‘I don’t care if you think of it as an opportunity, a threat or an obligation, but do it,’ says Tex Gunning, President of Unilever Bestfoods Asia. He is talking about business engaging with poverty eradication and environmental sustainability. This must happen, he argues, because business does not only live from the world, it must also live in the world.
Underpinning its – and our – continued existence is the need to create a world in which we can all live dignified lives and which does not consume its resources at a faster rate than they can be produced. He talked to Alliance about Unilever’s approach to these questions and the importance of partnership in their solution.
As far as he is concerned, the separation of business from the community is a nonsense. He cites an article by Ian Davis of McKinsey which argues that business is part of the community and that to polarize things and to say either that business is just about shareholder value or, on the other hand, that it is just about social causes misses the point. ‘I think that is where I come from as well. I say look, as a business you can only sustain yourself if you’re economically sustainable, but equally you can only sustain yourself if you’re socially and environmentally sustainable.’
He believes it is no more possible to live among people as a company without engaging with their concerns than it is to do so as an individual: ‘You cannot assume as a company that you can ignore the people who live around you, who are in effect your market, who have ultimately to sustain your growth and give you a licence to operate.’
If you can’t see engaging with your community as a moral imperative, ‘see it as opportunity, define your research and development agenda, be creative about your distribution agenda, and see it as a chance to enhance your business. That’s Prahalad’s argument – he says if businesses do that, they will start to invent technology that will be beneficial to the poorest of the poor. Ultimately they will unlock these markets, and then you will get economic activity, employment, dignity.’
The ultimate bottom line
For Tex Gunning, the notion of a triple bottom line is a misreading of the real nature of things: ‘I don’t think there’s such a thing … the ultimate bottom line, I call it. The ultimate bottom line is that you sustain yourself in the long run. And you cannot sustain yourself in the long run as a business if this world is not sustainable. And for this world to become sustainable, we have to think in sustainability terms, not in social responsibility terms, because that confuses the whole issue. Then it becomes a kind of choice, people say, “Well, I don’t think it’s my responsibility.” You say, “Wait, you’re sitting on the board of this company, are you responsible for its sustainability?” They say, “Yes, of course I am.” “Well,” I say, “I don’t think your company will be sustainable if you keep on ignoring your neighbours, I don’t think it will be.”’
The nature of the threat
There is also a significant element of self-preservation in tackling social and environmental questions. Speaking of Asia, he says: ‘You have 3 billion neighbours, of whom at least 2.5 billion are living in poverty, living on $1 or $2 a day in households with four or five people. This creates diseases and environmental disasters. It also creates social problems, ranging from the extreme of terrorism to petty crime or families falling apart, and that in itself leads to all kinds of problems.’
As for the environment, the picture is equally bleak: ‘Climate change is apparently much worse at the moment than people have predicted. Take water sustainability: it’s just shocking to see how water consumption will go up in countries like India and China, and you know that at a certain point there will just not be enough water to carry out certain economic activities.’ Environmental questions, too, are likely to have their social consequences, he believes. If large numbers of people begin to migrate from places where it has become impossible to sustain life on a large scale, the countries they migrate to will have a new set of problems to deal with.
Unilever’s approach – ‘part of our genetic code’
How do these views translate into practice with Unilever globally? ‘This is who we are,’ Gunning says. ‘I mean, every single Unilever company in the world does social work, voluntary work, community work. One of the strategic pillars of Unilever is called community and the environment,’ he adds. ‘This is led by the CEO and Chairman of Unilever.’
‘Unilever has been at the forefront in sustainability projects. We took the initiative on sustainable fisheries with the Marine Stewardship Council and the World Wildlife Fund. At the moment between 50 and 60 per cent of the fish we use in our fishfingers is sustainable, but we plan to make sure that in the next few years this figure goes up to 100 per cent.’
He sees Unilever’s current work as continuing the tradition of socially engaged business practice from its parent companies: ‘Leverhulme in Port Sunlight of course set up an incredible business, but he took care of his employees, he built houses for them, he built a whole village for his workers. And the family on the Dutch side was an incredibly socially engaged family too. I think that is still part of our genetic code.’
Bottom of the pyramid
But Unilever is a business too and it’s entirely consistent with Gunning’s views that there should be a commercial element to all this. Talking of C K Prahalad’s bottom of the pyramid idea, he says: ‘Prahalad believes that if you force companies to think of this as a commercial opportunity, that will drive the technology agenda, the resource and development agenda, the distribution agenda. They will find ways and means of driving their products into poorer areas – which is happening. I mean, Unilever gets 60 or 70 per cent of its sales in countries like India out of products like one rupee sachets of shampoo.’ And that, he adds, is ‘the model that we apply throughout Asia. We have affordable products which are the same products as the ones in expensive bottles but sold at very low prices.’
He is also aware of two of the main criticisms of this approach: first, that there is no guarantee that any of the wealth created actually stays in the purchasing community; second, that the disposal of millions of small sachets can create a serious environmental problem. With regard to the first, the idea is to combine the marketing of cheaply packaged goods with a distribution system that trains and uses local women: ‘You make sure they have proper microfinance systems, then you also start to alleviate poverty and rebuild capacity.’
The environmental issue, Gunning acknowledges, must be solved as a matter of urgency: ‘The technological solution is to come up with biodegradable packaging, and obviously the whole industry is working its guts out to start cracking that.’
