Paul Polman on Accelerating System Change

I really enjoyed reading your book, Net Positive. For those of you who haven't had a chance to read it, this is a plug. It's a really great business book. I was struck by the title of your book, Net Positive. As you've heard this morning, we've been talking about net zero. And I wonder, are we really at a point where the conversation can shift from net zero to net positive?

Well, thanks for asking and thanks for having me here. But I don't think we have a choice, to be honest. The reason why we use net positive versus net zero is that we've really— for us, the definition of what a company needs to do goes well beyond the energy transition. We're talking about undermining of democracy. We're talking about human rights. We're talking about restoring our biodiversity. So our concept of net positive is a broader concept. We ask ourselves a very simple question: how companies can profit from solving the world's problems, not creating them. And as we have seen, It's well beyond climate alone. The second thing is we've overshot the planetary boundaries, really well beyond what we think. And in fact, it's, it's Johan Rockström at the Resilience Institute is looking at 9 planetary boundaries. 6 of them we've already exceeded. So we have to restore our biodiversity. We have to bring our oceans back. The world's capacity to absorb, for example, climate change is running out. And the issues are significantly higher than we think, and it takes us a longer time to address. So the only way that companies can survive in the future is actually with a restorative, reparative, regenerative mindset. And you start to see that happen. Microsoft and Ørsted, Danish energy company, looking at carbon capture storage or taking carbon out of the air, going back to when the company started. Walmart making big commitments like Unilever on regenerative agriculture. Google going water positive, etc. And the third thing which is important for us, why we call it net positive, is that we also think that companies need to have an active participation in driving these broader systems changes. I saw one of your polls looking there in the other room, but we were waiting about the complexities of European legislation. Might be true, might not be true. It depends on what side of the mirror you're sitting. But at the end of the day, it does call out the need for companies to be actively involved in that policy setting. Setting to be sure that we get the right policies. And, and often the right policies is actually less policies, not more. But it does require this active participation, and we just see too few companies doing that.

Like you said, it goes beyond climate change, right? What else can a company do to become net positive?

Well, for us, net positive has 5 characteristics, if I, if I may say. So the first one is to take responsibility of your total impact in the world. It starts really there. There are very few companies actually, even today, that take commitments for Scope 3. Many companies in many industries think they can outsource their value chain and also outsource their responsibility. It just doesn't work anymore. It is taking care of all of your stakeholders, taking a longer-term view on the business, not the myopic short-term view, seeing shareholder return, which is important, but seeing that as a result of what you do, not as a myopic objective. And then last but not least, be involved in these broader systems changes. Now, how do we implement a European biodiversity directive, a farm-to-fork strategy, a sustainable reporting directive that makes sense? Be active part of these discussions as we change the way we do business.

When you were CEO of Unilever back in 2009, you started pushing sustainability and this idea of of just doing good business very early on, really before it became sort of a must-have on the corporate agenda. And you launched the Unilever Sustainable Living Plan, which basically pushed social and environmental progress along with economic growth. If you had to launch a sustainable living plan today, what would it look like and how might it be different from the plan you launched back then?

Well, there will be a lot of differences because the world has moved on. But when we started in 2009, it was not just a conviction. You know, the science was there. We had a lot of evidence that we were destroying the planet, that our linear extractive production and consumption methods were running out of, out of time. And, and these issues have only piled up in the last 10, 15 years. So we might have been a little bit ahead of the trend in the sense of Not having the data to prove that it actually is a good business, which we do have now. Being a little bit progressive in some of the commitments we made based on sound science, by the way. We never moved away from that. But you know, few companies at that time were ready. The financial market wasn't frankly as ready as it should have been. So so it it was a a struggle to get it higher on the agenda to some extent. But it was all an effort to make to move from responsible business to resilient business. I think the next step that really companies have to look at is what we talked about, move to regenerative business, not just focusing on output and growth, but on impact. You know, it's basically you have to think about we've done very well with the fossil fuel economy and has given us a lot of wealth, at least for a certain part of the world's population, not all, but it's given us a lot of wealth. And then from the fossil fuel economy, it became the data economy. We invented the internet and all the other things. And an enormous amount of wealth creation again that you've seen even this year. All the stock market increases are basically in the top five technology companies, and I think now we're moving from a from a fossil to a technology to a biodiversity economy. How can we live in harmony with planet Earth? Planet Earth will always be there, but we're seriously challenging our own existence. We've lost seventy percent of the world species in the five. Last 5 decades. Some people call it the 6th greatest extinction. We're cutting forests as if we don't care. As long as a dead tree is valued more than a tree that's alive, we frankly are in trouble. So we need to move to thinking holistically and living in harmony with nature. In fact, we are nature. The word human and humus that Hanneke just talked about, the ground, has its same derivative. And if we don't understand that, we're actually working very hard on our own demise. So we have to think about that in a, in that regenerative sense.

