Prospects for sustainable growth
In Unilever we are convinced that businesses which both address the direct concerns of citizens and the needs of the environment will prosper over the long term. This thinking lies at the heart of the Unilever Sustainable Living Plan and our Compass vision of doubling the business while reducing our environmental footprint and increasing our positive social impact. As sustainability becomes embedded, there is growing evidence that it is also accelerating our growth. It certainly contributed to another strong year for Unilever in 2012.
This growth can benefit the hundreds of thousands of small businesses who work with us around the world. Some of these are smallholder farmers; others are micro-entrepreneurs who either sell or distribute our products. Most are in the developing world.
The role of multinationals in economic development has been the subject of much debate. We believe that businesses like ours can play an important role, not only in generating wealth and jobs around the world, but in sharing technology, developing best practice and setting high standards of corporate behaviour on issues such as respect by business for human rights.
Our performance in 2012
2012 proved to be another challenging year for the global economy. Commodity markets remained volatile and costs rose significantly in excess of expectations. The threat of the world’s largest economy going over a ‘fiscal cliff’ and the euro crisis added uncertainty and undermined fragile consumer confidence. Most developed markets experienced sluggish growth, contrasted by relatively healthy consumption and growth in aspiring markets.
Against this backdrop, Unilever performed well in 2012.
Turnover increased by 10.5%, taking Unilever through the €50 billion barrier, a significant milestone to becoming an €80 billion company. Emerging markets grew for the second consecutive year by more than 11% and now account for 55% of total business. Personal Care and Home Care showed double-digit growth, in line with our strategic priorities. Despite commodity cost increases of over €1.5 billion, and the heavy investments made in supporting our brands, growth was profitable, with 0.3% improvement in core operating margin to 13.8%.
Sharing the benefits of growth
Our business contributes to the economic well-being of many individuals, both though direct employment and when linked to our business relationships along the extended value chain of suppliers, distributors and retailers.
The impact on livelihoods is greatest in developing and emerging markets. This is because our supplier and distribution networks involve millions of small-scale farmers, distributors and retailers. Most smallholder farmers grow their crops on less than 2 hectares of land. They are often held back from improving their incomes because of their lack of knowledge of up-to-date farming practices. If smallholders have access to training, better quality seeds and fertiliser they can significantly increase their yields.
This benefits Unilever too. As we grow our business in developing and emerging markets, we will be sourcing more agricultural materials grown by smallholders. If they prosper and their incomes improve, they will be able to invest and we will have greater certainty of supply and, often, better quality raw materials for our food products.
We have expanded the number of smallholders we reach with training and increased our investment. But we still have much to do to demonstrate the impact of our work on their livelihoods, and how we are engaging with women farmers. Smallholders and their practices are diverse which makes the task of measuring the benefits of our interventions more difficult. Nevertheless we want to co-develop a simple, cost-effective method to show that our interventions do improve smallholders’ livelihoods.
In 2012 we commissioned an independent assessment to evaluate our impacts on livelihoods, focusing on the outcomes of Rainforest Alliance Certification.
See smallholder farmers and small-scale distributors for more.
Growth depends on our people, and the standards we set
Sustainable, profitable growth can only be achieved if the right people are working in an organisation that is fit to win, underpinned by a culture in which performance is always aligned with values and people behave with integrity. We are increasingly an agile, flexible and diverse business with people who are motivated by doing good while doing well. We are building capability and leadership among our people – and we are attracting some of the best talent in the market place.
See how we develop our people and engage with their concerns for more.
Our Code of Business Principles and Unilever’s Supplier Code set out our commitment to human and labour rights and specifically to treat our employees and business partners with dignity, integrity and fairness. Like many other companies, we have been undertaking a comprehensive assessment of how best to operationalise and implement the UN Guiding Principles on Business and Human Rights, including a review of our Code Policies and ensuring alignment with our Unilever Sustainable Living Plan.
See how we are developing our approach to human and labour rights for more.
