Sustainability That Sells: Why Consumers Hold the Key to Real Change

Unilever’s recent decision to scale back its environmental and social commitments means a significant shift from the ambitious sustainability agenda championed by former CEO Paul Polman. During his tenure from 2009 to 2019, Polman embedded sustainability into Unilever’s core strategy. He launched the Unilever Sustainable Living Plan (USLP) in 2010. This revolutionary initiative aimed to double the company’s size while reducing its environmental footprint and enhancing its positive social impact (strategicleaders.com). Unilever positioned themselves as a leader in corporate sustainability, but financial motives have now prevailed. What could have been done differently?

Unilever’s strategic pivot

Polman’s approach was revolutionary; he steered away from short-term sales goals, highlighted the financial risks of climate change, mandated that suppliers develop plans to eliminate deforestation from their supply chains, and acquired eco-friendly brands such as Seventh Generation and Schmidt’s Naturals (news.mongabay.com). His leadership redefined sustainable business practices and demonstrated that integrating ethical principles can drive corporate success (europeanceo.com). However, shareholders thought differently. This is eloquently described in the fascinating book ‘The Lonely Quest of Unilever’s CEO Paul Polman’ by Jeroen Smit.

Under the current CEO Hein Schumacher, Unilever has adopted a more “realistic” approach to sustainability, focusing on execution instead of advocacy. Unilever is no longer a front-runner, but merely a follower doing the bare minimum. This approach includes merging the sustainability and external communications departments and revising environmental targets. It’s a clear shift back to profit over planet. In that sense it illustrates the failure of Polman’s work. Schumacher contends that while some goals have been scaled back, spending on sustainability initiatives has increased (ft.com).

Better for people and the planet

This strategic pivot underscores a critical insight: for sustainability efforts to gain shareholder acceptance, they must align with consumer preferences and demonstrate tangible benefits for consumers. Only sustainable initiatives that offer direct value to consumers, such as refillable spray bottles that reduce plastic waste and at the same time save consumers money, are likely to succeed. This is something we see over and over in our consumer research for sustainable food brands. Being sustainable isn’t enough. There needs to be something in it for the consumer as well. Short-term individual gain is required, not just being better for the future of the planet.

An example: regenerative agriculture. Almost every expert on agriculture supports this approach to farming. Consumers also generally understand that these practices are better (Read the regenerative agriculture report). However, products produced through regenerative practices, are often more expensive. Consumer demand is therefore limited to a small niche of sustainability-minded people. This small market is not enough to support the breakthrough of regenerative practices. So far, most marketing efforts have been aimed at bringing the message of ‘better for the soil’ across, but consumers mostly don’t care. How do we make them care? By giving them a reason to buy these products. For instance, this could involve advertising that produce from healthier soil has higher nutritional value. Communicating health benefits like higher vitamin content, more protein, extra fibre, etc will set this regenerative produce apart in a way that motivates consumers.

Better for people and the planet

I am not saying that brands should only engage in those sustainability efforts that sell. On the contrary, I believe that marketers should use the complete arsenal at their disposal to change consumer behavior for the good (Read more on why). To successfully future-proof their product portfolio, companies need to create demand by choosing carefully what aspects of their efforts and which advantages to communicate. These choices should be grounded in deep understanding of how consumers perceive the category and sustainability within that category. It’s the perceived impact and its benefits that determines whether they buy a product (or not).

In conclusion, while Unilever’s recalibration of its sustainability strategy reflects a response to shareholder expectations, it also highlights the importance of consumer-centric approaches to sustainability. Only by aligning environmental initiatives with consumer desires and demonstrating clear value, can companies combine financial success and meaningful progress toward sustainability.

Additional sources:

ft.com

reuters.com

ft.com

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