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Is sustainability really benefiting business? Four reasons to say ‘yes’...

Karen Hamilton, Global VP, Sustainable Business, describes how Unilever is capturing the business benefits of sustainability – and seeing evidence that it drives growth and trust while reducing risk and cost.

“Sustainability is creating value for our business.”

Not so long ago, many of us would have been surprised by that statement, or at least sceptical about what was meant by ‘value’.

Among business people, there was a tendency to think of commercial activity and sustainability as separate things, even if we had chosen to work for a business like Unilever where a sense of social purpose has always been a vital part of the culture.

We knew environmental responsibility and social impact mattered, and we were proud our business took them seriously, but it was hard to see how they could be measured in top- or bottom-line terms in the way that other investments and activities could be.

I believe that has changed.

We’re seeing more and more evidence that our approach to sustainability, built around the Unilever Sustainable Living Plan (USLP), is creating real and measurable value.

The four value drivers

We have developed a simple four-point framework to help capture the ways in which sustainability contributes to our success.

We call them the four value drivers, and they are deliberately business-focused – providing us with a way to quantify the benefits of doing the right thing for people and the planet, measured in purely business terms.

Our evidence is showing that sustainability is...

... driving growth

Sustainability deepens brand equity, drives sales and inspires innovation.

We’re seeing a shift in our consumer research, which is showing that sustainability is no longer a niche issue. Consumers want sustainable products, but they want them to be high-performing products too, and at the right price.

That research is supported by the performance of our sustainable living brands, which include our biggest brands Knorr, Dove, Dirt is Good (our laundry brand, which has different names in different markets), Lipton and Hellmann’s. All our sustainable living brands have integrated sustainability into both their purpose and their products, that is, they have taken action to make sustainable living commonplace in a way that’s relevant to the brand, good for society and meaningful to consumers.

Combined, sustainable living brands delivered nearly half our growth in 2015. They are growing significantly faster than the rest of the business – 30% faster – and even faster than they did in 2014.

... lowering cost

Cutting waste and reducing the use of energy, raw materials and natural resources helps us create efficiencies and cut costs.

These savings ultimately help improve our margins.

We have made cumulative cost avoidance of over €600 million through eco-efficiency measures in our factories since 2008. Our waste programme during this time has contributed to around €250 million of cost benefits.

... reducing risk

The way the world understands risk is shifting.

For a long time businesses and investors tended to focus on the short to medium term but in the last 12 months or so, with the launch of the UN’s Sustainable Development Goals (the Global Goals) and the Paris Agreement on climate change, awareness of the wider risk environment is growing.

Sustainability helps us mitigate risk, in ways that investors and others understand, because at some point these risks hit our top or bottom line. That could be because governments introduce new regulation, like carbon pricing, or because we become unable to source the materials we need for our business, which is why we are sourcing more and more of our agricultural materials sustainably. Future-proofing our supply chain like this helps mitigate against the risks associated with climate change, water scarcity and the changing weather.

... building trust

Trust strengthens our relationships with everyone we deal with, which in turn makes our business stronger.

Consumer trust is obviously very commercially important, but so too is the way that our reputation for sustainability helps attract the best people to Unilever, and the way our sense of purpose inspires us as employees. In 2015, for example, we maintained our status as the Graduate Employer of Choice in the FMCG sector across 34 countries. We are also named within the top three most sought-after employers globally on LinkedIn.

Only the beginning

While we’ve been drawing up this framework, I’ve been very aware that in many ways we’re just at the start of our understanding of sustainable business and its benefits. But the opportunities are already clear.

I’m convinced that sustainability is a competitive advantage, both operationally, in terms of building a stronger, more robust and more innovative business, and on the shop shelf, where there is huge potential for more mainstream brands to benefit from the shift in consumer trends in the way that Knorr, Signal, Ben & Jerry’s and many others already are.