Paul Polman: B Corps, Climate Change, and the Future of Capitalism

Hi folks, Ryan Honeyman here from Lift Economy. Many folks have come to us over the last 10 years and asked, how do I get more involved in creating an economy that works for the benefit of all life? They also ask, what skills and experiences do I need to help make this transition? So 3 years ago, we created something called the Next Economy MBA to help address this and similar questions. Lift Economy's Next Economy MBA is an online course that's designed for entrepreneurs, aspiring entrepreneurs, students, recent graduates, employees, and folks who want to learn more about transformational next economy strategies and businesses. Join the growing alumni network of nearly 250 alumni who've gone through this program and learned essential skills and hopefully built lifelong relationships for catalyzing businesses in the emergent and regenerative economy. So we encourage you to check out our course. You can go to lifteconomy.com/mba. The next course, Cohort 7, starts on September 21st, 2021. So once again, go to www.lifteconomy.com/mba. And now, on with the show. Welcome to Next Economy Now. The goal of this podcast series is to highlight the leaders who are taking a regenerative, bioregional, equitable, democratic, racially just, and whole systems approach to creating the new economy.

Paul, welcome to the show.

Thank you, Ryan, for the opportunity. I appreciate it.

Paul, let's start with a bit about your background. How did you first get into sort of sustainability or, you know, purpose-driven business?

Well, I think for me it's more than sustainability. Obviously, a lot of the issues that we face today that we have to deal with simply went around 15, 20 years ago. When I got into the more senior jobs in business. So a lot of what we do today has developed over time, but I've always had a great interest in helping others. When I was young, I wanted to be a priest and I wanted to be a doctor. All that didn't work out for me, so I ended up doing business, often an alternative that is easiest to take if other things don't work. And the more I went into business, I discovered obviously the power of business to drive change. I come from a family of 6, was basically born shortly after World War II. I thought I was born a long time after World War II, but the older I get, I noticed how close that was. And my parents were all— they met in Boy Scouts, by the way, and they were fully focused on getting us an education that was deprived from them, giving us an opportunity to improve our lives in the way that they never had this opportunity. Fight for peace in Europe and all the other things. So the concept of putting yourself to the service of others, which I think underpins all of this what we're doing, is very much given to me. And then during your life, you have some of these things that Bill George calls crucible moments, where you get formed, where your character gets challenged. It might be because someone dear in the family is leaving you, or I was in Mumbai when the Taj Mahal got attacked and you see people being mowed down in front of you, or I worked in Newcastle where for the first time I got exposed to second generations that had never worked, never seen their parents work. I climbed Kilimanjaro with 8 blind people and saw the power of people with disabilities, and all these occurrences make who you are. But I think the thing perhaps I liked the most was the work I did for the Sustainable Development Goals when the Secretary-General at that time, Ban Ki-moon, asked me to be the business representative of this 27-people high-level panel of eminent people, as it was called then, to start developing the sequence of the Millennial Development Goals, which are now known as these famous 17 Sustainable Development Goals. And there we got exposed to all walks of life, all parts of society, and that was like drinking from a fire hose. And a lot of that, fortunately, we've been able to implement in Unilever and and has served as well.

And did— when you first became CEO of Unilever in 2009, was sustainability really popular then, or did you have to sort of popularize it within the company?

Well, one of the reasons I joined Unilever, and I was the first CEO coming in from the outside, because I was attracted to the company for its values that really go back to Lord Lever, who started his business in the end of the 19th century in Victorian Britain. And made hygiene commonplace, that was his slogan. He believed in a concept called shared prosperity, built houses for his workers, guaranteed them 6 days of pay, you know, paid the workers when they went to World War I and guaranteed their wages and their jobs back, introduced pensions in the UK. So this man had a vision of business that needed to be done differently. And when I came into this company, I realized that I just could not demand respect from others, I had to earn that respect, especially coming in from the outside, which had never been done here before. So I dived into the history of the company. And as Jim Collins says in his book, From Good to Great, when you want to drive change, which was absolutely needed, we were at the height of the financial crisis when I came in. Most companies were hunkering down and cutting costs and looking at the financials only. This company had a little bit of pressure, and I was brought in because it needed to have a different strategy and grow again. So I started by having a deep understanding of the company and its values, because as Jim Collins says, nurture the core before you stimulate progress. And knowing a lot about the history of the company then also allowed me to bring back some of these points of strength that have served us well, on top obviously of changing our strategy. But it allowed me to be accepted, and it allowed us to make changes at a faster pace because we just went back to the founders. The issues of sustainability are probably different now than they were 10 years ago because the world is going incredibly fast, but this company has always been on the foreground by, you know, they started the Marine Stewardship of sustainable fishery or the roundtables of sustainable palm oil or, you know, this company has always had a little bit of a concept of doing well by doing good, which is exactly why I joined. What we have changed perhaps is over the last 10 years, be a little bolder with a more aggressive plan, and obviously have shown that a multi-stakeholder model where you work for the benefit of the stakeholders and not to the benefit of the shareholders is actually a very good model ultimately for the shareholders. And that's probably what is more needed now than ever and gets to the heart of what you are championing, Ryan, with the B Corps themselves. And that's obviously what Unilever has shown over the last 10 years at scale. We've made tremendous progress in building in a more sustainable and equitable model with our Unilever Sustainable Living Plan. We're being recognized for that, but on top of that, our business has performed as well with a 300% shareholder return over these 10 years, outgrowing the industry, 19% return on invested capital. So I firmly believe that that's a good result from the way we do business. That's why the development agenda, the sustainable development agenda, is such a powerful agenda, because it also makes sense from a moral point of view, from certainly a desire to make this planet, save this planet and save it for future generations as well, but increasingly it's also a very attractive financial model, which should give us obviously encouragement.

