Unilever's New Global Strategy: Competing through Sustainability (2016)

– Detailed Analysis

1. Introduction
Unilever Overview: Unilever is one of the world's leading consumer goods companies, with
a diverse portfolio encompassing food, beverages, cleaning agents, and personal care
products. Established in 1929, Unilever operates in over 190 countries, reaching billions of
consumers daily. Its extensive brand portfolio includes household names like Dove, Lipton,
Ben & Jerry’s, and Axe.
Importance of Sustainability in Global Strategy: By 2016, sustainability had emerged as a
critical component in corporate strategy, driven by increasing consumer awareness,
regulatory pressures, and the recognition that long-term business viability is intertwined with
environmental and social stewardship. For multinational corporations like Unilever,
integrating sustainability into their core operations was not just an ethical imperative but also
a strategic necessity to maintain competitiveness and drive growth.

2. Unilever's Sustainability Strategy

The Sustainable Living Plan (USLP): In 2010, Unilever launched the Unilever Sustainable
Living Plan (USLP), aiming to decouple business growth from environmental impact while
increasing positive social impact. By 2016, this plan had evolved, with sustainability
becoming central to Unilever’s global strategy.
Goals and Objectives:
• Environmental Impact: Reduce the environmental footprint by improving water
usage, enhancing renewable energy adoption, and minimizing waste.
• Social Impact: Enhance health and well-being, improve livelihoods across the value
chain, and promote diversity and inclusion.
• Economic Performance: Achieve sustainable growth by fostering innovation,
driving efficiencies, and building resilient supply chains.
Key Areas of Focus:
1. Climate Action: Commitment to becoming carbon positive by reducing greenhouse
gas emissions and increasing renewable energy usage.
2. Waste Reduction: Aiming for zero waste to landfill across operations and promoting
circular economy principles.
3. Sustainable Sourcing: Ensuring all agricultural raw materials are sustainably
sourced, supporting biodiversity, and enhancing supplier practices.
4. Health and Well-being: Developing products that contribute to better health and
hygiene, and supporting communities in accessing essential services.
3. Integration into Business Operations
Product Development and Innovation: Unilever embedded sustainability into its product
innovation processes. This involved developing products with reduced environmental
footprints, such as concentrated detergents requiring less packaging and water, and personal
care items using sustainably sourced ingredients.
Supply Chain Management: The company worked closely with suppliers to ensure
adherence to sustainable practices, including fair labor conditions, sustainable farming
practices, and minimal environmental impact. This included providing training and resources
to suppliers to meet Unilever’s sustainability standards.
Marketing and Branding: Sustainability became a key differentiator in Unilever’s branding
strategy. Brands were positioned around their sustainable attributes, appealing to
environmentally and socially conscious consumers. Campaigns highlighted Unilever’s
commitment to sustainability, enhancing brand loyalty and reputation.

4. Competitive Advantage through Sustainability

Differentiation: By prioritizing sustainability, Unilever differentiated itself from
competitors, offering products that aligned with the values of a growing segment of eco-
conscious consumers. This differentiation fostered brand loyalty and allowed for premium
pricing where justified.
Cost Savings and Efficiency: Sustainability initiatives led to significant cost reductions
through energy efficiency, waste minimization, and optimized resource usage. For instance,
adopting renewable energy sources reduced long-term energy costs, and efficient supply
chain practices lowered operational expenses.
Brand Reputation and Trust: Unilever’s commitment to sustainability enhanced its
reputation as a responsible corporate citizen. This trust translated into increased consumer
preference, attracting not only consumers but also investors who prioritize Environmental,
Social, and Governance (ESG) criteria.

5. Implementation and Execution

Organizational Changes: To support the sustainability strategy, Unilever restructured its
organization to integrate sustainability into all business functions. Dedicated sustainability
teams worked alongside product development, marketing, and supply chain departments to
ensure cohesive implementation.
Partnerships and Collaborations: Unilever partnered with various stakeholders, including
NGOs, governments, and industry consortia, to advance sustainability goals. Collaborations
facilitated knowledge sharing, resource pooling, and the scaling of sustainable practices
across the industry.
Measurement and Reporting: Robust metrics and key performance indicators (KPIs) were
established to track progress against sustainability goals. Regular reporting, both internally
and externally, ensured transparency and accountability, fostering continuous improvement.

