Former Unilever CEO Paul Polman Says Aiming for Sustainability Isn’t Enough. The Goal Is Much Higher

0:00This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. Propel Fitness Water with Gatorade electrolytes, zero sugar, and vitamins. Propel hydrates better than water to help you get the most out of your workout and get back to your best self.

0:41What propels you? Propel with Gatorade electrolytes.

1:00Welcome to Harvard Business Review's The New World of Work. I'm Adi Ignatius, Editor-in-Chief of HBR, and each week on this show, I talk to a top-tier CEO about the future of work, about how we'll innovate, how we'll collaborate, how we'll lead. Before I introduce our guest this week, let me just go quickly to a word from our sponsor. Unisys is an IT company that builds critical solutions trusted by demanding businesses and governments around the world. They partner with clients to enable cloud transformation, protect critical operations, and empower the modern workforce. Visit unisys.com to learn more.

1:40So our guest this week is Paul Polman, who's one of the most inspiring CEOs of our era. For 10 years, he served as the CEO of Unilever, and in that role, he stood out as perhaps the corporate world's most outspoken champion for sustainability. After leaving a job two years ago, he co-founded Imagine, a foundation whose mission is to empower like-minded CEOs to deliver on ambitious sustainability goals. Paul is also the co-author with Andrew Winston of a new book, Net Positive, How Courageous Companies Thrive by Giving More Than They Take. It's a playbook for the contemporary leader who wants to deliver to all of its stakeholders, its employees, its customers, its community, the planet.

2:27Full disclosure, HBR is a publisher of this book. So for scheduling reasons, I interviewed Paul yesterday. He was in the United Arab Emirates for a conference. You'll notice there are a couple of moments when the video isn't perfect, but bear with it. The sound is fine and it's a great interview. So I'm going to come back. I will come back live at the end of the interview to talk about our next guest. But here's the interview with Paul Polman. Paul, I want to thank you very much for joining us today. Thank you for the opportunity. Look forward to it. Yeah, well, let's jump right in. So your new book is Net Positive, How Courageous Companies Thrive by Giving More Than They Take.

3:08Give us a sense of what does it mean for a business leader in your mind to be net positive? Well, what we're trying to do in this book is really ask the simple question, Adi, that how can a company profit from solving the world's problems, not from creating them? And the ultimate question that we pose is, is the world better off because your business is in it or not? And that comes from a very simple notion that this year, World Overshoot Day, which is the day that we use up all the resources that the world can replenish, was July 29th. And after that day, you could argue, we're actually stealing from future generations and this is one of the issues that we're wrestling with which is uh that we're bumping up against these planetary boundaries like climate change biodiversity destruction and inequality so most people or most companies are in the csr space corporate social responsibility which is being less bad but when we overshoot these planetary boundaries so much less bad is simply not good enough anymore i used to murder 10 people now i murder five people am i a better murderer i don't think so so then people say i need to be sustainable which is neither good nor bad it's very admirable position but increasingly companies are starting to understand that you need to be restorative reparative regenerative and this is really what net positive leaders do net positive leaders for us have a few characteristics if you want to that we describe in the book the first one is really that they take responsibility of that total impact in the world i call it that total handprint all consequences intended or not this episode is brought to you by palm olive family time isn't just the big moments it's weeknight dinners sitting around the table everyone talking all at once so when the plates are empty and the sink is full, use Palmolive Ultra.

4:58Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. Propel Fitness Water. With Gatorade electrolytes, zero sugar, and vitamins, Propel hydrates better than water to help you get the most out of your workout and get back to your best self what propels you propel with Gatorade electrolytes where we see some companies going wrong nowadays is that they celebrate and herald the positive sides of their business model but when it gets to undermining democracy or hate speech or child addiction they don't want to take that responsibility net positive leaders operate for the long-term benefit of business and society actually they run their models just like we did in Unilever for the stakeholders in In fact, they believe in it so strongly that they can actually prove that by optimizing the return for all of the stakeholders, which includes the planet and future generations, they ultimately also satisfy the shareholders.

