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This article originally appeared in Chandler Foundation’s Social Investor magazine, the only peer-to-peer publication serving social innovators and leaders in global philanthropy. It was originally published under the title "Unfinished Business.”
Russia’s attack on Ukraine highlighted both the enormous fragility of our global system and the growing divisions among companies about their response, says Paul Polman, former CEO of Unilever, one of the world’s largest consumer goods companies. Some companies distanced themselves from Russia right away — admittedly, often the ones who did little business there. Some took a halfway route, committing to no further investment or exports while trying to maintain their operations. A third group continued operations in one way or another.
Polman acknowledges that these decisions can be difficult and complex, but insists that companies should do the maximum possible. The seasoned business leader notes that those firms that proactively left Russia have not been punished by the market, while those who equivocated have seen their reputation and market value suffer. When faced with existential questions, financial markets have “become more tolerant towards those making the tougher decisions than what we might have seen in the past,” he observed. For many, the so-called nonmaterial issues have rapidly become material.
Polman’s voice has become even more urgent since he stepped down as CEO of Unilever, a position he held from 2009 to 2019. As he transformed Unilever, Polman became the face of stakeholder-centric business. Post-CEO, he now wants to do even more to change the capitalist system, putting it in greater service of “the billions of people being left behind, not just the billionaires.”
He took inspiration from examining the company’s reforming roots in Victorian Britain, where founder William Hesketh Lever recognized the problems of the day, such as the lack of housing near factories for workers, the need for pensions and fair wages, and high infant mortality rates. The company responded to the needs of its time, and led public hygiene campaigns and focused on giving its employees, their families, and consumers better lives.
For challenges in this century, Polman’s leadership team at Unilever took a range of decisions under a Sustainable Living Plan to decouple growth from environmental impact, improve the overall social impact, and most radically, set aggressive performance targets such as decarbonizing, human rights, and living wages.
Early in his tenure, the financial markets were skeptical, especially when Polman decided to stop reporting quarterly earnings or give guidance on future financial performance, an anathema in an age of peak capitalism. At one point, he faced down activist shareholders advocating that he should sell the company. Yet in his decade at the helm, he rewarded patient shareholders with a 290% bump in shareholder returns, beating rivals Nestle and P&G and the FTSE index. It was no mean feat as he had assumed the job in the wake of the Great Recession and an underperforming company.
“Now it is a much easier story to sell,” he says, helped by a wealth of data that “show convincingly that these longer-term focused, multistakeholder models, with purpose and sustainability at their core, in general perform better than companies that more aggressively pursue short-term profit maximization.”
For Polman, “The point has been passed when you have to argue about why stakeholder-centric strategies make sense, and the debate has moved to the how of doing it right.”
The real danger is that every philanthropist has his or her pet project, and you get a divergence of strategies, when we would be better off putting egos aside and working together.
Seeking Partners at the Vanguard of Change
To help others figure out that how, Polman has gone beyond his reach as a corporate titan to take on advocacy roles in organizations that he regards as crucial to building a multistakeholder movement for system change. He holds nonexecutive leadership roles in influential organizations such as the International Chamber of Commerce, United Nations Global Compact (he is a passionate advocate of the Sustainable Development Goals, which he helped write), The B Team, and The Rockefeller Foundation. He chairs the board of the University of Oxford Saïd Business School and works with next generation leaders through organizations such as One Young World. He is passionate about bringing together collectives of CEOs who, together, he believes can drive tipping points in their industries, including in the food sector and through The Fashion Pact, which he launched with the support of French President Emmanuel Macron.
Last year, he published a book (with Andrew Winston), Net Positive: How Courageous Companies Thrive by Giving More Than They Take, emphasizing how it is no longer enough not to do less harm, but companies need to be intentionally doing good for the planet. Strikingly, the book is outspoken on political issues, such as the importance of companies and their leaders to pay their fair share of taxes. Polman, who considered priesthood before he discovered business, is optimistic that his newfound freedom can make him a more effective leader of change: “My journey has moved from formal or bought authority to moral authority, and I think the platform of moral authority is a better one. A little bit harder work, but it’s a better one, using the convening power and the credibility that has come with what Unilever delivered during my tenure.”
