Management Development Institute, Gurgaon

Name of Programme:- PGPM

End term Examination, Term-III
Name of the Course: CSR
Name of the course Faculty: - Prof. S.K. Tapasvi

Name :-SIDHANT Roll Number:-20P107

Q.1 Examine Paul Polman’s USLP strategy in the light of your understanding of strategic
CSR as different from responsive CSR.
Marks: 20
Ans)

Paul Polman's USLP strategy included Unilever's efforts to secure double-digit revenue while
separating growth from the company's environmental impact. However, it was more than a
traditional CSR program, and rather the strategy was entirely aligned with commercial interests,
which had three goals: -

1) reduce the negative environmental impact of product production and use.

2) 100% sustainable agricultural raw material production
3) help 1 billion people improve their health and well-being.

In order to study Paul Polman's USLP strategy from a strategic and responsive CSR perspective,
we must first understand the difference between them.
• Responsive CSR- Responsive CSR means to serves as a good corporate citizen, meets the
needs of growing stakeholders, and mitigates the current and potential negative impacts of an
organization. The focus is on environmental issues or general social impacts such as training
programs and is not directly related to the company's core business. For example, Maruti’s way
of giving road safety trainings to reduce accidents.
• Strategic CSR – Strategic CSR is more than a solution. Direct organizational resources and
management attention are used to initiate and implement a CSR program consistent with the
company's strategy. This allows companies to stand out from the competition and strengthen
their strategic position.

The degree of community involvement determines corporate social responsibility responsibly and
strategically. Therefore, Unilever has adopted a responsive CSR strategy based on good citizenship
and efforts to minimize damage from value chain activities. It also strategically leveraged
corporate social responsibility by seizing opportunities to improve key areas of competition and
strengthening strategy by transforming value chain activities for the benefit of society. As a result,
the USLP strategy leverages all the significant real-world benefits of CSR, i.e.

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• Integrate the CSR perspective into the strategic planning process.
• All actions are directly related to the core business and are reviewed by PwC.
• Consideration of stakeholder perspective.
• Polman emphasis on the transition from short to medium to long term management of the
company's resources and relationships with key stakeholders.

USLP can analyze through three levels of interaction between the company and the issues affecting
the communities in which it operates.
• Common social issues- The fact that Unilever was founded to protect people from diseases
such as typhoid, cholera and smallpox reflects the fact that public conscience has always been
an integral part of the company.
• Social impact on the value chain- handwashing programs are an attempt to solve the problem
of increasing the positive social impact that society creates, and also, Lifebuoy marketing
campaigns have always been seeking behavior improvement.
• Social aspect of competition- the company has promised to take responsibility for the entire
value chain and the entire production cycle, including working with tea and palm tree suppliers
to achieve 100% sustainable distribution.

Hence, USLP as a program was equally inclined towards strategic and responsive CSR. As a
program, it helped align the routine actions and short-term goals of the company with the long-
held mission to “do well by doing good”. Its key characteristics are:

• Taking control of the entire Value Chain: Upon analyzing the 50 targets, Unilever found that
their own operations accounted for merely 6-7% of their environment footprint, hence the firm
committed to taking responsibility of the entire value chain. E.g, Collaboration with palm oil
suppliers were achieved to meet 100% sustainable sourcing requirements.
• Consumers over Shareholders: With the unprecedented decision of not publishing any
quarterly reports and earning’s guidance Polman marked the shift in company’s strategy and
priorities. Even when the stock price fell by 10%, the CEO was committed to the statement
that the firm is in sync with consumer’s need, the environment it operates in and will take
responsibility of society after that shareholders will be rewarded.
• Accountability and Performance Measures: Unilever while still driving performance from
financial objectives-based incentive compensation but achievement of USLP targets were
independently audited by PwC and were reported in detail through the management reporting
system.

Thus, the USLP strategy not only mitigated the potential negative impact of organizational
operations, but also provided several strategic advantages, like company's continuous growth,
developing a competitive advantage through social enterprises, more opportunities for innovation,
and new market development.

All of these factors underscore the fact that Unilever executives have taken one step further in the
responsive CSR initiative and want to integrate corporate social responsibility and sustainability
practices into their organization's core business.

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Q.2 Which behaviour change options do you think Sudhir Senapati should agree to
implement? Should he be worried about Samir Singh’s priorities?

