Unilever’s CEO Nicole Sparshott on the business of sustainability

Unilever is one of the first major global companies to declare a commitment to sustainability and is actively embedding responsible management practices across its global operations

Unilever is one of the world’s largest and oldest consumer goods companies. With foundations stretching back to 1883 when Sunlight Soap was launched in the UK by Unilever’s founder, today the company employs almost 150,000 employees across 54 countries and generates more than €50 billion (A$70.3 billion) per year in revenue.

Unilever is also a global pioneer in responsible management and has been a first-mover in committing to sustainable development goals (SDGs). “This notion of being a force for good is something that is very much in Unilever’s DNA,” said Nicole Sparshott, CEO Unilever A/NZ and CEO T2, who was recently interviewed for the AGSM 2021 Professional Forum: Responsible Management in an Accelerating World, by Professor Nick Wailes, Senior Deputy Dean (External Engagement) and Director AGSM. In a wide-ranging conversation about responsible management, Ms Sparshott explained Unilever has a long history of taking the lead on environmental and social issues.

“If you think about our founding fathers over a hundred years ago, Lord Lever was the first person to create Sunlight Soap because he wanted to make hygiene very commonplace in Victoria and England. Or you have Sir Thomas Lipton, who wanted to democratise access of tea so that it wasn’t just something that the elite had, it was something that was available to everybody,” she said.

About 12 years ago, Unilever launched its sustainable living plan, which was designed to make sustainable living commonplace. The vision for the business was to double its growth while improving its environmental impact in the process, and in doing so also “reach one billion people in a really positive way”, she said.

Ms Sparshott, who has worked in the fast-moving consumer goods (FMCG) sector for 25 years, said Unilever developed 70 bold commitments as part of its sustainable living plan. Key to the delivery of this is the “Unilever Compass” which brings the sustainable living plan and Unilever’s business plan into one inextricably linked vision and strategy for the organisation. Ms Sparshott said this has hardwired sustainability into Unilever to be a force for good: “it’s our opportunity, our imperative to not only deliver profitable growth, but to do it in a way that has a regenerative impact on the planet and contributes to being a fairer and more socially inclusive world,” said Ms Sparshott, who also serves as a Non-Executive Director of World Wildlife Fund Australia and Global Sisters, a NFP which assists women with financial independence and security.

Key sustainability goals

There are a number of key targets in Unilever’s sustainability plan, and one of these is that all packaging should be recyclable, reusable or compostable by 2025. With some 2.5 billion people across the globe use a Unilever product every day and more than 400 brands globally, including household names such as Ben and Jerry’s, Dove, TRESemme, Sunsilk and Omo, Ms Sparshott said there is “a lot of heavy lifting” involved in meeting the company’s sustainability targets. “Really, our nirvana is to reduce the amount of virgin plastic that we use across all of our brands and to use post-consumer recycled plastic. Many of our beauty and personal care brands are close to using anywhere between 20 to 100 per cent of post-consumer recycled plastic. That means it’s much more friendly for the environment. That’s just one target that we’ve set ourselves and we continue to work on that year-on-year,” she said.

Unilever has a goal of becoming carbon positive by 2030. “It’s about taking a whole of system look at not only your own operations, but how you feature in the bigger ecosystem that we’re part of,” said Ms Sparshott. “If I use that example just there, we’ve converted all of our operations to 100 per cent renewable electricity, and we’re now very much turning our attention to de-carbonisation of our manufacturing facilities. Our nirvana would be to make transparent our carbon footprint on every single product that we bring to market so that we can help people make better choices – because we’ve made it easier for them to understand which products have been made with a really strong sensibility around our carbon impact.”

Making business decisions that support sustainability

As a business, there is a natural focus on delivering profitable growth within Unilever, but Ms Sparshott explained the dual goal of sustainability requires more thinking and hard work in order to deliver both profit and for the planet. “Actually, being sustainable can at times cost more money,” she said. “You do have to re-engineer your value chain to be able to do things differently, and that means at times you’re putting extra cost into the system, so you need to remove non-value-added cost from somewhere else. But it also means that we can have a positive impact on the community, and for us, it isn’t just about the environmental impact. It is also around diversity, equity and inclusion.”

