Paul Polman returns to the Institute for Real Growth as an author rather than as a chief executive, to discuss the book he wrote with Andrew Winston. He refuses the framing that the world has entered a new normal, on the grounds that we have been in it a long time, and puts climate change and inequality at the root of everything else.
His central claim is that the case for acting no longer rests on morality, because the cost of failing to act is now higher than the cost of acting. That crossover, rather than conscience, is why the financial market moved. It does not move for moral reasons, he says, but it moves when it sees an opportunity or a risk.
Key findings
- Polman separates three kinds of authority and is explicit that he timed his own move between them. The one he holds now is the one he rates highest.
- His objection to current corporate practice is not that it is insincere but that its ambition is set at the wrong level. Reducing harm is not a destination when the planet is already overdrawn.
- Polman rescales the planet’s 4.6 billion years to 46 years. Human beings arrive four hours ago and the industrial revolution one minute ago, and in that minute half the world’s forests have gone, 68 percent of vertebrate species have gone over five decades, and only 8 percent of what is produced gets reused.
- The transformation described in the book runs in a fixed order, and the first step is personal rather than organizational. You cannot have a sustainable company if you are not sustainable yourself, and the opening chapter is about unlocking the company’s soul.
- The chapter he calls the elephant in the room is a consistency test, and Polman applies it to activities most companies do not count as sustainability at all: lobbying, tax, and executive pay.
- Asked to name the blockage in the middle of an organization, Polman reassigns the fault upward. Stuck managers are, in his account, operating under boundaries the leadership team set.
Bought, formal, and the third one
Polman sorts authority into three kinds. Bought authority is the billionaire’s money in politics, which he says is not a good thing. Formal authority came with running Unilever, where 175,000 people worked for him. Moral authority is the third, he says he timed the move to it carefully, and he rates it the most powerful of the three.
He spent the last five years of his ten year tenure turning Unilever’s size and scale into changes larger than Unilever. Optimizing your own company inside a system that is not designed to deliver, he says, only brings you so far. The deeper work of decarbonizing the global economy needs government, civil society and business together, and few of those partnerships succeed.
The book he did not want to write
Polman says he never wanted to write a book, on the view that chief executives write them either to stroke their egos or to rewrite history. He asked Andrew Winston, author of The Big Pivot and Green to Gold, to write it with him for an outside American perspective. Holding the first copy, he says, felt like a baby being born.
The book came out in November and is heading north of 100,000 copies. Polman calls it a practical book from a practitioner who ran a big publicly traded multinational, and one tool among several for changing what good looks like. The movement behind it pushes three levers: the leaders currently in power, the business schools he says have failed to create the right leaders, and youth movements.
Four hours of people, one minute of industry
Polman scales the planet’s 4.6 billion years down to 46 to make the proportions legible. On that scale human beings have been here four hours, and the industrial revolution started one minute ago. He is addressing marketers, a profession he says was built to convince everyone to buy more stuff, and infinite growth on a finite planet is not on offer.
In that one minute the world lost 50 percent of its forests, and over the last five decades 68 percent of its species of vertebrates, mammals and birds. Only 8 percent of what is produced gets reused. Overshoot day fell on July 29 last year, and every day after it, Polman says, is stealing from future generations.
Less bad is not a standard
Most companies, Polman says, are still in CSR mode: claims on carbon, less plastic in the ocean, no deforestation in the value chain. He allows that this is a real step change on what their predecessors did, but it measures progress against the past rather than against what the world needs. Less bad, in his rendering, is murdering five people instead of ten.
Sustainable is not good, he argues, only not bad, and a planet that has overshot its boundaries cannot afford a neutral position. The words he wants instead are restorative, reparative and regenerative, and the acronym he wants reversed: from corporate social responsibility to responsible social corporations. The book runs in that same order, from the leader to the company to the wider society.
Why the economics now do the persuading
Asked which appeal actually moves leaders, Polman answers opportunity. The shareholder still carries disproportionate weight for most businesses, so the moral case, which he says is hard to move quickly, works best through employees and their children. The faster lever is to make the economics work in your favor and align shareholders with longer term stakeholders.
