Professional Documents
Culture Documents
CASE STUDY
on
Corporate Social Responsibility (CSR)
of
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I. BACKGROUND OF THE STUDY
Typically, when people think about sustainability in the realm of Corporate Social
Responsibility (CSR), they think about the specific activities of companies, such as
conservation of natural resources and the integration of alternative energy in buildings
and factories. Some companies, however, take sustainability a step further in their CSR
efforts. Unilever, a British-Dutch multinational consumer goods company, focuses not
only on the specific activities of their company, but also the supply chain that supports it,
as well as the activities of its customers and consumers. This effort to go above and
beyond the norm by making sustainable living commonplace is why Unilever is widely
regarded as one of the few truly sustainable businesses in the world.
As one of the world's leading suppliers of fast-moving consumer goods with
operations in over 100 countries and sales in 190, Unilever's sheer size enables it to
make an enormous positive impact on both society and the environment. The
company's groundbreaking, 10-year Sustainable Living Plan is perhaps its greatest
CSR success so far and exemplifies how businesses can reduce environmental impact
for the long-term and on a large-scale, while also maintaining sales growth.
The Sustainable Living Plan, which launched in 2010, includes three overarching
goals which Unilever has pledged to achieve by the year 2020: (1) improving the health
and well-being of the company's customers and consumers, (2) reducing the company's
overall environmental impact, and (3) enhancing the livelihoods of millions of people
around the globe. In addition to these three goals, the company hopes to double the
size of its business.
Five years into the ambitious plan, Unilever is on track to meet most of its green
goals and has made admirable progress in improving the livelihood, health, and well-
being of others. More than 55% of Unilever's agricultural raw materials are now
sustainably sourced, which is more than halfway to the 2020 target of 100%. The
company is also making significant reductions in CO2 from energy and water in
manufacturing, reducing them by 37% and 32% per ton of production respectively since
2008. Unilever has even achieved one its green goals ahead of schedule: zero non-
hazardous waste to landfill. It has also managed to reach over 397 million people with
programs on hand washing, safe drinking water, sanitation, oral health, and self-
esteem.
In addition, the business case for Unilever's progress could not be clearer: the plan
accounted for half of the company's growth in 2014 and grew at twice the rate of the
rest of the business, according to the company's chief executive, Paul Polman.
In a world of growing rising population, and increasing environmental challenges,
the need for businesses to go above and beyond in CSR is evident, as are the benefits
and opportunities. This calls for a transformational approach, like that of Unilever, to the
way corporations think about sustainability.
II.
III. PROBLEM
need for businesses to go above and beyond in CSR is evident, as are the benefits and
Despite of every possible effort, the company could not reach to its defined target
regarding GHG emission and water usage. The analysis had shown that Unilever’s
footprint per consumer use had increased by some extent. Unilever’s GHG impact per
consumer use had increased by 4% since 2010, and consumer water use impact had
been reduced by only 2%. The CEO acknowledged that because both of the “off-track”
USLP pillars were linked to consumers’ use of its products, they would be hard to fix. In
contrast to a goal of halving its environmental footprint, in part due to its merger and
acquisition activity.
meet its goals without changing customers’ behavior, which is an extremely difficult job.
Three years ago, the company measured the carbon footprint of 2,000 products and
found that on average 68% of greenhouse-gas emissions in their life cycles occurred
only after they got into the hands of consumers, mostly through the energy intensive
The figure presents the logic and flow of the sustainability and CSR self-study
and its conclusion in a transformational commitment at Unilever. Following Cescau’s
decision to go for transformation and the Unilever Board’s concurrence, Gunning,
and the study team members, in consultation again throughout Unilever, began to
detail potential action strategies for brands and the company’s value chain, including
its community outreach and communications. In turn, Cescau and the other
members of Unilever’s executive board fanned out across the globe to meet with
national operating company executives and marketers as well as global and local
customers.
3.1 Marketing Environment
Suppliers bargaining power: The force of supplier in business displays the way
authority and power would grip them. Unilever has its business across the world. The
bargaining power of supplier is significant but has limited effect on the company.