6:07But they're not driven by the shareholders as their sole objective, if you want to. And then the net positive leaders are societal leaders. They understand that they need to play a role, an increasing role, in driving the broader systems changes, either at an industry level or with other partners. We described this in the book as 1 plus 1 is 11 and it takes 3 to tango. So these are leaders that you can hear it from my description, are probably very purpose-driven leaders. They cherish the partnerships. They think multi-generational. They operate with a high level of compassion or empathy, humanity, humility, if you want to.

6:50And it's interesting that these are also the leaders, actually, that have done well during this COVID crisis. The last point to perhaps mention is that these leaders understand the importance on doing it everywhere in all parts of their business models, in all brands, in all operations, if you want to. and they need to be consistent. And increasingly, companies that are consistent build that trust that is needed to drive prosperity. What do I mean by consistency? Not making one statement yourself and having a trade association advocate for something different. Not using money in politics to advance your own goals at the detriment, actually, of undermining democracy.

7:29Working human rights, looking at CEO salaries, having responsible positions in tax payments, etc. So these are all the hallmarks, I would say, of a net positive leader. I like, there's a line that you use that's really a challenge to corporate leaders that I've heard you say, if a goal is not making you uncomfortable, it's not aggressive enough. Talk about what you mean by that. Well, yes, if many of the CEOs play what I say not to lose versus playing to win. And we cannot simply not afford it anymore. An example of that would be most companies still taking climate commitments on scope one and two only, when you know that 80%, 90 % is in scope three.

8:12So just to put targets out that you know you can achieve, that you can get away with, but it's not what society needs, doesn't build a trust anymore. so we talk about courageous leaders in the book coming from the french word coeur which is the heart as much as the head which is this bringing humanity back to business and what these leaders do actually they are so strongly purpose-driven that uh you know that they understand that it's uncomfortable to set targets that you don't know how to achieve but that are needed it is uncomfortable to take responsibility of the total handprint you have in society.

8:50It is uncomfortable to work with other people when you're not totally in charge and can set the agenda or might have to hear some inconvenient truths. So that takes courage that comes from that stronger sense of purpose. But what is very clear that we've also seen in Unilever, where we set 50 targets, by the way, I was under the impression that the more we are open and transparent with what we do, hence the 50 targets, the more we build that trust and transparency. Because these targets were audacious, we also said we don't know how to get there, frankly. And one thing is for sure, we can't do it alone.

9:28So that built an incredible amount of good work. This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. Propel Fitness Water. With Gatorade electrolytes, zero sugar, and vitamins, Propel hydrates better than water.

10:07to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolytes. We'll open doors. And I think that was part of the reasons why in Globescan and other studies, we were continuously seen as the most trusted company, even well ahead of some of them like Patagonia. So I think it does pay to work on that. And then there's something that I've always remembered a saying that says, if you reach for the stars you don't end up with mud in your hands so we set audacious goals of completely decoupling our growth from environmental impact long before it became popular decarbonizing our own electricity use reaching 1 billion people improving their health and well-being and frankly some of these targets we achieved or exceeded and some of them we fell slightly short But where we fell short, we were probably 10 times better off than the trajectory we were on in a business as usual scenario.

11:09Well, so let's look back to your time at Unilever. You know, you definitely did some audacious things. You pledged to double output while cutting in half the sort of externalities that the company produces. You did away with short-term earnings guidance. You pissed off a lot of hedge fund managers. You know, what parts of the Unilever playbook would you recommend and what would you not recommend, you know, having lived through it? Well, to use your word, it's not bad to piss off some people. You have to make choices and, you know, you're not running a popularity contest here. You need to do what's right and right for the business.

11:47And I think one of the things that has been very powerful for us is to go back to the core, go back to the history of the company, why it was founded, which was making hygiene commonplace in Victorian Britain when Lord Lever started the company one out of two. Babies didn't make it either past year one. So we translated that in making sustainable living commonplace, adapting that to today's needs if you want to. So finding that purpose is a very important thing and that we've also seen that backed up by data, that companies that are driven by these stronger purpose, longer term models, putting sustainability at the core, in general, significantly outperformed their peer groups.