And you know, you famously did not report I think it was your decision to not report quarterly returns, right? And instead went to annual returns. Can you talk about that decision and what sort of pushback or what did you see from that?

Yeah, no, thanks, Ryan. Well, you cannot solve the issues of food security or poverty or equitable growth if you live under the myopic pressure of quarterly reporting. And shareholder primacy. It's driving businesses into the ground, it's starving economies from growth, it drives a high divide in society, and many of the major issues that we have to deal with are then not being addressed. So we needed to provide space that we were not going to just chase the quarterly numbers, but that we were going to run this business for the longer term and that we were going to grow it again. Our business had declined quite significantly from the height of about $50 billion to $38 billion when I came. Now it's back to $55 billion, but I needed to send a message that it was going to be different. So under the principle of the first day they hire you, they can't fire you, I discussed obviously with others, but we stopped quarterly reporting, we stopped giving guidance, and And we started implementing different systems here in terms of executive pay and other things that clearly sent a signal that we were going to run the business for the longer term and providing some space. Also a signal that we were going to run it for the multiple stakeholders and that shareholder return was an outcome of what we were doing, but not a goal in itself. A little bit difficult to just explain that when you put it in words, but when we started to put our actions behind that and people saw that we were serious about it, you know, it started to gain momentum. Unfortunately, I had expected more companies to follow us because there's no law that prohibits you from doing that, and that has still proven to be a little bit problematic. But what we have seen is by only reporting our results twice a year, we don't talk the weather or Ramadan or short-term crises, we end up having more strategic communication, and when you have more strategic communication, you attract different kind of shareholder. Our shareholder base over the 10 years have drastically changed. We now have 70% of our shareholder base that has been with us for 7 years or more. The turnover in the top 10 shareholders is now half of what it used to be. So our fluctuations in our share price are less. The speculators are out of it. So we have a shareholder base that more reflects now also our strategy, and obviously it has served them well.

Now, on our podcast, you're actually the first CEO of a publicly traded company, although no longer. I mean, maybe the weight is off your shoulders a little bit, but what is the pressure that you feel or felt to grow? Because there's this— you know better than perhaps any other large company CEO that how do you reconcile this need for growth as a public company on a finite planet And, you know, how do we, like, I really admire how you had said, I think, and I don't remember when you started or later on, you had said, you know, we're gonna double profits while also cutting our, I think, impact in half or something like that. Was that, is that a fair—

No, our Unilever Sustainable Living Plan, just to make clear to the people that worked here first and foremost, was to send an enormous signal that we needed to grow again in terms of being able to create value. If you decline, you don't create value, you start chasing your tail, you cut costs, and you actually become an easy prey for the short-term part of the financial market, and the business becomes dysfunctional. So our goal was we needed to double our turnover over the— we never said in which time period, obviously, but we needed to double our turnover but have the environmental footprint and increase the overall social. So what I wanted to say clear to everybody is, it is about business results in the end, but it is about business results whilst decoupling growth from environmental impact and increasing the overall social impact. We put 50 targets out there because I could see that trust in business was low as well, and the only way to repair trust is to work with transparency. Transparency builds trust, which then is that basis for prosperity. So these 50 targets were basically there to hold us accountable. We also set very audacious targets that made people feel very uncomfortable. How can you do this alone? If you don't achieve them, are you going to resign? And all the other things that came with it. The skeptics came out, and there are enough of those in the world. But we did something that I think made the company a little bit more human versus a lot of other companies that are out there, We said we simply don't have all the answers, and nor can we do that alone. And that made us less vulnerable, made us more human. Others started to want to work with us. We created partnerships. And whilst we were 10% sustainably sourced 10 years ago, after working it for over 100 years, we are now 70% sustainably sourced. We have reached nearly 650 million people improving their health and well-being. Whilst we were operating under a very good level of 10, 15, 20 million, and we're getting credit for that. We've been consistently now number 1 on Globescan for corporate reputation or on the Dow Jones Sustainability Index as the number 1. So, you know, we've become the 3rd looked-up company on LinkedIn after Google and Apple because people, especially the younger generation, want to make a difference and work for companies with purpose. So I firmly believe that What the bigger change we have made is that we've shown, especially to the financial community also, that a model that focuses on multi-stakeholders, with obviously a disciplined management team and a good strategy, is actually to the benefit of our shareholders, and that business can be done differently. There are many challenges in society that are not being addressed right now that we might have not been aware of the last 15, 20 years ago, but these challenges need to be addressed. Business cannot succeed in societies that fail, and nor can business be a bystander in a system that gives them life in the first place. So I've always felt that we need to step up to the plate, that's our responsibility if you're in a position to actually do something about it. We know that governance in the world is very difficult, we have a global governance system that doesn't quite function at a time that more and more of these issues that need to be solved like cybersecurity or climate change or privacy are of global nature, but then the only answer there is not to blame the politicians or start to ridicule them, although they always have a temptation to do that, but to de-risk the political process. A good example where we've done that is Paris, where in 2015 with the COP21 there were more business people, 1,800, than countries obviously, and heavily pushing for an ambitious agreement, whilst it's by no means enough Whilst we need to go much farther still, what we got in Paris was far more than people expected and forms the basis to accelerate from. But the private sector on top of civil society should take a lot of credit for that. So I think we're showing that the model we put in place, the space that we're providing around that, the way we're working on that, the transparency that we put behind our model is a good thing for everybody. Doesn't mean, as I come into your question, that it's all that easy. Unfortunately, we've pumped too much money in the global economy. The global economy is what people call the VUCA world. There's too much uncertainty out there. Every day we seem to invent another level of uncertainty, so the discounting of future cash flows is very high. So the pressure on short-term performance has increased, not decreased. Then there are the enormous amounts of skeptics out there, of vested interests who frankly don't want to change. They want to make noise, they do the greenwashing perhaps if you're lucky, but they basically stay in the CSR space. I always say we need to move from CSR to RSC. RSC is instead of corporate social responsibility, you really want to get to responsible social corporations, and that change process is difficult. Many things you can do yourself, no doubt, low-hanging fruit, but a lot of things you need the world around you to function. So whilst our plans initially focused on ourselves, we had to step up the social compliance path, especially after the collapse, for example, of the Rana Plaza and other things. But we also said midway through, we need to use the size and scale of Unilever to focus much more on transformative change outside of the company itself. And that's when we took on a much bigger role, which I think is ultimate leadership, to put yourself to the service of others. And that's really what our model is now, with reaching 2.5 billion consumers a day, being in all countries in the world, you know, 80% of the global households, we have an opportunity really to make transformative changes beyond any government. And that's good for us as well if those are— these changes are in areas that are imperative to make our business long-term successful.

