For Paul Polman, Unilever CEO, It's a Question of Hypocrisy

Among corporate leaders today, Paul Polman has carved out a unique place for himself.

As CEO of Unilever, Polman heads an international food and home goods mega-corporation that sells products in 100 countries, employees 169,000 people, and features 400 brands, among them Ben & Jerry’s ice cream, Dove soap, Marmite spread, and Colgate toothpaste. In 2016, the Anglo-Dutch company grossed $56 billion, making it so attractive that earlier this year Kraft Heinz tried to acquire it in a $143 billion takeover. Only after Polman rallied opposition from members of the British government did Kraft Heinz back off.

Despite Unilever’s position as a business force — or perhaps because of it — Polman has taken an unusual stand for the head of an international corporation. His mandate, he says, is to fight for not only his company’s success but also global society’s greater good. On that point, Polman has said capitalism has proven to be “dysfunctional,” producing wealth disparity, short-termism in decision-making, and a willingness to ignore the need to protect the environment. As a result, Polman has become an outspoken advocate, especially on issues concerning climate science and environmental sustainability.

In pursuit of his activism, Polman has announced he is “ashamed” of his $12 million annual salary, adding, “I would work for free. Honestly, the salary itself doesn’t motivate me.” He has also said: “It’s not important to be CEO. It’s important to be a human being.” But since he is Unilever’s CEO “my personal mission is to galvanize the company to be an effective force for good.” As such, Polman downplays return on investment and highlights sustainability, going so far as to create a Sustainable Living Plan for Unilever.

Polman’s focus on being the “do good” CEO caused one publication to dub him a “high priest” of business, a “corporate evangelist.” Lofty titles, to be sure, but unfortunately what Polman says and what Unilever does are often two separate matters. Indeed, many times Unilever’s actions are in direct opposition to Polman’s haughty rhetoric. As National Review put it: “Unilever has violated virtually every gospel that Polman has preached.”

Consider profitability. Despite claims to the contrary, Polman has committed to raising Unilever’s profit margin, which was 15.6 percent in 2016, to 20 percent by 2020. He made the pledge in part because Kraft Heinz announced it intended to hit a 30 percent margin by 2019, and Polman got pressure from his stockholders. One way Unilever planned to increase margins was to jack up royalties paid to the company by local partners. So, starting in 2013, in India, Hundustan Unilever saw its royalty fees double over three years — an increase Polman called “no big deal.” And in 2015 Unilever tripled royalty fees to its partner in South Africa. That partner filed a lawsuit attempting to block the increase, but Unilever is expected to demand the company pay the higher fee anyway, regardless of any legal opposition.

At the same time, the South African Competition Commission announced that — in another attempt to secure profits — Unilever was guilty of colluding with a local company, Sime Darby Group, to control the country’s margarine and cooking oil market. Unilever and Sime entered into a plan not to compete with each other in agreed-upon markets, creating a price-fixing scheme good for the companies but harmful to consumers. The commission recommended Unilever be prosecuted; the company could face a fine of 10 percent of annual revenue.

There have also been issues concerning Unilever’s treatment of workers. In Kenya, for example, women employed by Unilever were being forced to pay supervisors a quarter of their modest salary — $4.15 a day in 2011 — to keep from being harassed. One woman told The Irish Times: “When I was younger, they asked me for sex. Now they just harass the older women.” Eventually, the Center for Research on Multinational Corporations found that Unilever failed to take adequate measures to prevent harassment, sexual or otherwise, of its female employees in Kenya.

One of the most egregious violations of workers’ rights came in India. For years, workers in a thermometer factory owned by Unilever were exposed to mercury poisoning. Finally, some 600 workers filed a lawsuit against the company. The suit was well underway in 2009 when Polman was named CEO, but he made no moves to settle the case. Instead, Unilever continued to argue that it did not pollute the area around the factory, which ultimately closed, even though the Indian government found the mercury exposure “hadn’t just hampered the lives of workers but also [had] taken a toll on their newborn children.” The lawsuit was settled last year — seven years into Polman’s tenure as CEO — with Unilever paying an undisclosed sum to the injured workers.

Unilever’s actions in India prompted one social activist to declare: “For all its talk of social responsibility, Unilever has behaved no different from Union Carbide in Bhopal.” Unfortunately, Unilever’s actions are not isolated to India. In markets around the world where Unilever’s brands are sold, Paul Polman’s hypocrisy is the rule rather than the exception.

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