Unilever focuses on its policy of local buying and manufacturing. It helps the
organization in providing itself with an edge in putting a brake on the power of suppliers,
making them weaker to parley at the terms of the company. This strategy does not allow
the suppliers from swapping to Unilever’s rivals and charge rates higher than that of
Unilever.
Competitive Rivalry: Strong business relevance of the other market giants in the world
has been creating a realm of threat for the Unilever (Ehrenberg & Smith, 2016).
Abundance of large number of competitors in the vast market has been proven quite
strong. Not only the large companies, but the local business enterprises have been
creating a cope of tight competition for Unilever. The range of competitions starts from
the small corner shop to the heavy weight organizations like P& G, Nestle and Kraft.
Since these competitors furnish and offer uniformly striking products and services to the
customers, they have been creating a tough challenge for the company to stay
undefeated in the market. These competitors have the ability and strength t attract the
existing customers of Unilever towards them by providing better facilities in terms of
product and services (Banks et al., 2016). Another form of competition is based on the
product price. Since the consumer market is highly bargain- oriented, the best product
in cheapest price is always given priority by the customers. P&G often offers business
discounts to the customers to attract greater number of heads towards them. Moreover,
the local shops and the stores have greater hold and understanding of the customers,
hence providing better opportunities for them in customer attraction (Ehrenberg &
Smith, 2016).
Threat of Substitution: The twenty first century has brought new dimension in the
realm of market ad customer demand. Since the age of consumerism has been strictly
dependent on the variability of the consumer demands, sudden change in the mode of
products and services has created a lacuna between the company and the customers
(Mathooko & Ogutu, 2015). Hence, the monotonous range of the product varieties has
pointed out to the faults and setback of the company. On the other hand, companies like
P&G, Kraft and Nestle have introduced new range of products and services to the
customers thus creating an obvious shift of the customers from Unilever. The
consumers reportedly do not experience varieties of products from Unilever, apart from
the household ones (Morschett, Schramm-Klein & Zentes, 2015). Therefore, Unilever
ought to be adoptive new procedure and strategies in reaching to the demand of the
customers. Fair and strategic understanding of the customer psychology leads to long
term success of a company (Dobbs, 2014).
Buyer Power: Since Unilever is an international company, the buyers are speckled all
around the world. The number also crosses billions. Moreover, the buyers are so
diversified in different countries and regions, the mindset to the payment of the product
and consumption method differs accordingly. However, the long range of varieties of the
customers is not able to affect the pricing process of the company. Yet, they can shift to
the consumption of products from other companies. Therefore, Unilever has a greater
chance to lose the customers in a huge extent. To satisfy the customers Unilever has to
take precautionary action in terms of price determination of the products and service
provision to the customers (Banker, Mashruwala & Tripathy, 2014).
Threat of New Entry: Unilever has vast geographical market where the company has
been operating for years. The strongest market segment in terms of geographical
arena, are the developed countries where the company has been doing business from
the beginning of its franchise establishment. However, the market in the less developed
and the developed country for Unilever is not at puny. The brand image of the company
has been kept intact with constant product supply and service provision in the
developing markets like India, Pakistan, and Bangladesh. They have created a well-
structured market opportunity in the aforesaid countries. However, new entries in the
developed countries require a lot of legal procedures whereas the less developed or the
developing countries provide the multinational business organizations with investment
facilities in lieu of better employment and trade opportunities. The advantage of Unilever
lies in the fact that the company has constructed its business plinth in almost every
market in the world in the form of franchises, branches, or subsidiaries. Its brand image
is the greatest and strongest barrier for the other new entries. On the other hand,
weakening of brand image might allow the new entries to introduce and expand
business thus capturing the existing market of Unilever.
Weaknesses
1. Unilever can be directly competed with by larger retailers.
2. Highly dependent on retailers. Given that retailers have direct control over
customers, the corporation lacks a direct significant influence on consumers.