What was the last country you got into out of all of them in the world?

One of the recent countries we went into was Ethiopia, for example.

Okay.

So Ethiopia is a low-developing country, obviously economic struggles, the market isn't quite there yet, currency control, other things, but it's a country that is very advanced in terms of implementing the Sustainable Development Goals. They have 40,000 health workers, they give people free education, obviously the quality needs to move up, But it's a country that still comes out of the Marxist era, but has a socialist development plan, and it's actually fairly good to lifting people out of poverty. Not fast enough, but it's happening. So we concentrate on schools, on handwashing. Trachoma is a big issue there still. They had cholera outbreaks, so brands like Lifebuoy are ideal for that, and it establishes the brand. We shipped a few million bar soaps there at the beginning, and then we work with our food brands like Knorr and give them nutrition, which is very important. We put iodine in the bouillon so that they don't have the issues of stunting or iron deficiency. And then we go into oral care. Half of the absenteeism in schools is because of oral issues. So we introduce our oral brands. And now we have a decent business in Ethiopia. Don't make money yet, but it's a long-term thing. This will be the second biggest country in Africa after Nigeria. But we do it all by taking a development agenda. Our principle is that we are there to make the country more successful, and if the country is more successful, we will be more successful, not the other way around.

You know, it seems like one of the things I'm noticing in my work, and you probably notice as well, is that many companies are moving towards more sustainable products and services, right? Like I noticed I think Hellmann's Mayonnaise is one of your brands, right?

Correct. Yeah.

So it's using cage-free eggs now.

Correct.

You acquired Seventh Generation, which is incredible in terms of social and environmental responsibility, Ben& Jerry's, Sir Kensington's, I think Maytara. You have a lot of amazing brands. I think one of the things I've noticed is it seems like that is amazing on the product and service side, But then there's this challenge where, you know, the people who benefit on the capital side are usually like, you know, public, like large investors who like— it can sometimes— it feels like it sometimes leads to concentration of wealth when there's a beneficiary on the product side. So it's like one of the things I've been interested in, how do we make sure that, say, Unilever's, you know, doing great business in Ethiopia could actually benefits, you know, the— how do you make more ownership, like how do you spread ownership more broadly, I guess? And that's probably very far away from what you have to deal with on a day-to-day, but it seems like if the suppliers were owners and the customers were owners and the workers were owners, it's like the benefits on the capital side would accrue more broadly. Do you have any thoughts on that?

