Unilever CEO Paul Polman has become the poster child for ‘purposeful leadership’, known for respecting not only profits but people and planet.
Indeed, Dean Peter Tufano revealed that this year’s MBA class expressed their aspiration for Oxford Saïd by declaring that it should be ‘the Unilever of business schools.’
It was small wonder, then, that his Distinguished Speaker Seminar on 20 March 2018 was delivered to a packed Nelson Mandela Lecture Theatre – and he did not disappoint, speaking for an hour without notes and inspiring and challenging the mostly student audience.
The best of times, the worst of times
Polman opened by reminding the audience how lucky they were to have been able to choose to be in education, and how their circumstances came with ‘a duty to put yourself in the service of the others’ – the people who ‘do not have a choice’.
For while it is now a better time to be born than any other in human history – with more people in education than ever before, more women participating in the economy, a higher life expectancy, greater access to clean drinking water, and (‘despite what you read in the papers’) more rights for more people – too many people still feel that they have been ‘left behind’
He believed that the financial crisis revealed the complacency and intellectual laziness that came when ‘the stock market … [goes] up every year by 5 or 10 per cent and everything grows’, which meant that ‘people stop asking themselves questions’. After the crash, he said, ‘we found out – or at least some of us found out – that the system we were operating under was probably not that sustainable – supported with heavy levels of Government debt or individual debt. We found out that it was based on over-consumption, no care for the planetary boundaries, and more importantly we found that it left too many people behind … From Occupy Wall Street to the Arab Spring, Brexit and Trump – these are all signs of the dissatisfaction that people felt.’
The problems that need to be resolved
Responding to this meant identifying the core problems that need to be solved. He highlighted four:
- Planetary boundaries
Of the nine planetary boundaries that define the health of the planet, four are already past acceptable levels. Climate change is the most urgent and apparent: in the US alone, last year there were 16 natural disasters more than the norm. And this is pushing people back into poverty; Polman suggested that even the Syrian crisis actually had its origins in climate change, with the combination of drought and urbanisation. It is why the principle of ‘no backsliding’ had to be built into the Paris Accord: ‘If it comes down to a battle between man and nature, nature will win.’
- Global governance
Global challenges such as climate change and privacy cannot be managed on an individual country level. But, as Polman pointed out, the governance systems that we have in place to manage the world date from 1944. Institutions such as the OECD, IMF, and WTO reflect what the world was like then, and are less capable of addressing issues that are important now.
Who, he asked, is in charge? The private sector depends on elected representation by people who are knowledgeable and responsible, but ‘Now politicians are outsourcing their responsibilities – a good example is the Brexit vote in the UK.’ He was also alarmed by the prospect of countries ‘increasingly drawing back into their own little shells, and forgetting the concept of the common good’.
- Short-term versus long-term
Climate change, food, security, property, jobs, youth unemployment: these are challenges that cannot be solved by a focus on quarterly profits, said Polman. He was also critical of a financial system that ‘is increasingly self-serving’, with financial instruments apparently becoming an end in themselves and only 15% of bank-lending going to the real economy. ‘It is more profitable to play the financial market than to run the real economy,’ said Polman, ‘And this is why we don’t see growth or job creation.’
The challenge is to create more inclusive economic growth and even out the gross inequality created and perpetuated by our financial systems.
On the one hand technological developments are energising and exciting, said Polman; on the other, they increase inequality: ‘The fourth industrial revolution is to be celebrated, but it is also bringing with it the biggest wave of job destruction that we’ve ever seen, and it’s coming at us very fast.’
A partnership for the common good
Solutions to these challenges start with the Sustainable Development Goals (SDGs), suggested Polman, the 2015 agreement between 196 countries to ‘finish the job’ that was started with the Millennium Development Goals and a plan for the irreversible eradication of poverty.
It is a plan that is heavily dependent on partnership, ‘A partnership for the common good that starts with respect and dignity for each and everybody in this world; an opportunity to have access to education; a chance to make it past the age of five; to find a job to give you dignity and respect, just as we all would expect it for ourselves. It’s a partnership that deals with communities and thinks intergenerationally.’
It is in that context that Polman explained the reasons for Unilever’s own aim to ‘decouple growth from environmental impact and increase its overall social impact.’ He simply asks why other companies do not do the same thing. ‘What gives us the right’ to endanger the planet? To outsource our responsibilities while outsourcing the value chain?
And while the process of ‘putting your own house in order’ can be ‘uncomfortable’, he admitted, ‘every time we do it we find benefits – in our reputation, in a highly engaged workforce. And increasingly we find opportunities to grow even faster … Then when you get your own house in order you go into your value chain – your suppliers and business partners. And you find that working with your value chain you can achieve impact that makes you feel proud, that brings a little more focus and meaning to life.’
The vital role of the private sector
The reason that companies have to understand and buy in to these ideals is that they are needed to help provide solutions to the world-scale challenges underlying the SDGs.
Polman calculated that around three to five trillion dollars a year are needed to implement the SDGs. That is actually only around three to five per cent of the global economy – which, if it eradicates poverty, is a relatively small amount. But the total amount of Overseas Development Aid, pegged at a target of just 0.7 per cent of GDP for donor countries (and not all have reached that target) is only 160 billion dollars. There is a gap worth trillions of dollars that can only be plugged by the private sector.
‘The ultimate role for leaders is to drive changes beyond your own self-interest,’ said Polman. ‘It is clear that in the absence of global governance that I talked about that companies cannot be bystanders in the system.’
The time is now
‘Because we have waited so long we have got to the point where the cost of not acting is actually greater than the cost of acting,’ said Polman. ‘Let’s make use of that.’ If people and companies have not so far been motivated by their own morals, then perhaps they can be motivated by the economic penalties of not acting. And that, he said, involved changing boundaries that moved thinking in both politics and the private sector from the short to the long term.
- Change the focus from return on financial capital to include social and environmental capital. ‘We measure what we treasure,’ said Polman.
- Move the financial markets to focus on the longer term. ‘Remember that a lot of money in the financial markets comes from us, from our investment in pension funds. They have long-term obligations, so they should be looking at long-term incentives. And they should be investing in companies that create a world that you want to retire in.
- Create a more inclusive economic system. ‘Our economic systems were developed at a time when labour was scarce, so we taxed labour. Resources were abundant so we didn’t tax resources. Now we live in a different period. Now resources are scarce so we should tax them, and work to make labour more attractive.’
- Agree a different social contract for companies. ‘Simply, it cannot be right to treat people in a way that you would not want to be treated yourself. Why do we not apply that in everything we do?
As Polman concluded, none of this is new. We do not need any more answers: ‘What we need is human willpower. We need people who are more purposeful and driven by something different from the here and now. We need people who are systemic thinkers, people who can work in partnership, people who can think longer term. … It boils downs to leadership and it boils down to us – do we care or not?’
If we care, we can create a movement to accelerate at scale. And the time to do it is now.