Marks: 20

Ans) In order to make this strategic choice of choosing among behavior change options, we first
need to make sure that whatever decision is being taken by Sudhir Senapati, it is line with the
overall corporate strategy, meets the vision of the CEO Paul Polman, has the ethos of the thoughts
of the founder William Lever, and is in line with the goals of the organization at Senapati’s level,
his superior layer of management and as well as Samir Singh’s level.
One thing important to note is that organization is designed in such a way that the goals of Sudhir
Senapati are different from the goals of Samir Singh. Sudhir Senapati reports to the MD of
Hindustan Unilever, who in turns reports to the global COO. This makes it clear that the goals of
Sudhir Senapati is in line with that of MD and COO, i.e. to look at the bottom line of the income
statement, make Lifebuoy and other cleansing products a valuable proposition for the company
and doing so by increasing the sales cost effectively. Thus, every decision made by him on the
budgeting has to be seen from the lens of the cost effectiveness.
Whereas, goals of Samir Singh are different and are in line with that of President of personal care.
He’s mainly concerned about the sales of the brand, making it a commercial success by increasing
its reach, and also fulfill the goal of changing lives of 450 million by 2015.
But both their goals are also tied with the vision of the CEO Paul Polman. The CEO has the
following vision: -

• no longer provide earnings guidance or publish quarterly reports.

• to follow a four- or five-year process, need to change the strategy and the structure as well
as the culture.
• ambitious goal of doubling Unilever’s sales volume. But he also acknowledged that
“growth at any cost is not viable,” and committed to achieving this goal while decoupling
growth from the company’s environmental impact.

In order to achieve these goals, he has given three goals for the company to work upon.

• halve the environmental footprint of its products

• help 1 billion people improve their health and wellbeing
• source 100% of its agricultural raw materials sustainably.

Hence, Sudhir Senapati is obligated to work towards the goals of reaching 1 billion people, a part
of which has to be fulfilled through the brand of Lifebuoy. Hence, it is necessary for him to be
concerned about priorities of Samir Singh, and support him in his goal of achieving the target of
450 million by 2015.

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The only way to decide an option now is to come up with a solution that supports both this goal,
and do so in a cost-effective way which provides returns in a span of 5 years, a goal given by CEO.
We can look at all the three options first, and then try to view these options from the lens of the
objectives mentioned above: -
1) The KKD Rural Outreach Initiative –

This had high potential as being a source of increasing sales in rural areas where marketing was
difficult, and also causing behavioral change. It had impacted 2.50 crore people in 70000 villages
by increasing the Lifebuoy’s soap consumption by 8% and increasing market share from 13.9% to
15.6%.
The drawback of this was the decreasing cost effectiveness as more remote villages were included.
Furthermore, this was shown to not cause sustainable change and had a long payback period of 8.6
years.
From the lens of objectives mentioned, it satisfies the goals of the founder, CEO, was high on
reach part and satisfied goals of Singh, but not that of Sitapati as not cost-effective.
2) Madhya Pradesh Partnership –

This was one of the best options for behavioral change, because kids were shown to change the
whole family. Only 900,000 kids were reached, but 4.5 million people might be affected.

The drawback was that this was an unbranded program and as such the USLP program benefited,
but Sitapati found it time consuming and long payback.
One additional aspect is that this program can be expanded to other states where they might find
it easier to brand the program.
From the lens of objectives mentioned, it satisfies the goals of the founder, CEO, was high on cost-
effectiveness part and reach part, and satisfied goals of Sitapati, and Singh (but in long term).
3) Urban Schools Liquid –

This program used the higher margin Lifebuoy liquid and also made a more fun and interactive
call for change. The payback period was also 3.5 years, and similar to the MP initiative, the whole
household was accepted. The drawback was the expensive for rural liquid, and smaller reach of
the program.

From the lens of objectives mentioned, it satisfies the goals of the founder, CEO, was high on cost-
effectiveness part, and satisfied goals of Sitapati, but not Singh as he thought it was not in line
with the way of changing lives of people and get them healthy.
The decision I would recommend to Sitapati is to go with a combination of option 1 and option 3,
with an equal priority to both the options. The reason for making this choice is to reach both the
financial targets as well as CEO’s vision. Since Sitapati is concerned with a return of total portfolio,
he can help Singh by diverting some of the profits from option 3, to help him leverage option 1 to
reach masses. Although, option 2 is also a good option and should be continued in current capacity,

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but it is not a strategic CSR way since the company will not be able to grow its brand equity, and
might not even be able to help people to change habits. The reason for the last statement is the
belief that the buying choices are mainly made by the adults and not the children, especially true
fact in rural areas. The strategy might work in case of MP, but to reach a larger audience, a better
and larger view of rural market should be taken, which can be achieved through option 1, supported
by option 2, thus meeting both the targets of Singh and Sitapati, and the firm.