Integrating Sustainability into Organizational Strategy. The Business Case for Sustainability

Transcription

1 Integrating Sustainability into Organizational Strategy The Business Case for Sustainability 1

2 Unilever History Unilever was formed in 1930 from two companies: Margarine Unie and Lever Brothers. Margarine Unie (Netherlands) Lever Brothers (UK) Two separate legal parent companies have been maintained: o Unilever NV (Netherlands) and o Unilever PLC (UK). 2

3 Unilever Business: Big Global Consumer Product Brands 3

4 Unilever Size: Big 4

5 Unilever Scope: Global 5

6 Unilever People Impact: Important to Consumers 2 billion consumers use a Unilever product on any day. 6

7 Agricultural Impact: Unilever a Big Player 15.3 billion spent on raw materials and packaging from over 10,000 suppliers in Our share of world volume: Preliminary data pending audit. 7

8 Sustainability: Part of Our DNA & Vision Create a better future every day. Help people feel good, look good and get more out of life Inspire people to take small everyday actions that can add up to a big difference for the world. Double the size of our company while reducing our environmental impact. 8

9 Environment & Sustainability Unilever External Recognition Carbon Disclosure Project Rated Best in Class in Climate Change Disclosure Dow Jones Sustainability Indexes Rated #1 in the Food & Beverage Sector for the 12th consecutive year 9

10 The Business Case for Sustainability 10

11 Good EHS Performance Adds Value! " There is considerable evidence that EHS contributes to shareholder value in a variety of ways- not only through "tangible" contributions such as risk reduction and profitability improvements, but also through " intangibles" such as brand equity, human capital, and strategy execution." GEMI (Global Env. Mgmt Initiative) 11

12 Environment & Sustainability View from the Corner Office McKinsey & Company: 90 % of CEOs doing more than they did 5 yrs ago to incorporate environmental, social and governance issues into strategy & operations Goldman Sachs: Leaders in implementing environmental, social and governance (ESG) policies have outperformed the general stock market by 25 % since August Harris Poll: 80 % globally say that environmental and sustainability factors are taken into account when they select suppliers 12

13 Environment & Sustainability Impacts Shareholder Value Research in the U.S. & Europe demonstrates that 50% - 90% of a company's market value can be explained by intangibles 13

14 Environment & Sustainability Impacts Shareholder Value Quality of Mgmt is a key non-financial determinant of market value & EHS & Sustainability performance are a key indicators of an organization's quality of mgmt 14

15 Environment & Sustainability Stock Performance Pharma Companies with above ave. ratings have outperformed companies with below average ratings by approx. 17 % points (1700 basis points) 15

16 EHS Impacts Share Value 16

17 The Business Case for Sustainability: EHS Positively Impacts Shareholder Value 35% of institutional investors' portfolio allocation decisions are based on intangibles like EHS & Sustainability 17

18 Leveraging the Environment Doing Well by Doing Good 18

19 Building a Sustainability Vision Doing Well By Doing Good 19

20 Having A Vision & Action Plan Better Than a Confession 20

21 Sustainability Triple Bottom Line Sustainablity Makes Sense From Averill. (2011). Lean Sustainability. CRC Press 21

22 The Lean Sustainability Virtuous Cycle From Averill. (2011). Lean Sustainability. CRC Press 22

23 The Lean Sustainability Virtuous Cycle Recognize: Leaders see business case & need Visualize: Current state vs. future vision Organize: Form = Function Strategize: Relevant business strategy Conceptualize: Pilot to test green approaches 23

24 The Lean Sustainability Virtuous Cycle Prioritize: Decide actions, timelines, & resp. Operationalize: Link to core business & WoW = doing old things in new ways Synthesize: Eco-innovation, apply green in new ways = doing new things in new ways Integrate: Enterprise wide process, green DNA Synergize: Transform org, leverage green for competitive advantage 24

25 Effective Sustainability Strategy Create a Better Future Have an Integrated Strategy Assess Impacts Across Value Chain Work With Others Engage Customers & Consumers Brands as Change Agents Establish New Ways of Working & Doing Business Eco Innovation Eco Efficiency - Market Based Solutions Focus on Areas You Can Impact 25

26 An Effective Energy / Carbon Strategy Involves Many Pieces the Beginning) Step 1 Check / Analyze Plan Do 26

27 An Integrated Sustainability Strategy 27

28 Greenhouse gas per cosumer use (g CO 2e ) Greenhouse gas per cosumer use (g CO 2e ) Unilever Compass Vision Absolute environmental impact 50 Halve the impact per consumer use tn uses 2.4 tn uses 28

29 Unilever Compass vision 80bn Volume growth Business as usual 40bn Absolute Environmental Impact Act decisively 2008 Time

30 Unilever Sustainable Living Plan Targets Brands as Agents of Change 30

31 Sustainability Coordination & Execution Brand Sustainabilty Team Targets & Regulatory Requirements 31

32 Assess Impacts Across Value Chain 32

33 Understanding our Carbon Footprint Our wider footprint is significantly larger than our own operational footprint (4 m tonnes) and depends on assumptions about how consumers use our products 33

