Corporate Social Responsibility: Unilever - Case Study Example

Corporate social responsibility (csr): unilever case study report Name Institution Course Tutor Date Executive Summary Corporate Social Responsibility (CSR) is essential in a business organization. Stakeholders are all entitled to a responsible treatment by the company. Unilever is one of the companies that have faced many critics about how it impacts people and their environment. Issues of increased hazardous wastes disposal in the landfills and deforestations in the countries from which the company obtains its raw materials are some of the critics. However, Unilever established and launched a CSR strategy, Unilever Sustainable Living Plan, which has enabled it to manage its impact to people and their environment. The company has reduced its impact on the environment and consequently improved its relationship with the various societies through innovated products and job creations. In the long run, Unilever has managed to cut costs of its production and operation, which has increased the level of saving and its competitiveness as well. Contents Executive Summary 2 Introduction 4 Definition of Corporate Social Responsibility (CSR) 4 Unilever Company 5 Corporate Social Responsibility (CSR) Strategy of the Company 5 Corporate Social Responsibility (CSR) Analysis 7 Importance 7 Features 8 Advantages and Disadvantages 9 Conclusion and Recommendation 11 Appendices 15 SWOT Analysis 15 Strengths 16 Weakness 16 Opportunities 16 Threat 17 Porter’s 5 Forces Analysis 17 Threats to new entrants 17 Threat of substitutes 17 Bargaining power of customers 17 Bargaining power of suppliers 17 Industrial rivalry 17 PESTLE Analysis 18 Corporate Social Responsibility (CSR): Unilever Case Study Report Introduction Definition of Corporate Social Responsibility (CSR) Different writers have defined Corporate Social Responsibility (CSR) in various ways. Hopkins (2003) defined CSR as the accepted relation of business with its stakeholders. This concept depicts responsible management of the stakeholders. Holme & Watts (2000) describe CSR as the ethical characteristics and practices of a business organisation. According to the authors, CSR describes the way a company relates and behaves with its stakeholders in a responsible manner to create a suitable external environment for the community and the internal environment for the employees. Ogola & Dreer (2011) explains that a company needs to promote equality within and without the business. Therefore, CSR is an essential tool for enhancing equality amongst the employees and the entire community of the organisation. CSR strategies are also significant in a competitive market environment. It is imperative to consider and practice CSR in the management of business. The ability of a business to prosper in a competitive environment is dependent on its image and reputation. Barkay (2012) elaborates that CSR reflects the persuasion power of a business organisation’s reputation. Similarly, Kotler & Lee (2005) argue that effective CSR strategies enable an organisation to expand and maintain its market share, which consequently results in maximised revenue and profitability. Furthermore, CSR strategies establish good relation amongst employees and customers. The good relationship helps the business to retain good talents and creativity in the business (Smith 2003). Therefore, CSR is the ethical conduct and practises of a business enterprise that enhance its reputation and competitiveness, alongside its market share. Unilever Company Unilever is a British consumer goods company. The company has its headquarter based in London in the United Kingdom (UK). Most of its products are transnational. They include food, beverages, cleaning agents, and personal care products (Unilever 2017). According to Boyle & James (2014), Unilever is ranked first amongst the largest consumer goods company in the entire world. Amongst its reputable product and brand internationally includes margarine. Boyle and his colleague argue that the company has its branches in 190 countries currently. Despite having over 350 brands, the company tends to focus on thirteen of them that have sales above $1 billion (Unilever 2017). The management operation of the company is structured as a single business with a common board of directors that regulates the Unilever N.V. in Rotterdam and Unilever Plc in London. This report seeks to explore the CSR strategy if Unilever Company, its importance, features and advantages and disadvantages. The paper will also address the SWOT analysis, Porter’s 5 Forces and Pestle analyses of the company’s CSR, as well as the recommendations for sustainability of the company about its CSR strategy. Corporate Social Responsibility (CSR) Strategy of the Company Addressing the issue of CSR entails exploring the sustainability of a company with respect to the impacts that it has on the community and its environment. A business organisation is required to