If he has learned one thing from his time at Unilever, it is that the company could have gone further, faster if it had put even more effort into partnerships with others, from business, civil society, and government.
“If you ultimately want to attack the real fundamental issues, in an environment that has become shorter and shorter term, you need to form broader coalitions,” Polman said.
He is working to create coalitions of companies sector by sector where he sees the potential for significant change through expanding what he calls “pre-competitive collaboration,” especially in their supply chains. Influential groups of leaders have been formed in industries such as fashion and food production, both of which have fallen short in curbing carbon emissions.
Meeting at Crossroads, Not at Crosshairs
The complexity of today’s problems — where globalization has shrunk the world while amplifying the repercussions of policy decisions — demands more collaboration between business and governments, Polman contends.
On climate change, he believes that “in some instances business is ahead of governments and is actually starting to push governments to go further.” For example, innovative companies brought technologies for solar and wind energy close to a tipping point of widespread adoption, but faced slowing momentum from governments that still subsidize fossil fuels and unsustainable agriculture by US$1.8 trillion a year or have lengthy approval processes.
While climate concerns are now a priority for many companies — the E in ESG (Environment, Social, Governance) corporate framework for addressing society’s issues — Polman sees little progress in social aspects of modern work. Perhaps companies have too long left these concerns to governments?
“Companies still struggle with the social coefficient: How many companies really have moved forward and invested in people and the safety nets around them, or in training and development, or in human rights in the value chain?” Polman said.
Increasingly, he views issues such as climate change, inequality, or poverty as symptoms of a deeper underlying problem: that too little is being done about what Polman regards as inherently solvable. “This is an issue of greed, of apathy, of selfishness, more than anything else. We have a leadership vacuum.”
He believes in businesses needing to take a stance and an active part in driving social change. To address this, he is working with business schools, such as the University of Oxford Saïd Business School, to “change the face of management education.” The U.S. association Business Roundtable repudiated Milton Friedman’s advocacy of maximizing financial returns to shareholders and embraced stakeholder capitalism, but business schools have yet to respond, says Polman. He reinforces that we need to bring humanity back to education, explaining the broader role of business with a multidisciplinary approach. Polman says we need to teach people the value of systems change, the power of purpose and how to do it, and the value of partnerships, of becoming societal, cooperative leaders — not competitive leaders.
Philanthropy as Advocates for Corporate Change
Philanthropy can play a key role in helping to make business more of a force for good, Polman believes. For a start, philanthropic endowments should be invested, and their shareholder proxies voted, inline with the philanthropic mission. Philanthropy should also take bigger bets, including by partnering more effectively. He would like to see more efforts such as the Global Energy Alliance for People and Planet, where billions in philanthropy donated by Jeff Bezos, The Rockefeller Foundation, the IKEA Foundation, and others, catalyzed significant additional funding from other sectors. When philanthropy is willing to take any first losses, it can crowd in money from the private sector, Polman said.
Philanthropy also has the advantage of bringing higher credibility than business when it advocates for policy changes, and should do more of it, Polman argues. That includes more scrutiny of businesses to hold them to account, such as recent philanthropically-driven efforts to increase carbon disclosure by companies. His fear is that philanthropy will continue using a scattershot approach, rather than having the impact it should.
For now, Polman is encouraged by some crucial technologies on the cusp of breaking through, especially in energy, food, and transport. The increasing realization that not acting actually costs society more than acting, and the larger change that will come with 50% of the global population aged under 30 entering the workforce in the near future. He believes them to be more purpose-driven, more demanding of their employers, more adept at embracing technology, more attuned to partnerships, and multigenerational in outlook. For Polman, there is no question that, to really change the system, we need to increasingly give the younger generation a seat at the table.