34 Source: Unilever Baseline 2008 Our Impacts -Sourcing & Consumer Use Unilever s Greenhouse Gas Footprint Distrib. Raw materials Manufacture / retail Consumer use Disposal 26% 3% 2% 68% 1% Unilever s Water Footprint Water used in sourcing raw materials Water we add to the product Water used by consumers in waterscarce countries 50% (est) 1% 49% 34

35 Waste Footprint Primary packaging Secondary packaging Leftovers Est. national index of materials recycled, reused or recovered 54% 13% 34% X%

36 Assess Impacts Across Value Chain From Averill. (2011). Lean Sustainability. CRC Press 36

37 Environmental Value Stream Mapping From Averill. (2011). Lean Sustainability. CRC Press 37

38 Environmental Value Stream Mapping From Averill. (2011). Lean Sustainability. CRC Press 38

39 Energy Mapping From Averill. (2011). Lean Sustainability. CRC Press 39

40 Work With Others 40

41 Working in partnership is crucial in developing and delivering some of our major sustainability commitments. Our principal global partnerships are with: Working with Others UN World Food Programme: to feed hungry children and improve their nutrition World Heart Federation: to promote heart health FDI World Dental Federation: to improve oral health Global Public-Private Partnership for Handwashing with soap: to promote good hygiene practice Global Alliance for Improved Nutrition: to co-create new approaches in food fortification to address malnutrition UN Global Compact: to align business operations and strategies in the areas of human rights, labour, environment and anti-corruption 41

42 Use Market Size to Influence Suppliers 42

43 We Work With Other to Achieve Sustainable Sourcing We aim to ensure our raw and packaging materials are obtained (throughout the extended supply chain) observing Unilever guidelines and/or certification to manage responsibly their social, economic and environmental impacts Sustainable agriculture programme Palm Oil commitment Tea commitment Ben & Jerry s dairy programme Sustainable paper opportunity 43

44 Customer Partnerships Unilever manages a number of partnerships globally. 44

45 Work With Consumers Helping society through our products and programs. 133 million people reached by Lifebuoy handwashing programmes since million people in 3 million households in India provided with safe drinking water through Pureit 45

46 Brands As Change Agents 46

47 Consumer Education & Partnership 47

48 Innovation: Brand Imprint Social (People) Environmental (Planet) Economic (Profit) Posterity 48

49 Eco-Efficient Manufacturing Strategy A Common Improvement Process Energy & CO 2 Analysis & Prioritization Governance & WoW Site Assessments, Project Lists, Project Action Plans Implementation Monitor & Review Water Waste Prioritization Tools, Targets, PAR, FWS Audits, EPR, Compass Steering, Working, & Site Teams 3 rd Party Audits, Low/No Cost/Breakthrough Green Funnel, Green Lens all Projects Monthly EPR, Proud Practices 49

50 Green IT 50

51 IT s Global Industry C0 2 Emissions Source - Gartner IT s contribution = same as the airline industry 51

52 Green IT Definition Drivers: Economic sense Environmental survival Social responsibility Legislation Objective: The use of efficient and effective IT to support an environmentally sound business Component: Minimizing IT's impact on the environment Component Use IT to minimize business environmental impact 52

53 Cross-Category Metrics 53

54 Unilever s Greenhouse Gas Emissions By Category Absolute Per consumer use [in g CO2e] 54

55 The Shape of the Plan Corporate initiatives Category initiatives Unilever Sustainability Plan Local initiatives (centrally & locally driven) 55

56 Comparison to External Peers Overall Assessment 2008 Europe Americas Asia/AMET Level of Green Optimisation (relative to peer) Level of Green Optimisation (relative to peer) Level of Green Optimisation (relative to peer) Meeting Sustainable Development Objectives / CSR Policies that meet regulatory standards and corporate green objectives Reducing Energy Consumption / Technology Optimization Level of Green Optimisation (relative to peer) Adopting and Promoting Green IT Policies Level of Green Optimisation (relative to peer) 56

57 Sustainability Progress 57

58 Manufacturing Progress 264 manufacturing sites. Continuous improvement in eco-efficiency in factories ( ): 43% reduction in CO 2 from energy 75% reduction in water use 63% reduction in total waste 58

59 Significant Reduction In Direct Manufacturing Impacts Greenhouse Gases Water Waste -43% -75% -63% CO 2 from energy use (kg/tonne production) Water use (m 3 /tonne production) Waste (kg/tonne production) 59

60 Sourcing Progress Twelve years as sector leader of the Dow Jones Sustainability Indexes. Our goal is to double the size of the business whilst at the same time reducing our environmental footprint. We are committed to sourcing all palm oil from certified sustainable sources by % of the tea we use globally is sourced from Rainforest Alliance Certified TM farms 60

61 The Green Journey 61