Overall, he is keen to stress that, with the bottom of the pyramid approach (or the Unilever variant of it), ‘the single most important thing – and Prahalad emphasizes this as well – is that you create dignity.’
Bringing two paradigms together
So there is a both a commercial and a humanitarian element in Unilever’s approach. The trick is to fit them together. Take the case of the water filter that Unilever is developing in India: ‘We have a little container, it’s about half a metre high. It doesn’t use any electricity, so you can put it anywhere, and it filtrates the water out absolutely pure of micro-parasites, bacteria and viruses.’ It is being test-marketed at the moment in Mumbai and it is selling at €27. But at that price it is only available to the relatively well-off.
‘The technology agenda says how can we get the €27 down to, say, €10 euros and then to €6, but I’m just not willing to wait. We know that every year 400,000 children in India die because of diarrhoea. So yes, we will have a commercial trajectory, we have to sustain ourselves economically as Unilever so we will stay close to that paradigm. But at the same time – and this is the new paradigm – we will sit with social partners and say, look, how do we exploit this technology and save lives?’
The Millennium Development Goals
Does he see what they are doing as explicitly related to the MDGs? ‘In terms of malnutrition and child mortality, we explicitly talk about them,’ he says. ‘The water project that we have in India obviously addresses the child mortality issue, and the project with Synergos and UNICEF (see below) addresses the malnutrition and child mortality issue. The sustainability projects obviously fall under the MDG on the environment.’
But Unilever doesn’t necessarily present its projects in terms of the MDGs: ‘We don’t say our objective is Millennium Development Goal 2; we say, our objective is to bring water to the rural areas to make sure that people get clean water.’
The malnutrition programme
One of Unilever’s most recent projects is ‘a malnutrition global partnership with UNICEF and the Synergos Institute’. He cites the grim statistic of 10 million children a year dying before the age of five: ‘Wherever you come from, from a sustainability point of view you cannot have so many children dying, you cannot have so many uneducated, stunted children. So we said as a company that is in hygiene and nutrition, a company that has massive research and development competencies and massive distribution competencies, that we should explicitly put this on the agenda, and bring people together to try to solve this problem. UNICEF was the most obvious partner, but we are also talking to the World Food Programme people in Rome. And Synergos, with its capacity to initiate grassroots works and to open up doors, particularly for funding.’
They are now at the stage with the malnutrition project where they have identified 36 people in two states in India. The first convening meeting will probably take place in September, ‘and then the idea is to take these 36 people through the U-process’.
What is this U-process? The idea is to bring together groups and individuals from different backgrounds with similar aims and levels of commitment. The premise is, as Gunning says, that ‘none of us is as smart as all of us’.
That is one element of the process. The other is the creation of what he describes as a community: ‘You need to have a group of people who are highly committed to the issue because otherwise egos and institutions get in the way. So you have to bring them together in a space where they form a community with each other, not only intellectually but also emotionally and socially.’
How does this happen? Gunning believes that you can put even the biggest egos together in a room and ‘as long as you leave them long enough, the egos will disappear. What normally stops people synchronizing and dialoguing and reflecting properly is their own egos. When you bring them together in a natural setting and take them through certain processes, they start to synchronize. Nature helps because apparently people start to realize subconsciously that there’s a bigger thing out there.’ The result, he claims, is that ‘you start to see one picture, and therefore one alliance solution comes out that is intellectually convincing but also emotionally appealing to all the participants’.
‘Where social capital and financial capital come together’
Overall, he is convinced of the crucial role of partnership in tackling the big, hitherto intractable problems of poverty and environmental sustainability. These problems are multi-faceted and interrelated. Partnership, as the malnutrition programme illustrates, allows different kinds of expertise to be brought to bear on one problem. It also allows a commercial innovation to be more widely and effectively exploited. Talking of the water filter, for instance, he says: ‘If you roll this out only commercially, then I think you miss the point. You’ve got to start to find partners and say look, how can we in partnership, with for instance UNICEF, start to roll this out? And that is where social capital and financial capital come together.’
‘And that I think is one of the most interesting things that is emerging everywhere, that people are starting to think in terms of partnerships. They’re starting to see that we’re all part of this one world. We’ve all committed ourselves to the Millennium Development Goals, and we can’t think any more from our own ego, our own perspective, our own organizations. We should think in a more abundant manner.’
Partnerships are also important from the point of view of scale. They allow responses proportionate to the size of the problem. ‘That’s why you have to go into partnerships, and that is why you see that the top of Unilever is involved in many of these global initiatives – to give them visibility and clout, and of course to give leadership to other institutions.’ Such leadership also draws attention to the problem, where real awareness has been lacking. ‘I believe that many people want to do something but they just don’t know what to do.’
‘We can make a difference’
So the will is there, Tex Gunning thinks, but it often needs to be channelled. In a sense, he believes that we are all of us engaged in one great enterprise and that the separation of functions into business or government or healthcare is arbitrary and misleading. We stand or fall together: ‘We are all part of this world, and if the parts are dysfunctional, then the whole is dysfunctional and therefore we cannot sustain the whole.’ The problems are great, but not, he believes, insoluble: ‘I think a fatalistic view would be terrible. As Jeffrey Sachs says in his End of Poverty book, we can make a difference, and we should make a difference.’
Tex Gunning is President of Unilever Bestfoods Asia. He can be contacted at Tex.Gunning@unilever.com
1 The Economist, 28 May 2005.
2 C K Prahalad, author of The Fortune at the Bottom of the Pyramid (Wharton School Publishing, 2004).