You've consistently talked about serving multiple stakeholders, and that includes people, your own employees at a company. And recently you've been quite active in talking about the younger generation, the workforce. We've seen a generational change in people, people's expectations from companies that they work at. We've been through a period of quiet quitting, and now we are seeing what you've described as Conscious quitting. Can you tell us a little bit more about that?

Yeah. So we're actually looking now, you know, the way I always describe it, I've moved from formal or board authority when I was the CEO of Unilever for a decade to, to probably more moral authority. I don't have the money, the big organization behind me and all the other things. And we're continuously looking at tipping points to move things forward faster. How can we drive CEOs to a higher level of ambition? A higher level of action because the direction is clear. We don't have to debate it anymore. What we need to do is well understood by most people. But the speed and the scale with which we're doing it is frankly missing. And one of these surprising tipping points that companies ought to be very sensitive to is your own employees. It would have been unheard of 5 or 10 years ago that your own employees would walk out of your company. And now it's a weekly occurrence somewhere in the world that people actually walk out. Because they don't see the company's commitments being put into action. They don't believe the CEOs are genuine. They don't think that companies go far enough versus what they really should be doing. And employees increasingly— I always say in every company there's a greater Thornburn now. Employees increasingly speak up, organize themselves. And so what we really see amongst the millennials, the Gen Zs, and and so forth, a significant increase in them selecting companies based on their values, based on the commitments these companies make. They want to be part of something bigger than just earning money. They want to work for companies that actually make this a better world. And 30% actually have left companies because of that, because they didn't see words matching actions. And 45% is considering that. And these numbers are significantly higher if you go to these younger age groups that we're talking about. So that's why we call it conscious quitting. And, you know, it was the second most talked discussion on LinkedIn for a long time. So it hit a lot of strings and we got a lot of people to say, yeah, that's exactly what I'm doing or considering. And, and companies ought to be careful about that. Like in the UK now, if you look in London, 75% of CEOs say they can't get the talent they want. Well, the first thing to start is, is to keep the talent you have. And that's—

yeah, I was struck because when you did post this on LinkedIn, as we talked about earlier, it really resonated.

Incredible. You know, in Unilever, when we moved to the Unilever Sustainable Living Plan that you referred to, which is really decoupling our growth from environmental impact.

Yes.

Increasing our overall social impact. 53 overarching targets, 50 big targets. Hanneke talked about some of them. What we were surprised about was that we became the 3rd most looked up company on LinkedIn after Google and Apple. We're not a brand name in a sense, you know. So it was quite surprising to us. And we got over 2 million people applying. We didn't have any problem attracting talent in a sense. So there is something out there that is happening to these younger generations that we'd be better to take notice of.

I also want to talk about consumers. Being at Unilever, you provided people around the world with the everyday essential items that they need. which gives you a really special and unique window into what customers are thinking and what they're prioritizing. How has customer expectation from corporates changed over the last, say, 10 years?