The performance of retailers has a direct impact on Unilever's performance
and brand reputation.
Evaluation of External Environment
External evaluation does not try to create an entire list of possible elements that
could influence a company's performance; rather, it aims to identify critical variables that
can be addressed with practical solutions.
Opportunities
1. Expansion. Because Unilever is one of the world's largest corporations, it
has the potential to expand its operations outside consumer goods. The
corporation can use its financial resources to implement diversification
initiatives that reduce the risk of substitution.
2. Reaching out to emerging markets. On the one hand, the globalization
process and global media have promoted the Western way of life in Asia.
Unilever might take advantage of this edge to present itself as a successful
brand that assists locals in joining the Westerners. On the other hand, India
and China now have the so-called “newly affluent trillion-dollar consumers”,
providing a golden chance for the company to leverage this consumer base
who is well-known for trying to mimic consumerism in the West.
3. There is a huge movement toward sustainable and healthful products.
Unilever can use this chance to develop new goods that cater to the needs
of the millennial population, allowing them to expand even further globally.
Threats
1. Numerous global competitors. Companies like Nestle, Proctor & Gamble,
Mondelez International, and Colgate Palmolive put the corporation under
competitive pressure. While this is unlikely to unsettle the corporation, it is
worth noting that intense rivalry has a significant detrimental impact on
pricing methods and, ultimately, profitability.
2. The global economic downturn
3. Increased scrutiny.
4. Substitution is a significant risk. Many of Unilever's products can be simply
replicated or swapped. This can be a big problem, especially in places like
Asia and Africa, where labor and raw materials are cheap.
5. A move away from synthetic items and toward natural ones. The majority
of individuals substitute natural and/or traditional alternatives for Unilever's
products. The threat persists in the Western world, as well as in cheaper
countries, due to consumer shifts toward home-made, hand-made, or all-
natural items.
According to Carroll’s pyramid, responsible business is one which qualifies all the levels
of responsibilities before taking up philanthropy. Without fulfilling the other
responsibilities, a business cannot sustain.
IV. Alternative Course of Action
Living Plan (USLP), which aims to develop industry while decreasing its
environmental footprint and increasing its social impact, is putting this ambition
into action. Unilever's mission is to make life more vibrant. They meet everyday
demands for exercise, grooming, and personal care with goods that make people
feel healthy, look beautiful, and get more out of life. (Lieu, P. T. H., Arunjit, N.,
Buapradabkul, S., & Nathaniel, D, 2021). The Sustainable Living Plan, which
launched in 2010, includes three overarching goals which Unilever has pledged
to achieve by the year 2020: (1) improving the health and well-being of the
around the globe. In addition to these three goals, the company hopes to double
V.1. Recommendation
Unilever should continue its Sustainable Living Plan. This case study
in the CSR of Unilever has been committed to corporate social responsibility
(CSR), with the purpose of promoting the economic, social, and environmental
values of the nations in which it operates. Since for the five years into the
ambitious plan, Unilever is on track to meet most of its green goals and has made
admirable progress in improving the livelihood, health, and wellbeing of others.
More than 55% of Unilever's agricultural raw materials are now sustainably
sourced, which is more than halfway to the 2020 target of 100%. The company is
also making significant reductions in CO2 from energy and water in
manufacturing, reducing them by 37% and 32% per ton of production respectively
since 2008. Unilever has even achieved one its green goals ahead of schedule:
zero non-hazardous waste to landfill. It has also managed to reach over 397
million people with programs on hand washing, safe drinking water, sanitation,
oral health, and self-esteem.
Despite the many highlights which are outlined in this report, USLP journey has
also presented with many hurdles. Unilever did not achieve all its targets but learnt that
they must focus on systems change as well as individual programs to ensure long term,
sustained impact. With the satisfactory performance of the implemented strategy, we
will recommend that Unilever should launched another 10-year Sustainable Living Plan.