respond to the impacts of its activities on the stakeholders and their environment is a manner that corrects or neutralise the damages and negative effects. Just as any other manufacturing companies, Unilever has had various critics from its environment concerning the effects of its activities. In 2008, Greenpeace UK targeted and criticised Unilever for causing deforestation (Greenpeace UK 2001; Greenpeace UK 2007). The movement claimed that the company buys palm oil from the suppliers that damage the Indonesia’s rainforests. In that year, the statistics indicated that Indonesia was losing its rainforest at the rate of 2% annually (Greenpeace 2001). Also, the country was ranked amongst the countries that emit much greenhouse gases due to the destruction of rainforests, which was associated with palm oil industry that contributes to more than 4% of the world’s greenhouse gas emission. Palm oil is one of the Unilever’s raw materials for its products. Therefore, its activities are directly linked to deforestation and climate change. Also, most of the packaging materials for the company’s products are made of paper. More critics have also been associated with these materials since the company purchases paper packaging materials from Asia Pulp & Paper, which is deemed a threat to the environment (Riley 2015). Additionally, Unilever has been criticised for causing vulnerability to producers of its agricultural raw materials. Rainforest Alliances Certification Scheme (RACS), the scheme that certifies Unilever's tea, has been associated with critics for offering the producers low prices that guarantee their vulnerability to market variations (Corporate Watch 2005; Porritt 2010). Therefore, it is evident that the company has faced a lot of critics about their business operations as well as the products. Unilever has also been associated with market domination, misleading marketing and cooperating with the oppressive regimes (Corporate Watch 2005). In response to the critics, the company launched a CSR strategy that aims at solving the critics and improving the company’s performance. The company’s CSR contributes to the strengths of its reputation as well as the products. Archie Carroll’s theory argues that every stakeholder of a company is entitled to corporate social responsibility of the company (Thompson 2017). Consequently, the stakeholders affect the performance of the company. Depending on the reputation of the company amongst its stakeholders, the market share and profitability can either increase or reduce. Unilever also values and gives priority of concerns to its consumers, employees, investors, suppliers, and communities. The company developed a CSR strategy document, the Compass, in 2009 to ensure that it has a corporate social responsibility to all its stakeholders. The Compass entails the details of the company’s CSR strategy, known as the Living Plan, which aims at improving health and wellbeing, reducing environmental impacts, and enhancing livelihoods (Unilever 2017). Since most of the critics circled the effects of their activities to the environment and wellbeing of the consumers and other stakeholders, the living plan can and will improve good stakeholders’ relationship and the sustainability of the company. The Unilever Sustainable Living Plan (USLP) is the organisation’s blueprint for achieving the vision of growing and developing the business. According to the company's official website (2017,n.p.), "Unilever Sustainable Living Plan is our blueprint for achieving our vision to grow our business, whilst decoupling our environmental footprint from our growth and increasing our positive social impact." As one of the largest multinational companies in the world that deals in consumer goods, the company impacts both society and the environment. With the USLP, the company can identify the areas of opportunity for its brands and maximise the exploitation for the benefits of the stakeholders and the company as well. Corporate Social Responsibility (CSR) Analysis Importance The USLP, which was launched in established in 2009 and launched in 2010, seeks to double the size of the company. Since stakeholders are the major influence on a company's business performance, establishing and developing an effective CSR strategy is one of the key factors towards earning the positive influence from the stakeholders. Therefore, USLP is set to improve the relationship that the business has with its community. Improved relation consequently increases the level of trust between the stakeholders and the company, as well as improving the image and reputation of the business amongst its suppliers, consumers, investors, and the community. The CSR strategy also seeks to reduce CO2 from the energy and water in manufacturing. The USLP will also help the company to achieve the acquisition of the agricultural raw materials from a sustainable source. Features The USLP is a CSR strategy that includes four major goals to be achieved by 