His evidence is the bill for the pandemic. Saving lives and livelihoods in Europe and the United States alone cost about 17 trillion dollars, and the International Monetary Fund estimates 25 trillion dollars of lost GDP in this decade alone. That is infinitely more, he says, than it would have cost to avoid the problem in the first place.
The pandemic should not have surprised anyone, he argues, because SARS, Zika, Ebola and Asian flu were all zoonotic diseases tied to the destruction of biodiversity. What was surprising was the severity, and the inability to act together as global citizens, with emerging markets left at 15 percent vaccination. The direction is now settled, he says, and the speed and scale are not.
Port Sunlight, and the sentence they rewrote
Polman’s first move on purpose at Unilever was physical. He took the whole leadership team to Port Sunlight, to the house of Lord Lever, and brought with him a line from Jim Collins in Good to Great about preserving the core and stimulating progress. The exercise was to understand what had made the company tick in the first place.
Lord Lever’s purpose was making hygiene commonplace in Victorian Britain, at a time when one in two babies did not survive past their first year. After a lot of work and soul searching, Unilever translated that into making sustainable living commonplace, changing what the sentence promised while keeping its shape.
The personal purpose journey that followed drew on Bill George’s work and remains one of the most popular training courses at Unilever, with nearly 100,000 people through it. Polman spends time on purpose because it lets employees write themselves into the story and own it. It also, in his account, gave the company the courage to set bolder goals.
Targets the world needs, not targets you can hit
The test Polman applies to a goal is external: set the targets the world needs, not the targets you can get away with, which he says is still the norm. That meant taking responsibility for total impact rather than scope one and two alone. In food it brought deforestation, smallholder livelihoods, stunting, food waste and obesity into scope, and with them the opportunities.
Three targets set 12 or 13 years ago are the record he leans on. Unilever committed to 50/50 gender diversity and to zero fossil energy in its own systems, and reached both a few years ago. Zero waste in its factories was achieved five or six years ago.
Publishing the numbers made the company uncomfortable, and Polman handled that by stating a dependency rather than lowering the target: Unilever said plainly that it could not get there alone. GlobeScan later rated the standing that resulted above even Patagonia’s, and he treats that as what expanded the company’s circle of influence.
One plus one is eleven, and it takes three to tango
One plus one is eleven, the chapter title, means optimizing within the current system through partnerships with your own industry, your suppliers and your value chain. At Unilever it took the form of the Partner to Win program. Procurement had been rewarded for finding the lowest material cost, with little concern for how that price came about.
The new variables were sustainable standards and innovative capability, and suppliers were sorted into three levels with more Unilever business attached to the higher ones. Polman reports cost coming out of the system, a significantly faster move to sustainable sourcing, and profitable growth at the same time. The Glasgow coalitions on shipping, airlines and food are the same idea at industry scale.
The next chapter, it takes three to tango, is about systems change and brings in government. Climate change and food security cannot be solved, he says, without the right rules, laws and regulations, and current subsidies on fuel and food drive behavior in the wrong direction. Waiting for the legislation and then complaining about it is not the answer.
The elephant in the room
The last chapter is about trust built on transparency and truth, which Polman says can only come from consistency in everything a company does. It is often what you do in the dark, he says, that makes you shine in the light. The pattern he objects to is celebrating the part of the record you are good at while funding activity that undermines it.
His examples are specific. Lobbying in the United States still runs to 3.5 billion dollars, and the trade associations campaigning against climate proposals were funded by the same companies that had made climate commitments. Ten percent of GDP sits offshore, 20 of the top 500 companies have never paid tax, and General Electric once carried more tax lawyers than anyone else on the payroll.
Executive pay is the third item: 20 times average pay 30 years ago, 380 times now, and much of it not linked to performance either. People look at that, he says, and ask whether their bosses are real and sincere. These are the tougher challenges, and leaving them unaddressed undermines the trust the rest of the work is meant to build.
Better to make the dust than to eat it
Polman’s slogan is that it is better to make the dust than to eat it. Unilever was first to put all the ingredients on the label for perfumes, first to disclose its tax principles, and worked with the OECD on base erosion and profit shifting. The cost was internal as well: he closed the inherited tax haven operations that had nothing to do with the business.
Colleagues argued internally that publishing perfume ingredients handed competitors an advantage. The hardest case was the human rights audit Unilever asked Oxfam to run, deliberately in Vietnam, the toughest country available. The report raised issues that were not easy to discuss, and Polman published it unedited.