Well, I think it's absolutely important what you are saying. In the US, you've seen over the last 30 years or so the number of publicly traded companies cut in half, and that market concentration is not necessarily healthy for an economy. On top of that, increasingly you see these companies playing the stock market because there's more money to be earned on return on capital than there is on return of labor, hence the high level of stock buybacks or special dividends. So we have shown over and over with the work that we've been involved in with organizations like Focusing Capital on the Long Term and other things, that that's not a very healthy situation. So you need to be sure that more public companies can succeed and that that wealth that is created by these companies is broader spread. And Unilever, you know, we have an enormous shareholder base of over 2 million shareholders that benefit and that depend on their pensions basically of a lot of the money that we generate. So we have a dividend payout that has gone up 8% a year over the last 35 years. Anybody that has invested in Unilever has done very well and has guaranteed its retirement. So we have that responsibility. We also have a responsibility to the other stakeholders. Many companies focus on the supply chain, that is easy, and we do the same. All of our suppliers have a— with our responsible sourcing code, have an opportunity to contribute to making this a better world by moving to sustainable sourcing. They benefit from our capabilities and skills. But they benefit also from our business success. And with our Partner to Win program, we have very loyal supporters. The countries that we are in benefit because our business model is entirely focused on putting our brands to the service of people. All of our brands have a purpose that is so ingrained in the brand's mission, and rightfully so. Consumers don't want to buy just products anymore, they want to equally know what these products stand for. So we have a leading toilet cleaner which is called Domestos, and that is building 25 million toilets. Because they're building 25 million toilets, they are much closer to what is going on in the market, and their innovations and their marketing plans are much more profound. A brand like Lifebuoy simply is there to help a child reach the age of 5. 4 million children still die of infectious diseases like diarrhea and pneumonia. You can cut that down by 75% with handwashing like Lifebuoy. Like Lifebuoy, or a brand like Dove that, you know, in the US stands for women's self-esteem. Women still have— are deprived of access to financing or education or land rights or other things. We want to change that and give women self-confidence to have the same possibilities as what we take for granted. So what we find is that these brands with a strong purpose or social mission do very well and grow faster. I've often said if I could buy all the 2,700 B Corps and call that Unilever, I'd probably even have a better performance than I currently do, you know. So, and it's the right thing to do, brands like Seventh Generation, to think ahead with everything they do. And in, in Seven Generations Ahead, I mean, you have to get tears in your eyes. We didn't do much due diligence. I, I really wanted to get acquainted and partnering with them just on the concept alone. That's how we should be running the world. And increasingly we can show that that's a very profitable way, partly because technology has developed, which makes it more exciting. We can get now green energy at lower cost than fossil in many places in the world, and also partly because the consumers have changed, fortunately, and they're looking for purposeful brands. They want organic, bio, neighborhoods, and, and these brands are totally on trend, and they might have been a little bit ahead of their time, was a little bit more difficult, but if you now have a brand that doesn't treat its people well in its value chain, that puts the plastic in the oceans, that has microbeads, that uses ingredients you can't pronounce, it's highly likely that your company will not do so well. So these B Corps have been very close to the consumer, externally focused, with indeed a social mission that we are now bringing into Unilever. That's why one of our goals in the 5— in the Unilever Sustainable Living Plan is to create jobs for 5 million smallholder farmers in our value chain. We're well on the way to do that. We put gender balance in our value chain. Our company is already gender balanced. Our board, our management is 50% women already, in many places more. But now we are bringing that into the value chain so we can drive these changes with these specific targets that we set. But the more we do it, we also see that it's darn good for business and make it work for society. So we look in all what we do to all the stakeholders, and where the challenge comes in is not only the financial market, but you need to balance sometimes a little bit more one stakeholder, a little bit more another stakeholder, but over time it balances out, hence the need for this longer-term model, and that's really what we are trying to put in practice. Also, don't boil the ocean at once. I'm certainly not advocating that Unilever is perfect, We have to be very careful what we do first and how to sequence things. It goes wrong when you get so passionate and you start to do things that can't really be afforded right now, where there are no real technical solutions. You know, salt, sugar, and trans fatty acids are not good in food, but if you take them all out, first of all, the consumer puts it on the plate at home by shaking the salt jar, and secondly, the product tastes so awful that nobody buys it. So some of these things you have to work your way into and do it at an accelerated pace. In some places of the world you just can't get green energy, or, you know, so then you need to deal temporarily with fossil fuel. So don't boil the ocean at once or eat the elephant in one bite, but make these longer-term plans. We've made our factories waste-free, no waste to landfill. Waste is a concept that wasn't invented by nature, but by human beings, so we can also work ourselves out of waste. But it takes a little bit of time. In 2 or 3 years' time, quicker than the 5 years we'd set for ourselves, we moved all of our factories to no waste to landfill. So don't do these things at once, call them out, you know, that you want to do it, but make smart plans over time. So don't become your own worst enemy when you already have to deal with a lot of these forces that might be against you in this journey of change that we need.

I'm curious for your analysis of the rise of more populist movements and sort of the— it seems to be increasing income inequality and just sort of, there's a lot of very challenging issues arising, let alone, maybe we'll talk about climate change after this, but at least around income. And I'm curious for your analysis about—

Yeah.

You know, what do you see? Because you talk to more world leaders and other business, you know, what is your analysis about why this seems to be rising now? What do you think is happening that's the reason behind it?

