Plastic not fantastic

Unilever reaches circa 3 billion people a day globally with its portfolio of 400 brands. Although the company is under pressure from some activist investors – the Hellmann's Mayonnaise flare-up earlier this year in which the consumer goods giant was challenged on why Hellmann’s needed a mission to “eliminate waste” and why a mayonnaise needed purpose – the company remains firm on its trail-blazing agenda set more than a decade ago to align its brands with an agenda beyond profit, while delivering growth.

For brands like OMO, some of focus has been on eliminating virgin plastics in brand packaging, ensuring products are biodegradable and replacing fossil fuels with renewable or recycled carbon in its formulation.  

“OMO has a great focus on sustainability and the planet,” Sparshott told the Value Creators Forum. “Dove is another great example but is more socially focused – doubling down on  efforts on self-esteem. One of the biggest issues teenagers face is the challenge of social media, digital distortion and the impact it has on their confidence.”

In Australia, at a brand level for Dove, OMO, Surf and Toni & Guy, recycled plastics make-up 25-70 per cent of packaging and the corporate target is to halve virgin plastics by 2025. 

“There are other brands in our portfolio that still have work to do to kind of meet that standard,” Sparshott says. “And it goes back to this point about sustainability or purpose being someone else's job. It helps a lot if you can say to a brand manager, ‘the stuff that you're working on right now and the ripple effect it has really matters’."

Sparshott says when Unilever talks about having a triple bottom line, it’s having a net positive impact on profit and a “regenerative” effect on the planet and a more positive social impact for people. 

“We need to profitably grow, because we're a business, but also because that's the fuel to invest in the other things that matter to us – one being a regenerative impact on the planet. It’s not just ‘do no harm’ – that's not the point. It should be regenerative and then it's contributing to a fairer and more socially inclusive world. I'm a bit of a pragmatist on this stuff because I think you could try to tick every single box, but sometimes you’ve just got to get started.”

Indeed, getting started is where many CMOs at the roundtable were still challenged. For a select few, it was clearer because their enterprise had already landed on a corporate vision.

Litigation concerns

One financial services CMO in the discussion said: “All I see is litigation. That gap between promise and deliver, it almost feels, maybe because organisations such as ourselves are a bit later to the party, that we have to do and then say, not say and do. So that's one of the things that's on my mind.” 

Sparshott acknowledged the tension and said it was why ESG and purpose action requires enterprise-wide buy-in for the mission, rather than a marketing-led program. Purpose is intrinsically linked to brand and corporate will. Communications and marketing, she says, comes after an agreed corporate mandate but how that is executed to the mainstream is always nuanced. 

In the short-term she says there are cost-trade-offs at a business level to get there, although not always. Unilever ANZ has reduced its energy outlays by shifting to 100 per cent renewable electricity but conversely it's investment in post-consumer recycled plastic is higher. 

The upshot though is that Sparshott in her conversations with broader industry and government felt the path of executive leadership resistance is far less today than it was even a year ago. She was one of the more vocal business leaders at the start of Covid to publicly implore the Morrison government to make climate change policy part of its Covid recovery plans – risky perhaps but principled and consistent with Unilever’s vision articulated in great detail via its “Compass” manifesto.

"It's on the business agenda in a way that it wasn't before,” she said in response to a CMO question on where the corporate appetite generally was today. “There’s still a bit of ‘we’re not quite sure how to embrace it’ and that’s genuine. That's what you have to lean into. The world's been chaotic, it keeps coming – but this stuff is going to keep coming. You can't just keep saying ‘we're not doing it’. 

“But I tell you what, whether this is a good thing or a bad thing, money talks. The fact that the investor community is looking more at social impact investing, purpose-led brands and the carbon footprint of organisations, it enables conversations to be had. And action.”

Say one thing, do another

On the “say-do” concerns raised by the financial services CMO and many others around the table – where customers claim their allegiance and buying preference to ESG-leaning products and services but go missing at the purchase point – Sparshott notes there has been a fundamental shift in public sentiment. 

“I can only talk about it from the FMCG lens and summarise,” she says. “Five years ago people said that this is important to them, but didn't necessarily put their money where their mouth is. Fast forward and I would have maybe incorrectly thought that Covid would have paused people's interest and desire to spend money on brands with purpose or sustainability.” 

But that is not the case. 

“If anything it’s accelerated. So now, not only are people in FMCG categories seeking out brands that have been sustainably made through their value chain and have purpose … but sentiment has now shifted from claimed interest to putting their money with their mouth is. We're seeing it in people spending more on our brands and our share increasing as a result of it,” says Sparshott.

“Conversely, some of our competitors who have done it better than us in certain spaces are also benefiting from it. So I think there's lots of evidence to now show, at least within FMCG, that people have moved from claim to act.”

