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07/09/2021

Unilever Makes Sustainability Its Business

How innovative products and processes and changed conversations with retailers are helping one of the world’s largest CPG companies change the world
Mike Troy
Editorial Director, Grocery Group
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Unilever Makes Sustainability its Business
Unilever's EVP of Foods and Refreshment for North America, Jostein Solheim

Unilever published its first corporate social responsibility report in the late 90s, and the London-based multinational company, with U.S. headquarters is Englewood Cliffs. N.J., has been expanding its sustainability efforts ever since. That strategy has worked: Unilever’s annual sales are nearly $58 billion, its products are sold in 25 million retail outlets in 190 countries, and 13 of its brands have sales greater than $1 billion.

Playing a key role in advancing the company’s sustainability-driven growth strategy is Jostein Solheim, EVP of foods and refreshment for North America. Solheim assumed that role in 2018 after a stint as CEO of Unilever’s Ben & Jerry’s brand for eight years. He spoke with Progressive Grocer about leading with purpose, taking on big problems and having new types of conversations with retailers.

Progressive Grocer: Unilever’s purpose is to make sustainable living commonplace. What does that mean for consumers? 

Jostein Solheim: The fundamental belief behind Unilever’s purpose and mission is that by connecting sustainability and social responsibility with our business, internally and externally, we perform better as a business and deliver better results to shareholders. The magic of our strategy is to connect the two, connect the performance of the business with a bigger mission of doing the right thing for the planet and communities. And through that leverage, we get top-level performance. If you disconnect it, it doesn’t work. The leverage comes through the engagement of the whole team, the whole community. About 2 billion portions of Unilever products are consumed every day, so we need communities that are stable and thriving.

PG: How does that philosophy come to life in conversations with senior retail executives?

JS: The conversation is about moving from a relationship which has traditionally been grounded in negotiation to a relationship that is more grounded in innovating together.

PG: How do you? Are you structured in such a way internally that teams working on these things come together with trading partners?

JS: If we start with the big picture, on the customer side and retailer side and on our side, what we are seeing is that the silos of the way the organizations have been classically built have evolved. One simple example is our customers have become our media partners, and our marketing folks have to integrate their campaigns with the retailer’s platform. We’re getting a lot of data and information from this, which drives our innovation. We can work with our customers to look at the data and say, “There looks to be an interesting space here.” Then we bring our cross-functional team in to deliver on that in what the tech industry refers to as “agile ways of working.”

PG: Are there certain areas you are focused on?

JS: There are two main types of sustainability-based innovations. One is consumer-led. It’s what we are seeing with a huge trend towards flexitarianism. People are balancing out their diets and choosing to avoid some meat and dairy products, and that’s created a boom in vegan products. We see that in the ice cream category and nondairy ice cream. Ben & Jerry’s is now the No. 1 nondairy ice cream, and it’s a huge growth area. So is vegan mayonnaise, with Hellmann’s. Ben & Jerry’s nondairy has a 40% lower carbon footprint than a dairy equivalent, but it is still a fully indulgent product. That’s what I call “consumer-led,” where there is a trend and we meet it.

The other part is what I call driving loyalty and connection with consumers. That is something like PCR [post-consumer recycled] packaging. Hellmann’s is now at 100% use of post-consumer recycled plastic. Most people don’t run around the store and look for PCR packaging, but when they realize slowly over time that it is used, people say: “This is a good company. These are people that care.” It builds loyalty.

PG: And you’ve got data that validates that?

JS: Ben & Jerry’s is a great example. I was CEO for eight years, and what you can see very clearly is consumers that bought Ben & Jerry’s and were aware of our initiatives were twice as loyal as the people who just thought about the brand as being good ice cream.

a person standing in front of a mirror posing for the camera
“If we could get people to, once a week, open their fridge and say, ‘I’m going to make dinner out of this,’ whatever it is, we would halve this food waste problem,” says Solheim.

PG: And the trend of people caring about the sustainability attributes of brands and the companies that produce them has only intensified.

JS: When I started in 2010 as CEO of Ben and Jerry’s, I was asked, “Why are you doing all this [sustainability] stuff?” Now, it’s like, why aren’t they doing it? In 10 years’ time, the situation has flipped, and the reason is because consumers care, and they feel they can make a difference by buying the products that do better for the things they care about.

PG: Let’s revisit the conversations you are having with retailers about Unilever’s product innovation pipeline, marketing support, taking price and other real-world considerations of retail partnerships.