Yeah. So I never liked the word consumer, even when I went into Unilever. Big revolution. The boss doesn't like consumers and this is all we're doing. But, you know, you don't consume a car, you use a car. You don't consume a house, you use a house. You don't consume a barbecue in the summer, you use a barbecue. So if we start thinking about usage, then you also get very quickly to circularity. You get to optimization of use of materials and all that. So some things you do consume. I understand that. But even then, you need to be very responsible to ensure that consumers, using your word, citizens, as I call them, can continue to do that. So it's very important. Most companies are inside-out companies. They're full of themselves. They have a lot of money. And they advertise, and if it doesn't work, they advertise a little bit more. But basically, they stuff it down your throat, and that has resulted in this you know irresponsible consumption pattern. You can't blame the consumers for that. But if you treat them like citizens, you all of a sudden start to understand their problems. That's why many of our brands—you know, Domestos, a toilet bowl cleaner—we had to attack the issues of open defecation. Lifebuoy from India—we had to attack the issues of infectious diseases. Five million children. Losing their lives before the age of 5. So we became problem solvers of big societal issues, and that expanded these brands, that made these brands grow faster. And that's really the essence of putting purpose at the core of the business. So what we now see with younger people, that, that is far more attractive to them. As I said before, they want to be part of solving some of these solutions, and they actually are increasingly making their brand choices based on their values. you know, basic performance for many of these brands has become pretty close. So they're starting to select these brands on a little bit more than, than just the technical or, you know, the ingredient sides of it.

When I was reading your book, the one thing I was struck by is how often you touched upon the word— how often you use the word courage. And very often you talk about how it's really important for leadership, for business leaders to do the right thing. What's the most courageous decision you've taken as a business leader?

Well, I don't like to talk about myself too much, but, but courage comes from the French word corps, or the Latin derivative of corps, or the French word cœur. So it's speaking from the heart. So it's being true to yourself. And that's missing in a lot of cases right now where companies make commitments that are minimal they can get away with versus what science will tell you. Where they agree that some issues need to be addressed, but they delegate it to others. It doesn't become their problem. Where partnerships are not the genuine ones to drive the broader systems changes. So courage is actually acting in the face of fear versus flying, flighting in the face of fear, if you want to, and how to deal with that. And that comes from a stronger sense of inner core or purpose. There's no question about it. So I don't know. I actually think that most of the things we did was common sense because the world needed it. Science was requiring it. I think it takes more courage to deny that. It might sound horrible, and that's not how we use the interpretation of the word courage. But to deliberately do the wrong things versus what society needs, to deliberately put things in your own interest when you know it's not in the interest of the common good, To say one thing and do another thing, I think to some extent takes more courage. So I don't like to say what we did was courage. We abolished quarterly reporting. We abolished guidance. That was a big thing in those days. But it was needed to create a space for people to operate in the longer term. And it served us well. 300% shareholder return over 10 years, outgrowing our competitors top and bottom line. Sure, you need to run the business with discipline, but these things You can do much better if you take a little bit of a longer horizon. And frankly, the financial market, at least a big part of the financial market, would actually support that. So I don't know if that is courage or not. I tend to look at courage much more in individuals that I see. You know, we run one of our biggest foundations. We run as, as 25,000 blind or deafblind children in school in Africa in 8 countries. And if I see— I was just coming back from Kenya and I see the people working with these kids at a pittance of a salary. Putting their lives ahead of the lives of these kids ahead of their own. That's what I call courage and leadership. The doctors that go to Ebola and COVID when they don't even have a medicine yet, putting their own lives at risk. That's what I call courage. You know, we post a question on LinkedIn.

I was just going to say yes. Yeah.

Which is amazing again how reactions come out there, you know.

Yes.

But someone posted this morning like one of their bosses sold their house. his own private house, because he didn't want to take a loan. He didn't want to put the company in debt. And he used the money of his private house to be sure that he could keep paying his employees. And had to buy back a house 3 years later when house prices had doubled. But the guy said, if I do it today, I'd do it again. We had an employee in Unilever that gave up one of the organs to an intern who came in, who wasn't even part of the company, but needed an organ transplant. That one really struck me. So that's, to me, that is the level of courage. What we do as CEOs, most of that stuff, we like to blow it up, but it doesn't really fall under that heading. Courage is truly when you put yourself to the service of others, knowing that by doing so, you're better off yourselves as well. And that takes a lot before you get to that point.

And all of you can weigh in on this conversation as well. You can just go to LinkedIn, and Paul has asked, what's— We

want your ideas on there.

