Capitalism needs to evolve: Polman

The chief executive of the world's second-largest consumer products company, Unilever, had an admission to make at the Global CEO Summit organised by the Indian Society of Advertisers here on Wednesday. "When I was trapped inside the Taj Mahal Hotel on November 26, 2008, I realised how precious life really was," said Paul Polman, 57, with a tinge of emotion in his voice as memories of the brutal terrorist attack on the five-star hotel that night came back to haunt him.

Polman's brush with death, in a sense, proved to be his moment of epiphany, driving him to devote greater attention to his philanthropic work, especially for the blind, and more importantly, pushing him to make his company more socially responsible and sustainable. "In November 2010, we set out the Unilever Sustainable Living Plan, committing to a 10-year journey towards sustainable growth. What makes our plan different is that it applies right across the value chain. We are taking responsibility not just for our own direct operations but for our suppliers, distributors and - crucially - for our consumers," Polman said while addressing a packed audience, who didn't mind waiting the entire day for his speech, which came at the end of the Summit.

"All of us need to be net contributors to society. We must offer more than we take. We cannot afford any more global warming. We cannot let people go hungry. And, we cannot allow people to work for abysmally low fees. Capitalism needs to evolve," he said.

"Rapid globalisation and the resulting interdependence of financial markets, technology and economic systems have made this a more complex world to manage. Never before have we seen such rapid explosion in the global population, shifts in economic power or resulting pressures on natural resources. The complexities created make it difficult for us to deal with them. Enormous swings in currencies, raw material costs or climate have become the norm. The digital revolution will continue to change lives and businesses at an increasingly fast pace. Many struggle with this 'new normal'. No wonder the average tenure of a CEO is now less than four years - and those of politicians even shorter."

What can companies, therefore, do to navigate this VUCA world? Be more inclusive and sustainable. "Every brand should have a social purpose. We must grow our business, but keeping in mind the environmental and social impact it has."

Unilever has opted to walk the talk on this subject. Dove, said Polman, stood for women's self-esteem, Lifebuoy, a personal favourite of Polman's, which continues to grow in double digits a century after being created in India, has a mission to promote a healthy and hygienic life. Kissan, also a big brand in India, would eventually move to sourcing 100 per cent of its key ingredient tomatoes sustainably as opposed to 60 per cent now. "You cannot talk people into something what you haven't behaved into," he said quoting a popular line from the book 'Seven Habits of Successful People' by Stephen Covey.

"England took 100 years to double its gross domestic product during the Industrial Revolution. India has taken only 10 years. The new centre of gravity is shifting to the east and the south. I call it the new Asian hemisphere, where the US is shrinking back to its territory. In other words, it no more decides the framework of how to do business. That is increasingly coming out of markets from the east. But at the same time, there is a need to be transparent to be accepted," he added.

Unilever derives nearly 60 per cent of its revenues from emerging markets, so Polman is well aware where the centre of gravity for his company lies. However, the Dutchman, who married an American and has worked for almost 25 years with Procter & Gamble, the world's largest consumer goods company, admitted that emerging markets were slowing because they had failed to capitalise on the rush of easy money that flowed into these economies following the quantitative easing undertaken by the US.

"Unlike the US, which is practically on steroids (read quantitative easing), emerging markets are not structurally unsound. There is growth happening here. However, these markets missed an opportunity to improve tax structures and infrastructure when the going was good. They did not take tough decisions then. It is a little difficult now as the US looks to taper its quantitative easing programme," he said in response to a question from the audience. "But I will still continue to bet on emerging markets, where population is exploding and consumption markets growing."