Creating and sharing wealth

We believe business plays a vital role, generating equitable wealth and jobs around the world, transferring technology, and training and developing people.

An important contribution

Unilever’s deep roots in emerging markets mean we can make a valuable contribution to economic development in these countries.

In 2004, we began working with Oxfam – a campaigning NGO which can be one of our most challenging critics. We wanted to examine the extent to which our business can contribute to poverty alleviation, and focused on our business in Indonesia. Through this study and follow-up studies in South Africa and Vietnam, we now have a better understanding of our economic footprint in these countries.

The research found that our local businesses make a significant contribution to the local economy through jobs and economic activity.

Creating value

As well as the 169,000 people that we employed directly in 2015, 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 rely on many suppliers around the world to provide the inputs for our business. For example, in 2013, out of our sales income (turnover) of €49.8 billion, we spent €35.7 billion on purchasing goods and services. This included €20.2 billion on raw materials, packaging and goods for resale from over around 10,000 suppliers. We also buy many different types of non-production goods from a large number of suppliers.

Subtracting our purchases of goods and services from our turnover left €13.7 billion as the cash value our operations added in 2014. The chart below shows how the value added was distributed among different stakeholders for that year.

Our employees gained the largest share, earning €6.1 billion of the total. The providers of capital who finance our operations gained the second-largest share at €3.7 billion, with €2.3 million going to governments in corporation tax.

Increasing our impact further

The study also highlighted ways in which we could do more to enhance our impact, for example on poverty, employee skills development and small-scale suppliers. One of the most effective ways to make a difference is by ensuring our products are more affordable and more accessible for consumers. Finding new ways of working with suppliers and distributors can help us grow our business and make a sustainable contribution to economic development.

Lessons learned with Oxfam

We are now drawing these lessons into our work to support smallholder farmers and micro-enterprise models in our supply and distribution chains.

Oxfam has also drawn on the learning from our work together to develop its Poverty Footprint tool. The tool has been designed to provide a measurable methodology for companies to evaluate and influence their impacts on people and communities, specifically in terms of poverty. It aims to identify five social impact metrics:

  • Diversity and gender equality (eg equal rights, protection of cultural identity).
  • Sustainable livelihoods (access to jobs and credit).
  • Health and well-being (eg access to health care and education).
  • Empowerment (eg the right to organise and unionise).
  • Stability and security (eg ability to deal with a personal or natural disaster, crime or violence).

Unilever in Indonesia – a case study

We have operated in Indonesia for more than 75 years and are deeply embedded in the local economy. Our business contributes directly to the country's tax base and employment, and has an extensive network of local suppliers and distributors. Approximately 95% of Indonesians use at least one Unilever product, including brands such as Pepsodent, Lux, Sunlight and Lipton.

In the year of the study (2003), Unilever Indonesia employed approximately 5,000 people, of whom 60% were direct employees and 40% contract workers. In addition, nearly 2,000 people were employed in factories solely making Unilever products under contract. Indirectly, however, the full-time equivalent of roughly 300,000 people made their livelihoods in Unilever Indonesia's value chain. More than half of this employment is in distribution and retailing, amongst an estimated 1.8 million small stores and street vendors.

Of the total value created in 2003, around two-thirds was distributed to participants other than Unilever Indonesia, such as producers, suppliers, distributors, retailers and the Indonesian government, which received an estimated 26% of the total.

By examining the jobs and the value created at each point in this chain, we learned a great deal about where companies can have the most positive and negative impact on poverty reduction. The value created by people working at either end of the value chain (for example in agriculture and retailing) is much lower than the value captured by those at the centre of the chain (companies directly supplying Unilever Indonesia). It is possible to increase the value created by people at the ends of the chain, for example through producer co-operatives or alternative supply-chain models.

Lessons learned from the research

Fast-moving consumer goods (FMCG) company value chains can offer poor people an opportunity to gain basic skills within a structured learning environment and earn incremental, regular income. Such opportunities may be the first steps towards accumulating assets, increasing independence and improving quality of life.

However, from our research it also became clearer that participation in value chains alone does not guarantee improvements in the living conditions of poor people. For value chains to work for poor people, there needs to be other social institutions and resources in place, such as credit and saving schemes, marketing associations and insurance schemes. For optimum impact, a concerted effort is required between business, governments, international institutions, civil society and others.

Lessons learned from the partnership

This project represented a big step for Oxfam in its work with the private sector as they had never before gone so far in exploring the motivations, trade-offs and choices that companies make in their operations.

The project was also the first time that we had worked so closely with an NGO to analyse our social and economic impacts in a particular country. The research gave us new insights and information in a number of areas, including new perspectives and ways of looking at social issues. During the project Oxfam and Unilever came to realise that, despite our very different missions and goals, we share a commitment to contributing to poverty reduction and economic development.

Subsequent research

Following on from this study, we have conducted further research.

For example, in 2008 we carried out a study with INSEAD international business school in South Africa. (PDF | 2MB) André Fourie, CEO, National Business Initiative and South African Reference Group Member for this study concluded that "The scope and depth of Unilever's economic 'footprint' demonstrates the value of large corporations to the country, the economy and the broader society."

We also conducted a study (2009) with leading think tank, the Central Institute for Economic Management (CIEM) in Vietnam (PDF | 841KB). Pham Lan Huong of CIEM, who was the team leader of the research, concluded that "Unilever has proven you can successfully incorporate a social agenda into a company's business agenda, helping to contribute positively to the socio-economic development of the country."

More recently, Oxfam conducted a two-year research project, ‘Labour Rights in Unilever’s Supply Chain’ (PDF | 851KB). This was published in early 2013. Oxfam used our Vietnamese operations as its main case study and made six recommendations for our business. These are based around supporting workers’ livelihoods, providing human rights training within the organisation, implementing more ways in which workers can raise areas of concern, and working closely with suppliers and partners to ensure standards are met. We reviewed our Vietnamese supply chain in the light of the recommendations.

We also realised that Oxfam’s recommendations could be considered in a global context. As a result, we studied how we could promote sustainable livelihoods for all our workers and for those in our value chains. This work contributed to the creation of our three new commitments, announced in 2014, which support our goal to enhance livelihoods.

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