Running Head: THE DRIVER FOR “FOR-PROFIT” ORGANIZATIONS 1

Corporate Social Irresponsibility

Unilever’s Kodaikanal Mercury Dumping

Margaret Heinsohn

ORG536 - Contemporary Business Writing and Communication

Colorado State University – Global Campus

Dr. Brian Neff

June 26, 2016

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Corporate Social Irresponsibility

Unilever’s Kodaikanal Mercury Dumping

Today’s economy is becoming increasingly aware of environmental deficits and societal

shortcomings. More and more humanitarian efforts have been geared towards holding businesses

accountable for their footprint in the world. This has led the way for emerging markets who are

no longer a rising force but the main focus. This includes organizations who have a strong

market presence who are working out how to expand businesses to new consumers. These

ventures have pointed out social needs that have opened up strong commercial opportunities.

Researchers have not only focused on the dynamics and growth of these emerging markets but

also companies such as Unilever have been attracted to explore the business opportunities

offered by these markets, (London & Hart, 2004). Unilever’s home page dives into their products

and their effort to keep their consumer products sustainable and environmentally friendly.

Unilever is a multinational consumer goods corporation based in London and Netherlands with

sub companies in India. Their products include cleaning supplies, personal hygiene products,

food and beverages (Unilever,2005). Unilever has been attracted to explore the business

opportunities offered by emerging economies referred to as “the bottom of the pyramid”. This is

explained by Prahalad’s 2005 book, The fortune at the bottom of the pyramid. Prshalad states

that it is known as “the largest, but poorest socio-economic group in the world.”

In an emergent economy, ethics is an evolving topic, which means that the demand for

evaluation and CSR audits increases with the growing demands from investors and
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environmental groups. The 2009 academic journal by Karnani, The Bottom of the Pyramid

Strategy for Reducing Poverty: A failed Promise, focuses on how the bottom of the pyramid is a

greatly romanticized view of the poor. Karnani (2009, p.6) states that the poor is actually harmed

when CSRs profit from the bottom of the pyramid. Mainly due to the lack of legal, regulation,

and social mechanisms.

Corporate Social Responsibility

A social business is one who focuses on societal problems that need to be addressed

worldwide while still remaining profitable, which is what differentiates it from a charity or non-

profit organization. Unilever’s sustainability model is one based on a social business practices.

The organization recently launched an initiative using their Life buoy soap line in India which

has become a top seller. Life buoy is a perfect example of how an emerging market has attained

profitability from a low-cost, high volume approach. In order to tap into this market, Unilever

had to create it, through massive health education programs; which educate children, parents and

village leaders on the benefits of using soap (Lifebuoy promotes handwashing, 2005, p. 3). The

goal was to educate 200 million people in chosen developing countries in “the bottom of the

market” (or BOP). Unilever successfully reached 70 million by the third year, experiencing a

20% sales increase (Lifebuoy promotes handwashing, 2005, p. 3).

The Bottom of the Pyramid

To understand an “emerging market” whose purpose is to create a sustainable business,

one must understand the characteristics of the bottom of the market. According to C.K. Prahalad

in his 2005 book The Fortune at the Bottom of the Pyramid the term “Bottom of the Market” is a

concept to influence the lives of poor populations in the world through business initiatives and

practices of international organizations. Unilever prides its self as one of the bottom-of-the-
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pyramid (BOP) market leaders today, whose chief executive, Paul Polman determined to

improve the world market with his sustainability plan. According to Polman, their sustainability

plan in accordance to the BOP is to “half the environmental footprint of our products”, “help

more than 1 billion people take action to improve their health and well-being”, and “ source

100% of our agricultural raw materials sustainably” Unilever (2005). This BOP initiative would

alleviate poverty and increase public health as well as a profitable business venture. In fact,

Unilever has generated more than half of its sales from this emerging BOP market.

There may be doubts on whether or not Unilever is a socially responsible company or just

exploiting into an untapped market. This is because in today’s technologically advanced and

environmentally aware market, companies are scrutinized on their socially ethical behaviors and

environmental footprint. However, it is important to remember that a low price product is

attractive but it may not be enough to meet the limited budget needs of consumers at the BOP

due to the fact that affordability goes beyond the number on the price tag (Prahalad, 2005).

Moreover, business in the BOP can be profitable if the concepts of Corporate Social

Responsibility is fully understood and integrated into the business model from the start.

“Corporate Social Responsibility” (or CSR) refers to a business practice that contributes back

into society through services and projects where the company can make a profit. CSR has

become more common for companies to do business and tap into emerging markets. Being

considered a CSR company also has it benefits. First, brand differentiation through CSR

demonstrates to stakeholders that it is an organization that takes current issues like poverty,

health, and the environment as a priority.

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For Unilever, as with any business, profits and the financial benefit of shareholders are

essential. However, there are many stakeholders that also but be taken into consideration. While

engaging in the BOP may be very profitable, it is also a sensitive market. The question may be

asked if it is acceptable for a for-profit company to profit from poverty. The author of this paper

believes that if the company is true to the CSR method of business and shows improvements on

the communities it does business with, it is acceptable for a for-profit company to profit from

poverty. BOP customers are not the average consumer, any organization involved in making

profits from the BOP must take more responsibility with it. It is worth emphasizing that doing

business with the world’s most impoverished societies for the purpose of eliminating global

poverty brings up some ethical dilemmas. This is due to the fact that gaining high profits from

the poor may be perceived as a way of exploiting or manipulating highly uneducated consumers.

Essentially, a CSR is meant to be a way of giving back to communities, yet for some it is

a way to get tax rebates and a way of receiving attention in a competitive market. Interestingly

enough, CSR has been the center of business competition amongst companies because each

company wants to be seen as doing better for the environment and giving back more to people in

need. In any case, regardless of the motives behind being a socially responsible company, the

ultimate results are good being that a good cause is addressed and being helped. Moreover, it is

important to take into account that even though a company has made great financial gains, while

being considered a CSR, does not necessarily indicate that unethical business practices are being

done. As a matter of fact, Unilever was named “the world’s most ethical company” in 2009 by a

think tank in charge of ranking companies based on ethics, corporate social responsibility (or

CSR), and anti-corruption sustainability. Unilever has stated that , “According to the judges,

Unilever earned a coveted place on the list by going beyond legal minimums, introducing
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innovative ideas to benefit the public and forcing its competitors to follow suit by raising the bar

on what it takes to be an ethical leader.” Unilever (2005).

In conclusion, doing business with the bottom of the pyramid (BOP) consumers, while

making great profits is acceptable as long as the company is held responsible. Consequently,

Unilever’s progress needs to be quantified to their stakeholders. Currently, Unilever shares its

progress on their sustainability goal in three categories: health, environmental impact and

enhancing livelihood. At the end of the day, CSR is about managing the relationship with its

stakeholders to produce a positive impact on society and still make a profit.

References

Prahalad, C.K. (2005).The fortune at the bottom of the pyramid: eradicating poverty through

profits. Upper Saddle River, N.J: Wharton School Publishing

London, T. and Hart, S.L. (2004). Reinventing strategies for emerging markets: beyond the

transnational model. Journal of International Business Studies, 35(5), pp.350-370.

Karnani, A. (2009). The Bottom of the Pyramid Strategy for Reducing Poverty: A failed

Promise, DESA Working Paper, No. 80, New York: United Nations Department of

Economic and Social Affairs.

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Unilever (2005). Lifebuoy promotes handwashing with soap to improve health. Retrieved from

https://www.unilever.com/images/es_Lifebuoy_promotes_handwashig_tcm13-13301.pdf