Paul Polman: A ‘tempered radical’ bows out

Earlier this year, the Saïd Business School at Oxford asked its MBA students to pick a business that would best describe their institution: “Are we the Microsoft of Business Schools, are we the Goldman Sachs or the Uber?”

The students concluded that their aspiration was to be the Unilever of Business Schools. The Saïd Dean recounted that conversation in the presence of Paul Polman, an indication of the kind of influence the CEO of Unilever has had as the champion of the triple bottomline approach that he pushed at his company.

The move to shift the Unilever headquarters failed and Paul Polman decided to retire, a less-than-happy exit for a leader who has stood out as one of the most important voices on sustainability in the thick of a highly competitive business. But how sustainable is Polman’s way, which he executed through what he called the Unilever Sustainable Living Plan that promised to cut the Unilever footprint by half and grow the business at the same time?

This year-end, Polman’s decade-long journey at Unilever comes to an end amid circumstances that have pitted shareholders against his attempt to simplify the corporate structure and shift the headquarters of the company from London to Rotterdam. A shift would have made it near-impossible for a hostile takeover attempt of the kind mounted last year by Kraft Heinz.

The move to shift failed and Polman decided to retire, a less-than-happy exit for a leader who has stood out as one of the most important voices on sustainability in the thick of a highly competitive business. But how sustainable is Polman’s way, which he executed through what he called the Unilever Sustainable Living Plan that promised to cut the Unilever footprint by half and grow the business at the same time.

He achieved this rather obliquely by de-emphasising the share price and refusing to give out quarterly numbers, building on it with a sharp focus on sustainable actions and none of the ruthless cutbacks and aggressive takeovers that the Kraft Heinz Company is known for.

Profit focus

Yet, fund managers and shareholders work with a different agenda governed more by higher profits and rising stock prices in the near term, not necessarily the long-term view that Polman brought into fashion at Unilever.

A lot of that turnover is increasingly coming from the emerging markets that are a magnet for MNCs looking for the next wave of growth. As these markets (including India) push GDP growth, they offer opportunities unavailable in developed economies. Unilever says 58 per cent of its business is in emerging markets. But competition is fierce. The opportunities and pressures have stretched the meaning of the term innovation, leading to some very unsustainable ideas.

Despite growing awareness of sustainability, consumption patterns remain unsustainable especially in developed markets. On the other hand, Unilever reports that over half of all consumers already buy or want to buy sustainably. Unilever’s sustainable brands have outperformed the average growth rate over the last four years and in 2017 they delivered 70 per cent of turnover growth.

A lot of that turnover is increasingly coming from the emerging markets that are a magnet for MNCs looking for the next wave of growth. As these markets (including India) push GDP growth, they offer opportunities unavailable in developed economies. Unilever says 58 per cent of its business is in emerging markets. But competition is fierce. The opportunities and pressures have stretched the meaning of the term innovation, leading to some very unsustainable ideas.

For example, Unilever once marketed food products in India called “Amaze”, promoting it as “brain food” for the “mental and physical development of children” until the regulator stepped in. Fair & Lovely builds on the very unsustainable idea of selling fair skin as desirable.

One way to look at Polman’s work is to say there is only so much a large company can do. It was bold for its time but not bold enough to fire up the markets about a new set of consumers who demand from companies a new order and new respect for the planet and her resources.

Polman promoted sustainability and in return took home a package that reportedly amounted to £10.3 million, one of the reasons cited by the investors unhappy with his performance. Such high packages are among the reason that investors have lost trust in big business. In that sense, Polman played with the new but was ensconced in the old — a “tempered radical” who, as the term goes, “identifies with and is committed to the organisation, and is also committed to a cause, community, or ideology that is fundamentally different from, and possibly at odds with the dominant culture of the organisation.”

Polman played with the new but was ensconced in the old — a “tempered radical” who, as the term goes, “identifies with and is committed to the organisation, and is also committed to a cause, community, or ideology that is fundamentally different from, and possibly at odds with the dominant culture of the organisation.”

The next level of sustainable businesses will demand fundamentally different models that can work with and echo the demands of deep ecology, which in the words of authors Fritjof Capra and Pier Luisi “asks profound questions about the very foundations of our modern, scientific, industrial, growth-oriented, materialistic worldview and way of life.

The business model that captures this spirit is a long way off. But whenever it emerges, it will have Polman to thank as one of its early pioneers, a leader who was bold enough to act and go on record: “We are at a turning point. Only businesses that help people and planet thrive will succeed. We have to scale our impact through partnership, collaboration and trust.”