Well, the first thing I think is you need to start with the positive news. You know, over the last decades, obviously thanks to, you know, technological advancements and other things, You know, we have seen a tremendous amount of people being lifted out of poverty. There are less people going to bed hungry now, there are more people in education, more people have access to water or housing. Every day, 200 million more people get lifted out of poverty. So, you know, it's the best time to be born. But we've also discovered, especially in the financial crisis, 2007-2008, that the way we were growing I think became unsustainable. High levels of corporate and public debt, overconsumption by a certain part of the population, and frankly leaving too many people behind. And any system where you leave too many people behind, or where they feel it's not fully functioning for them, will ultimately rebel against itself. And that's what you see. Normally we would have the governments to take care of that, like in the US under Roosevelt, you went to the New Deal, and you evolve capitalism. You put Social Security in place or healthcare, whatever, and you evolve and you do well. Right now we're in a period of time where unfortunately global governance and rule-based systems are being challenged by the same, for the same reasons as why we haven't addressed some of these most pertinent issues of poverty, income inequality, and climate change. Whilst these issues are becoming more and more global and the effects global, The boat people, the immigration is a result of poverty. Income inequality, you can see the yellow vests in France, or climate change, I don't have to talk, it travels the world now at speeds never seen before. But unfortunately, we are at a period that global governance doesn't quite function. Populists take over, they don't have solutions, they stay in power, end up doing shorter and shorter focused things, political cycles are getting shorter, the global governance structure doesn't really attack these issues, and people start to react to symptoms but don't take the time out anymore to attack these underlying causes. As business, you have a longer-term view, you're in more countries, you don't get elected, at least, you know, to some extent, and you can perhaps spend more time on the underlying causes. And what we do at Unilever then is to say, or what I will focus on is to say, How can we help de-risk this political process? In essence, you have to believe in the goodness of people, but then you have to ask yourselves, if we all believe in the goodness of people, there's no CEO who wants more unemployment or more people going to bed hungry or more people dying from air pollution, but then why collectively do we create these terrible results, if you want to? Now, partly because it crept up with us by surprise and we haven't created the leaders that know how to deal with it. It requires a different form of partnership, different leaders, more purpose-driven, more longer-term focus. We just don't have enough of them. And partly it's also because in terms of addressing these issues, it's very, very challenging and very, very hard work to do this. And not everybody has invented the internet, and there are many people that just don't know how to go about it, and we need to just create more momentum around the successes and put more practices out there that show that it works. The biggest influence that Unilever has had is not the success of Unilever itself, it's the influence that it had on all the other people to also take a little bit more courage to start moving forward at a faster pace. And that is the role of business now that is going to become more and more important. And that's what we're obviously focused on. And what we're trying to do is to get more people to join us.

Yeah, I think one of the books and folks who have been influential on my thinking is the Winners Take All book, Anand Giridharadas. He calls out B Corps in particular and leaders as, we say we're doing good, but what's happening with more concentration of wealth and I know you've had conversations with him and you've read the book, and I'm curious if over the last several months in conversations with other CEOs or other leaders, have we started to— do you think that our social good movements have started to look more closely at like what we are actually doing? Do you think that that has crept into our consciousness, or do you think it's still, you know—

Oh yeah, I think it's not enough and not at the speed and scale that we need, but there are more and more people. There's no question about it. B Corps is one of the fastest growing movements. Impact investing is one of the fastest growing, or green bonds, companies starting to integrate these Sustainable Development Goals. There's a lot of positive that we can celebrate, but unfortunately it's not being addressed fast enough. Anand makes a valid point that a lot of people have made. I don't— he's put it eloquently in his book and is trying to make money out of that, but the point is that don't on the one hand make a lot of money by making the system worse and then trying to do good by using some of that money to say, you know, I'm improving this world. So are you part of the solution or are you part of the problem is a valid question that he is posing and hopefully making some people think. He's very light on solutions and he's a little bit cynical to the process and a distrust of business that that goes beyond what I think is needed, and he puts all the trust in governments, which unfortunately most people in this world are not doing anymore, for good reasons. So we need to find other solutions of partnership, we need to create space where that trust is being created, which is very important, and where in partnerships of private sector, civil society, and governments we need to move things forward. I will not do anything in Unilever anymore if it doesn't have that partnership, And what we find is when we create those partnerships, we can reach far more people down on the bottom of the pyramid and we make our business model far more successful. Now sure, there are always some elements in a business of this size that people question. I still have the challenges of having to close factories in Europe if I cannot afford the costs anymore, or I sometimes cannot get sustainable sourcing because the quantities that we need still simply isn't available and it takes time. But then to say, you know, you're the problem and you shouldn't be there type thing, which is basically what he tries to advocate in his book as well, is a little bit simplistic. Work with the companies that drive it, create a race to the top, and move forward. Right now we're at a very delicate point in society, coming back to your previous question, because we are all geared with the short-termism of the financial market, the short-termism in the political environment, to react to the symptoms, as I said, and often with dysfunctional responses, but we don't take out the time to work on the underlying causes under the principle, as I said, that there are no bad human beings. Why do they behave this way? It's because the boundaries that are put upon us make us behave this way. If I ask a salesperson to only get rewarded on the number of orders he writes or she writes, they're going to write a lot of small orders. and behave that way. If I reward them on the customer service and the quality, they're going to behave differently. So the boundaries that are put upon us drive our behavior. We have currently boundaries that only reward financial capital, not social or environmental capital. So we need to expand the definition of capitalism to include social and environmental capital, hence, for example, a price on carbon. When we do that, our capitalist system is probably best placed to deal with it. We need to ensure that the financial markets move to the longer term. So how do we change those boundaries? So we need to start rewarding labor. All the reward right now is on capital, and frankly, the capital— if you play the capital markets, you don't pay much tax in any jurisdiction, whilst the tax is totally geared on labor. Perhaps we should start to think of totally shifting that. We need to move to a circular economy. We know how to do that and get out of this linear economy. And provide space to create that. No individual company can set up a recycling system, they don't have the critical mass to do that in a profitable way. So we cannot blame them for the packaging that floats in the oceans, but we have here a systemic solution that needs to be thought through. So they take time and they need to be put in place and they take efforts and they take certain leaders. That's why the new leadership that we need is not only people that care, have a high level of awareness and engagement, but, you know, are purpose-driven, are longer-term, you know, understand that they have to put the interest of others ahead to drive some of these changes, which is hard work, which exposes yourself, which makes you subject to criticism at times by many, but at the end of the day, you know, you're talking about do we want to save humanity or not. This generation has done more damage in the last 30 years than in its 5 billion years of existence. That's just for me mind-boggling. The rate of species that disappear are 1,000 times more than the normal pattern. That to me is mind-boggling. And we're getting to the point that on each of these Sustainable Development Goals, the famous 17 goals, it takes $5 trillion a year to implement that and eliminate poverty, not leave anybody behind. On each of these goals, we're already incurring costs that are much higher. $5 trillion a year according to the IMF, just the cost of climate change-related issues alone. Goal number 16 is about peace and justice. We spend in this world 2 to 3 times more on conflict prevention and wars than it costs us to implement all of the goals, and we still have the courage to call ourselves most intelligent species. I don't get that. So we're getting to a point that some people might not have that morality, I buy into that, that's the reality of the case, but we're certainly getting to the point where the cost of not acting is becoming higher than the cost of acting. So this is a wonderful moment to celebrate, to accelerate, and to make this the growth story of the century, the more equitable and sustainable growth. And we need it because the population is going to double, or the urbanization in the next 30 years, you know, infrastructure is going to double in the next 15 years, So the pressure that is coming on the planetary boundaries is going to be exponential, and that's why it requires us to change. Now it's tough, I recognize that it's tough. We've never decarbonized the global economy, we're carbon junkies. We've never moved to a circular economy, we don't really know how to move the financial markets to the longer term. And all of that at a system when government governance doesn't work is tough, I recognize that. That's why we need the right leaders. So the best thing we can do is invest in leaders and trees, and that's really what I would focus on if I have some energy left in myself as I move forward.

