followed company in the world on LinkedIn, after Apple and Google. You know, a sleepy, old soap maker. Not bad.

very cool.

 

TY MONTAGUE 

Okay. I have a couple of questions that I want to ask you to wrap up. I’m just curious about this. You’ve acquired a number of certified B Corp’s over the years.

I think seven or eight of them. And I just wondered if there were any plans to become a B Corp at the group level? 

 

ALAN JOPE

Yeah. We’ve, we’ve studied this at least twice that I know of inc- in excruciatingly, detail. B Corp certification is not designed for enterprises the scale of Unilever. It would, we would need to create an entire industry of certification, around the company.

Every operation in a hundred and ninety.

 

TY MONTAGUE 

Right.

 

ALAN JOPE

Countries. Multiple divisions, multiple brands. And it would cost an absolute fortune. And, it is doable. It’s just about doable, but the kind of bragging rights- I would love for Unilever to be a B Corp. But the br, the bragging rights of becoming a B Corp are not commensurate with the cost and effort that would be required to achieve that certification.

 

TY MONTAGUE 

Yeah. No. that completely resonates. Okay. So two questions to wrap up. First of all, what have I not asked you about that you think that our listeners should know about you or about Unilever?

 

ALAN JOPE

You’ve not asked, you know, the share price has been languishing a little bit for the last couple of years. And, I think in the spirit of the name of the podcast, all these, all these fine words that I’ve been saying about all the wonderful things that we’re doing in the world well why shouldn’t it be more visible in the share price?

That’s the, the really stinger tough question. And, the short answer is we’ve surprised the stock market three times in the last three years. We, under undergrew, what we said we would do in 2019. So in December 2019, we announced a sales warning, and that caught the market off guard. In the first year of COVID 2020, our operating margin went backwards by 60 basis points

 

ALAN JOPE

When the market wasn’t expecting it. And then the third one, I think is a little harsh. We were the first company out of the gate, to, attention to inflationary pressures that were coming in mid 20, 21. 

 

TY MONTAGUE 

Right. 

 

ALAN JOPE

And so

 

TY MONTAGUE 

And right. 

 

ALAN JOPE

Exactly, but the one-day drop in our share price, on those three days, explains the entire discount to our sector. And what it says, it’s great to be sustainable. It’s great to have a super year of growth last year, but in our particular sector, the sort of predictability and reliability of performance really matters as well. And there’s, I make no excuse to that, there’s no reason why Unilever shouldn’t deliver what we call 4g growth, which is consistent growth, competitive growth, profitable growth, and responsible growth.

 

ALAN JOPE

And that’s still in the to-do list.

 

TY MONTAGUE 

And just to follow up to that, you discontinued quarterly reporting, a while ago, a decade ago. Does that help or hurt? 

 

ALAN JOPE 

Yeah. When we say we discontinued quarterly reporting, kind of. 

So, we still report our top line and our growth every quarter. And, we report our full P and L the bottom line, Semi-annually. So it at the mid-year. So if 

 

TY MONTAGUE 

I see.

 

ALAN JOPE

So really what we stopped doing was reporting at the end of Q1 and the end of Q3. And I would say it’s materially helpful.

It gives us flexibility to invest in the business within a half, rather than constrained by the particular phasing that a quarter would demand. I think it’s a good thing, but it’s not all the way to, we abandoned quarterly reporting. I don’t think, I don’t think 

 

TY MONTAGUE 

Right. Ok no, thank you for the clarification on that. I appreciate it.

 

TY MONTAGUE 

Ok. Ok. Allen, on Calling BS we have a question that we ask every guest. So we define BS as the gap between word and deed in organizations. And we have a tool that we call the BS scale, where we rate organizations on that gap. Zero being the best zero gap between word and deed. And a hundred being the worst total bullshit.

So taking into consideration that everything is a journey. Where would you rate Unilever on that scale today?