Ms Sparshott said that she encourages everyone in the business to ask themselves two questions as they go about their daily priorities and broader goals: “Is it good for business? Is it good for society? When the teams can say, it’s good for business, but we haven’t quite ticked the box on society and planet, then we encourage them to go back and work a little bit harder. We need to crack both.”

At the same time, it can be good for society but not for business, and Ms Sparshott said this approach doesn’t pass either. “We’re not an NGO. We are a business entity, and we want to make sure that we’re both. It’s that beautiful, sweet spot at the end-end. It’s great for business and it’s great for society and the planet. Then that’s where we want to be, and that’s the role that I think corporates can take,” she said. In fact, the company’s sustainable living brands are growing faster than others in the rest of the business and now deliver the lion’s share of Unilever’s overall growth.

A customer-led approach

Sustainability is increasingly important for customers and Ms Sparshott observed there has been a shift in sentiment on a consumer level. A few years ago, consumers might have said they wanted to buy products that were more sustainable but didn’t always make spending decisions that corresponded with this sentiment. “That is shifting. We’re actually now seeing people make real choices at the point of sale around products that have been purposefully crafted with sustainability or ESG, let’s say, at the heart of the way they come to market,” she said. “Demand, I think, is also creating the impetus for companies to really step up in this area, or I think you’re going to get left behind.

To help the business’ leadership team understand this, Unilever brings in external contacts (such as professionals from other organisations, independent writers or experts, or consumers who are passionate about sustainability) once or twice a month to share their perspective on sustainability with Unilever’s leadership team. “I’m always amazed at how much transferable knowledge there is out there,” she said.

This “outside-in” perspective is an important supplement to the internal views and thoughts of the leadership team, and Ms Sparshott gave the example of the consumer-led perspective. “At the end of the day, the sustainability space can be complicated. In many ways, demystifying and simplifying it and helping others to understand the small choices that they can make every day that positively contribute to a better world, is best done with the people that you’re looking to talk to. They can really help tell those stories quite powerfully,” she said.

Read more: Why investors want to see more CSR reporting from companies

Acquiring B-Corp status for T2

Ms Sparshott also serves as Global CEO of luxury tea and gifting retailer T2. Acquired by Unilever in 2016, T2 brand has been expanded from a bricks-and-mortar retail model to include a direct-to-consumer eCommerce business in addition to other alternative channels. “When we acquired T2, our number one objective really was to take this beautiful Australian brand and create a T2 generation across the globe,” she said.

“When we interrogated it, we realised that we had an opportunity here, not just to be the best tea in the world, but the best tea for the world. How do you actually create this real purposeful tea business? I remember sitting around the table with the leadership team saying, ‘Imagine if we could make T2 a B-Corp?’ The reason we liked B-Corp as an entity was because it had such high standards in terms of both impact on the environment, as well as impact on people,” she said.

Certified B-Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. “We thought: ‘if we set ourselves up to get externally certified by a body that would carry those standards, then it would force us to do things differently.’”

Some 18 months later, T2 attained its B-Corp certification, but she recalls this was not achieved without a significant amount of work. “I have to tell you, we had to really re-engineer our entire value chain. We had to make sure that we could sustainably source all of our teas [and] all of the ingredients that we blend with our teas. T2 is famous for using obscure, lovely indigenous ingredients from many places around the world and all of those had to be certified,” she said.

The business had to re-examine how it produced homewares and tea wares, and in some instances, change partners that didn’t subscribe to the same values that were really important to T2. “Like Unilever, it became a whole-of-company enterprise. And there was so much discretionary effort that people put into the business, because they were so passionate about being part of the team that re-imagined the way a luxury tea business could operate on a global scale. I would say we had the highest of highs and the absolute lowest of lows on that journey, but certainly walked away feeling that we had done something really purposeful,” said Ms Sparshott.

To listen to the full interview with Nicole Sparshott, please visit the AGSM 2021 Professional Forum: Responsible Management in an Accelerating World website. The Professional Forum features interviews and panel discussions with leaders who share their insights and expertise and consider how responsible management is influencing strategic business decisions and uncovering new market opportunities.

UNSW Sydney and UNSW Business School are committed to delivering against the UN Principles for Responsible Management Education (PRME) and UN SDGs. More information is available in the UNSW Business School 2021 PRME SIP Report.