Active Collective Advocacy

The support of business has been integral to making progress on climate change. The Paris climate accord came together in 2015, in large part, because of an unprecedented presence of business and CEOs at the meetings. They spoke with one voice, demanding progress.

The NGO Ceres coordinated a Climate Declaration from 1,600 companies. Specific sectors, such as finance, also put out statements of support.⁴ There are good reasons for companies to act proactively. Many regions of the world have some form of carbon tax, but it’s not uniform. A quarter of the world’s emissions are already under a pricing scheme.⁵ Since no business enjoys operating in many different regulatory environments, it makes sense to call for harmonized policies.

Many businesses got vocal when, in June 2017, the president of the United States announced that he was pulling the country out of the Paris Agreement, effectively making the world’s biggest economy the lone holdout. In a frantic few days before the announcement, Paul and the then-CEO of Dow, Andrew Liveris, scrambled to get a group of CEOs to speak up. The morning of the decision, the thirty multinationals they gathered ran an open letter as a full-page ad in the Wall Street Journal, urging the president to keep the United States in the agreement. They said the Paris accord would create new clean-tech jobs, reduce risk to businesses and communities, and strengthen the country’s competitiveness. The ad was signed by the CEOs of big brands such as 3M, Allianz, Bank of America, Citi, Coca-Cola, Disney, Dow, DuPont, GE, J&J, JP Morgan Chase, and Unilever.

A few days later, another coalition created by WWF, Climate Nexus, and Ceres got hundreds of companies to publicly declare, “We are still in” (which has since merged with another pledge movement into “America is all in”). The signatories now number roughly 2,300 businesses, 400 universities, 300 cities and counties, and 1,000 faith groups. CEOs and governors were instrumental in keeping the United States engaged in global climate negotiations after the country pulled out of the Paris Agreement.

For the 2019 climate conference, Paul and Liveris again reached out to CEOs to make their collective voices heard, and a larger group overwhelmingly called for reentering the Paris Agreement. Anne Kelly, the VP of government relations at Ceres, says that having two CEOs pushing so hard was “a real game-changer and integral to its success.”⁶ In the end, the CEOs of eighty large companies signed a “United for Paris” statement, which added some new, important elements: The statement recognized the climate crisis as a human and inequality crisis, not just an environmental one, and the signatories included the AFL-CIO, a coalition of labor unions representing 12.5 million workers.

It was a powerful message to policy makers to see business and labor together. The statement committed companies to support “a just transition of the workforce that respects labor rights … through dialogue with workers and their unions.” That phrase was highly unusual. Sharan Burrow, the general secretary of the International Trade Union Confederation, says that American companies generally fight against labor rights policies, and “that’s why having signatures of business and the AFL-CIO [together] was so important.”⁷ During the pandemic, a large coalition of companies, lawmakers, and activists in the EU came out in strong support for a green recovery focused on the clean economy, protection of biodiversity, and a transformation of the agriculture system.⁸ The CEOs on the list included Europe’s most forward-thinking leaders, such as Danone’s then-CEO, Emanuel Faber, Jean-Paul Agon from L’Oréal, and Jesper Brodin from IKEA. Another coalition, Business for Nature, brings seven hundred big companies and major NGOs together to “call for governments to adopt policies now to reverse nature loss this decade.”⁹

These public statements are just words, of course. They’re not the same as action and measurable changes in outcomes. But they commit companies to support the right policies, which then gives employees and other stakeholders ammunition to hold them accountable. It also makes moving on to more concrete partnerships easier—it all builds momentum from “say” to “do.” In the six years since the Paris Agreement, for example, more than 2,000 companies have signed up to set science-based carbon reduction targets, while hundreds are committed to 100 percent renewable energy.

On climate issues, the business community, in many regions, is ahead of governments. In the United States in particular, companies publicly advanced their carbon reductions and use of renewables while the government was going backward. If any CEOs remain skittish about speaking up, consider that an Edelman survey shows that over 86 percent of people are looking for CEOs to lead on issues like climate change and racial justice.¹⁰

What Net Positive Companies Do to Speak Out Collectively

Guiding Policy toward Net Positive Outcomes

Unilever launched the USLP with big, hairy, audacious goals. It was clear that many of the targets were impossible to reach without partnering with governments and civil society. Unilever proactively engaged with many stakeholders to build deeper relationships and advocate for change. Miguel Veiga-Pestana, the global head of external affairs and sustainability at the time, led the company’s work in Brussels. His goal was to engage with EU leaders on their priorities—such as increasing European competitiveness and participating in the emerging discussion about building a green economy.