The expected attack from the press did not come. Readers concluded that if Unilever had these issues then other companies had worse, and Polman says it created trust and made more people want to work with them. He sets that against a field where more than half of companies still set no diversity targets and very few publish a human rights report.
Middle management is stuck for a reason
Told that the blockage sits in the middle of the organization, Polman moves it upward. Make it my problem as a leader, he says, not their problem. Most people want to do the right thing, but middle managers are usually operating under boundaries the leadership set, and when they are stuck they are stuck for a reason.
His example is the sales force. Reward them on the number of orders they write and they behave one way; reward the same people on customer service or customer satisfaction and they behave differently. He gives the same reason for abolishing quarterly reporting and guidance at Unilever, which he presents as moving the boundaries that drove the behavior.
Business treats delegating complexity upward as a sign of weakness, and Polman argues the reverse: complexity should be delegated upward and owned by the leaders. When Unilever’s people reported conflicting objectives between departments, or a structure that blocked a new business model, the leadership changed it. He also overhauled the training programs, and changed people where the progress he wanted did not appear.
The only department whose job was ever to sense
Marketing has three roles in Polman’s account, and the first is sensing. It is the only department whose job is to serve societal needs and stay in touch with society, and he says it has lost that direction. The second role is translating what the company stands for into what its brands say, which is no longer only about functional benefits.
The examples he gives are the ones he built: Dove standing for women’s self esteem, Lifebuoy for helping a child reach the age of five, Domestos for attacking open defecation. The third role is succession, because marketing is still the biggest source of talent for chief executives, which he turns into a responsibility for creating the right leaders.
The job is getting harder, with the fast pace of technology and a bifurcating society making it more difficult to establish connections and stay ahead of trends. Told that students at the business school he chairs increasingly see marketing as selling evil, Polman concedes the point rather than defending it: selling more stuff is not marketing anymore. He suggests the title itself may have to change to change the mindset.
Not an idealist, a hopist
Asked whether people call him an idealist, Polman answers with the commercial record first: Unilever grew from 38 to 55 billion under him, and he created 300 percent shareholder return. He is not an idealist, he says, but a hopist, a word he coins on the spot. His one regret is that he probably was not aggressive enough.
Three things encourage him: millennials and Gen Z, who he finds strongly purpose driven, technology moving faster than expected, and the arithmetic he opened with, that the cost of not acting now is higher than the cost of acting. Hope, he argues, drives change more usefully than fear. True leadership is putting the interests of others ahead of your own.
Three parting instructions
Polman’s closing advice to marketing leaders comes in three parts. The first is the size of the opportunity, which he puts at 12 trillion dollars unlocked and 380 million jobs created over the next decade by moving in a greener direction. Anyone who answers that we have done it already, or that it cannot be done, should not be in the job.
The question he leaves them with is whether the world is better off because your company is in it. Leaders are paid to profit from solving the world’s problems, not from creating them. His second instruction is courage, on the shop rule that if you break it you own it, and taking responsibility for your total impact.
The third is that these are not issues to take on alone. Partnership is hard work, it exposes you and it requires compromise, but Polman ties it to goal 17 of the Sustainable Development Goals. The marketing community, he tells them, is better placed than anyone to drive those partnerships.
Scope and limitations
This is one executive’s account, recorded in 2022 while he was promoting a book he co-wrote, and the interview is with the Institute for Real Growth rather than an independent reviewer. The figures he gives are his own claims or his recollection of studies he commissioned, not reported results verified here. That applies to the pandemic cost totals he attributes to the International Monetary Fund, the share of today’s problems he says existing technology can already solve, and the pay multiple and lobbying total he cites. It also applies to the number of people put through the Unilever purpose course, and to the revenue and shareholder return figures for his own tenure. Polman himself concedes that the sequence he describes is harder in practice than it sounds, and that he did not know at the time whether he was right. Parts of the conversation are commentary on named politicians and specific national political events, which is his own view and is not covered here.
Source
This page summarises HGS #44: Paul Polman (Former CEO, Unilever) urges business leaders to address societal challenges, by Marc de Swaan Arons, 2022-04-04.