6. Challenges and Obstacles

Internal Challenges:
• Organizational Resistance: Shifting to a sustainability-focused strategy required
significant cultural change, encountering resistance from parts of the organization
accustomed to traditional business models.
• Initial Costs: Investments in sustainable technologies, training, and process
reengineering involved substantial upfront costs, posing financial challenges despite
long-term savings.
External Challenges:
• Market Dynamics: Rapidly changing consumer preferences and increasing
competition necessitated agility in sustaining the sustainability strategy.
• Regulatory Environment: Navigating diverse regulatory landscapes across different
countries added complexity to implementing uniform sustainability practices.
• Supply Chain Complexity: Ensuring sustainability across a vast and complex global
supply chain was challenging, particularly in regions with less stringent enforcement
of environmental and social standards.

7. Outcomes and Impact

Performance Results: By 2016, Unilever had made significant strides towards its
sustainability goals:
• Reduced Environmental Footprint: Achieved substantial reductions in greenhouse
gas emissions, water usage, and waste generation across operations.
• Sustainable Sourcing: A high percentage of key agricultural raw materials were
sustainably sourced, enhancing biodiversity and supporting farmer livelihoods.
• Product Portfolio: A growing number of products were labeled as “Sustainable
Living Brands,” contributing to higher growth rates compared to the rest of the
portfolio.
Market Position Improvements: Unilever’s sustainability strategy bolstered its market
position, making it a leader in sustainable consumer goods. The company leveraged
sustainability to enter new markets, attract diverse consumer segments, and strengthen its
global brand presence.
Sustainability Metrics Achieved:
 • Carbon Neutrality: Significant progress towards carbon neutrality with increased
use of renewable energy.
• Waste Management: Achieved near-zero waste to landfill in several manufacturing
facilities.
• Social Impact: Enhanced community development programs and improved living
standards among supplier communities.

8. Comparison to Competitors
Benchmarking Against Peers: Unilever’s sustainability strategy positioned it ahead of many
competitors who were slower to integrate sustainability into their core strategies. While
companies like Procter & Gamble and Nestlé also pursued sustainability initiatives,
Unilever’s comprehensive and integrated approach provided a more substantial competitive
edge.
Competitive Responses: Competitors responded by ramping up their own sustainability
efforts, recognizing the strategic advantage Unilever had secured. This led to an industry-
wide push towards greater environmental and social responsibility, benefiting consumers and
the planet.
Market Leadership: Unilever established itself as a sustainability leader, often cited in
industry rankings and sustainability indices. This leadership attracted partnerships, talent, and
investments aligned with sustainable development goals.

9. Lessons Learned and Future Directions

Key Insights:
• Integration is Key: Embedding sustainability into the core business operations
ensures it is not sidelined but becomes a driving force for innovation and growth.
• Long-term Commitment: Sustainability requires sustained effort and investment,
with benefits accruing over the long term rather than immediate gains.
• Stakeholder Engagement: Collaborating with stakeholders across the value chain
enhances the effectiveness and reach of sustainability initiatives.
Future Sustainability Initiatives: Building on the 2016 strategy, Unilever continued to
expand its sustainability commitments, setting more ambitious targets in areas like climate
action, circular economy, and social equity. Future directions included leveraging technology
and data analytics to further enhance sustainability performance and exploring new business
models that promote sustainability at scale.

10. Conclusion
Unilever’s 2016 global strategy of competing through sustainability marked a pivotal shift in
how multinational corporations approach business growth and competitiveness. By
integrating sustainability into every facet of its operations, Unilever not only addressed
pressing environmental and social challenges but also unlocked new avenues for innovation,
efficiency, and market differentiation. Despite facing significant internal and external
challenges, Unilever's unwavering commitment to sustainability yielded tangible benefits,
reinforcing its position as a global leader in sustainable consumer goods. The case of
Unilever underscores the potential for sustainability to serve as a powerful catalyst for
competitive advantage and long-term business success in the modern global marketplace.