12:26The second thing I would say, coming back to the shareholders, yeah, do the long-term focus. You know, to solve the issues like climate change or food security and inequality, we can't do that in the red race of quarterly reporting. So by moving out of this quarterly reporting and giving guidance and moving compensation to the longer term, that in itself was not that heroic, I think. It was really meant to change boundaries. People's behaviors are decided by the boundaries that they have to operate in. Unilever had fallen victim, like so many other companies, into that short-term behavior, and that's what we had to move.

13:01I certainly recommend that to other companies. Moving to this multi-stakeholder model and taking responsibility for your total handprint actually opened up a lot of doors, created a lot of opportunities, created an expansionary mindset versus a shrinking mindset. setting these targets and operating with transparency regretfully we have issued two human rights reports with many salient points points in there and i was hoping that others would issue human rights reports but it hasn't happened people are still worried and and that they are exposed in fact even if you have these issues talking about it will hopefully solve them faster and shine a light on it and create these partnerships so be transparent if you want to build that trust and that brings me to the last point which says ultimately we need these bigger transformations how do you get plastics out of the oceans how do you stop deforestation and some of these things no company can do that alone so you need these broader partnerships and you need to embrace them and i had the fortune to get jeff seabright in that you know and we formed some incredible partnerships that frankly has served as well in tackling some of these tougher challenges so you talk about This episode is brought to you by Palmolive.

14:18Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. propel fitness water with gatorade electrolytes zero sugar and vitamins propel hydrates better than water to help you get the most out of your workout and get back to your best self what propels you propel with gatorade electrolytes a multi-stakeholder world and you know everybody talks about this now every ceo talks about this the business roundtable brought it up are we there I mean, are people living up to that or are we just talking about multi-stakeholderism?

15:17Well, it's a mix. It's not bad. You know, I used to chair the International Chamber of Commerce, Adi, and until last year, Ajay Banga has taken over from me and there are 48 million companies. And the reality is most of them are in the CSR space still of Les Bet that I talked about. Some try to move to sustainability, but being sustainable. but very few companies, Unilever not included either, are in the net positive. There are hallmarks of net positive behavior, but not that consistently yet. But I do believe that business is moving for many reasons. If you are now, especially on things like climate change, if you now run a business, you will have the effects of climate change more likely into your P &L than not, in disrupted supply chains, natural disasters, and many other things.

16:02In fact, COVID saw another disease, a direct result of destroying biodiversity, would be one example of that. It's hard to argue that it didn't cost us a lot of money. We're also seeing the financial market move, where we now have half the world's money under management, making pledges to make their portfolios net zero. One of the bigger alliances that came out of Glasgow was the Glasgow Financial Alliance on net zero, which has now$130 trillion under management. Any shareholder proposition that comes from the asset managers is actually more on ESG now than on purely the financial performance.

16:40And then governments are moving if we like it or not. Before COVID, we had 20 % of governments make net zero commitments. Now we have 90 % of carbon emission under net zero commitments. And increasingly, you see the European Green Deal or the European taxonomy. We just announced at Glasgow the establishment of the Sustainable Standard Board. So it's coming in. And if that isn't enough yet for businesses to start moving, listen to your own children or your employees. In every company now, there is a greater thorn burn if you want to. We've never seen so many walkouts or opt-outs, you know, in terms of not wanting to work for these companies or actually deliberately walking out.

17:25and that's now, you know, would have been unheard of a few years ago. It's now the order of the day. So, you know, increasingly you see companies with hallmarks like Microsoft recapturing carbon since 1975, like Walmart protecting 50 million acres of land or 1 million acres of miles, square miles of ocean, Nestle going to regenerative agriculture. Actually, Interface I saw the other day coming out with a tile that absorbs carbon. Google trying to use the algorithms to get climate deniers or false science off their platforms. These are all the initial hallmarks of net positive, but it requires consistency.

