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Thursday, June 1, 2017

Unilever CEO Headlines CEIBS Master Class

June 1, 2017. Shanghai – Hours before US President Donald Trump announced that America would withdraw from the Paris climate accord, saying it would cost his country US$3 trillion in lost GDP, the CEO of one of the world’s largest fast-moving consumer goods companies warned of the long-term cost of failing to address the underlying causes of climate change. “We spend far more dealing with the impacts of climate change because we are not dealing with the issue,” said Unilever CEO Paul Polman. “The cost of inaction is becoming higher than the cost of action.”

Speaking at this evening’s CEIBS Master Class, before a packed auditorium at the school’s Shanghai Campus, Polman tipped his hat at China’s efforts at sustainability and climate change, noting its significance “especially at a time when others are pulling away”. With the US’ position on climate change, China now has a unique opportunity to fill the vacuum, a move that will earn the Asian country global respect and see it increasingly take on a greater role in the world, he said. 

The Unilever CEO also spoke of the role that the private sector, including companies such as the one he heads, needs to play in ensuring that they “help governments do the right thing”. “If we don’t tackle climate change, we won’t have economic growth, and this is widely accepted by many businesses and people – except some in the US,” he said. He urged companies to think long term, instead of going for the short term wins, adding that enterprises need to increase the benefits they bring to the wider society and not just their shareholders – a move that will ultimately be good for their bottom line. “By focusing on consumers and serving them well, the long-term stakeholder is best served. If you had invested £1 in our company in 1986, you would have £68 now, compared to £17 from the stock market,” he said.

Earlier this year, the company’s healthy balance sheet made it an attractive target for an unsolicited $143 billion takeover bid by Kraft Heinz, a food conglomerate backed by three Brazilian billionaires and Warren Buffett. The bid was later withdrawn but it was clearly unwelcome. During the Q&A section of this evening’s event, Polman said the bid was “purely an attempt, by a few people, to get short term returns”. He added “We spend a lot of time to get the right shareholders that support our strategy.”

A large part of that strategy is a commitment to the global sustainable development goals that range from eradicating poverty and hunger to partnering with others who share the same values. “Sustainability is about putting the future of your children and grandkids ahead of your own greed,” said Polman. For example, Unilever takes the unique approach of taking complete responsibility for its entire value chain – unlike CSR initiatives that largely focus on factories that are immediately under companies’ control. “You can’t outsource your responsibilities,” Polman stressed.

He added, “The fiduciary duty of the board is to the long-term success of the company. I don’t think there is a trade-off between long and short term. We are even more determined to fight for our model, which I believe is a good thing, and hopefully it will be for other companies as well.”

Today’s speech by the company’s CEO was just the latest step in a long-running relationship between CEIBS and Unilever that goes back to 1997 when the company began enrolling its employees in the school’s non-degree programmes.  As CEIBS Dean Ding Yuan explained during his welcome address, Unilever was among the first European multi-national corporations that looked to CEIBS for employee training in the early days of the school’s launch. “We were at the core of training talents for these companies, and we developed together,” he said. “Now we are working hand in hand with Chinese companies as they go global.”

For his part, Polman said he was pleased that there are 25 CEIBS Executive MBA graduates and five MBA graduates working at Unilever, adding that CEIBS – with its strong ties to both China and Europe – is exactly the type of educational institution needed at a time when there are growing divisions in some parts of the world.

Despite his concerns about climate change and the short term approach being taken by many, he is optimistic that the widespread use of the internet has boosted the levels of transparency, and that millennials will soon have more votes than baby boomers (most of whom voted for Brexit, for example). “We need human willpower and leadership to get going and put the common good ahead of our own interests, to get out of our comfort zone and work in partnership with each other to solve these issues,” said Polman. “The world has many of these leaders, and CEIBS is creating some of them. Ultimately it will be people who make the difference.”

Charmaine N. Clarke