Case: Unilever’s new global strategy competing through sustainability (HBR, 2017)
- How would you evaluate Paul Polman’s 2010 decision to implement a new strategy based on the Unilever Sustainable Living Plan (USLP)? What benefits did it offer? What risks did it present?
- What actions should the company take now? Which of the three options identified at the end of the case would you recommend management take?
- How would you go about implementing your recommendation?
The correct answer and explanation is :
Evaluation of Paul Polman’s 2010 Decision (USLP Strategy)
Paul Polman’s decision to implement the Unilever Sustainable Living Plan (USLP) was a bold strategic move that aimed to align sustainability with long-term profitability. The benefits included:
- Brand Differentiation: USLP positioned Unilever as a leader in sustainability, enhancing brand reputation and customer loyalty.
- Cost Savings: Sustainable practices, such as reducing water and energy consumption, led to lower operational costs.
- Attracting Talent & Investors: Sustainability-focused companies appeal to socially responsible investors and attract purpose-driven employees.
- Regulatory Compliance: Proactively addressing environmental and social concerns reduced risks related to regulatory changes.
However, the strategy also had risks:
- Short-Term Profit Pressures: Investors concerned with quarterly performance might resist long-term sustainability investments.
- Implementation Complexity: Transforming global supply chains and ensuring supplier compliance posed logistical and financial challenges.
- Market Resistance: Some consumers, particularly in price-sensitive markets, may not prioritize sustainability over cost.
Recommended Action & Justification
Among the three options at the end of the case, Option 2—Scaling Up Sustainable Living Brands is the most viable. This approach leverages Unilever’s existing commitment to sustainability while expanding the business. It allows Unilever to maintain its leadership in responsible consumer goods while focusing on growth. Sustainable brands like Dove, Ben & Jerry’s, and Seventh Generation have demonstrated profitability, reinforcing this strategy.
Implementation Plan
- Expand Sustainable Product Offerings: Invest in R&D to create more eco-friendly and ethically sourced products across all categories.
- Strengthen Partnerships & Advocacy: Collaborate with governments, NGOs, and industry groups to set sustainability benchmarks and influence regulation.
- Marketing & Consumer Education: Educate consumers on the benefits of sustainable products through digital campaigns and transparent reporting.
- Supply Chain Innovations: Work with suppliers to adopt greener technologies, reducing carbon footprints and ensuring ethical sourcing.
- Financial & Performance Metrics: Integrate sustainability into key financial KPIs, ensuring that growth and profitability remain aligned with impact goals.
By scaling sustainable brands, Unilever can balance profitability with purpose, ensuring long-term competitive advantage.