Paul Polman - Going Long Podcast, Ep. 1

I'm Sarah Williamson, and this is Going Long with FCLT Global. On this show, you'll learn what it means to be long-term from the top minds in global business and investing. Leaders from companies and investment organizations join us to discuss how they are leading their teams for the long run on issues including capital allocation, risk management, climate change, and sustainability. To learn more, visit our website at fcltglobal.org. We're here with Paul Polman. Paul is co-founder and chair of Imagine, a new organization which mobilizes business leaders around tackling climate change and global inequality. He's the honorary chair of the International Chamber of Commerce, chair of the B Team in the Saïd Business School, and vice chair of the UN Global Compact. He was CEO of Unilever from 2009 to 2019, where he demonstrated that a long-term multi-stakeholder model goes hand in hand with excellent performance. And of course, importantly for us, Paul has been a board member of FCLT Global since our founding in 2016. So Paul, you have always been a leader on these topics around sustainability and thinking long-term. When Focusing Capital on the Long-Term was just forming, the idea of long-termism was a bit of a fringe topic. It was a— it wasn't mainstream. back in 2016. Now it's clearly on the front page. So what, what drove you to be concerned about the idea of long-term investment in business decision-making back then and got you started on, on this journey?

Well, thank you, Sarah, and thank you for the opportunity. It actually started already well before. If you go back to the time that I became CEO of Unilever, which was end 2008, was basically at the height of the financial crisis. And it was clear to me, at least already before, but certainly during the financial crisis, that the system we had created wasn't quite working. It was an enormous cost to society, that crisis, that frankly has resulted in the current COVID crisis because we still haven't addressed the main underlying issues. But what was very clear then was that there were signs that running this business with this myopic focus on the shareholder which was often translated then into getting very short-term results, was actually killing the goose with the golden eggs. If you look at it, that 70 to 90% of the value of any company is created by investment 3 years out or more. If you're an oil company, it might be 15 years out, although there I have my doubts now that value will be created when we talk of climate change in a minute. But most of the value of a company is created long-term. Yet we've all been on boards, we've all been part of companies, and we've seen that with the pressure coming in from the financial market, the pressure coming in from the boards, we've actually seen dysfunctional behavior. At that time, a statistic came out that said that about 50% of the CFOs would actually take the wrong longer-term decision to protect their quarters, to hit the guidance that was given to the market. So I actually inherited a company that wasn't in good shape when I came in. Unilever actually had come down in turnover from about €55 billion to about €38 billion over the preceding 10 years. Unlike its competitors, it had not created any shareholder value. And what you see is when a company goes in this downward spiral, then the behavior also becomes dysfunctional. We were putting guidances out there and numbers that we frankly couldn't deliver. And people were starting to manage the business by the quarters. Our brand spending was sort of known as discretionary. And you could see that because we had to publish. We were underinvesting in R&D, which you could do for a few years, but then it comes, you know, you pay the price for it. And I think we started to see that as a company. So I needed to get the growth back. I needed to build shareholder value back. And it was very clear to me that we needed to do that by investing for the long-term health of this company. On top of that, there were some societal issues that we needed to address, climate change and inequality being the most urgent ones. And I felt that it was difficult to solve these issues on a quarterly basis. And by running the business a little bit more over the longer term, we created that space to make these investments to create a different relationship with the financial markets and actually create a higher return over time. It is very clear that if you run your business for the short term, you can get perhaps short-term returns that even might be in premium, and some investors might like that. But the broad base of investors who represent our pension funds, if you want to, want to be sure that you have a longer-term return in line with their obligations and they want to be sure that you can retire in a world that we can live in. And what is proven again over and over with increasingly more and more results coming out now is that these multi-stakeholder longer-term business models also give a longer-term return. In the US, running your business for the longer term was estimated to unlock about $1.5 trillion 1.5% consistent cumulative higher returns. And the same we saw in Unilever by moving to this longer-term multi-stakeholder model, by abolishing our quarterly reporting, by stopping giving guidance, we actually created a 300% shareholder return over 10 years, which was quite respectable vis-à-vis our peer group or the market in general. But we also saw some of the effects of what we are doing in a positive sense. We changed our shareholder base and we attracted more longer-term shareholders. We saw less rotation in our top 10, top 50, or top 100 shareholders. We saw their holdings increase. And what I noticed was instead of having these quarterly discussions and these movements in the shares, which some people like to speculate against, We also then ended up having a more mature conversation with our shareholder base. By only reporting twice a year, the conversations became more strategic, more longer-term, and I'm sure that that also has something to do with us having attracted more of these longer-term investors. So all of that for us has worked out. There were some underlying statistics in 2007, 2008 that were worrying to me. And most of these statistics came from the US because it wasn't available in Europe. It's still too fragmented by country. But the statistics in the US said that over the last 30 years then, we've seen publicly traded companies go down from about 8,000, you know, odd number to about 4,000 plus. So by half. We also saw the length of a publicly traded company go down quite dramatically. When I was born in 1956, the average length of a publicly traded company was 67 years. 10 years ago, it had dropped to 17 years, and it's actually still going down. And the third statistic that worried me was the tenure of a CEO, which had dropped to below 5 years. So a combination of signals of lifetime, of number of publicly traded companies, or 10 years of CEOs was for me a lethal brew that was creating a soup that certainly wasn't tasting good. And we saw the symptoms there in the 2007-2008 crisis. And unfortunately, after the crisis, we started the quantitative easing. We put so much more money in, interest rates went down, risk profiles went up. Unfortunately, we spent the money in the wrong way, as we've now learned again with COVID So we actually pushed unknowingly perhaps the market even more to the shorter term. And there would be indicators, I think, from the feedback that we got from the many surveys that we have, that the pressure actually has only gone up. So it makes us more determined to put a group of responsible business leaders together that care about the future of the planet. That care about maximizing the longer-term returns on their investments, that care about addressing the major issues that need to be addressed at the same time— climate change and inequality, the most pertinent ones. But if you can put them all together and you take this longer-term horizon, you actually can also show increasingly now that you also have a better return. So how can we create these tipping points at scale now becomes the question, not why we need to do this, but much more importantly now that we focus on how we should go about this.