2020. According to Unilever Sustainable Living Plan (2013), the goals include the following: Improving health and wellbeing amongst its customers and consumers Reducing the overall environmental impact of the company’s activities Enhancing the livelihoods of its existing and potential consumers Expanding the business to double its size The CSR strategy focuses on production practices that contribute to emission of greenhouse gasses into the environment and the safety of the consumers and other stakeholders. The strategy has been through 5 years of development and progress. The company has managed, within the five years, to improve the livelihood of its consumers, alongside their health and wellbeing. For instance, Unilever has established sustainable sources for its agricultural raw materials by 55% and still aims to reach 100% by 2020. Also, the CSR strategy features cleaning agents such as Lifebuoy that aims at improving the livelihood of the consumers. Unilever argues that the product delivers 99.9% protection against germ protection (Unilever Sustainable Living Plan 2013). Additionally, the strategy also entails Becel and Flora pro-active brands programs; known as It Takes a Village; to help individuals with cholesterol levels above the recommended move to a healthy diet. The CSR strategy also features innovated technology in production and packaging. Advantages and Disadvantages Within the five years, the company's CSR strategy has evidently indicated significant advantages to the organisation and its stakeholders. First, the company has been through various critics that it contributes to deforestation as well as emission of greenhouse gases into the environment. With the CSR strategy, Unilever has managed to achieve sustainable sources for more than 55% of its agricultural raw material (Riley 2015). This is a significant progress towards meeting the goals of promoting health and wellbeing of people and their environment. Secondly, the company has evidently made progress in reducing the volume of waste that is emitted or dumped into the environment. Though the USLP, the company has monitored the amount of energy used in manufacturing. According to Giva Blogs (2016), Unilever has reduced the amount of CO2 from energy and water during production by 37% and 32% per ton of production respectively since the CSR strategy was launched in 2010. Therefore, it is evident that Unilever has achieved one of its strategic goals of zero non-hazardous waste to landfill. Consequently, by reducing waste in energy, raw materials, and manufacturing, the company has improved efficiencies in production, which has resulted in cut costs of production and improved margins. According to the report by Unilever Sustainable Living Plan (2013), zero waste to landfill is already in 75%, and €200 million has been saved since the company does not spend much in disposing of waste like it used to before the CSR strategy. The company also argues that the USLP inspires the employees to act towards achieving the efficient use of energy and avoiding the associated cost. Unilever (2017) reports that the company has managed to avoid more than €150 million in costs. The technology and innovation aspects of the CSR strategy has also resulted in reduced use of plastic and paper packaging materials. As Greenpeace UK (2007) argues, the paper industry has threatened the existence of forests and the green environment through increased rates of deforestation. Also, plastic products have also caused increased level of greenhouse gases on the environment. However, Unilever has managed to reduce the amount of the paper and plastic packaging materials through its CSR strategy. According to Unilever Sustainable Living Plan (2013), the technology aspect of the USLP CSR strategy has enabled the company to reduce plastic packaging materials by 15%, whilst the materials remain 100% recyclable. The innovation technology that has been used in most of the products such as Dove Body Wash has reduced up to 27,000 tonnes of plastic resin annually since the CSR strategy commenced in 2010. This reduction in plastic usage has resulted in savings of up to €50 million. Therefore, the CSR strategy has improved efficiency in production practices of the company as was targeted by the company in their goals and visions for the strategy. According to the reports of the progress of the strategy, Unilever has made significant progress in improving the health and wellbeing of its consumers. With the introduction of lifebuoy and Dove amongst other products, the health and hygiene habits of the consumers have been improved. Food and refreshment products have also achieved the highest nutritional standards with 31% of the company's portfolio as far as the national nutritional recommendation as concerned. With the reduction in energy consumption and the amount of CO2 and other toxic gases, Unilever has managed to reduce the negative environmental impact by some percentages and still targets 