You know, I recently did a podcast with a professor, John A. Powell at UC Berkeley. Do you know John Powell?

I've heard of him, but I've never met him.

Yeah.

Yeah.

So he's a— for folks on the podcast, he's a professor of law at UC Berkeley, but an expert in diversity inclusion, equity. And he actually says that one thing that he likes to point out is most people would say climate change, at least most progressive people in business, maybe like me and you, Paul, would say climate change is our biggest problem. But he has an argument that actually our biggest problem is the sort of not addressing systemic issues of identity and race and diversity because at least in the US, there's this anxiety that is— he calls it latent white anxiety about what's happening to our country in the US at least. And so we can't even get to the conversation about climate because, you know, we have Donald Trump and there's so much identity politics. And I'm curious, do you sense that at all in your work? Like there's a sort of an echo?

Well, I think to save humanity has to be done by human beings and we need to have a common framework or at least a mechanism that is built on some of the common values, and that's really what is important for democracy. So that's why I like Europe at least, because from all the places in the world, it seems to still be the place where human values and dignity and respect for human beings is better developed. That's also why business speaks up when governments fail on issues like LGBT. If it depended on Pence or others in the US, a lot of people would be discriminated against. That's why people spoke up when you had Charlottesville. That's why you got the movement Black Lives Matter. So if these moral values, which Paul is talking about, if these moral values get undermined, you undermine humanity and the real existence of us here on this planet. So it starts with that. It starts with that. My wife wrote a book which is called Immaculate Souls. And it really deals with a very simple principle which you find in every religion, in Judaism, Hinduism, Islam, Christianity, and it's called the Golden Rule: do unto others— and she's added the planet— do unto others and the planet as you would like to have done to yourselves. And if we apply that rule in a lot of things that we— decisions that we make for the people that are able to make decisions, we would make better decisions. I don't want my children to be in slave labor. Then why do I allow slave labor in my value chain? I don't want my children to not have access to education, so why do I deprive others from the chance to have education? I certainly want my children to pass the age of 5 and not go to bed hungry. Why are we working very hard then to deprive others from that basic human right? So it starts with humans, it starts with us being human, and it starts bringing humanity back as a very important need also in CEOs. That's what I call need to be purpose-driven, and we need to spend more time on that. We've cut the humanities from education. You know, it's bizarre to me. I know we're talking here a little bit and dreaming, but it's bizarre to me that this world is more connected than ever. We have— we send each other 50 billion likes a day. We even commit suicide if we don't get enough likes. But then you go to restaurants you see couples sitting there with telephones across from each other, not saying a word, but looking at their telephones. I always wonder if they send WhatsApp messages to each other or text messages. You know, in America, we have an average of 700 to 1,000 friends on Facebook or LinkedIn or Snapchat or whatever you have, but we only have one real person that we can talk to. Well, in the UK, they even appointed a Minister of Loneliness. So if we don't bring humanity back in everything we do, then we will not solve the issue. So it starts there, and that's really what he's pointing out. The biggest question you should ask yourself always is, do we care? We walk past homeless people, 700,000 now in the US, cities like San Francisco where I was recently, or Seattle. It's worse than I see in Africa, living in tents along the highway, plastic sheets. Do we care? We drive by there in our fancy cars, I'm happy to have a Tesla driverless car to go to work to be unhappy, but do we care? We know how to build houses, that's not an issue. We are drowning people on small island states, do we care? We think it's cool to have a— buy a $1 t-shirt whilst people are being treated in slave labor in the garment industry, do we care? So the big question starts with humanity, otherwise you don't create purposeful leaders that drive that change. Against all these odds. The only way you survive in this world that has a certain level of insanity going on now is to be very strongly purpose-driven, otherwise it doesn't work. It's amazing to me with all the pressure we have in Unilever and all the changes we have to make to simply survive in a system that doesn't quite work, how high the engagement score stays, which is well on the top of the top decile of 8,000 companies we compare ourselves with, but it's because these people are so incredibly purpose-driven. They're on a mission and they want to leave this world in a better state than they found it. So that is the basis of everything you need to work to do all the other things we talked about. So I could not agree more with that and I could not stress more the need to ensure that we create more people that are able to take on these responsibilities that come with them.