Unilever sees policy-making as a funnel. At the top end, as officials get their heads around an issue like climate change, they discuss a wide range of policy options. The funnel narrows to something specific, such as a carbon tax, and then further to minutiae about pricing and mechanisms. While discussions were at the top of the funnel, and nobody had a clue yet about what to do, Veiga-Pestana would bring executives to meet with policy makers. “You can’t overstate how important it is to have a CEO like Paul or other senior leaders in the conversation early on,” he says.

Unilever offered the EU help in areas where it had specific knowledge: food security and supply chains, deforestation and climate change, hygiene and sanitation, empowerment of women, circular economy, and more. Executives helped EU officials understand how a policy might impact business and markets. Policy makers often expressed surprise at how Unilever approached them. Other business leaders normally came in to complain about legislation or ask for a lower tax rate, but as one government official explained, “Unilever comes in proactively with ideas about how to help Europe.” That kind of authentic work builds credibility and earns the right to be a strong voice in the development and implementation of policy. In the climate realm specifically, net positive companies should support an array of existing or potential rules and government actions (see the box “Climate Policies Companies Should Fight For”).

Cynics will say that this sounds like the same old self-interested lobbying. Not exactly. The difference is that net positive advocacy does not solely benefit the company; it drives changes that make the system more sustainable. There’s nothing wrong with advocating for society-improving policies that also help the business meet its goals.

Unilever Russia provides a good example of this balance. To reduce the footprint of its product and please consumers, Unilever wanted to increase the use of postconsumer recycled (PCR) materials in its packaging. Russia’s recycling infrastructure, however, was lacking. Irina Bakhtina, then Unilever’s VP of corporate affairs and sustainable business in Russia, worked with recyclers and retailers to set up their own infrastructure. Within a year, Unilever launched a portfolio of beauty and personal care products that came in 100 percent PCR bottles.

In parallel, Bakhtina tried to improve policies in Russia that hinder progress. She didn’t approach the government to ask for special tax breaks for the recycling infrastructure Unilever built (the company hoped to earn back the investment in sales and brand value). She did, however, want to change the way Russian regulations incentivized choices about material use. The country has an extended producer responsibility (EPR) law that charges manufacturers for each ton of plastic they use. The fee applied to everything equally, both nonrecyclable plastics (such as PVC) and the recyclable plastic Unilever needed for its PCR packaging.

Bakhtina partnered with a professor at St. Petersburg State University to create a detailed formula for collecting fees not based on weight, but on the type of plastic. Easily recycled materials would have much lower fees than plastics that end up in landfills. The incentives would drive businesses to use more of the recyclable materials, providing more feedstock for PCR packaging and lowering the cost of better materials for everyone.

There are miles of space between asking for tax breaks for your business specifically and asking for lower tax rates for all recycled content packaging. The former helps shareholders but drains money from the country. The latter increases the incentive to build a circular business around plastics and packaging, creating jobs while lowering both material demand and carbon emissions.

Unfortunately, many companies like to guide policy in the opposite direction, away from net positive outcomes. In the wake of the pandemic, a lobbying group representing the largest chemical and fossil fuel companies—who see their future in producing more plastic—worked to change a US-Kenya trade deal to lift limits on waste. It would greatly increase plastic use across Africa. Many of these same companies have signed on to the Alliance to End Plastic Waste.¹¹ That’s a good definition of hypocrisy, which, as usual, transparency helps bring to light.

Like any company, Unilever has had moments, often as part of trade groups, where lobbying has not matched the company’s goals to serve the common good. But if differences in philosophies are too big, net positive businesses leave the associations, as Unilever did with the US Chamber of Commerce, Business Europe, and the American Legislative Exchange Council—all were reluctant to fight climate change or actively worked against progress.

The work Unilever does in Russia and China best represents where the company is and wants to be. It has taken this path toward systems reset many times, helping governments, for example, develop better ways to stop product counterfeiting; build more consistent tax policies that attract foreign investment; improve efficiency in government and business; and support laws like the United Kingdom’s Modern Slavery Act.

Unilever is often recognized for its policy leadership. For its efforts to reduce animal testing requirements in Russia and China, the animal rights group PETA named Unilever (and a few other leaders, including Avon and Colgate-Palmolive) a “Working for Regulatory Change” company.¹²

What Net Positive Companies Do to Guide Policy toward the Common Good

Helping Countries Develop and Thrive

For businesses to succeed, the countries and communities they operate in need to thrive as well. Without economic development and protection of natural resources, human well-being suffers. Persistent poverty is not good for business.