100% by 2020. Some of the practices of the CSR strategy involve the door-to-door selling operations to enhance company’s relationship with the customers. This methodology of company and brand promotion has created jobs for most men and women, especially in India. However, the company had been criticised for cooperating with oppressive regimes, and yet the CSR strategy has not addressed any issue about it. According to Corporate Watch (2005), Unilever is cooperative with Rainforest Alliances Certification Scheme, which has faced many complaints about how they treat their tea suppliers. Since one of the key purposes of CSR strategy is to establish and maintain good relation amongst all stakeholders, the USLP should have addressed the issue that concerns their suppliers. Additionally, the CSR strategy does not address the criteria for reducing paper consumption. Therefore, the two areas that are stated above depict the disadvantages of the CSR strategy. Conclusion and Recommendation This paper intended to explore the CSR strategy of Unilever Company, its features, importance, and advantages and disadvantages. Evidently, the company has faced several critics concerning their practices and related products. Unilever has contributed towards global warming through its waste disposal, paper packaging materials, and the raw materials such as palm oil, which has contributed substantially to the increasing rate of deforestation of the rainforest. Also, the company contributed to the amount of the CO2 and other related greenhouse gases that are emitted into the atmosphere, alongside the waste in the landfills. However, with the establishment and development of the CSR strategy, the company has managed to reduce the amount toxic gases that are emitted into the atmosphere and the hazardous waste disposed in the landfills. Moreover, reduction in plastic resin usage for packaging has also reduced. Also, Unilever has managed to establish sustainable sources for 55% of its raw materials through its CSR strategies. Moreover, the company has managed to establish a good relationship with the public. Most of its projects have entailed the creation of jobs that have lifted the living standards of many, especially on India. Through their CSR strategy, Unilever has also managed to reduce their costs of production and operation. Their innovation technology has enabled them to reduce the expenses they used to incur on disposal of waste and packaging materials. The company has managed to reduce the amount of hazardous waste disposed in the landfills. Even though the company has made various significant steps towards achieving their 2020 goals, their CSR strategy review report has not addressed the plans that are in plans to respond to the issues connecting them with their suppliers. The suppliers are left vulnerable to the market price variations, yet Unilever has no plan to change that. Therefore, it is imperative that the company looks into the challenges that affect their suppliers. Responding to their grievances is one of the ethical conducts that would promote the image and reputation of the company. Also, it is essential that the company considers a number of paper materials that is used for packaging. Through the use of metallic materials instead of papers, the company can make significant changes towards conserving the environment. Reference List Barkay, T, 2012. Employee volunteering: Soul, body, and CSR. Social Responsibility Journal, Vol. 8, No. 1: 48-62. Boyle, M. & Jarvis, P, 2014. Unilever spreads splits, boost chances of exit a share gain. Bloomberg News. Available from https://www.bloomberg.com/news/articles/2014-12-04/unilever-plans-to-split-spreads-business-into-standalone-unit [2017] Corporate Watch, 2005. Unilever: Corporate Crimes. Available from https://corporatewatch.org/company-profiles/unilever-corporate-crimes [2017] Giva Blogs, 2016. Case studies in CSR: Unilever. Available from https://www.givainc.com/blog/index.cfm/2016/5/2/Case-Studies-in-CSR-Unilever [2017] Greenpeace UK, 2001. Unilever admits toxic dumping: Will clean up but not come clean. Available from http://www.greenpeace.org.uk/media/press-releases/unilever-admits-toxic-dumping-will-clean-up-but-not-come-clean [2017] Greenpeace UK, 2007. Palm Oil: Cooking the Climate. Available from http://www.greenpeace.org/international/en/news/features/palm-oil_cooking-the-climate/ [2017] Hopkins, M, 2003. The planetary bargain, CSR matters. Holme, L.H. & Watts, R, 2000. Making good business sense. The World Business Council for Sustainable Development. Ogola, O.F. & Dreer, T, 2012. Market share as an indicator for corporate social responsibility spending: The study of Coca Cola’s market. African Journal of Business Management, Vol. 6, No. 6: 2234-2247. Phil, R, 2013. Hasbro turns over a new leaf, steps up for rainforests. Huffington post. Porritt, J, 2010. Unilever’s trailblazing environmental plan. The Guardian. Available from