Unilever, one of the world’s largest fast-moving consumer products corporations, has gone above and beyond the call of duty to safeguard human health. Over the past 27 years in Vietnam, Unilever has built its brands as a force for good, demonstrating that a sustainable business approach delivers higher performance. In a recent visit to Vietnam, Alan Jope, Unilever CEO, spoke to The Saigon Times on the quest to move the entire company to sustainability.
The Saigon Times: What changes in the country can you notice during your trip back to Vietnam after the Covid pandemic?
Alan Jope: Upon arrival at the airport on Tuesday night in HCMC, I was struck by the number of new buildings, sophisticated retail outlets, and beautiful world-class hotels. I wonder if it was my imagination or if HCMC has blossomed during the last four years since my last visit to the country.
Vietnam has been one of the best-managed economies in the world through the Covid crisis. Whereas many of our businesses are still struggling back to business, Unilever Vietnam’s business is doing really well. And I think that is a credit to the Government.
Can you say something about your company’s slogan “Make sustainable living commonplace”?
I think it is worth going back to one of the founders of the company, William Lever, who created Lever Brothers, which became eventually Unilever.
In 1870, he was tackling public health and women’s empowerment by defining the mission of the company as to make cleanliness commonplace and lessen the load for women.
In Victorian England, he built a model village for his workers to live in decent conditions. He was pioneering on pensions, so when his workers reached a certain age, they could retire and have a pension.
When World War One broke out and his workers went off to fight. Not only did he hold the jobs open for them, but he also paid their wages to their families through the time when they were off fighting.
So the responsibility to our employees and the communities we do business with and to the environment goes back a long way in Unilever’s history. That is why we talk about our purpose of making sustainable living commonplace as sustainability has been at the heart of Unilever from day one.
So, what is the meaning of sustainable business?
I often get the question “How do you trade off financial results versus sustainable business?” We do not believe there’s a trade-off. Sometimes there are short-term trade-offs, where you incur costs as an investment. But over the long term, there are many ways, many reasons why sustainable business results in a stronger, more durable business.
Let me talk about the business case for sustainability, which I think is the heart of the matter.
First, we have got very hard evidence that brands that consumers see as having a positive impact on society and the planet can grow seven times faster than the rest of the portfolio. From a growth perspective, if you break consumers up into age cohorts, millennials have a big impact on brand preference while zennials are obsessed with the conduct of the brands and the companies that they choose to buy from. Therefore, it is also about being relevant in the future.
Second, in terms of cost, we have eliminated about 1.2 billion euros from Unilever through sustainable sourcing. A lot of it is avoided cost of energy as we try to bring down our CO2 footprint. We save a lot of money there.
Third, macro risks and micro risks are reduced by attempting to do our business on a sustainable platform. I mean that a world that is under water or on fire is not a great place to sell your products. So I think business has a choice. We can either be part of the solution to those problems, or we can be part of what causes the problem. We choose to be part of the solution.
Finally, we believe sustainability is the right thing to do in the war for talent. Our company is only as good as our brands and the people in the company. These days, people want to work for organizations that do things the right way. So I am sure you are aware that Unilever is the preferred Employer of Choice in all sectors for graduates in Vietnam. Besides, we have a graduate recruitment program in 54 countries around the world, which started in 17 countries eight years ago. So young people want to work for companies having a positive impact on issues they care about.
And now you can see that Unilever Vietnam, 27 years old, is already the 12th biggest company in Unilever globally.
Do you have any barriers when you conduct the strategy towards sustainability?
There are four big challenges for us regarding carbon reduction, agricultural sourcing, plastic waste, and making sure that people in our extended supply chain are well paid.
However, I think one of the biggest challenges we have is plastic management, as we need to build a more circular economy and it’s not an easy challenge.
We want to be net zero plastic to make sure that we recover from the environment, at least as much, or maybe much more plastic than we use in our business operations and Unilever Vietnam has collected and processed about 70% of as much plastic as we use.
There are many examples where Unilever sees leading behavior in Vietnam. Our biggest, best brands in Vietnam are very active in a public private partnership, working with the Government, working with other private sector companies, working with NGOs on getting the circular plastic solution.
What do you think about the current status of Unilever Vietnam’s sustainable development in the world?
Overall, if we take a global view of business right now, what we see is strong economies in Southeast Asia. In Southeast Asia, I think we have to call Indonesia and Vietnam as two very attractive markets, with big, high, good populations, well-managed economies, and very different types of government with a well-managed economy.
Our strategy very much includes a high ambition for Vietnam. I think it has taken us the growth, and the size of the business that we have created for 27 years. We hope to double that in the next five to 10 years.
Your company is still expanding in Vietnam. Do you plan any further investment here in the future?
We will be investing in our people, our brands and capital assets, and we will continue to build out our expansion and capacity. Our two factories will need to keep investing to handle the expansion. But the investment is not just capital investment. It is the investment we are making in our brands, and our people as well.
If a company wants to adapt to a sustainable business model, what advice can you give them?
I believe that anyone can help businesses progress towards a more sustainable business model by not spreading and holding on to the false belief that there is a trade-off between good business and sustainability.
I think the easiest way is to consume less energy. When companies use less energy, their costs go down. They can make a great contribution to Vietnam’s carbon footprint and save money by investing in LED lighting instead of conventional lighting, using energy-efficient mechanisms, proper insulation and consuming less energy. Don’t position it as a choice between good business and ethical business, because ethical business can be good business.
Believe it or not, paying your employees properly is a good investment for your business. Paying your people properly reduces turnover dramatically and turnover costs the business a fortune when you lose people. So paying people probably better, less turnover because you get higher productivity and better satisfaction. So these are investments, they are not costs.