And so as you were making those transitions at Unilever and you were changing out your shareholders from some to others, how, how did the shareholders change? How did that process go and how did the conversations change? Did people really ask you about the sustainability efforts you had underway, or were they, were they more tolerant of those? How did you think about that?

Well, I have to honestly say, with the benefit of hindsight, that I probably was too assuming and that it was so obvious to me, probably a little preachy, and underestimated how easy it is to get rid of shareholders and how difficult it is to attract new shareholders. So Unilever didn't have much credibility when I came in because we didn't deliver on the quarters either, or we didn't deliver the annual results. So when I said we're going to abolish quarterly reporting and we're going to stop giving guidance, it was more seen automatically as a reflex, may I say, as a warning. Whilst the share price had gone up 8% on my appointment news, it actually dropped very quickly back to 8% when I made the statement, no guidance, and frankly, there are still too many CEOs that come in that think it's a good opportunity to clean the decks and to set the base low, often related to their compensation. I didn't want to do that, but I didn't have that credibility yet for the market to interpret my numbers. The second challenge I had was that whilst it was obvious to me that business cannot be a bystander in a society that gives it the right to exist, and nor can business exist in societies that fail. So I've always seen it as the business responsibility to ensure that we address profitably the issues of people and planet and that we proactively contribute to that. That has been the basis why Lord Lever created the company in the end of the 19th century. He already talked then about shared prosperity, but with the whole Milton Friedman shareholder primacy We probably forgot about that a little bit. So I've always seen that the business was there to serve society, but unfortunately the second issue that was that there weren't many data available for me to come out and say, you, you know, we're now going to run a much more purpose-driven model, we're going to put our multi-stakeholders at the center of our attention, especially the citizens that we wanted to serve, and the shareholder returns are only a result. We've gone well beyond at that time what currently is the BRT statement, which put all the stakeholders at par. We actually don't think so. We think that we are here to be smart about it, but that we are here to serve our citizens, our consumers as some might call them, and our customers, and do that in a very intelligent way so that our shareholders long-term benefit. But our shareholder return is a result, and I've always approached it that way, and I've always communicated with our shareholders that way, and some felt very uncomfortable about it. Some felt uncomfortable with the bullets in quarterly reporting. How can we keep you accountable type comments, as if slavery still existed. And then, you know, we did not really at that time have a very good developed way of talking about the materiality of what might be the non-tangibles but which in fact make up 80% of the market cap of companies now. So how do you talk about culture? How do you talk about sustainable sourcing? How do you talk about human rights in the value chain? How do you talk about employee engagement? All these things are easier now. Now we can show that more gender-diverse organizations have a better return, or companies that have internalized climate change and started to de-risk their exposure to carbon have a better return, or companies that have more engaged cultures seem to be more resilient, and COVID has even brought that to light even more. But, you know, put yourself back 10, 12 years ago, that wasn't the case. So there were a lot of skeptics out there from the newspapers, from the shareholder base that we had then, and perhaps I was too rough to the ones that didn't align with us because I made it very clear that You know, if your objectives don't align with ours, you know, put your money somewhere else because you're not going to change us. We are going to change Unilever and we're going to do that by making it a long-term resilient, successful, consistently growing company. And I've delivered that with 10 years top and bottom line growth and the shareholder returns. So over time, I think our shareholder base, as I mentioned, became more supportive, became more loyal. and stood with us even during some of the times that we asked them to tighten the belt. If you run a multi-stakeholder model, it is impossible to run a short-term model because who are you going to optimize? By definition, then optimizing one of the stakeholders will go at the expense of other stakeholders, so you never can run this multi-stakeholder model for the short term. It's just a contradiction in termina. If you want to be more sustainable company, more equitable company, and you want to address these issues, you can't do that either on the shorter term. Addressing the issues of climate change or inequality, of water shortage, of food security, of inclusion—they require longer-term plans. And increasingly, we now understand that because we weren't able to address them that quickly, we are starting to incur enormous costs for society. COVID is. Costing us already now $12 trillion, and we haven't even stabilized the global economies. By the time we get out of this, it's probably $20 trillion. So we're starting to realize that we are incurring higher costs by not addressing these issues than what we need to invest to address it. And the multi-stakeholder model allows you to invest in a measured way over a period of time to ensure that all the stakeholders win. and that you actually maximize shareholder return as a result. We had to change our investments in the company. Our brands were underinvested. Our brand support had to go up. I had to explain that to the market, but certainly we started growing again, but our margins were not improving. We actually saw cost decreases because there were a lot of efficiencies to be had. I put that back in quality of product and I put it back in the capital allocation. to strengthen again our industrial base to accommodate the growth. So for the first 4 or 5 years, the investors saw low margin progress below the industry, but they saw above industry level growth. And that growth made us more resilient. And slowly, as we got our R&D up again and better running and our innovation stronger, we started to enhance our margins because of the innovation pipeline. And we also moved our margins forward. But we explained it to our shareholders, our shareholders started to understand that and we were able to satisfy our multiple stakeholders. We were able to invest in the suppliers in our value chain, we were able to invest in our people and our value chain with human rights and other things, we were able to invest in our brand support, our product quality, our R&D, our investments in our capital structures. And all these investments started paying out after 4 or 5 years very clearly. And you saw the margins accelerate in the company without compromising on too many other factors. So it allows you to balance. Some years it's your value chain that benefits, some years it's your employees or the people in your value chain, and some years it's your shareholders a little bit more. But over time you can maximize everybody and that certainly cannot happen, it's impossible unless you're, you're a miracle, have the magic wand to do that on a quarterly basis.

That makes sense. And so when, when you think about the, the times the shareholder had to tighten their belt, as you said, how do you convince the, the shareholder that, that, that you will balance it in the long term? And is if you think about The Kraft Heinz scenario that you had, and you mentioned the loyalty of the shareholders. How did you see that turn itself into support for the company when you were under pressure?