https://www.theguardian.com/sustainable-business/blog/unilever-sustainable-agriculture-plan [2017] Riley, j, 2015. CSR-Unilever’s Strategy & Culture of Sustainability. Available from https://www.tutor2u.net/business/blog/csr-unilevers-strategy-culture-of-sustainability [2017] Thompson, A, 2017. Unilever’s Corporate Social Responsibility & Stakeholders. Available from http://panmore.com/unilever-corporate-social-responsibility-stakeholders [2017] Unilever Sustainable Living Plan, 2013. Making progress, driving change. Unilever. Unilever, 2017. About our strategy. Available from https://www.unilever.com/sustainable-living/the-sustainable-living-plan/our-strategy/about-our-strategy/ [2017] Appendices SWOT Analysis Strengths Unilever has improved technology with a high level of innovation capabilities. This strength has enabled the company to reduce the amount of plastic resins used for packaging, which has cut costs and enabled the company to save. Sustainable raw material sources have enabled and are still enabling the company to achieve its goals of reducing environmental impacts. Unilever is producing zero hazardous wastes to the landfills. This strength has enabled the company to respond positively to the critics about the environmental impacts that they have been responsible for causing. Weakness The company has faced critics about cooperating with the oppressive regimes that leave the suppliers of tea vulnerable to market price variations. However, they CSR strategy has not addressed such issues. The company is still likely to face critics. Additionally, the paper packaging material is one of the causes of deforestation and global warming, yet the company's CSR strategy has not addressed the issue. Opportunities With the new projects and programs, the company has improved the relationship it has with various communities. Door-to-door selling has created more jobs for the poor. This exercise is an opportunity for the company to promote the image of its brands and products, alongside the reputation of the company. The company has also managed to cut cost in various operations. The increased level of savings is an opportunity for the company to meet its 2020 goal of doubling its size. Threat The increased rate of deforestation in the regions from which the company obtains their raw materials and its paper packaging materials, which are also contribute to deforestation even further, are some of the threats facing the company's CSR strategy. Porter’s 5 Forces Analysis Threats to new entrants The global market for transformational consumer goods is growing rapidly with the increasing population. More firms are likely to venture into the business, which is more likely to pose threats to Unilever, considering the critics surrounding the company. Threat of substitutes With the reduced cost of production and operations, the company is more likely to improve its competitiveness against top competitors such as Procter and Gamble and Colgate-Palmolive amongst many others. Bargaining power of customers The company is more likely to reduce the potential pressure from its customers. Increased savings consequent reduced prices of its products. Bargaining power of suppliers The company mostly purchased its raw material from Indonesians. With the critics about deforestation rates in the country, Unilever has managed to establish sustainable sources for its raw materials. Therefore, the company can overcome the potential pressure from its suppliers. Industrial rivalry Considering innovation and improved technology, alongside the large size of the company, Unilever is still able to remain competitive against its competitors. Therefore, the company can retain or maximise its market share in the industry. PESTLE Analysis Political and Legal factors: Unilever was most likely to face political and legal actions about its impacts to the environment. However, the company has managed to avoid such circumstances through its CSR strategy that focuses majorly of the environment and wellbeing of the community. Economic Factors: with the declining status of the global economy, the increased savings by their new strategies will be able to provide the company with the necessary stability against potential economic threats. Socio-cultural: most of the Unilever’s products are accepted in various societies. With the new CSR strategy programs, most societies have already identified themselves with the company, especially in India where more jobs have been created. Technological factors: the new innovated products of the company are the evidence that Unilever is improving its level of innovation and technology. Also, the greenhouse gases and other toxic wastes have been managed and reduced by the CSR strategy. Environmental impacts: the company has managed to reduce the amount of hazardous waste deposits into the landfills. The amount of CO2 and other greenhouse gases have also been reduced. Unilever has also managed to establish sustainable sources for their raw materials. Read More