 

ALAN JOPE: That’s interesting. So if it was, the gap between ambition and where we are today,

Then it’s a high number. It’s a high number, it’s, you know, 60. If it’s the gap between what we say and what we’re really doing in the company, then it’s quite a low number because we’re, we are very transparent and

 

TY MONTAGUE No, I think it’s the latter. I think it’s gap between what you say you stand for and where, what your intention truly is. 

 

ALAN JOPE: Then I would say, I think we are quite transparent. We report a lot, and, there’s not a huge gap between what we say we’re doing and what we really are doing. So I’d give us a, but there’s obviously some, so I’d say, I don’t know, 20, 25.

 

TY MONTAGUE 

And in a company of your scale, I just have to say I think that’s extraordinarily low. So I’m very inspired by what you’re doing. And, I want to thank you for being on the show today. This has been great.

 

ALAN JOPE

Does that uh, mean you’re not going to wrap up by saying you’re full of shit?

 

TY MONTAGUE 

Nope. You’re off the hook. Not full shit not, not on our scale, not on our scale.

 

ALAN JOPE

Ok. Well, it’s been a while since we saw each other. Thank you very much for having me on and, maybe we can follow it sometime. And meanwhile, look forward to that beer together. Thanks for having me.

 

TY MONTAGUE (VO)

I’d like to end the show today by giving Unilever an official BS score. Our scale goes from zero to 100. A zero means there’s no gap between a company’s word and deed. And 100 means the gap is huge, total BS. 

Alan Jope gave Unilever between a 20 and a 25. Based on what I’ve heard today, I’m going to give ‘em a 20. I see all kinds of promising signs that this company is really trying, starting with leadership. 

The sheer size of this company makes it much harder to live up to their purpose. But it also means that when they do meet their ambitious goals, the positive impacts are substantial. Alan Jope is clearly passionate about getting things right, and his enthusiasm informs every aspect of the business, driving real change. 

The company is also quick to admit where it falls short, and they’re willing to acknowledge problematic areas of their history. Which is why I am hopeful that their score will go down as time passes. But Alan Jope’s retirement announcement comes at a time when board members and shareholders are more concerned with their short term earnings than the longer term goal of building a sustainable global company. 

While he’s still at the helm, Alan Jope is steering the ship straight towards Unilever’s purpose but we will be keeping an eye on what happens once leadership actually changes. 

 

TY MONTAGUE (VO)

To weigh in with your thoughts, visit our website callingbullshitpodcast.com. You’ll be able to see where Unilever ranks on BS compared to the other companies and organizations we feature on the show. 

 

TY MONTAGUE (VO)

And if you’re starting a purpose led business, or you’re thinking about beginning the journey of transformation to become one, here are three things that you can take away from this episode: 

One: Set ambitious goals. As Alan Jope pointed out, it’s by setting goals that at first seem unachievable, that real change happens in an organization. The goal keeping him awake right now is cutting the use of plastics by 50% in one of the largest package goods companies in the world. So what’s yours? 

Two: Your business strategy and your purpose are not separate things. They’re two aspects of one thing: the problem in the world that you exist to solve. Your purpose is why, your business strategy is how. And when you get it right, profitability is a natural outcome.

Three. There’s a timer ticking on businesses that don’t make the shift to being purpose-led. And it’s going off in about 10 years, maybe even less than that. Why? Genzennials. They’re voting with their wallets for companies that are trying to solve some of the big problems in the world. They will decide what businesses thrive and what businesses fail in the future. Don’t wait to establish a relationship with them. Start now. 

 

TY MONTAGUE (VO)

And if you had fun on this trip across the Universe, subscribe to the Calling Bullshit podcast on the iHeart Radio app,  Apple Podcasts, or wherever you listen to people speak into your ears. Thanks to our production team. Hannah Beal, Amanda Ginsburg, Andy Kim, DS Moss, Haley Paskalides, Parker Silzer, Basil Soper and Mijon Zulu. 

Calling Bullshit was created by Co Collective and it’s hosted by me, Ty Montague. Thanks for listening.

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