Yes, put your ideas on there and Paul might respond. You know, one thing that keeps coming up is we hear about companies doing amazing work. We hear about their net-zero targets. We hear about them doing good work in the field through their foundations. How do you cut— how do you decipher what is noise and what's actually being done?

It's becoming easier, obviously. I have the advantage of speaking with a lot of CEOs. There's not a week that goes by that I don't speak to 20 or 30 CEOs or work with industry collectives, understand what's happening. You know, I always look people in the eye and you can see if they tell the truth or not. If you see 5 people from the communications department around them, a piece of paper that they read from, you, you have a high chance that you deal with a load of baloney. So, so these things you can pick up. AI. Obviously is a very good tool to see as well. But nothing beats real action, explaining what people do, not what they say. Stephen Covey, in his book 7 Habits, said it very well when he said you cannot talk yourself out of things you have behaved yourself into. So I don't get too excited by big commitments. I get really excited by things that are happening. And here is the reality, if we like it or not. We have a carbon budget of about 500 gigatons left. That led to the carbon law, like Moore's Law, you know, 50% reduction every decade to stay within the 1.5 degrees by 2050. The reality is we are now finding out that the Earth's capacity to compensate for our lack of moving is less than we thought, that we're getting closer to negative tipping points. And it turns out, as will soon be published, that our carbon budget is more like 250 gigatons, which means actually that in the next 5, 6 years, we'll we'll be hitting the 1.5 degrees. If you think it's serious now, which it is, it will get significantly more serious. The carbon emissions this decade are going up 14% when they should go down 45%. Oh my God, the numbers are so big. So we're well off our track. You know, the COP28 is not done and we can talk that later. So we're well off track. So companies that make commitments by 2050 is kicking the can down the road. Companies that only make commitments by 2050 and not have anything by 2030, is outright irresponsible. And there are many companies that have made science-based target commitments. 4,000 companies, $38 trillion of market cap. So there are things happening. But are we putting it at the speed that is needed? Are we fully internalizing these challenges? I think we still have some way to go.

I know we have questions from the audience. I want to go to Meg right away.

How can governments support this transition more effectively?

Well, so what we have seen, fortunately, if you take the last— let's take the last decade to not get too emotional on the discussions of the last 6 months. But we've seen environmental legislation probably more than doubling. And there are some incredible pieces of regulation, if you want to call it, of frameworks. The IRA infrastructure or CHIPS Act in the US is dramatically changing the environment there from far behind to a catch-up mode, I would say, not that leadership thing. The European taxonomy or corporate sustainability directives are good pieces of legislation. Europe increasingly becoming the standard setter for the world. The border adjustments for carbon would be another example, or the deforestation directives influences other parts of the world. But we see the same happening everywhere. In fact, contrary to what people think, The— if you take emerging markets like Chile or Morocco or Tunisia or China, if you want to call it that, they're actually significantly farther ahead on the conversion to green energy than the US is even today. So we see this acceleration happening. What governments— governments can do more, if you talk just about climate change, is really a putting their commitments into action. What we talk about CEOs long on words and short on action, I think that is also a disease that has crept into governments where most of them cannot look beyond their nose or the next election, which seems to be every 2 or 3 weeks, where attention seems to be drawn down to the crisis for here and now versus the longer-term thing. So how to really get them to understand that nature-based solutions are important, it's is still a struggle, as Hanneke was talking about how to get to sustainable agriculture. Food and land use systems, 30% of the problem, also 30% of the solution. A very fast response, low investment, high returns, but yet it's still a struggle to get it on the agenda. And she gave some examples here from the UK, which I totally subscribe to. So how do you keep that on the political agenda? How do you give politicians more courage is something that business needs to take more responsibility of. I've always said that we've benefited for a long period of time from governance running well, democracies functioning, etc. Now we have a difficult period. There's no question multilateral institutions not quite designed for what they need to deliver on today, etc. Populism, nationalism coming into national politics exactly because we're not addressing these issues. But that is the moment for business to step up and de-risk that political process. And yet too few businesses

Thank you very much. Thank you, Paul. I— we could have carried on, but I know we're out of time. But thank you so much for joining us today. Thank you.