You know, on the solution side with climate change, are you familiar with Project Drawdown by Paul Hawken?

No, I'm not actually. I apologize. There's so many things going on.

No problem. Well, the book is called Drawdown, and it maps out the top 100 solutions to climate change by efficacy and effectiveness. So his theory was saying, like, we have all these things like unplug your VCR at night and, you know, use wind power and use solar, but what actually has the best, like, results if implemented at scale? And he wrote a book called Drawdown, and one of them is regenerative agriculture and permaculture. And so where I was sort of going on Unilever's side is, you know, one, I wanted to see if you had heard of that book and we could, you know, it's fine. But on the permaculture regenerative ag side, I'm curious, have you started to look at that in your value chain at all?

Yeah, yeah, absolutely. And obviously being, as we say now, you need to really in this world, you need to get regenerative. Just to be sustainable is not even enough anymore. There are some, you know, tipping points that we have reached already. Johan Rockström talks about planetary boundaries, 9 of them, 4 of them are already beyond the tipping point, so we have to make things better, not avoid things from getting worse. So regenerative as a concept is a very important thing that needs to be entered into every business thing. I appreciate you pointing out the book and I've written it down, so I will read that. But for example, on climate change, one of the things we are working is deforestation is again up 51% last year, or in 2017, we don't have the 2018 numbers yet, versus the year before. We're cutting down the lungs of this world. Hubert Reeves, who is a philosopher in Canada, said it well when he said, man is the most insane species. He worships an invisible God and destroys the visible nature. Not realizing that the visible nature he or she destroys is the invisible God he worships in the first place. So 30% on climate change, the natural solution, 30% is actually in reforestation, in restoration of degraded lands, and that's a natural solution at relatively low cost, but we are just on steroids to get a quick kick out of cutting down forests. So we very much have created coalitions on food and land use. Food waste, 30 to 40% of the food that we produce is wasted. If food waste alone would be a country, it would be the 3rd biggest emitter of carbon after China and the US. So we've created an initiative called 12.3. Goal number 12 is responsible consumption. Goal 12.3 is on food waste, to cut that down significantly with a coalition which we call the Food and Land Use Alliance. To look at all of this. So these are regenerative natural solutions, and in our own sourcing, we obviously do the same. We're very heavy into tea or palm oil, and we're moving all in that direction. What we find very simply is that better agricultural techniques, we can increase the yield always by 2, 3, or 4 times. Then we need to make it sustainable, and for us, sustainable also means a heavy social component to this, and then increasingly looking at regenerative. So it's a must for every company. We have a wonderful opportunity because the Biodiversity Convention is going to be in China in 2020, the IUCN has their convention in France just before that, yet very few companies have biodiversity on their business agenda, yet they fully depend for their businesses on natural capital. I could not run my tea plantations if the rain doesn't fall on it, or I could not use my water that I need for many of the products if it's polluted. It's as simple as that. So the value of natural capital, the importance of protecting our biodiversity, we need to get it on the business agenda, we need to put a value on that, and that might help us accelerate, you know, the regenerative thinking that obviously people like Bill McDonough and others have championed already for a long time. So one of the task forces that we're creating right now and will be on the agenda for Davos as well is exactly around, in this case, biodiversity, but getting that higher onto the private sector agenda to do something about it. So we know the urgency, we know the direction we need to take. I think a lot of the solutions— I'll redraw down— a lot of the solutions I think are well known. And we're working them, you know, developing urbanization is probably the biggest thing. We're going to double the number of cities in the world in the next 30 to 40 years with population growth and urbanization alone. How we are building cities is going to be crucial in terms of if we're going to survive or not. London still has roads from the Roman times. So building cities sustainably, more dense, thinking about public transportation, Working on the energy sector and the energy transformation, the mobility sector, the food and land use sector, these are areas that are priorities to move to a green energy. But the good thing now is to a green economy. But the good thing now is we have the answers, we know how to do it, and it's becoming within our reach. And you'd be stupid as a business to— and you play with fire if you don't— to not seize these opportunities and implement it aggressively. Makes a lot of economic sense already. So, you know, Unilever, 70% of our energy is green energy. I've never had a payout for any of the decisions we've taken that was more than 3 years, for example.