So interestingly, when Kraft Heinz came, I was just looking at that the other day for a book I'm writing, but if you go back to 2017 more or less, our shareholder return had been well in the top tercile of our industry. So the hostile takeover bid that we got from them, which frankly was only financial manipulation more than anything else, had nothing to do with underperformance. In fact, one of their major shareholders was Warren Buffett, and our performance had been ahead of Berkshire Hathaway with our longer-term, more responsible approach. And at Squat Box and other venues, I didn't hesitate to point that out. So it wasn't a question of that. We were running our company very prudently. We had our balance sheet that wasn't overleveraged. We were investing in sustainable sourcing in our value chains. We were paying our people decent salaries. We were creating jobs as much, and we were running the business with a high engagement as a desired employer. We were attracting the right talent, and we were growing, you know, consistently in shareholder value. Never the number one every year, but over the longer time we were doing this. Kraft Heinz was a little bit in vogue because with cost cutting, with neglecting all these externalities, you know, human rights, climate change, Glassdoor employee engagement, you would always find them on the bottom. They thought they had a great opportunity to go after Unilever, leverage it up 7 times, use our own money and cash flow, sell off some of the businesses at a premium, and then sort of become owners of that business and then buy something else again. We didn't think it was a match in values. We didn't think it was a match in strategy. It was purely financial manipulation, so we rejected it. That company had not shown to be able to grow business and frankly was working on a Ponzi scheme that required them to continue to acquire businesses. When they could not acquire Unilever, at the end of the day, our share price continued to go up about 50% since, and their share price went down 70%. They've taken write-offs. They had to justify legal cases because of manipulation of their books. They've seen 3 general managers. I think the financial market, bar a few that were looking for short-term returns, but I think the financial market broadly understood it. And whilst we don't want to claim in hindsight justice, it was actually so obvious that in this case I don't feel bad to tell you afterwards what I could have predicted beforehand as well. And fortunately enough of our shareholders, not all of them, but enough of our shareholders were pointing out that we certainly could be doing more for them and could be better performing. And that was an honest and constructive discussion that helped us. But broadly, they also thought that our model was more robust for the longer term with more optionality. And frankly, the COVID crisis has brought that out During COVID you could really see the companies that were run on a more ESG mindset, longer-term multi-stakeholder, have actually accelerated their performance, whilst the funds, the financial funds that have invested on that basis also seem to have had a better performance. Ellen Jobe, my successor at Unilever, was able to extend immediately €500 million of financing to the value chain that the banks weren't even able to lend, as you well know. They won't take the risks as we've become used to. We were able to keep investing in our businesses, even make an acquisition. Very important to invest in R&D, and companies that do even during the crisis tend to come out stronger. And it was good to see that a company like that was actually able to do that. Now it paid off. With borders shutting down and supply chains being disrupted, it paid off to have good relationships with our suppliers in the value chain. With employees having to work at home, which might sound cool, but now we know the enormous mental pressure and tension that it gives, etc. A highly engaged workforce has to deal with it but can deal with it better than anybody else. And then when the banks are sort of drying up and when you want to do things your cash flow and liquidity becomes your priority. A company that has managed that reasonably well is better off. And I felt over my 10 years always explaining that to our shareholders and making very clear that what you say you would do and you repeat what you had done was very good. When I retired, not because of that, but we have changed our pension system from direct benefit to direct contribution. It costs money short-term, it affected our bonuses even, but it was the right thing to do because I could see that 10, 15 years out the company would have enormous liabilities. My predecessors had not made contributions to the pension plan, they'd actually