Corporate Social Responsibility of Unilever - Case Study Example

INTRODUCTION This paper is about the multinational corporation, Unilever and its efforts towards CSR (Corporate Social Responsibility). Unilever is a giant conglomerate that has interests and businesses in diverse fields that range from Agriculture to Household products to health care and hygiene. This paper looks at the profile of the company and what it is doing for the society. As is apparent, CSR is a term that has been used widely to describe the range of activities that encompass the social benefit aspect of an organization. The underlying premise behind CSR is that organizations and corporates need to give back to the society from which they have been drawing their profits and hence need to behave responsibly in a societal and socio cultural manner. The reason for taking Unilever as an example is because of its footprint that stretches many countries across the globe and in particular the UAE (United Arab Emirates). Unilever has a strong presence in the UAE both as a marketer of retail and household goods as well in contributing to the economy. In fact, it can be said that like in many countries worldwide, Unilever is a household name in the UAE as well. I start the paper with a brief background of the company and its history and then describe what is meant by CSR. Then, I detail Unilever’s approach towards CSR by taking a case of its activity in the Agriculture business. Thus, the paper is divided into two sections. The first section is about the company and its history and the second section is about the company’s approach towards CSR with a discussion in each section with reference to the context of the section. Throughout this paper, the emphasis would be on CSR as a philosophy and Unilever’s approach towards CSR. COMPANY PROFILE Unilever's history dates back to the UK date in 1885, when the Lever brothers launched the world's first packaged laundry soap, Sunlight. The product's success in the UK was quickly emulated globally, resulting in Lever Brothers acquiring many businesses worldwide. In 1930, Lever Brothers agreed to a “merger of equals” with the Netherlands-based Margarine Union to form Unilever, thus creating the present company. Through a series of acquisitions including Bestfoods, the second largest ever cash acquisition (in 2000), Birds Eye Foods (1943) and Ben & Jerry’s (2000) Unilever has become a global company with a portfolio of well-known brands including Dove, Persil, Lux, Knorr and Flora. Unilever manufactures and markets food and home and personal care products to consumers in approximately 150 countries. It employs 227,000 people worldwide. Unilever is now a behemoth that has a presence in almost every country in the world and in the UAE as well. It has successfully integrated its manufacturing operations with that of the marketing arm and hence the name Unilever is synonymous with a host of products. Unilever is heavily influenced by its five-year strategic focus on leading brands, improving operating margins and increasing top-line growth, and by its mission ‘to add Vitality to life – meeting everyday needs for nutrition, hygiene and personal care with its brands to help people feel good, look good and get more out of life’. The strategic plan and its mission seek to link the business and its brands shaping its future direction. This includes addressing concerns about the environment and wider sustainability issues. Unilever’s approach to sustainability involves the implementation of its environmental strategy which includes three sustainability initiatives covering fish, water, and agriculture. These initiatives were chosen as they represent areas where Unilever can make a measurable difference (Article 13.com, 2008). CORPORATE SOCIAL RESPONSIBILITY There has been a renewed focus on CSR by the investor community and the consumers alike with each segment asking for the organizations commitment toward the environment and society as part of their annual reports. The move towards CSR is not only driven externally but by internal factors as well that include a genuine wish to be socially responsible. With this kind of interest in a company's social agenda, it becomes important for corporations to show how they conduct business with a concern for workers and communities. The past year's crises in U.S. corporate accountability can only accelerate the demand for corporate disclosure of the ways in which they manage their impact on employees and on communities. The increasing globalization of the world economy will likely do the same. Today significantly more workers in more countries work directly, or through suppliers or subcontractors, for U.S. companies than they did a decade ago. These workers frequently work under dangerous health and safety conditions and may receive relatively poor wages and benefits. Their communities often have poor infrastructure and living standards. This setting has caused concern for how U.S. companies manage their impact on workers and their communities internationally. The weakness of labor and workplace laws in many countries, lax implementation, and the absence of mandatory multinational labor and workplace standards, will continue to fuel the demand for public reporting on corporate social impact overseas. Public reports on how a company manages its impact on workers and communities are greatly appreciated by investors. At home there is always the chance for litigation on a range of employee and community issues. And the global economy poses a range of people-related risks. A report that reflects a socially aware approach will instill investor confidence in a company's ability to avoid potential liabilities and damage to corporate reputation. With these trends, companies are realizing that developing a socially responsible agenda and publicly reporting on their initiatives is a powerful, if not necessary, means to attract and retain customers, employees, and investors. As the trend intensities and the dialectic between stakeholder interest and corporate response sets in, newcomers to social reporting are compelled to jump on the bandwagon. APPROACH TOWARDS CSR Unilever is one of the few companies to have received acclaim for its business practices. Not only has the company worked towards sustainability in its operations but also has had what can be called a “green” approach towards business. It is the combination of sustainability with a focus on environment that the company has successfully mastered in its business. The company promotes sustainability and started a sustainable agriculture program in 1998. In May 2007 it became the first tea company to commit to sourcing all its tea in a sustainable manner, employing the Rainforest Alliance, an international environmental NGO, to certify its tea estates in East Africa (this did not apply to tea estates in India as Unilever sold all its plantations in India in 2005, although the company still sources from India). It declared its aim to have all Lipton Yellow Label and PG Tips tea bags sold in Western Europe certified by 2010, followed by all Lipton