JS: Phase one of any strategic discussion with a retailer today is centered around the big issues that we’ve got to solve together, be that data and insight, be that around how we optimize our investments around their shoppers, be that around how we address plastic. Even diversity and inclusion is high on the agenda. It is clearly on the retailer’s, and our interest that that shopper who comes into that store and cares about these different issues is engaged and connected around them. We’ve really moved to, how do we solve this, and what are the best ways of doing it?

Let’s be also very transparent and honest that on pricing and promos, we’re sort of in the same boat as we’ve always been. We’re negotiating, we have different points of view, and we argue and we analyze and all of that. We’re still in a competitive marketplace with different pressures, and we see those sometimes differently with retailers. But it’s very different when you’re trying to solve these issues fundamentally to how do we drive engagement of the shopper in your stores and on your e-commerce platforms, and then we go to pricing and all that other stuff.

PG: You hear more companies talking, as Unilever does, about being a regenerative company, and the concept of doing more good instead of less harm. It’s a very aspirational goal you have.

JS: The idea is that through your whole ecosystem as a business, can you move from being a carbon emitter to carbon neutral to carbon positive? And that’s not by using financial instruments. Are we there yet? No. A couple of big things are really tough. One is just a basic measurement. We know for a fact that we have studies and science behind the basic practices of regenerative agriculture and its impact on soil health, and, to some extent, implied carbon sequestration. But it is another thing to measure these impacts at scale and claim them in your annual report. We are also looking at things like deforestation and reforestation. Again, how do you measure it? Those are the things that we want to solve as an industry over the next 10 years, and how we make it work economically throughout the entire supply chain.

PG: That’s a challenge with a lot of sustainability initiatives. People want to recycle, but the system is fragmented and broken.

JS: There’s sort of a three-step process. We are investing in the recycling infrastructure through funds and partnerships. Then we move to post-consumer recycled plastic use, and we have technology that really allows us to create as close to a clear plastic as humanly possible. And that, of course, creates a demand and a value in the recycled plastic, which allows the recycling industry to spend a bit more money sorting it, because they can sell it back to us.

Now, that’s still a loop which is suboptimal. So then we try to reduce the amount of plastic we use, either through coming up with new technology or different packaging formats that are better for the environment. Then, of course, you try to reuse. And that’s an experiment which, in our industry, is tough. It is tough because if you end up shipping your container of mayonnaise and then picking it up and then cleaning it and then filling it and then shipping it, that’s burning a lot of energy.

PG: And very complicated?

JS: It is complicated. That’s why a lot of people say people don't care. People care about the outcomes. They care about the fact that when they go to the beach and see plastic debris, then you see this plastic floating in the ocean, so people care about the outcomes. Sustainability companies want to brag about all the good work they do. People don’t really care about how you make the sausage. They want the outcomes. That’s what we’re focusing on. How can we make these outcomes relevant and motivational for our consumers?

PG: There are a lot of elements to sustainability, including the consumer piece and the in-home usage and preparation of products. How are you integrating those factors into your sustainability discussions?

JS: You have what we call scope one, two and three of your carbon footprint. Some folks that talk about how environmentally friendly they are, they talk about scope one, which is just the energy that they use themselves. Scope two is with your extended supply chain, and then scope three is everything, including consumer use. As a sustainable company, we are looking at scope three, which means we assess everything that our products create, from the freezing to the boiling of water to the use of hot water in the shower. Some of those things you can impact, and some you can’t. The key is not to get frustrated about the things you can’t, but to work with the things that you can.

PG: What’s a good example you can share?

JS: The Hellman’s Make Taste, Not Waste campaign we launched at the Super Bowl with Amy Schumer as the Fairy Godmayo is really clever. About a third of all the food we make is wasted, and about 40% of food waste happens at home. So how do you engage with that? Nobody wants to seem like they’re criticizing people and ourselves, so that’s where we came up with Make Taste, Not Waste. It is anchored on several key things. One is to save money. If you’re throwing away 40% of the food you bought, that’s losing a lot of money. Another is that we often open the fridge and look at what’s in there and go, “I don't know what to do with this.” We’re doing a bunch of different initiatives around how do you take whatever ingredients you’ve got and make them into a meal? If we could get people to, once a week, open their fridge and say, “I’m going to make dinner out of this,” whatever it is, we would halve this food waste problem.

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