The business of saving the earth

Net Positive: How Courageous Companies Thrive By Giving More Than They Take

Author: Paul Polman & Andrew Winston

Publisher: Harvard Business Review Press

Pages:  274

Price: Rs 1,250

This book couldn’t have been released at a better time. The COP26 Climate Summit, with its minor successes and its bigger failures in getting all countries aligned to a common climate goal, is still being discussed. Paul Polman and Andrew Winston’s book examines what corporations should be doing if we do not want to destroy the planet with our actions. Mr Polman was the CEO of Unilever for a decade and had created its sustainable living plan.

Mr Winston is a long-time thinker and writer about sustainable businesses, having written The Big Pivot and co-authored Green to Gold earlier. Their collaboration — Net Positive  — is both a call to action for CEOs as also a broad guide to building a business strategy that has sustainability at its centre, instead of viewing it as an element of a Corporate Social Responsibility project.

Net Positive is a concept that entails the corporation putting back more into the environment and society than it takes out. This is different from a company that is setting the goal of being less harmful to the environment by, say, reducing emissions or planting more trees or adopting other green practices. It is also far more ambitious than a Net Zero or Net Neutral goal for sustainability. And though it is not a concept that Messrs Polman and Winston developed by themselves, they are among its more visible advocates.

The book is not a How To guide or a workbook with specific actions prescribed. It lays out some broad principles. Nor is the book about just the Unilever journey —  though the company and Mr Polman’s decade-long stint do form a big part of the book. Some other companies and what they are doing also get referred to from time to time, but a lot of the focus is on what are the critical things to keep in mind.

Some points that the book makes are particularly important and every CEO following this path needs to remember them. The authors explain that Unilever could embark on this bold path only because Mr Polman had taken care to fix the other issues — sluggish growth, high costs and so on. More importantly, he never made it an either/or choice for the board or investors. Unilever adopted an exceptionally ambitious sustainability target and road map — but it was never at the cost of profits or shareholder returns. Unilever consciously chose to drop short-term shareholder returns — but focused on delivering higher long-term returns to every stakeholder, not merely shareholder. But this would not have been possible if Unilever had not fixed its old problems first and earned the trust of the board, the employees, the investors and the other stakeholders, including customers, people in communities where it operated and so on.

One of the things Mr Polman did while embarking on the Unilever Sustainable Living Plan (USLP) in 2010 was to stop quarterly profit guidance. This was an incredibly brave decision but it allowed the company to focus on long-term innovation, set ambitious targets and align the whole company to meeting those goals without getting distracted. This did not mean the company gave up on meeting its own short-term profit or revenue goals — or that shareholders had to wait a long time to see returns. It did all those things, but where the approach helped was in ignoring short-term profit maximisation tactics if they would hurt in the long run. Interestingly, Leena Nair, who has just been named the new Chanel CEO, makes several appearances in the book because she had a crucial role in implementing the USLP as chief human resources officer.

With sustainability at the centre of its business strategy, Unilever vastly outperformed companies that were following a narrower goal of maximising shareholder profits in the short run.

Seven years into the USLP journey, in 2017, Mr Polman and the Unilever board got an offer to be acquired by rival Kraft Heinz. That company itself had been bought a few years earlier by Brazilian private equity group 3M and Warren Buffett’s Berkshire Hathaway. Kraft Heinz followed a strategy exactly opposite to that of Unilever — it believed in slashing costs, taking on high debt and focusing entirely on shareholder returns. Its offer was attractive and would have meant a lot of money for Unilever shareholders if the company agreed to be acquired. But

Mr Polman and the board decided to refuse. In two years, it would prove to be the right decision. Unilever kept going strong while Kraft Heinz got into financial trouble in 2019.

The principles Messrs Polman and Winston lay down are simple to grasp but not the easiest to implement, especially for publicly listed companies with shareholders demanding returns. Nor, as the authors point out, is there a perfect company — and that includes Unilever — that has managed to do everything and can be used as an example. Every company that has embarked on this path has made plenty of mistakes. And all of them are still works in progress. It is this pragmatism that elevates this book above those of the average ESG guides for corporations that keep being published.

The reviewer is editor, Prosaicview.com, www.prosaicview.com and former editor, Business Today and Businessworld