tea bags globally by 2015. Corporate social responsibility at Unilever means responsibly managing multiple relationships every day with employees, consumer, shareholders, suppliers, governments, local communities, and many others in society. Our commitment to high standards of corporate behavior is an integral part of our operating tradition. It is spelled out in our code of business principles and is implicit in many of our business practices. Unilever's "Social Review" covers: * Employee compensation and bonus programs * Compliance with labor laws, * Diversity in employment practices, * Standards in corporate behavior, * Workplace safely and security, standards and metrics, * Investment in people, * Transparency and responsible behavior, * Sustainable development research funding, * Investment in community, * Code of business principles, * Affordable product, * Commitment to quality, * Meeting consumer needs (Human Resource Planning, 2003). UNILEVER’S CSR ACTIVITIES Unilever’s activities towards fulfilling its corporate social responsibility activities span the entire globe and can be called truly “transnational” in character. From the jungles of Africa to the wetlands of Asia, Unilever undertakes activities that are consistent with its corporate mission of being a socially responsible entity. Towards this end, it has partnered with several NGO’s (Non Governmental Organizations) working in these countries with a view to establishing long term relationships aimed at CSR. Launched in Ghana, the 'Novella Africa' initiative seeks to extract oil from the Allanblackia tree on a commercial scale--in a way that benefits the local population. This tree grows in the wet tropical forests of sub-Saharan Africa, producing pineapple-sized fruits, with many seeds rich in oil with unique properties that can be used to produce food products and soap. Local communities already use the oil but, until now, it has never been used on a commercial scale. The overall aim of the project was to contribute to the sustainable development and trade of a new forest-based commodity that can help economic development by diversifying income sources, improving livelihoods of poor rural communities and fostering sustainable tropical forest management. By working in partnership, the quality and reliability of the supply chain can be secured. Apart from the core-team, more than 40 NGOs, small African businesses and government organizations support the initiative as partners in different African countries as a result of the work conducted in Ghana. The main aim of the Sustainable Agriculture Initiative, established in 1998, was to ‘ensure the continued availability of Unilever’s key crops by defining and adopting sustainable agriculture practices in the supply chain’. The Initiative sought to develop: a definition for sustainable agriculture; principles of purpose and intent; indicators to focus specific areas of work; parameters and guidelines that lead to measurable improvements. This was the first time that the company had attempted to consider these issues (African Business, 2007). From the outset Unilever recognized the value of engaging with its various internal and external stakeholders to help shape the Initiative and invited them to participate in a series of workshops and consultations. Through this consultation process, Unilever refined its definition of sustainable agriculture to be one that ‘is productive, competitive and efficient while at the same time protecting and improving the natural environment and conditions of the local communities’. The initiative focused on five key crops; spinach, pea, tomato, tea and palm oil. These were selected because, for each crop, the company had a good understanding of its supply chain and had a strong association with the product, for example, the Birds Eye pea. They also represented a range of crops in which a variety of sustainability issues would be present, e.g. water conservation, energy and pesticide use. Specific programs of work were conducted on each of the crops. The work was guided by a set of principles for the Initiatives developed through consultation with stakeholders (e.g. farmers, food retailers, and academics, government, processing companies, civil society groups, consumer groups and trade associations). The biggest challenge was coping with the diversity of the crops and the countries involved in the program of work: from peas in England, spinach in Germany and Italy, to tea in Kenya, India and Tanzania and tomatoes in Australia, Brazil and the USA. This meant that the areas of focus might change with country whilst the crop did not. This diversity generated a number of issues to address, e.g. water conservation in Australia and lapwing management in pea farming in the UK. As can be seen from the preceding paragraphs, CSR as an initiative has met with success in Unilever’s scheme of things. Not only has it ensured that Unilever acts responsibly but has also enhanced the brand image of the company in promoting itself as a socially responsible company. In a way, companies like Unilever stand to gain from the renewed focus on their CSR activities as they have a good chance of deriving brand capital coupled with a real thrust on social activities. CONCLUSION In the preceding sections, we have seen how Unilever has managed to combine socially responsible behavior with that of the profit motive. This is the example that it has set for the rest of the industry. Namely, that of a company that can pursue profit without sacrificing the environmental concerns that are the top of every activist’s agenda. Thus, the company has blended CSR into its day to day activities with the result that the company now is fully prepared to deal with the environmental challenges that are likely to arise in the years to come. Unilever’s approach to CSR as well as the history of the company reveals a profound interest in the workings of the environment and a thrust on improving the lives of the citizens in the countries that it operates. As we have seen, the rationale and implementation of CSR by Unilever is multi-pronged and multi-faceted. This, in effect is the Unilever philosophy of doing business. In conclusion, with CSR becoming the buzzword in the business landscape, more and more companies are integrating CSR activities into their mission and vision and the way they operate. Unilever is a trendsetter in this field and it is hoped that other companies follow its successful strategy and maybe emulate it. I have relied upon the internet and academic journals for doing this analytical piece on Unilever’s CSR strategy and I have cited them in the sources. It has been a pleasure researching this particular topic and I have had many insights into what is CSR along with acquainting myself with Unilever. Sources William G. Stopper. “Current Practices”. Human Resource Planning. Vol. 26, 2003 Stephen Williams. “Business Meeting the Challenge”. African Business. No. 328, February 2007. “Unilever”. Article13. Com. 01 Jun 2008. 07 May 2009. http://www.article13.com/A13_ContentList.asp?strAction=GetPublication&PNID=1359 Read More