taken money out. I put all that money back in and we were the only company in the UK despite the low interest rates that had actually a balanced pension fund, you know, the actuarial value and all that. We had a balanced pension fund. So I left with a conscience that was fine. I didn't wait either for major restructuring. You haven't seen major restructuring for Unilever that my successor has to deal with. No, we closed factories when they needed to. We took care of the people involved when we had to. And we ran the business in that sense on a quite responsible basis, as if it was our family, as if it was our own money. And that actually the investors now, thanks to COVID, that's not something we wished to have happen, but the investors I think appreciate more and more. I've been talking to some, although I'm clearly not running the company anymore, I'm still in touch with some of them who have become friends. But, you know, these people point out that it's companies like that that they invest in for exactly the reasons that are now being tested. So, so I think that's a good thing. Unfortunately, we are pumping in even more money again. You now see again the stock market totally decoupled from what is happening in the real economy. It's a big concern of mine. And you see again short-term investors, you know, you take Dan Laub and his gang, you know, making $2 or $3 billion in one day with short selling again companies that have been hurt and trying to drive them down even further for their own financial benefit. These are the type of things that I think in all goodness that we need to collectively now start to attack if we want this world to function for everybody. You know, greed might be good for some, but I think generosity is always going to win it long term. And we now need to create this group of shareholders that has that longer-term responsibility, that understands that collectively it's better to create a world that functions for all So that we can all rise as the water levels rise, so to speak. And I shouldn't use that example, but because they are rising for different reasons, but then to go after your own short-term gains. By the way, I've never pointed that out, but with the Kraft Heinz takeover, we were unfortunately hampered because of Brexit, Trump election, Make America Great Again depressed the emerging markets on which we obviously disproportionately depend for our business. But we saw another thing that I've never shared, but I'm sharing with you right now, that we saw 4 or 5 times the activity of short selling in our shares than we had seen before. And we saw trading in the shares that we'd never seen before, pushing our share down. The day the, the offer was made, our share had pushed down, and you can see that if you look at our history. By about 15% as a blip. Nothing had changed in the way I was running the business. Nothing had changed in the noise we had put out there about what we were going to do. In fact, we had had a meeting with investors only a few months before where we told them actually more positive news that we were looking at moving forward. So it pointed out to me again the dark side of some elements in the financial market where some people are really disrupting it for everybody else and yet they're getting away with it. So the focusing capital on the long term brings awareness to some of these issues, brings responsible people together to do the right things and create the right environments, if it is in compensation, if it is in alignment of objectives, is it in transparency of communication, if it is in decisions on how to move out of guidance or short-term reporting, because we all need some hand-holding there, but also to work with governments and to show that many of the regulations that we have in the countries and many of the policies that have been put in place with good intention, often 20, 30 years ago, don't hold anymore in this rapidly changed financial environment that we're operating in. So if we do that, we not only ensure that we have a good return for our investors, but that we also create a society that is more sustainable and equitable. And fortunately, more and more of the investors, and certainly the more or less 50 organizations, wonderful organizations that belong now to Focusing Capital on the Long Term, have very clearly understood that. And at the end of the day, it's like with anything, if we really want to drive these systems changes that will be needed, you will have to get governments to understand as well that policies or regulations or frameworks need to adjust. The reality is otherwise, that there are some elements in the human species That think it's great if it's in their own benefit, but drive everybody else to extinction. That's not a good long-term strategy.