Your business can create a net positive impact and best help communities and countries develop by focusing on their needs. Never compromise yourself by seeking only self-interest. We offer a few examples of how net positive companies can partner with and help the regions they operate in.

Investing with the government in development.  Unilever Ethiopia signed a “memo of understanding” with the State of Ethiopia to build facilities in the country, develop an industrial park, and buy more local goods for its supply chain. The company built a state-of-the-art factory for oral care products, a risky long-term bet in a country where only 3 to 5 percent of people brushed their teeth regularly. Unilever also invested in school programs to encourage oral hygiene and improved nutrition, and provided free products during a cholera outbreak. The mutually beneficial relationship is driving growth and paying off. After five years of investment, the business is profitable, with sales of $100 million annually in the eighth-fastest-growing economy in the world.

Unilever Indonesia made a similar choice in developing a large “fractionation” unit—used to divide palm oil into solid and liquid ingredients—in a remote location in North Sumatra. The company spent $150 million and partnered with the government to build out local infrastructure and port capacity. Unilever Indonesia president director Hemant Bakshi says that the project was also intended to help the thirty thousand smallholder farmers surrounding the plant move to more sustainable practices. It was a multipronged approach, including policy changes, to help the region thrive. The work proved they could produce more sustainable, traceable palm oil in the country. Subnational governments see these kinds of commitments and are incentivized to change legislative or regulatory approaches to make it easier for business to invest in the region.

Building ecosystems of industry.  A single investment creates ripples and highlights policy and economic needs. In Ivory Coast, Unilever wanted to produce mayonnaise locally, but there was no supply chain. The company worked with the government to increase chicken farming for eggs, creating new jobs. Then, seeing a dearth of supply of bottles, it partnered with the government and other industries to create local, more sustainable supplies of glass.

In Colombia, Unilever helped ease tensions between the government and FARC rebels, many of whom clear-cut forests to plant coca for cocaine or illegally mine. At the request of then president Juan Manuel Santos, it put forward plans to create more economic activity and jobs, which reintegrated the rebels, provided more stability, and avoided deforestation.

In Russia, Unilever helped found the Foreign Investment Advisory Council, a group of more than fifty multinationals working with the government to create a healthy investing climate. Executives would often come to meetings with the country’s leaders and ask for regulatory relief, or talk about what they needed. In contrast, Unilever would ask how they could work to help Russia’s economy and industries thrive.

Solving shared problems.  In the Middle East, Unilever worked with governments on desalination projects to help reduce water shortages. It developed campaigns to change consumer water habits in places with some of the world’s highest per capita consumption rates. Has the company benefited from this work? Not in a way that’s easily measurable. But giving more people access to affordable water is good for a business selling toothpaste, shampoo, and soap. It helps competitors also, but without a systemic improvement in water availability, every company would suffer (see the box “Water Work”).

Being a good friend and partner.  Showing up as an ally during emergencies is both humane and it’s good business. That’s when true relationships are built. One of the critical moments in sustainable business history came out of a natural disaster. After Hurricane Katrina devastated New Orleans in 2005, the CEO of Walmart, Lee Scott, observed that his company’s emergency efforts to bring water and lifesaving supplies into the city were more successful than the government’s actions. He started to think differently about the role of his business in society. Walmart began working with NGOs and employees on reducing its environmental and social impacts. The company’s scale, and subsequent pressure on suppliers to improve their performance, jump-started corporate sustainability around the world. Unilever has also increased its involvement in disaster relief, in part through a partnership between its Vaseline brand and the NGO Direct Relief, bringing essential medical supplies to health-care professionals during emergencies.

There’s nothing more important than executives personally showing support when disaster strikes. Paul and his wife, Kim, were among the first foreigners to visit Fukushima, Japan, after the tsunami-induced nuclear plant meltdown, when most foreigners were leaving the country. A few weeks before he took over as Unilever CEO, Paul also found himself in a terrifying situation while staying in the famous Taj Mahal Palace Hotel in India. During a dinner with company executives and local leaders, terrorists stormed the hotel and held it hostage for days. While everyone at the dinner survived, many others at the hotel were less lucky. Paul insisted on returning to Delhi just six months later to finish the dinner, in the same hotel, but this time, the business leaders served the amazing staff who had saved their lives. It showed a commitment to an important and storied market for the company, and public support for the revival of a famous landmark. It’s what you do, not what you say.