Category shift underway

Sparshott qualifies the point that purpose and ESG mandates are far from uniform across all fast moving consumer goods brands or customers. But at a category level there are clear signs – fabric and home cleaning products for instance – that customer intent and purchasing behaviour is aligned. “They want to know that what they are buying is a safe, high quality, sustainably made product,” says Sparshott. “In the food industry they want to know that their product is sustainably sourced, that it's been manufactured in an appropriate way and we're also seeing a rise in the desire for Australian made."

Overall, she says there has been a changing of the tide. 

“At one point we cared enormously but it wasn't on the radar as much for our consumers. Now we're seeing a shift and there's much more demand for sustainable products.”

Magnumification: Just desserts for purpose

Which gets us to a robust discussion around Magnum. One CMO asked whether purpose mattered for Magnum – wasn’t it the decadent, crunchy chocolate outside and the rich ice cream texture inside that people wanted, irrespective of any higher order purpose?

Sparshott smiled. To her earlier point, each brand and category customer is not homogenous. Some want exactly as the CMO described on their tastebuds only, others want to know the softer elements. Then it becomes a job for “layering the messages” and understanding the “purchase decision hierarchy” of different customer segments. 

“It is about just understanding people that you serve, the different types of consumers under that group and then what the most motivating messages are for them,” said Sparshott.

In the end, Unilever has hundreds of brands and is weaving purpose into them. Communicating that to those that it matters to, equals growth.  

“Even if you just pick the big ones, the billion Euro-plus brands, they all have purpose at their core. They're purposeful, they have distinctive products, they reach the right people in the right way and they are delivering, on average, six, seven, eight, sometimes double digit growth year-on-year-on year. And I don't think that's by coincidence. I think that's by design.”

So how to do it, where to start? 

Former Unilever global CEO Paul Polman started Unilever’s purpose journey in 2010. He staked a goal of doubling the business but halving the environmental impact. Sparshott recalled the ripples of excitement and bewilderment globally across the company. 

Purposeful brands was a concept well ahead of its time. Whether it was finance, marketing, operations or sales, most thought it was someone else’s gig. CMOs at the Value Creators Forum quickly related to the conundrum. The fix, Sparshott made clear, was not quick. 

“It doesn’t happen overnight and I'll tell you what, it didn't get embedded in those first few years,” she recalls. 

“If you think that sustainability is somebody else's job, you've kind of failed before you've even started. It needs to be part of the culture of the organisation. If you’re in the supply chain, marketing, if you're in finance, if you're in legal, everybody should be able to say, ‘What's the role that I can take that is going to contribute to this outcome?’ And that's actually quite a big shift that we saw in our business that enabled us to do it.

“It doesn't matter what function you're in, what level of the organisation you're in, this idea is that everyone can ask the question: ‘Is it good for business, is it good for society?’ It becomes part of the ethos of the way we make choices.”

New partnering in the supply chain

The commitment also meant hard conversations with Unilever’s partners and suppliers to ensure they could drive positive impacts collectively. 

“We said we wanted to partner with those companies that share the same values on a triple bottom line – and not just triple bottom line when it suits us but consistently delivering that in everything we do, even if it's not 100 per cent perfect,” she says.  

“We sat down with all of our stakeholders to say ‘are you in’? Some of them were totally in although they had no idea how they could be part of it. But they were happy to partner with us for a solution. Then there are some that have just said quite honestly there was no way for them to do this, it’s going to be expensive, it's complex and they could make more money not doing it. We totally respected that, no issue – but we couldn’t partner with them. And that's where purpose, whether it's a brand purpose or a company purpose, becomes super values-based. What are the values by which you are defining your purpose, but also what are you not doing as a result?” 

Underpinning all of it, Sparshott says, remains the reality that people are buying a product because they expect it to have a certain quality, to deliver a certain promise, which cannot be compromised. 

“You can't have a brilliant purpose and an inferior product, right? You need to have a great product that's distinctive in and of itself and is wrapped up in a purpose that actually means it's contributing something more than just the efficacy that that product was designed for. That's hard to do sometimes and it can be hard to communicate – even when you have brands in your portfolio that tick all of those boxes.” 

Sparshott says start with the people that you serve: who are the people buying your product; what matters to them and what are the small actions you can take that make them feel like they're taking small daily actions in their own life? That aligns brand and buyer, and begins the journey.

People with purpose thrive

In Unilever’s Compass manifesto, there are three key tenets that guide the entire organisation on purpose:

The first is that brands with purpose grow. “This belief is real and there's plenty of studies that show it – yet people still are cynical when they see many different proof points,” Sparshott. “But I personally feel there is enough evidence to suggest that brands done well with purpose grow.” 

The second tenant is that companies with purpose last. “Companies that can be really clear about what they're contributing to society and follow that through have also been demonstrated to show that they stand the test of time; they typically have better shareholder return and they typically have better market capitalisation,” she says. 

The third is that people with purpose thrive. “It’s a really important one, because what we're seeing more than ever before is that people want to feel that the time they're investing is making a difference.”

Now to the hard bit for those not at Unilever: do.