To implement this recommendation Unilever should focus its programs on the areas
needing improvement based on the summary of 10 years’ sustainable living plan
progress. The following Key learnings on the implementation should be considered:
Make sustainable living effortless. Important as sustainability is for many
consumers, it is often just one deciding factor among many. Which is why the
way that Unilever design and deliver their products to make sustainable living as
easy and enjoyable as possible. The company underestimated how challenging it
would be to help most consumers change their behaviors to embrace more
sustainable ways of living. Unilever learnt many lessons about making
environmental behaviors easier and more attractive to consumers – all of which
help inform their brands’ ongoing efforts to ‘nudge’ people to use their products
more sustainably.
Be clear and consistent in why behavior change is important and what
changes we are asking consumers to make.
Demonstrate that sustainable living can be good for consumers as well as
good for the planet.
Increase our work through cross-sector collaborations and advocacy to
transform the systems in which our products are used.
2. Business must drive systems change. An individual company can change how
it operates but it cannot change the system. We have seen this play out in our
efforts to push forward renewable energy. Unilever is not a power generation
company. But we can – and do – produce our own renewable energy on our
manufacturing sites. We have also come to realize that we have to play a role in
advocating for even more systems change in other industries – such as power
generation. Our approach to advocacy rests on showing market demand for
sustainable solutions so that policymakers have the confidence to act.
Lessons for the future
Maximize the potential of emerging technologies, alternative production
methods and new business models to reduce the direct impact of our
operations.
Strengthen market signals for renewable power and other sustainability
solutions by working with others to increase private sector demand.
Continue to push for the transformation of sustainability-critical systems
through our involvement in progressive policy advocacy groups and
initiatives.
3. New ways of measuring social impact. When we set our Unilever Sustainable
Living Plan targets ten years ago, we did not realize how hard it would be to
measure our progress. Finding an impact indicator that works across all our
initiatives has proved especially difficult. As the data we have on our social
programs improves, so will our ability to enhance the areas where our impact is
high and to modify those areas where they are less so. Having an impact is our
primary goal, not measuring it. But to achieve the former, we need to get better at
the latter.
Lessons for the future
Consider additional or alternative metrics to ‘people reached’.
Examine bespoke social indicators for specific interventions.
Encourage the standardization of measurement tools, indicators, and
benchmarks.
4. Be ready to move fast. In 2010, things looked very different. The targets we set
ourselves were based on our best assessment of existing information and trends
at the time. Even so, some issues have accelerated faster than anyone could
have imagined, while others have come to the fore in ways no one anticipated.
We have had to adapt quickly, listen and in some cases break from the status
quo – even if it felt uncomfortable. We have seen this with our commitment to
reduce virgin plastic – one of the first to do so in our sector at the time, but now
fast becoming an industry norm.
V.2. Conclusion
Unilever’s CEO Paul Polman has shown great potentials in making perfect
decisions to achieve the goal and to lead the company towards its ultimate destination.
Polman and his ULE team has mainly focused on influencing people through
innovations in business strategies as they started recognizing people as individuals,
instead of consumers. Unilever’s CEO has also shown great initiatives in an intensive
communication campaign to make people aware about their new innovative strategies.
Polman and his ULE team have successfully led the company towards its goal to be
achieved gradually. Finally, we can say that zero-waste policies, reducing energy and
water consumption, improving the health of workers – all these things promote the
wellbeing of the environment and society, and they also improve efficiency, reduce
costs, and ensure viability in business. While Polman has extremely moral intentions, he
is also a businessman, and as Young noted, ‘Unilever’s attempt to cut resources, while
still growing, is the holy grail of industry.’ Polman certainly is an ambitious leader, even
a radical some may say, yet the world needs radicals like him – radicals who never stop
striving for the Holy Grail.
The Unilever’s engagement in Corporate Social Responsible (CSR) is
commendable. Its CSR program dubbed as Unilever Sustainable Living Plan (USLP)
was a first-of-its-kind in terms of its objectives, goals, and scope. In fact, USLP became
a model and benchmarked for corporate sustainability of other companies.
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