As well as the 173,000 people that we employ directly, our business generates economic benefits for many different stakeholders around the world.
Our products are on sale in over 190 countries. This generates income and sustains employment for the many retail customers and distributors who bring our brands to consumers.
We have carried out studies in Indonesia, South Africa and Vietnam to understand our economic impacts in these countries. Reports are available to read here.
Advancing women’s rights and economic inclusion
We consider the advancement of women’s rights and women’s economic inclusion as a business priority. We recognise the significant challenges women can face in global supply chains including discrimination, lack of access to good jobs, unequal pay, lack of opportunities for advancement, human trafficking and health and safety issues.
We are working to integrate respect for human and labour rights throughout our value chain, including issues around land rights, women and community dialogue.
As a result, we will undertake efforts to identify and effectively address endemic abuses that impact women’s rights, providing training and raising awareness, including the implementation of grievance mechanisms.
We will also work to increase the economic inclusion and employment opportunities open to women, helping to build capacity in areas such as financial literacy.
The importance of partnerships
While we are working to strengthen our own commitments and processes in the areas of women’s rights and economic inclusion, sustained and transformative change can best be brought about by listening to the voices of civil society organisations. These are critical to help our understanding of both women’s issues and priorities as we focus on our future work.
We will also continue to work through other cross-industry and multi-stakeholder initiatives such as the World Economic Forum, New Vision for Agriculture and the UN Global Compact. We endorse the Women’s Empowerment Principles(Link opens in a new window), a collaboration between the UN Global Compact and UN Women, and will work to further align and embed these Principles into our operations globally.
In our supply chain
Unilever has a long history of working with women entrepreneurs through our Shakti programme in India, which we have expanded to similar programmes in Bangladesh, Sri Lanka, Pakistan and Vietnam. Recognising the key role that women play in their communities, we want to do more to support women’s economic empowerment and to build our knowledge of which kinds of economic intervention are of most benefit to women and what barriers exist.
In the developing world, women make up an average of 43% of the agricultural labour force, rising to almost 50% in Eastern and Southeastern Asia and sub-Saharan Africa but, when compared to men, they have less access to land, water rights, finance and education.
In 2012, Unilever co-chaired the B20 Food Security Task Force, part of the Business20 Summit (B20), an international forum which encourages dialogue between the global business community and governments in the G20. The Task Force addressed the need to develop sustainable food and nutrition security programmes, including referencing the importance of land rights and empowering women farmers. It specifically recommended to the 2012 G20 Presidency, targeted programmes to provide farmers, including women farmers, with the skills they need to increase their productivity and income.
As a business we are linked to more than 1.3 million smallholder farmers. We know the positive effect economically empowering women has in terms of lifting families out of poverty.
Our goal, announced in our Unilever Sustainable Living Plan in November 2010, is to engage with at least 500,000 smallholder farmers in our supply network and we will be putting specific focus on women as we work to respond to the UN Secretary-General’s Zero Hunger Challenge, which includes 100% growth in smallholder productivity and income, particularly for women. We will also carry out impact assessments, concentrating on specific commodities where women play a key role.
In our own operations
We also recognise that it is important to make progress within our own operations and we will continue to build on the success of our ‘Winning Balance’ internal global campaign. We launched this in 2012 to help raise employees’ awareness of the compelling case for gender equality and to encourage their active support for it. The views we received are feeding into the development of our local and global priorities.
We have an established Global Diversity Board, and have set clear targets on gender balance which we are holding our senior managers accountable to.
We will continue to use our six identified enablers to retain and develop diverse talent - accountability, mentoring, networks, flexible working, career planning and culture. This work includes the formation of a global workstream for diversity in our supply chain, led by our Chief Supply Chain Officer.
In order to capture the significant work we are doing both in our supply chain and in our operations, we will be conducting an inventory of all the gender initiatives across our business and geographies. When completed, we will make this available on our website. This will frame our next generation of Unilever Sustainable Living Plan ambitions within the Better livelihoods pillar.