29 June 2018
Sustainability is at the heart of value creation for Unilever
William Lever founded Unilever with a clear purpose: to make cleanliness commonplace and rid Victorian slums of deadly diseases such as cholera. Fast forward to today, and while as one of the world’s leading consumer goods companies – making and selling around 400 brands in more than 190 countries, with 2.5 billion people using our products every day – his original business looks very different, there are still parts of his legacy he would recognise.
First, the company still has a clear purpose: to make sustainable living commonplace. It is a driving force behind how we work and underpins the Unilever Sustainable Living Plan (USLP). The USLP is an ambitious sustainability agenda, introduced in 2010, to drive sustainable growth by tackling a wide range of environmental and social issues, such as climate change and promoting equal opportunities for women.
William Lever was a well-known philanthropist and capitalist. He would surely approve of our strongly held belief today that businesses which will thrive in the future are those that serve society today. That is why the USLP has a firm eye on today’s challenges, helping us to drive more profitable growth for our brands while saving costs, mitigating risk and building trust among our many stakeholders.
The second thing William Lever would recognise is the fact that Unilever is still a company built over many years with a long-term horizon in mind. In other words, we have invested continuously in the things that drive growth and deliver superior returns: people, brands, world-class manufacturing, leading-edge R&D and sustainability. Not just over one quarter or even one year, but year in, year out.
It is a model that has served Unilever and its many stakeholders well, including shareholders. In the past 30 years, Unilever PLC has delivered a total shareholder return of 4,000%. During this time, and especially since 2010, we pioneered a new way of doing business, putting sustainability at the heart, not just a part, of our business model and strategy.
Unilever’s value-creation story is fundamentally a story of long-term sustainable value creation for shareholders and stakeholders. That is why we have woven sustainability throughout the strategic report. Our most recent annual report is the latest in a long line of reports to continue this trend.
The annual report is part of a broader suite of communications designed to engage stakeholders on our progress and future plans with regards to sustainability – with unilever.com as the apex. It is a vitally important publication, although it is principally aimed at the investment community, whose interest in sustainability is growing as their understanding of the risks and opportunities increases.
“ The company has a clear purpose: to make sustainable living commonplace”
With investors squarely in mind, our annual report does not have a conventional sustainability section, but weaves it throughout to signal sustainability is core to our business and not an add on.
We start on page one, with a clear statement of our purpose and its continuing relevance in today’s volatile world. The statement from our CEO, Paul Polman, reinforces this core message, and the strategic importance of the USLP to our future growth, with supporting financial and non-financial KPIs on the following page to demonstrate the progress we are making.
Every good annual report should reflect on the current and future trends that could impact value creation. Our annual report is no different and, alongside more traditional market drivers, we discuss the long-term macro forces impacting our business, such as climate change and the impact of diets on health.
Our value-creation model sets out the unique factors that enables Unilever to pursue a model of long-term compounding growth – including the critical role our people, partners and the natural environment play – and how the value we create is shared with multiple stakeholders. Following this, we describe how we are delivering long-term value for our most important stakeholders – consumers, society and environment, our people, our partners and our shareholders, including how we are creating value from the United Nations Sustainable Development Goals, which aim to tackle 17 of the world’s most urgent environmental and social challenges.
Unilever may have deep roots when it comes to sustainability. Yet, thankfully, we are not alone in recognising that sustainable business is good business – after all, the biggest challenges facing the world require many companies to pull together.
We use our annual report to showcase how we are benefitting from a progressive approach to sustainability – our ICSA award for ‘sustainability disclosure of the year’ is recognition of this. We hope it inspires other companies to follow a similar path.