You might assume that a giant global consumer goods company such as Unilever achieving quarterly growth of 7.1 percent could be attributed to large amounts of research and some clever future forecasting, and you’d be right, to a certain degree. Yet every great business is based on individuals who recognize opportunity through personal experience, and not what has been fed to you from your marketing team. Peter ter Kulve is one such person. As Chairman of Unilever Benelux he is riding a wave of product innovation and profitability based on the carefully observed needs of consumers, mainly in emerging markets. Unilever has drawn up a sustainable living plan which acknowledges that small actions can make a big difference.
On any given day, 2 billion people worldwide use a Unilever product – to wash their hair, clean their clothes or butter their bread. Unilever have been number one on the Dow Jones sustainability index for the last 11 years and is a recognized sustainability leader in their field. “This does not, however, make us an NGO,” says ter Kulve. “Our approach is still about making the company grow faster and making more profit, but a key belief is that we will do better business in a healthy society than in an unhealthy society. Healthy business needs healthy society.”
There is an increasing group of consumers where the ethical issues of a company is the deciding factor on whether a purchase is made. This group is growing and becoming more aware of the entire supply chain, right up to the retail store where the goods are sold. By striking up a dialogue with consumers Unilever has stimulated more growth for themselves while showing a rare level of respect to their consumers. Whereas in the past, corporate social responsibility was a pet project of the Chairman, it’s now become engrained deeply in many organizations such as Unilever. And here’s the best part: Unilever is saving money.
“We’ve innovated on quality, performance and packaging, says ter Kulve. “When we brought sustainability deep into our organization we opened a whole new innovation sector that had never been considered before. Sustainability leads to a new funnel of innovation.” When ter Kulve started working in the 1990s he found himself in a market focused on career, money and self progression. Talking to students at universities today, he finds no one worrying about these issues anymore, but rather, a concern on whether their career choice will have a positive effect on society. Ironically, this selfless attitude and the development of a clear view on sustainability is better positioning these students for the labour market.
Ter Kulve has worked all over the world, but it was his stay in Beijing during his term as CEO of the Asian ice cream division that taught him his most valuable lesson on sustainability. “When I arrived in Beijing in 1999 the ground water was at 160 metres below ground level, basically a desert city. By the time I left four and a half years later the water was at 240 metres. So, here we are selling shampoo. What are my chances of success when you are telling women to stand under a shower for 20 minutes and do three types of treatments when there is no water?” “In order to make growth possible you have to incorporate bigger social themes or else you simply become a problem instead of a solution. By promoting a lifestyle in Beijing, for example, which blindly drives consumer demand for water, I create a social problem, not a benefit,” says ter Kulve.
Unilever’s response to this dilemma was the creation of a shampoo which is applied dry and rinsed off in a third of the time. By innovating with social purpose the company has increased its chance of acceptance within society in a big way. With a growing global population set to tip the scales at seven billion people very soon, ter Kulve is also mindful of the dynamics of class and wealth on consumerism. He spent many years in Bangladesh doing social work and has seen the aspirational standards of living among the 160 million people squeezed into a small geographic region, fueled by Western consumption models. “If Bangladesh starts consuming in exactly the same way that we did in Holland in the 1950s and 60s it will become physically impossible. The resources it would take and the waste it would create make this an impossibility.
If we are to sell more product here we would need to de-couple growth from environmental impact.” Ter Kulve blames the current financial crisis on a sustained period of credit-financed over-consumption, for which we are now paying the price. “Some serious behavioral shifts are needed to avert future meltdowns. But then again, as a businessman, I recognize that every crisis is an opportunity to grow a new innovative product,” he says.
With Unilever expecting three quarters of its turnover coming from emerging markets by 2020 it’s going to have to take these observations seriously and develop solutions at a rapid pace to ensure the wheels of industry keep turning. Ter Kulve is convinced that Unilever should lead this agenda, foremost as a business driver and less so about saving the world. “It’s great that doing good for the planet is a spin-off of what we’re doing here, but what we really want to achieve is fast growth for the future.”
A few personal experiences have also made ter Kulve realize how operating in isolation from the environment or society can deprive companies of insightful business strategy. He recalls a mental shift in awareness when he read an article in a state-controlled Chinese newspaper which acknowledged that the cost of environmental degradation in a certain province was higher than the 12 percent annual economic growth they had experienced over the previous five years.
From thinking they had done so well commercially, they had realized that they had, in fact, gone backwards. “Seeing the filthy rivers and cities, realizing the cost of environmental degradation, I knew that the mold needed to be broken,” explains ter Kulve. A friend of ter Kulve and a past CEO of Unilever who was involved in charity work in Bangladesh once engaged him on a discussion around poverty.
Ter Kulve recalls telling him that he sees poverty and can understand it from an economic perspective, but it didn’t touch his heart. After being told by his friend that having no empathy with a third of the world’s population was a problem and that he was not a full human being, he accepted a challenge to work on a hospital boat in Northern Bangladesh. Here he spent two weeks among the poorest of the poor and realized that poverty can be managed, just like every other problem.
“When you cure a small boy’s skin problem with a 20 cent tube of cream, you can actually change his life. Poverty creates so many problems which can resolved in small ways. We can do it and we should do it,” stresses ter Kulve.