Towards integrated thinking at Unilever

Paul Polman, Unilever’s CEO, has made a clear connection between long term business success and tackling social and environmental issues:

“… the biggest challenge is the continuing threat to ‘planetary boundaries’; resulting in extreme weather patterns and growing resource constraints. These have increasing impact on our business… We remain convinced that businesses that both address the concerns of citizens and the needs of the environment will prosper over the long term… As… [the Unilever Sustainable Living Plan] becomes embedded, there is growing evidence that it is also accelerating our growth.” Annual report and accounts 2012 p 4

There are a number of things in Unilever’s annual reports that make the company stand out as a leader in connecting business success and value for investors with value for society.  The 2013 annual report succinctly captures the moral and business imperative for integrated thinking: “Business needs to be a regenerative force in the system that gives it life” (page 8).  And Unilever’s vision is to double the size of its business while reducing its environmental footprint and increasing its positive social impact.

Its annual reports set out, up front, financial performance and growth measures alongside key social and environmental measures.

Unilever's business model sourced from the Unilever website

Unilever’s business model sourced from the Unilever website

The simple pictorial representation of its business model puts its Sustainable Living Plan (which quantifies 2020 environmental footprint targets) right at the centre of everything it does.

The 2013 annual report provides a comprehensive analysis of key risks to value creation using a multiple capital approach – that is, it considers risks associated with society, relationships, the environment, intellectual capital and its people.  This demonstrates that risk identification processes involve a broad analysis of contextual factors.

Included amongst the various governance committee reports is one from the Corporate Responsibility Committee, rarely included in an annual report.

Critical to integrating sustainability into strategy, planning and decision making is incorporating it into remuneration and performance management.  Unilever’s annual reports demonstrate real leadership here in stating that social responsibility and performance against the Unilever Sustainable Living Plan is considered in determining rewards.

Unilever’s 2013 annual report makes a link between its customer base being predominantly female and its work on equal opportunities (page 16).  Female consumers have an interest in how women are treated at work. At 40% (page 6) the proportion of female non-executive directors is well above average. And 42% of Unilever’s managers are women (page 3).

There is room for improvement of course, but not the purpose of this article to set out where.  But I will mention a comment that particularly jarred – reference to the Dove brand “promoting self-esteem among young girls and women” (page 7).  There’s a bit more to it than this Unilever, particularly in your markets where violence against women and unequal opportunities are rife.

The International <IR> Framework has been criticised by some for focussing on value to investors, rather than value for society or stakeholders.  Unilever believes that the two are connected and has taken more steps than most to integrate social responsibility and environmental sustainability into the way it does business.

The links between value for investors and value for others are made in the International <IR> Framework in paragraphs 2.4 – 2.7:

“2.4 Value created by an organization over time manifests itself in increases, decreases and transformations of the capitals caused by the organization’s business activities and outputs. That value has two interrelated aspects – value created for: The organisation itself which enables financial returns to the providers of capital; Others (i.e. stakeholders and society at large).

2.5   Providers of financial capital are… also interested in the value an organization creates for others when it affects the ability of the organization to create value for itself…

2.6   The ability of an organization to create value for itself is linked to the value it creates for others…

2.7   …This includes taking account of the extent to which the effect on the capitals have been externalised…”

Too few companies explicitly recognise or acknowledge this. Unilever is a leader.

Contact Integrated Horizons if you would like to discuss integrated reporting.

Related articles on this website:

A global approach to sustainability: an interview with Ray Bremner, President & CEO Unilever Japan

Ten steps to integrated reporting

Five essentials to embedding sustainability

Integrated reporting – what it is – and is not: an interview with Paul Druckman

What is integrated reporting? And how do you do it?

This article was first published by the ACCA here and was written by Dr Carol A Adams FCCA and member of ACCA’s Global Forum on Sustainability If you are confused about what integrated reporting is, rest assured you are not the only one. A … [Continue reading]

DōWebinar on Integrated Reporting now available here

If you missed my DōWebinar on integrated reporting you can see the presentation and listen to it here. If you have any questions contact me directly or use the comment box below. You can read about my Dō Master Class on integrated … [Continue reading]

Moral accounting? Employee disclosures from a stakeholder accountability perspective

by Sarah Williams and Carol A Adams.  Published in the Accounting, Auditing and Accountability Journal Abstract The purpose of this paper is to examine how disclosure of employee issues by a large UK bank (the NatWest) may or may not promote … [Continue reading]

The ethical, social and environmental reporting-performance portrayal gap

by Carol A Adams. Published in the Accounting, Auditing and Accountability Journal. This article was in the top 15 articles downloaded from the journal website during 2013.  At the time of posting it has been cited 400 times. Abstract  The … [Continue reading]

Making a difference: Sustainability reporting, accountability and organisational change

by Carol A Adams and Patty McNicholas. Published in the Accounting, Auditing and Accountability Journal. At the time of posting this article has been downloaded over 9,000 times from the journal website Abstract The purpose of this study is to … [Continue reading]

Measurement of sustainability performance in the public sector

by Carol A Adams, Stephen Muir and Zahirul Hoque published in the Sustainability Accounting, Management and Policy Journal Abstract This article identifies current performance measurement practice within state, territory and federal government … [Continue reading]

Masterclass: Preparing for Integrated Reporting – London, 14th March

Preparing for Integrated Reporting A Master Class with Dr Carol Adams, Integrated Horizons 14th March 2014 * ACCA 29 Lincoln’s Inn Fields, London * WC2A 3EE £360 + VAT (£432 incl VAT) Book here Discounts are available for … [Continue reading]

The mediating effects of the adoption of an environmental information system on top management’s commitment and environmental performance

by Sarah Yang Spencer, Carol Adams and Prem W.S. published in the Sustainability Accounting, Management and Policy Journal Abstract This paper aims to examine the antecedent factor, top management's commitment to environmental … [Continue reading]

Five tips for better sustainability data management

By Tomi Pajunen.  This post first appeared on Mitopro Sustainability Professionals Blog and is reproduced with permission. Now it’s that time of the year again when many sustainability professionals focus on data management and quality or … [Continue reading]