And as you think about the lessons learned from COVID you know, there, as you said, the markets seem to be disconnected from the economy. There may be many long-term lessons about resilience learned in this time. But as you mentioned, with the financial crisis, some of those lessons learned were pretty quickly forgotten. So what— how do you think that this crisis is going to change the priorities of investors and companies? And what else can we be doing to make sure that hopefully when this thing is passed, people still remember the lessons learned from this time?

So obviously the scenario is still being written as we think, as we sit here. I don't think there's a post-COVID. We will be with COVID for a long period of time and people need to understand that. But I think the current crisis has taught us a few lessons and it's a subject of a separate conversation, but if I take the 3 or 4 big ones that come to mind, the first one is that we cannot have healthy people on an unhealthy planet. For the first time, the relationships between biodiversity, climate change, human health, inequality now, racial dimension, the economy, the financial system has become clear. And frankly, we struggled making that clear to many people, including in the financial market. The second learning of COVID is really the S of ESG. We have seen now that the people that mattered most, the healthcare workers, the people that produced our food, the transport, etc., were basically paid the least. You know, 60% of the world is still in informal economies. Most people still don't have a social safety net. And it really showed the underbelly that when economies go up and everything gets better every day, nobody asks themselves the question. But when you get a significant adjustment like this, which has been significantly bigger than the Big Depression and the money we had put in significantly bigger than the Marshall Plan, you see really the underbelly that needs to be addressed. Give everybody access to healthcare systems, provide a certain safety net for people, and if you do it the way we've done it now, in some countries, with plugging the hole for a temporary basis, it's not sustainable. We will find out. And the biggest issue we're going to see moving forward is that social cohesion, youth unemployment, that we need to address now. The third thing with COVID that we have shown is that ESG is performing better. So companies that were operating multi-stakeholder longer term did better. I think it's a turning point, a decisive turning point for ESG. We see the same in the funds. That's why the demands actually of the financial market also interestingly have gone up significantly during COVID And the final lesson is that the real black swan was not COVID. We've had Zika, Ebola, SARS and many other zoological diseases. So, you know, by destroying our natural habitat, the real black swan was in fact the inability of governments to do something about it. We saw no global cooperation, we saw borders being closed, we saw everybody fighting for his own. So you saw again the negatives of not having global governance at a time that we needed it most. So moving forward, I think for The companies that did well are the companies short-term that look at cash. Cash is king and liquidity, we've talked about that. The other ones is that the companies that protected their employees from a safety point but also from a security point have done well. The companies that then started to look in their value chains, protecting their customers and suppliers, not surprisingly. And then the companies that invest, that continue to invest in a time of crisis. Invest in supporting their brands, whatever it is, make capital investments. And then the companies actually interestingly that have transparently communicated with their investors. Companies that said, yeah, I'm going to retrain all my employees. Yes, I am going to significantly drop my profits this year, but I'm going to keep my people on the payroll because I will tell you when we come out of this, at least I don't have to rehire them and we get a flying start. So the ones that have communicated actually also tend to do better. So that's more the strategy during COVID but the longer-term effects are difficult to predict right now, other than perhaps again 3 things for the interest of time very quickly. First one is a significantly bigger role of government in society because that money is pumped in, that has to be translated ultimately into equity, lots of it cannot be paid back as debts, and the role of government in society is going to increase. What does that mean for companies? What does that mean for boards? What does that mean for different partnerships that need to happen is a question. The second one is technology. We've accelerated in a few months what normally would have taken a few years. It will change the way we work, the way we shop, the way we communicate, the way we behave, and that has big repercussions. And the final one is global governance, where I don't think it will improve in the near future. The US elections will have a certain determined influence short-term on many things. It's still an important role that the US plays globally as a steward of moral values that have been missing lately, but longer term we really need to look at strengthening our global institutions: the World Bank, the IMF, the WTO, the OECD and other institutions have not failed us during the crisis, but have not shown us their strengths at a time that we needed them. So in the absence of that, it requires businesses to fill that void and step up. It's in their own interest. So businesses now need to be more involved in these transformative systems changes. Businesses now need to be more involved in de-risking the political process. And that's why organizations like Focusing Capital on the Long Term, if it was needed coming out of the financial crisis of 2007-2008, it is now exponentially needed coming out of the— or being in the middle, if I may say, of the current COVID crisis.

