A growing threat
The world faces enormous challenges, from poverty to food security and climate change. For too long business sat on the sidelines, unable or unwilling to be part of the solution to these systemic challenges. This is changing -- as the limitations of governments in resolving these critical issues becomes increasingly apparent, as citizens increasingly demand change, and as the cost of inaction starts to exceed the cost of action.
The drive to meet these challenges comes not only from a moral standpoint, but also with a strong commercial imperative -- and that is why a growing number of enlightened businesses are stepping up to the plate. Three-quarters of the largest companies in the world have set clear social and environmental goals, 4000 now report on CO2 emissions, and 50 of the top 200 have an internal price for carbon. A major shift in our model of commerce is already underway.
The Unilever Sustainable Living Plan
Unilever's response is set out in the Unilever Sustainable Living Plan, which has stretching goals to reduce our environmental footprint and increase our social impact. It is making us more efficient and saving money -- over €300 million in cumulative avoided supply chain costs since 2008.
However, the time has come to look beyond incremental reductions in environmental impacts and increases in social impacts, important though these are. Business must make a bigger difference to global challenges by leveraging its scale, influence, expertise and resources to drive transformational change at a systemic level.
The Better Growth, Better Climate Report, from the Commission on the Economy and Climate, on which I sat, identified three key systems of the economy where there is potential to invest in structural and technological change: Cities, which generate 80% of global output and 70% of global energy use; energy systems, where renewables and energy efficiency offer significant investment opportunities; and land use. Food production can be increased and land use emissions cut through more sustainable agricultural practices and by protecting forests from further destruction.
Over half of Unilever's own raw materials come from farms and forests. That's why we have committed to champion sustainable agriculture in areas where we have most influence, to help smallholder farmers improve their practices and livelihoods, and to eliminate deforestation from supply chains.
This is not about mitigation. It is about opportunity and aligning our purpose in business with this opportunity. The World Business Council for Sustainable Development is championing this message with its Action 2020 roadmap. It's also one of the findings of the Better Growth, Better Climate Report, which argues that traditional macroeconomic objectives are best achieved through a decisive shift to a new climate economy, with inclusive, high quality, climate-resilient growth.
This is certainly our experience at Unilever. Looking at the world through a sustainability lens not only helps 'future proof' our supply chain, it also fuels innovation. Over half our agricultural raw materials come from sustainable sources and we are on track to make that 100% by 2020. Our brands with a strong social purpose, such as Pureit water purifiers, Domestos toilet cleaner and Lifebuoy soap, are not only improving millions of lives -- by helping to tackle the Water, Sanitation and Hygiene (WASH) agenda - all three are growing strongly. There doesn't have to be a trade-off between doing well and doing good; on the contrary, purpose-driven brands are actually growing ahead of the market.
Making 2015 a year of change
2015 can be a pivotal year for human development and climate change. In September leaders gather in New York to agree the Sustainable Development Goals that will replace the Millennium Development Goals -- to generate a more inclusive, collaborative, and solutions-focused agenda for change.
Then in December, the COP 21 Climate Change Conference in Paris holds out the very real prospect of a global agreement on curbing carbon emissions and the promise of a more stable and sustainable future.
Although often run as separate agendas, climate and development are entirely interdependent. We cannot eliminate poverty without enabling developing countries to engage more people in economic activity that use natural resources, and we cannot resolve climate change without creating wealth in a more equitable and less carbon intensive way. Left unchecked, climate change risks not only making the poorest poorer, but pulling the emerging middle classes back into poverty. A shift in gears, towards more integrated and systemic solutions, is also vital if we are to deliver a real and lasting impact.
Whatever governments agree and however high their ambition, the reality is these agreements will succeed or fail by how they are implemented by business on the ground. Business as usual is not an option. We have to find new ways of working and collaborating to bring about sustainable change.
Partnerships and collaboration will be key
I believe the solution lies in bringing together the few key players that can make the biggest difference in helping to create tipping points. It only takes a handful of companies to change together to trigger others to follow and transform whole markets.
This is the thinking behind Unilever's commitment to play a role in ending deforestation linked to supply chains. Deforestation accounts for 15% of greenhouse gas emissions, making it a big contributor to climate change. More than 1.6 billion people depend on forests for food, medicines and fuel, including 60 million indigenous people who are almost entirely dependent on forests for their livelihoods.
Palm oil, a key cause of deforestation, is found in 50% of all consumer goods. Multinational companies account for 20% of palm oil purchases. That is why, in 2010, 400 members of the global Consumer Goods Forum pledged to help achieve zero net deforestation by 2020.
This led to launch the Tropical Forest Alliance in 2012, a partnership between the CGF and six governments, including Indonesia. This was followed by the New York Declaration on Forests, at which over 170 entities signed up to halving deforestation by 2020, and ending it by 2030.
This pledge was the first time that a critical mass of developed and developing country world leaders partnered around such a goal. Today, with pledges from all the major palm oil producers and most of the world's big manufacturers and retailers, over 70% of the world's globally traded palm oil is now committed to be sustainably sourced.
If the consumer goods sector can do this with deforestation, think of the difference if other sectors convene similar coalitions to drive sustainable practices in other commodity supply chains.
Momentum is building. By changing the way we do business, by seeing the transformation to a low-carbon and sustainable economy as an opportunity to be seized, not a risk to be managed, by looking beyond our own impacts to systemic areas where we can make a transformational difference, and by working with others to achieve shared goals, business can play a bigger role in creating a better future.
The time to act is now.
This blog post is an abridged version of an article originally published in Reframing the Game: The Transition to a New Sustainable Economy -- edited by Mike Townsend and published by Greenleaf -- and is available now.
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