18:10You see some companies in the US making enormous commitments to be net zero, and they should be applauded for that, but then they still belong to trade associations that lobby the Dickens out of not getting the reconciliation bill passed because it has a tax increase behind that. So there is still work to do, if I may be honest. Well, I do want to ask you, I mean, you know, your book and your, you know, current foundation, Imagine, I think your goal with both is to empower leaders and to build a coalition. But I want to ask, you're asking for a lot of things, you know, pledges on sustainability, pledges on broad, you know, stakeholder engagement, protecting democracy, getting involved in other social issues.

18:57And I would imagine some CEOs will say, I can't. This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners, sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to 99.9 % of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier, so you can spend less time tackling dishes and more time together. Shop now at palmolive.com. Propel Fitness Water. With Gatorade electrolytes, zero sugar, and vitamins, Propel hydrates better than water to help you get the most out of your workout and get back to your best self.

19:42What propels you? Propel with Gatorade Electrolytes. Can't do everything. You know, and my board or my, you know, they won't support us getting involved in everything. So what's your advice? I mean, is there a place to get started if you want to be on this path? Or is it you're all in or you're not in at all? Well, you know, Mandela said it never seems possible until it is done. CEOs are able to juggle many balls. You cannot say anymore nowadays, is I'm going to strive to get a better gender balance in my company, but I don't care yet about people of color because that's an added project of people with disability.

20:20It just doesn't work anymore. You can't say I'm going to be sustainable here and destroy the world somewhere else. It just doesn't work anymore. You have to integrate that. And actually, the good thing is it's rapidly moving, Ari, from a risk management to an opportunity management. In COVID, we spent$17 trillion to save lives and livelihoods. The IMF estimates that over this decade, we've lost$27 trillion in the global economy in value. People have started to realize that we can't have healthy people on an unhealthy planet, but they've also realized that the cost of not acting is significantly higher than the cost of acting.

20:56So wherever you look, be it in the transformation of the food and land use systems or the energy transformation, which are difficult things to do, I'm not belittling that. But the cost of not acting being higher than the cost of acting makes it even attractive for the diehard Friedman supporters, if I may say it that way. So you talked a second ago about the role of employees, and I want to shift to that. So we're not just talking about leaders, but you talked about the power of employees, the ability to walk out. But let's talk, you know, in a more kind of day-to-day basis. You know, if a company isn't living up to the purpose or the mission statement that it has laid out, what can employees do short of walking out or quitting, taking their talents elsewhere?

21:42What can they do to try to move the company to do more? Well, it's very clear as small or big that you cannot be a sustainable company if you're not sustainable yourself. You cannot be a purpose-driven company if you're not purposeful yourself. So finding your purpose, fighting for things that you believe in, we all are children, or think about future generations. So live what you preach if you want to. And that's the first thing that employees can do. Educate themselves on the sustainable development goals, on some of these worldly issues, be connected with the world around you. Become an outside-in person or company versus an inside-out.

22:22You know, Mark Twain said it well when he said two important moments in life, the moment you were born and the moment you found out why you were born. And I think that's true for all of us. Employees have a choice and it's increasingly being exercised. Some people tell this, the biggest walkout or whatever after COVID where millions of employees don't want to go back to work. They do want to work. They do want to do something meaningful. and they've come to the conclusion that they want to work for companies where they can achieve something bigger than just themselves and belong to something bigger that they otherwise can't create.

23:02So they have a choice to work for these companies and increasingly exercise that. And then within the companies itself, most of the decisions are made at lower levels. When management isn't quite there yet, I understand that some of them take a little bit more to move. but you know start to convince them start to understand the barriers that get in the way for management and come increasingly with constructive solutions 60 % of the energy transition that needs to happen can be done today with technology available and it's actually cheaper than the alternatives that most companies are using so just capital is proving that running these models with purpose at the core are more profitable.

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24:5595 % of consumers, everything being equal, want to buy from companies that have purpose at the core, that are purpose-driven. And then if you can bring in more of these signals into the company, that's important. So many different areas, starting with yourself, starting with awareness, you know, opting in for the companies you want to work for. I do want to say opt out as well. It's very important. I had never thought that I would see the day that people would walk out of companies. It was unheard of five years ago. Now you see every week or every other week someone walking out of a company, be it Facebook for sexual harassment or Netflix for movies that don't pass the test anymore or Google for not making fast enough climate commitments or Wayfair delivering mattresses to the border where children get separated from their parents.

