The impact of social performance - Unilever and its environmental responsibility

Unilever is one of the world largest multinational companies, merged by British soapmaker Lever Brothers and Dutch margarine producer Margarine Unie in 1929, which is related with lives of over two billion people every day mainly in the area of food and beverage, home care and personal care. The corporate purpose of Unilever indicates that they require "the highest standard of corporate behavior towards everyone we work with, the communities we touch, and the environment on which we have an impact (Purpose & principles 2010)". This corporate purpose highlights the importance of social performances and the interactions with their shareholders.

Corporate social responsibility (CSR) is increasingly essential in the global environment (Wilburn 2009, 111), especially for large multinational companies who confirm that making contributions to shareholders is the driving force to increase the value of the corporations. Unilever claims that corporate social responsibility is at the heart of its business (Cescau 2007). “We've always believed in the power of our brands to improve the quality of people’s lives and in doing the right thing. As our business grows, so do our responsibilities (Our vision 2010)” Unilever has made a clear direction about their vision. These years Unilever has focus on building their corporate image with full consideration and improvement of social performance, varying from sustainable development, safety of food, to welfare of labor and other social performance beyond those areas, but there are still some problems existed that need much more improvement to do . The aspect of environment of Unilever will be illustrated amply in this paper to indicate the impact of social performance to the corporation.

Positive elements of performance

In the current trend, Unilever has observed that standards of social responsibility set by customers stimulate the corporations to undertake much more responsibility than before, which in the long term, will achieve a success. They still believe that the real success for them means acting with the highest standards of the corporate performance towards not only their consumers and employees but also the whole society and world (FCSR members 2010). As a member of the Foundation for Corporate Social Responsibility (FCSR), Unilever launched or participated in an ever-growing range of initiative activities to protect environment, source sustainable supplies of raw materials, and support local communities more over the years (FCSR members 2010). When it narrowed down to the aspect of environment, Unilever still insists on the perception of sustainable development, in exploring the raw materials, dealing with the waste, investigating the recipes and testing the productions. “As globalization accelerates, and as the limits of the planet’s resources are reached, large companies and brands will increasingly be held to account on the sustainability of their business practices” mentioned by Cescau (2007), the Group Chief Executive of Unilever, Unilever is committed to making continuous improvements in the balance of making profit and contributing to the environment, as well as to the longer-term goal of developing a sustainable business (Dizon et al.2008). It devotes working in partnership with others to rise up the environmental awareness, increase understanding of environmental issues, promote environmental protection, and disseminate good practice (Dizon et al.2008).

In the area of family care with Unilever’s products, many small changes in consumer behavior are made scalable, resulting in a sustainable and significant improvement, even though there are around 125 billion washes occurring each year (Ahlering 2010). It was reported that “since 1995, these changes have translated into a 44% reduction in greenhouse gas emissions in the manufacturing process, a 70% reduction in waste, and a 76% reduction in water waste (Ahlering 2010)”. Give the “Small and Mighty” for example, it was launched by Unilever in 2006, using less packaging, less energy in transport and needing less water, which resulted in 70 million liters of water saved in its first year (Ahlering 2010). After the launch of “Small and Mighty “, Unilever had grasped the large market of the eco-conscious consumers. In the following years, its competitors, Asda, Reckitt Benckiser and P&G were soon gearing up to launch a new detergent that will be marketed as environmentally friendly indirectly influenced by Unilever(Jack 2007,8).

When it comes to the food and beverages industry, over the years, the efforts to reduce environmental impacts yielded impressively results and the strategy of Unilever about sustainability has been making headway (Staff Group. 2010). It also engages its suppliers in both “Business Partner Code” and “Sustainable Agriculture Code”, as well as working with other organizations to engage suppliers in a positive way (Business in the Community 2010). For instance, one famous manufacturer in the industry of ice cream, frozen yoghurt and sorbet, Ben & Jerry`s, which got its acquisition by Unilever in 2000, believes in its role in limiting damage to the environment (article13 2002). Vermont Dairy Farm Sustainability Project was launched by the company to develop practical methods that could be used on typical dairy operations and to reduce the potential for nitrogen leaching and phosphorous run-off in the northeast, maintaining the economic viability of the farm(article13 2002). And also, a new flavor called "One Sweet Whirled" was launched to raise its customers’ awareness of global warming (Thompson 2007, 1). Due to all public welfare establishments Unilever set and all environmentally friendly action Unilever did, with the rank by the latest “Tomorrow's Value Rating tool “among the Food and beverage industry's 10 largest public companies, “Unilever scored 64 points out of 100, well above the industry average of 46. Nestle (59 points) and Danone (58 points) followed behind in second and third place (Staff Group. 2010)”.