Great, and then last question for you. You mentioned Lord Lever, who started Unilever way way back long ago, and you can remind us of the story of the soap. I think I know, but you'll tell it better. How much do you— how do you think about long-term cultures? Clearly, there are sort of talismans that people can look at long ago, but you've changed the culture of Unilever quite a bit. So if you think about a CEO coming into a company where perhaps the culture is short-term, Perhaps the culture is not focused on sustainability, perhaps they're used to the quarterly mindset. How do you start to move that culture to where it ought to be? Yeah,

it's not easy because you need to do a lot of things and there are no instant fixes. But a lot of these things start at the top and the fish rots from the head down. So if the CEO is not convinced and if you don't get a board that is behind you, then it's pushing water uphill. So you need to get the board and the CEO in the right frame of mind. The evidence now is more overwhelming that a green recovery creates more jobs, is actually cheaper, has a higher return, is more resilient. So now is actually the opportunity at a time that we need to create more jobs and address some of these social issues to move into a green direction. And investments like greening cities, restoring our natural capital, accelerating the energy conversion, the mobility and move to the electric car and all that are great moments right now to invest our money in. And fortunately in the rescue packages, unlike 2006-2007 when only 2.5% of the spending went into greening the economy, most of it went to in supporting banks. You know, at that time banks were too big to fail and people were too small to matter. But now at least in this COVID, with the European Green Deal, the farm-to-fork, the biodiversity package, some of these requirements behind these rescue funds that have been put in place now on companies, we are seeing that about 30 to 40% of the spending is actually green. Doesn't mean the other is bad, there's a lot of neutral because we had to keep people alive and all that, but increasingly I think It will help company CEOs and it will help boards to understand that this is a great opportunity. Lord Lever, as I said, started the company not for his shareholders. After all, he was the shareholder, he did very well, but it was never for him about money. In fact, the guy always had debt. He always had a bigger vision than the money he had, and he would buy because he knew the right thing would happen. He would build the houses for his employees. without the factory full. He would build a port without having, you know, the ability to fully use it because he had this vision of making hygiene commonplace. That, that was such a compelling vision for him, lightening loads for housewives. And especially in those days, 1 out of 2 babies, even in Victorian Britain, died before the age of 1. And he believed in a concept of what he already called then shared prosperity. He was a Unitarian and he was very much, as I said, he built houses for his employees, he introduced pensions in the UK. He's the only one until now that when he went into the House of Lords took the name of his wife. So he got the highest number of volunteers to go to World War I to fight in the war because he was the only company in the UK, bar perhaps a few smaller ones as exception, who guaranteed the jobs back and gave the wages to the wives so that they could keep going. So that's why these guys went and volunteered to fight for Britain. But he had that vision of we're all in this together, and it certainly served him very well. And what I did was— there's a difference between values and culture. Culture needs to change over time. You might become global, things like environmental things might might become more important, you might need to be a little bit more performant, performance-driven, etc. But values should not change. And one of the first things when I went into Unilever to be accepted actually, which was the, the onus of that was on me, not on anybody else around me, I learned something from Jim Collins, Good to Great, where he said you have to nurture the core to stimulate progress. So as the first CEO coming in from the outside, I It would have been silly, arrogant, and ineffective to go up on a soapbox and tell these people what to do. They had built a great company with great brands. They had their own pride. But going back to the values and reinterpreting those values and putting that as an anchor gives a little bit of stability that you need to then stimulate