Unless a product serves a higher purpose than making people more attractive or fragrant, it may soon be persona non grata in the portfolio of the world’s fifth-largest consumer products company.
In a bold move, Unilever CEO Alan Jope announced last week that the company will ditch brands that don’t commit to a social mission or that don’t “stand for something more important than just making your hair shiny, your skin soft, your clothes whiter or your food tastier.” He gave Unilever products that don’t measure up a timetable to commit to a purpose. If they can’t, “they may be better off being owned by someone else.”
The company will also scrutinize marketing efforts for “woke washing” — meaningless catchphrases about a noble mission without action to back it up.
In the world of consumer packaged goods, which often moves at glacial speed, Unilever’s announcement smacks of fundamental change. The European-based company is parent to more than 1,000 brands used by 2.5 billion people worldwide every day. At a time when consumers are increasingly demanding that business show a genuine commitment to fairness and social justice, Unilever’s tough leadership is sorely needed in the many companies that sell us daily necessities. Yet it is sadly missing.
Some might call Unilever’s move risky – especially if they believe business must be agnostic to social values and that revenue is all that matters. This camp (and it’s existed for a very long time) might also believe that exploiting human weakness and even societal prejudice to deliver the numbers is required to cater to consumers. (Consider that Unilever owns a few brands that whiten skin.)
This ethos may have been acceptable in previous decades, but it is increasingly foolhardy today. Cigarettes, unhealthy foods, products that rely on human misery to make them cheaply all need a rethink.
Packaged goods companies, retailers and restaurants need to wake up to the fact that their markets are shifting profoundly. This is not your 1980’s consumer. They are “woke.” Over 60% of today’s shoppers are demanding better-for-you foods. And according to the 2018 State of Sustainability in America survey conducted by Natural Marketing Institute, more and more consumers are looking for products that are both better for the planet and healthier for the person.
In the future, as Millennials and younger generations continue to weigh a company’s values and not just whether its products taste good or perform well, products that align with these values will prosper, and so will the companies that make them.
But this is not easily done. There’s tremendous board and investor pressure to keep the status quo. (Just look at Kraft Heinz.) Appealing to the next generation of consumers requires a new kind of corporate leadership — one in which companies and brands step up and own the social issues they have contributed to, then move to solve the problem.
Unilever understands that a higher calling, and socially responsible products and practices, are good for business. Jope points out that the 28 Unilever brands that are most committed to social justice are driving 75% of the company’s growth. He cites Ben & Jerry’s, which is up front about its social missions and progressive values; Dove, whose “Campaign for Real Beauty” features women of all ages, shapes and skin colors; and Lifebuoy soap, whose stated mission is to improve health in developing countries by encouraging hand washing and other hygienic measures.
So what’s keeping more big companies from following Unilever’s example? I see three misguided mindsets that corporate leaders – who often view “change” as a four-letter word — must overcome:
- “If it ain’t broke, don’t fix it.” Many companies continue to pour money and resources into brands that are out of step with consumer sentiments and social concerns. R&D budgets behind products that meet changing consumer demands have been slashed over the years and innovation is on the endangered species list. Kraft Heinz is an example of a consumer packaged goods (CPG) company that has followed this trajectory. On the other hand CVS made the risky decision to jettison its $2 billion cigarette business to set itself up to meet shifting consumer demands for a healthier lifestyle. Companies that stay put are sure to miss these tectonic disruptions and forfeit their market positions to more aggressive on-trend brands.
- “Deliver the numbers at all costs.” In most cases a company’s reward system does not align with the lofty societal or health goals espoused by leadership. Bonuses remain tied to hitting sales, growth and profit targets. These incentives trickle down to operating groups, including marketing and sales managers, who then act in the most expedient way to achieve these annual targets. One company that has made a concrete decision to align business goals with corporate responsibility is Danone. Danone changed its status to a B-corporation which undergoes a certification process to verify that it conducts business in a way that “meets rigorous standards of social and environmental performance, transparency and accountability.”
- “Wellness and sustainability are passing fads.” Companies who ignore how consumers feel about social and environmental issues do so at their own peril. Fair trade practices, preserving rainforests, reducing plastic waste, feeding the undernourished and treating workers humanely all matter to a growing number of consumers. A recent EAT Lancet report is further pressuring industry to take responsibility and act to reverse the global ‘syndemic’ of obesity, undernourishment and climate change. A company’s proven commitment to making the world better will go a long way to forging long-term bonds with consumers. “Woke washing” won’t work in today’s high-transparency environment and will only be exposed for its hollowness. Companies must police themselves or the market will call them out.
Unilever is wise to understand this and get ahead of it. It recognizes that the consumers of tomorrow, who will someday have the bulk of the purchasing power, will no longer stand for companies that peddle products that make us feel inadequate about how we look or whether our teeth are white enough or that perpetuate social problems rather than address them. More companies must follow suit to be competitive.