25:51and the list goes on. You know, this is really a moment of activism and CEOs are very sensitive to that. Most companies will have half of their workforce, millennials or Gen C already, and they are their future leaders and future CEOs. So paying the attention to them is significantly higher. And if they still miss the boat on that, which some do, then listen to your children. One of the main reasons we see fossil fuel companies changing more aggressively. And I'm at a conference here. The tone is quite different because the children disown them. So that pressure is there. Use it smartly, use it wisely, use it constructively, and you can start to change companies as much from the inside out as is happening from the outside.

26:37Yeah, that's great. We had Satya Nadella on the show a few weeks ago, and he really made some of the same points and preferred not to use the term great resignation, but the great reshuffle, because, as you say, people understand the talents they have, and they want to take those talents to a company that is worth it, stands up to their ideals. So we actually solicited some questions from our audience before this. So I want to ask one now that follows. So this is from Shokhat from Pakistan. on the question is what does net positive leadership look like in a situation where staff motivation is low and job uncertainty is high well if staff motivation is low and job uncertainty is high there might be signals that the business isn't run very well or that you're not adapting to the changing environment you know there are always exceptions there that you're in a business that is quickly being obsoleted but it's it's basically you have to go back to the core what we did in unilever was go back to the core of the company often that's where the answer is you you find that create the awareness of what the world needs linking people to the sustainable development goals taking a broader um mission when i came to unilever the data weren't very good either the company had lost turnover from 55 billion to 38 billion it had become short term it lost its mojo, but by nurturing the core before we stimulate progress, as Jim Collins said, by bringing back these broader responsibilities, this broader purpose to profitably address these issues of people and planet, as Colin Meyer founded, it took us a few years, but quicker than we thought, to bring our engagement scores back and to become the employer brand.

28:26In the end, in Unilever, we had 2 million people applying to us every year, the third highest after Google and Apple on LinkedIn. And in most countries that we were operating, we became again, preferred employers. So working on that and unleashing that enormous energy that is tapped into an organization is still the best way of moving forward. You need to get everybody really engaged behind something bigger than often when companies are in that situation, then this short-termism or chasing the target. You don't want to become a Wells Fargo or a GE or a Boeing with seconded to shareholder primacy.

29:05And that frankly doesn't work. So we also talk a lot on the show about the workplace of the future, what it will look like, what it should look like. I'm interested from your lens, the net positive lens of making the world a better place because your company is operating in it. What should the workplace look like? How should we, and partly that's a question what technology we should use. Partly, it's about whether we should be together in giant offices or distributed. From the net positive, in a net positive framework, what should the future workplace look like? Well, actually, I want to take a different tack in answering that, Adi, because we can all make our speculations of how many people want to work at home and how many people want to work in offices and how you have distributed work and different environments.

29:54It's true that most people now have become accustomed to flexible work. They've become accustomed to more empowerment. We've also seen that that is related to productivity increases that we didn't think were possible. But they also want to be more involved. Most of the CEOs acknowledge that they need to re-look at the flexible work arrangements, if you call it that way. But very few people consult their employees on doing this. So as we decide the future of work, I would just bring it a little bit to a different level. I think it is a more mature relationship, less hierarchy, more human, higher level of consciousness, hopefully more inclusive, an environment where we fight one of the most burning issues, which is inequality, where we have social safety nets in our business models that give everybody a chance.

30:47I think if COVID has done one thing is it has shown a light or a magnifying glass on the shortcomings in society. So if we want to have these engaged workforces, if we want to repair capitalism, if you want to bend the curve to where it needs to go, we need to have a different contract. Some people call it just transition. I just call it a fair society. And we're far from that. We're far from that. human capital has been depriorized over financial capital and it just doesn't work for the long term and certainly hasn't given us the results that we're after. This enormous polarization in society, increasingly more people excluded, the haves and the have-nots gap increasing.