Being a friend to the communities you work in is not philanthropic. It’s right and good, but also builds the business. It creates trust and goodwill, and it aligns the company with the countries and their development agendas. Being a good partner to host countries means being in for the long haul. The managing director for Unilever Ethiopia, Tim Kleinebenne, regularly meets people from other multinationals who want advice on the market. They will ask him, “How can I get money out of Ethiopia?” If someone thinks like that, they should go somewhere else. It’s a long-term journey and commitment to a new market. Unilever, Kleinebenne says, “has been recognized by the Ethiopian government, who knows we’re an honest player supporting national development.”¹³ Helping countries succeed is good for business. Thriving countries expand and reward the friends and partners that helped them get there.

What Net Positive Companies Do to Help Countries Thrive

Taking on the Largest Problems: The Challenge of Palm Oil

China and the United States are the two biggest economies in the world and, logically, the two largest emitters of greenhouse gases. The next two mega-emitters, however, are not the third- and fourth-largest economies, Japan and Germany. No, the honor goes to Brazil and Indonesia because they cut down and burn a lot of trees, which releases vast amounts of CO₂.¹⁴ Deforestation produces roughly one-fifth of the world’s greenhouse gas emissions.¹⁵ The drivers of deforestation are complex, but the core reason is clearing land for agriculture—soy and cattle in Brazil and palm oil in Indonesia, which supplies 58 percent of global palm oil (and Malaysia, 26 percent).¹⁶

Palm oil is an ingredient in a vast range of products—soap, shampoo, cookies, bread and dough, ice cream, lipstick, and on and on. It’s basically a list of Unilever products, which is why the company is the world’s largest single buyer. But it’s not just in consumer products. About half of the palm oil entering Europe flows into the tanks of cars as biodiesel (which means transportation competes for land with food).¹⁷

Indonesia’s palm oil plantations cover sixteen million hectares—an area two-thirds the size of the United Kingdom—up from one million hectares in 1990.¹⁸ Most of that growth came from burning virgin forests. The palm oil problem thus connects to every big problem. Inequality and poverty force people to cut down forests for survival, and deforestation contributes to climate change and destroys biodiversity. Stopping deforestation is devilishly hard, and will only happen with the support of a full system of producers, buyers, governments, communities, and finance. After many years of efforts and failure, the industry is finally making headway.

Many NGOs, but Rainforest Action Network and Greenpeace in particular, have focused activism on this issue for decades. Through the 1990s and 2000s, they campaigned against Unilever, Nestlé, their peers, and agribusiness giants such as Cargill and Wilmar. Greenpeace activists scaled Unilever’s head office building dressed as orangutans, a species threatened by habitat destruction. The global NGO published two blistering reports in 2007 and 2008 that linked the whole sector, but Unilever specifically, to rampant deforestation.

Unilever was not unaware of the issue. It cofounded the industry Roundtable on Sustainable Palm Oil (RSPO) with WWF in 2004. But in 2007, according to Gavin Neath, Unilever’s chief sustainability officer at the time, “We had no real consciousness that we were helping to drive deforestation and climate change … we believed that climate change was mainly a problem for Shell, Exxon, Ford, or General Motors, but not Unilever.”¹⁹ The protests were a “life-changing moment” for Neath; it became untenable for the company, and for him, personally, to maintain the current sourcing practices.²⁰ In retrospect, it’s something the company should have been more proactive about.

At the time, the head of Greenpeace UK, John Sauven, had never met with Unilever management. But soon after Paul arrived as CEO, he and Neath developed a solid working relationship with Sauven and they met regularly. Sauven talks today about how open Neath was when he appeared on TV and admitted that Unilever didn’t know precisely where its palm oil came from. “All our suppliers have technically infringed either RSPO standards or Indonesian law,” Neath said.²¹ This level of transparency built up a trust bank that gave Unilever the benefit of the doubt if something went wrong.

With Sauven’s encouragement to “throw down the gauntlet,” Unilever took a highly unusual step and canceled a contract with a large supplier that was not meeting the standards. Sauven calls the move “seismic.”²² The Rainforest Action Network released a statement praising Unilever’s leadership and pushing other companies to do the same.²³ Unilever, as part of its Partner to Win supply chain program, brought together the big producers for a closed-door meeting in Singapore and got them to sign a moratorium on deforestation. At the 2010 global climate conference, Unilever pushed hard for all Consumer Goods Forum members to commit to eliminating deforestation in palm by 2020. The 2014 New York Declaration on Forests was another big statement and yet, when it published its own five-year review of the program, it concluded that the group had made “limited progress.” Or as Sauven concludes more clearly, it’s been a failure.²⁴

NGOs continue to pressure companies to stop working with bad actors in the value chain. It’s easy to demand that companies stop using palm oil, but then what? Palm oil employs millions of people across seventeen countries—4.5 million in Indonesia and Malaysia alone.²⁵ The net positive view of the world includes improving livelihoods, so cutting off millions of jobs would go in the wrong direction. From a climate perspective, a boycott or shift to other oils could backfire. Dominic Waughray, who runs the Centre for Global Public Goods at the World Economic Forum (WEF), says pulling out would leave “a lot of farmers with no income, and the outcome would probably be a lot worse.”²⁶ People with limited options may cut down even more forest for lumber, fuel, or crops.