Well, Paul, I know you're a very busy guy, even though— so I guess this is maybe one last question or two for you is, now that you're no longer the CEO and you don't want to be called former CEO of Unilever, Maybe the question is, what's next for you? What do you really see in the future for yourself?

Well, first of all, there are many people that run around that say what they used to be. I came from Harvard. That's not important. What are you doing? What are you doing to make this a better world? Or, I used to be the CEO here or there, so I'm important. No, what are you doing now to be useful? So I have an apathy to being X something. I always like to look forward. Learn from the past, but not— and one of the areas I want to exactly focus on is how can we aggregate the aggregators. Thousands of flowers are blooming around changing the fashion industry or climate change or biodiversity or moving the financial market to the longer term, creating different standards that measure natural or social capital. There is a unique opportunity to bring these these associations or efforts together and to move it forward at faster scale by aggregating the aggregators. I've become the chairman of the International Chamber of Commerce, which has 45 million companies associated with that, the World Business Council for Sustainable Development I was the chairman of, the UN Global Compact, which is probably the biggest association with 12,500 members implementing the Sustainable Development Goals. I'm the chair of the B Team that we have created of more courageous leaders to move faster, and the idea there is if we can bring these organizations together somehow and run the same agenda basically around poverty alleviation, income inequality, climate change, we can actually move the private sector faster and implement the Sustainable Development Goals, which are clearly off track right now. At the pace that we need and leave nobody behind. And that's really an intersection of the private sector with civil society and governments that I have played over the last 10 years a role in some of these things, and that hopefully I can play an even bigger role as we move forward and doing that with the right people. So hopefully having fun along the way as well. It's not going to be easy, but I think we have long ago realized that we belong to the 2% of the world population that can do what they want, that are financially independent, can live where they want, and that's not true for the other 98%. So in that case, it's our duty to put ourselves to the service of the other 98%, and that's what I'm going to do moving forward. I don't know where it leads to, there's that level of uncertainty like anything, level of anxiety, but I certainly look forward to it. And that's what made me decide that 10 years in Unilever and learning a lot and appreciating that opportunity a lot, it's time to hand that over. You don't want to overstay and to start working on some of these other things that I was starting to spend already more and more time on over the last few years. So I don't know if that's a full answer. But come back in about 6 or 12 months, you know. People say, what's your new title going to be? And I was telling you on the phone, it's going to be Space Transformer. We have to transform the space that we're in and create a new system for everybody.

Just tell your kids you're moving back in with them. Now let's see if they— see what they say. It's like graduating college but reverse.

Yes, yes. I don't look forward to that one.

Yeah.

Anyway.

Okay, Paul, well, where can folks learn more? I know that you're active on Twitter. Any other— maybe say that Twitter handle and any other ways that folks can follow you or your work.

Well, they can follow me on Twitter. It's @PaulPolman. It's about as simple as it comes. And, you know, I put blogs out there quite often. You know, we do these type of things, the podcast. I like to work a lot with young people and bring young people together because these are the change drivers. So in a lot of these networks, One Young World or WE organization or Enactors or Global Shapers and all the other ones, I'm out there quite often and then hopefully you have opportunities to meet some of these great leaders and help them be successful because that's really what we are all about now and if I can be of service to some of them in one way or another, just reach out. And send me a message and hopefully we can do something about it. One day or another, I might even be so crazy to write a book. I've not had that courage and I've been too busy doing things, but if there's enough interest to put some of this on paper and help other people move faster, I might be convinced one day. I've always been hesitant as a CEO to write a book because many of these books are ego trips and then often the company one or two years later does terrible. So there's not much track record in these things, but now that I'm perhaps entering a different stage of my life and am out of my previous job, there might be an opportunity. So give me some ideas.

Absolutely.

And I'd be willing to listen to that. But meanwhile, you've given me an assignment to read Drawdown, so I've already ordered it on my podcast. Oh wow, look at that.

I was going to send you the link.

Yeah.

Okay, Paul, well, thanks so much for joining. You've definitely been an inspiration to the B Corp community and social entrepreneurs and sort of facing almost single-handedly into the headwinds against the capital markets to sort of promote sustainability. So I really want to honor and appreciate you for all your work in making sustainability more common.

Well, let me be honest. I think the B Corp and the B Lab and the whole movement there is an inspiration to us. Often I have dinners with B Corp leaders, and I had one the other day at Walter Robb's house. He very kindly put a group of people together. It gives me confidence in the future. It gives me confidence in the younger generation. It gives me confidence to not only give them a seat at the table, but to give them the table. So thanks for what you're doing.

Thank you.

And obviously lots of success on the journey as well.

Next Economy Now is a production of Lift Economy. To listen to all of our episodes, go to lifteconomy.com/podcast. That's lifteconomy.com/podcast. You can also sign up for our monthly newsletter at lifteconomy.com/newsletter. Please also rate and review our podcast on iTunes, Spotify, Stitcher, or wherever you get your podcasts. Thanks for listening.