Dave Lewis, Unilever UK and Ireland Chairman claimed that “Running a sustainable business isn’t just about doing the right thing. It’s another way for us to work closely with our employees, suppliers and customers and of course to engage positively with our customers (Business in the Community 2010).” By building the corporate image as the environmental leadership, Unilever unfolded its social performance and responsibility, which also earned a huge amount of business benefits due to the vision of sustainable development that build customer preference, increase the sale, and also gain some benefits from suppliers.

Negative elements of performance

Even though Unilever had set up their mission of manufacturing and distributing in an environmentally friendly way to mold the corporate performance and build a good image in which acting as the leadership to take care of the environment, it still had been accused of some environmental issues of different subsidiary companies in different countries, which in some degree detrimental to the international image of the company.

In March 7, 2001, Tamilnadu, Southern India, the action of allowing its Indian subsidiary, Hindustan Lever, dumping several tonnes of highly toxic mercury waste in the densely populated tourist resort of Kodaikanal and the surrounding protected nature reserve of Pambar Shola caught much attention by the society. The double standards and shameful negligence of Unilever was accused by Greenpeace (Greenpeace 2001). After that, Unilever had agreed to abidingly close its polluting mercury thermometer factory in India as the response to accuse. Even though Unilever had showed a clear admission of its guilt by making the agreement to clean up the scrapyard and close the factory, it still not accepted the fact that due to its bad and scandalous practices, people may have been exposed to the mercury as a result (Greenpeace 2001). This made the effort of the companies to ‘save the environment’ seems to be regarded as greenwash practices (corporate watch n.d.). This issue seriously impaired the social image Unilever built, and by which, the faith with the whole company held by consumers, suppliers and stakeholders is also cut down in a immeasurable degree.

Dealing with the waste is also not exactly the same as Unilever claimed, some problems of the environment were not got appropriately done. In August 2008, Brazil, air was reeking with horrible odor that twenty-five neighborhoods of the state capital of Goiás were affected by. The inappropriate supervision and control at the industrial waste treatment plant at Unilever´s factory in the north of the city resulted thousands of residents being exposed to a smell comparable to stinking eggs and at least 500 complaints by people suffering from headache and nauseas. After it had came into focus that the company should responsible for a nauseating smell in several neighborhoods of Goiânia, the fine of 10 million Brazilian reais (about 6 million dollars) was imposed to Unilever (Montevideo 2008). What was worse is that it badly affected the residents’ health and the ecological system as well as the value of the corporation. Another example was in 2010, the Environment News Service reported “Unilever was fined for polluting California air with fumes from its AXE Deodorant Bodyspray for Men (Protagonist 2010)”. As a result, Conopco Inc. d/b/a Unilever had been penalized $1.3 million for illegal consumer sales of AXE Deodorant Body spray for Men, announced by the California Air Resources Board (Environment News Service 2010). However, instead of fighting the penalty and refusing to budge, Unilever behaved very responsibly in the aftermath of the charges, it chose to cooperated with investigators, altered its formula, and paid the fine (Protagonist 2010).

On- balance conclusion

As shown above, Unilever had made some effort to grasp the concept of environmentally friendly performances, and social responsibility, which not only did some real exchanges to improve the condition of the environment but also attracted more eco-conscience customers and created much more profit for the company. However there are some environmental issues at the same time, which impaired the environmental contributions made by itself and had a side effect on corporation’s reputation that will affect shareholders’ judgments.
“Environmental problems are often the result of an agglomeration of individually insignificant actions and, as such, they usually require solutions that address collective action. Collective action, in turn, requires political leverage. Thus, community relationships, institutional structures, and political will all have an important role to play in responding to environmental crises (Treanor 2010,16).” In this sense, the environment problems may exist because of insignificant actions in different regions, different geographical conditions and different countries, but it still correlated with the core operating concept which the company insisted as well as the management and implement force of a company. That is what Unilever lacked of.

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