Where things stand now is mixed. Unilever and most of its large-company peers are sourcing almost all their palm oil from RSPO-certified plantations. They came pretty far, despite the odds. Yet deforestation continues. The structure of the palm industry is a big problem. Hundreds of thousands of smallholder farmers have to act in their own best interest to survive. On the demand side, big CPG companies do not control the market (Unilever, the biggest, buys 3 percent of global supply). The two largest countries buying palm oil are India and China, and many buyers from those countries don’t really seem to care. They want the lowest price and don’t worry about certifications.

The only solution is a combination of broader coalitions and better enforcement. Unilever tried using market forces to get to scale, investing in trading GreenPalm certificates, which were similar to renewable energy credits. The company spent millions of dollars, but peers didn’t follow, which meant Unilever was just paying more than its competitors. They concluded it wasn’t useful anyway. A certificate might make consumers feel better about the product, but it didn’t do much for tackling climate change or address livelihood issues like living wages. As former chief sustainability officer Jeff Seabright says, “We can’t draw a circle around a few good plantations and say ‘we’re pure’ when, next door, they’re slashing and burning and there are human rights abuses.”

Unilever needed a different approach to get at the root causes of deforestation. So, it used the $60 million it would have spent on certificates to hire people to explore solutions on the ground and create a global fund with the government of Norway and others to help smallholders convert their operations to better methods. Critics say sustainable palm oil is impossible, but it’s not true. The industry and NGOs have gathered best practices. Greenpeace’s Sauven says more productive species, for example, double yields and greatly reduce pressure to clear more land.²⁷ The most successful work today is through another collaboration, the Tropical Forest Alliance (TFA), which Seabright and Marks & Spencer’s Mike Barry helped launch in 2012. The goal was to take deforestation out of supply chains by 2020. Nobody has come close to that goal, but TFA is having some success. In fact, deforestation rates in Indonesia have finally dropped.²⁸ What’s working, WEF’s Waughray says, is a community-based, “jurisdictional” approach. With smallholder farmers running 40 percent of the acreage, the work needs to happen at the micro local level. But to get to scale, they must also work on entire regions.

TFA assembled a collaboration to support farmers with local education programs, national and local government help with land ownership, and purchasing commitments from the buyers. But it needed one more component: financing. Even if farmers are willing to shift to more productive species, what happens during the four years until the trees bear new fruit? They need bridge loans or ways to securitize the future flow of revenue. The core of the palm oil solution, then, is simple in principle: help farmers transition, and they agree not to burn down virgin forest.

The Norwegian government and Unilever created the &Green Fund. It’s one of the players providing capital and catalyzing investment, especially in jurisdictions where the local government is on board and policies support the efforts. The stability that a full system partnership provides makes it more attractive for companies to invest in the region as well. This multistakeholder collaboration seems to be the best path forward on palm oil. As Waughray notes, many NGOs on the ground and farmer associations now choose to work with alliances like the TFA—that, he says, tells us what’s really working.

The model can also be effective in other settings. Nutrition company DSM built a factory in Rwanda to produce fortified grains and supplements. As part of the Africa Improved Foods partnership, DSM works with the World Food Programme, the Rwandan government, and the International Finance Corporation to address stunting, which prevents kids from developing fully, and malnutrition locally (versus flying in food aid, which is inefficient and not consistent with the values of the initiative.)²⁹ The lessons are clear: systemic solutions require broad coalitions with public, private, and civil society working together; you need a critical mass of buyers and a way to shift the economics on the supply side; it takes patience and time (in this case many years). The good news is that the tools for doing this work are getting better. Satellite data, for example, can closely track deforestation, giving buyers like Unilever real-time data on compliance.

Palm oil is certainly a tough enough issue, but as the world gets more volatile, other more complicated challenges await: race relations, refugees, defending democracy, protecting science from attacks, and many more. The most complicated challenges are increasingly being laid at the feet of business leaders. The ultimate work of a net positive company is to tackle the biggest problems in deep coalitions to heal the world.

What Net Positive Companies Do to Tackle the Largest Societal Challenges