that progress. So from there, we built this performance culture back. We built this external focus back. which is the Unilever Sustainable Living Plan. We changed our reward systems to make them more longer-term driven. We took some boundaries away like quarterly reporting that otherwise would negatively affect the behavior. We celebrated short-term successes and built it up, and we made a 10-year plan that basically tried to decouple growth from environmental impact, increase our overall social impact, which we translated in reaching an additional 1 billion people improving their health and well-being. It served us well because it, it, it made us focus on broader penetration, attracting the millennial generation, our future consumers, having a deeper presence in more countries than we were in, and it actually became a driver of growth. It became a driver of responsible growth, understanding the bigger issues that we put on each of the brands. A brand like a toilet cleaner like Domestos We gave it a mission to attack the issues of open defecation. Dove had a mission to establish women's self-esteem. Lifebuoy, our bar soap, one of our bar soaps, had a mission to help a child reach the age of 5. Sunlight, which is the big soap, had a mission to save water. You know, brands in India had a mission to bring people together, you know, Muslims and Hindus, handicapped and and physically able. So every brand got a mission that was bigger than numbers, than top and bottom line if you want to. And by focusing on that mission, we actually focused on society. We became again a company just like Lord Lever had designed it, that was there to serve society. And then I hired smart people because everywhere we were the number one employer. After a while, we had engagement in the top of the top tercile. In the beginning, we had to change a lot of people. I had to change 70 of the top 100 people. But after we got the right people in place, they figured out how to do this, deal with all these constraints, and also ensure that the shareholders would stay satisfied. Now, I have to say, looking back at the 10 years, there are always decisions that you make that are trade-offs. You're putting in a new IT system, you're building a new training center, you built a new factory. that only pays out in 4 or 5 years. So these are decisions that you need to make and there are trade-offs and you try to space them out to manage them and then you try to offset that with a little bit more savings here or a little bit more working, you know, bringing your working capital down or other things. But ultimately we were able to do all of that, keep running at a 19% return on invested capital and also building the shareholder return over time. And I think it, it put the company in a very stable state even after I left. The biggest proof of a leader is not how well the company does when you're there, but how well the company does when you're not there anymore. And so far I have to say that Ellen Jobe and his team are certainly doing an admirable job. And recognizing that I might be biased, but in this comment I try to stay as objective as possible.

Well, Paul, that has been an amazing conversation and quite the tour of the way you've thought about both running a company and how it has an impact on the world and how we can change the world. You've obviously been a leader in this space for a long time, a real visionary. Lord Lever would be proud. You've been a real leader for FCLT, and I look forward to what comes next. So thank you so much for your time today. I'm really grateful.

Likewise, and for what you are doing. And obviously we now need to not only enlarge the organization, which is a wonderful organization that has already an amazing impact in providing the tools and the wisdom and the insights for asset owners, asset creators, and asset managers to act on. I would say thanks to the FCLT, the world is already in a better state, but more importantly, thanks to the FCLT, I would say it gives me confidence that we are attacking these issues smartly but also with the urgency needed. What is important is to get more members from the different parts of the world to be part of FCLT and I think that a webcast like this hopefully also leads to some other leaders taking a responsibility beyond their own companies, because ultimately that is leadership, to put the interest of others ahead of your own, knowing that by doing so, you're ultimately better off yourself as well. So thank you for your leadership and hopefully see you soon.

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