Ranjay Gulati: Does mayonnaise have a social purpose? How about fabric softener, ice cream bars? Alan Jope says yes. He’s the CEO of Unilever, the large multinational consumer goods company. Jope’s company sells Hellmann’s mayonnaise and hundreds of other products, from Dove Beauty Cream to Ben and Jerry’s ice cream to Axe antiperspirant. Unilever is one of the largest consumer product companies in the world. It is also a leading corporate proponent of sustainability and social responsibility. Alan Jope has been the head of Unilever since 2019. He says he’s carrying on a sense of social and business purpose that dates back to the company’s founding more than a century ago. But he’s quick to add that Unilever is also in the business to make money for its shareholders. Alan Jope argues that having a deep corporate purpose pays dividends and will keep doing so for years to come.

Hi everyone. Welcome to Deep Purpose, a podcast about courage and commitment in turbulent times. I’m Ranjay Gulati, a professor of business administration at the Harvard Business School. Alan Jope was born and raised in Scotland’s largest city, Glasgow. He spent much of his career at Unilever offices around the world, heading the company’s businesses in China, Russia, Africa, and the Middle East. This massive company sells more than 400 brands, but it started back in 1885 with a bar of soap made by William Lever with vegetable oil instead of animal fat.

Alan Jope: And he was quite the pioneer on business practices that today would be considered quite advanced. So back in the 1880s, he defined the purpose of Lever Brothers as to make cleanliness commonplace and lessen the load for women. So he was a public health pioneer and a gender advocate back then. When his workers went off to fight in the First World War, not only did he hold their jobs open for them, which was unusual, he paid their wages to their families throughout the entire period of conflict. He was an early pioneer of pensions. He created a model village for his workers to live in decent conditions. And so, the DNA of being a business that tries to be a force for good, a business that tries to do the right things for society and the environment goes back well over a hundred years and, I think, is quite deeply embedded in the company’s ethos. But let me finish with one comment though, which is Unilever is not an NGO. We are a commercial organization and our goal is to serve all our stakeholders, including our shareholders with strong returns.

Speaker 3: Unilever’s purpose: to make sustainable living commonplace.

Ranjay Gulati: Unilever’s current mission to be a corporate leader in sustainability was first chartered by Alan Jope’s predecessor, Paul Pullman. He’s the author of the book Net Positive: How Courageous Companies Thrive by Giving More Than They Take. When Pullman mapped the course for Unilever, he harkened back to founder William Lever’s quest of making hygiene commonplace in Victorian Britain. That’s when iconic Unilever brands like Dove Beauty Bars and Lifebuoy soap originated. I asked Alan if the re-minted purpose established by Pullman was part of why he, Jope, got tapped to succeed him and what role that revised purpose played in the handoff from one CEO to the next.

Alan Jope: First thing is that Paul did an absolutely outstanding job of resurrecting that DNA and putting it slap bang in the center of the table of Unilever’s agenda, that we want to be a company that sees sustainable business and purpose as part of what makes us different. I was on Paul’s executive team for quite a long time before taking this role, so he and I of course shared that common desire that Unilever is a model for sustainable business. And I’m a hundred percent certain that if he hadn’t detected an authentic commitment to that, he would have made sure that I would not have been a candidate to succeed him. So we had hundreds of hours of conversations on the subject over the period that we worked together. But I think it was taken as granted as we transitioned. And one word of wisdom that Paul left with me is that it’s not enough to work in the system, you have to work on the system. And so, he charged me with a responsibility, not just to operate Unilever but to be part of trying to make business a force for good more broadly.

Ranjay Gulati: We all talk about this idea, that purpose is a lofty thing. How does a CEO have to engage the purpose of the company on a daily basis? How does it inform your decision-making? Is it periodic, once in a while when you’re doing your strat[egic] plan or hiring plan? Or is it something that really is front and center of what you do on a daily basis? How does it play into decision-making for you on an average day or a week?

Alan Jope: One of the reasons I enjoy doing sessions like this, Ranjay, is because these types of thought-provoking questions come up. It wouldn’t enter my head that purpose or sustainable business was a periodic part of my job. It is my everyday job. Let me elaborate on that just a little bit. As I said, we believe in putting purpose and sustainable business at the heart of Unilever, because we think it will drive stronger financial performance. It’ll make us a stronger company. And the business case is emerging. It’s becoming clearer. It’s got really four components. The first is we measure how consumers see our brands in every market, in every category, in every month ongoing. And one question we put in all of the continuous tracking is, “does this brand make a positive contribution to society or the environment?” And brands that index highly on that measure, we call those our sustainable living brands. They now represent 60% of our revenue, and they are growing a multiple faster than the rest of the portfolio.

We say publicly three times faster, but we’re kind of hedging our bets. It’s actually much faster than that. And so, we are unequivocally convinced that brands that stand for something bigger than shinier hair, softer skin, or whiter clothes, but go beyond that, will grow faster. So that’s the first part of the business case, is growth. Secondly, cost. We have eliminated 1.2 billion euros of cost through sustainable sourcing, largely in the energy space. But we may want to come back to the cost dimension - and are there trade-offs? The third is risk: both macro risk – a world that’s on fire or underwater is not a great place to be selling salt or bullion cubes – but also micro risk. I’m slightly embarrassed to admit we got it wrong on things like Black Lives Matter on a couple of occasions with a couple of our brands. But we’d worked so closely with Black leaders that they rushed to our side at a moment of need.

But maybe the most important aspect of the business case is the fourth element, which is it’s a magnet for talent. People these days want to join companies where they’re comfortable with what that business and brand stands for. So the reason we put sustainable business at the heart of the company is because we think it drives growth, it takes out cost, it lowers risk, and it’s a magnet for the best talent. And therefore, it will help us deliver better financial performance.

Ranjay Gulati: Now you said 60% of your brands are purpose-driven. What about the other 40? Are they going to head there, or you’re going to be happy saying, “Look, not everything can have purpose. Some do. And some will never have it.”?

Alan Jope: I don’t think you can really fake purpose. It’s extremely difficult to find what can a brand authentically talk about that is relevant to their product category and is already present in their DNA? We profoundly believe that brands have to walk the walk before they talk the talk. So the reason why Dove can talk about girls’ self-esteem is because we’ve done workshops with 60 million girls, which we know changed their self-esteem and their perceptions of beauty. The reason why Domestos, which is one of our home care brands, can talk about sanitation for all is because we’ve put over 30 million toilets into homes in the emerging market. The reason why Lifebuoy can talk about saving the lives of kids under the age of five is because we’ve taught more than a billion people the merits of hand washing. Yes, a billion people the merits of hand washing. And only when you’ve taken those actions, we think do you earn the right to talk about these actions and that purpose to consumers. And when you get it the other way around, where the talk precedes the walk, that is greenwashing, and you will get rumbled.

And so, purpose has to be very authentic. Now, about five years ago, the ratio was the other way around. 40% of our brands over indexed on purpose. It’s now at 60%. We think there’s still plenty of runway to go. But there will be some brands that will not be able to find purpose. We will not take them out of our portfolio simply on some principle around if you’re not purposeful, you don’t belong at Unilever.

Ranjay Gulati: In my recent book, Deep Purpose, I lay out four advantages of having a clear and embedded corporate purpose. What I call directional, relational, motivational, and reputational benefits. Now, some skeptics say those benefits are outweighed by what they say are lost profits. But Alan Jope responds that the case for sustainability is completely proven. So why do shareholders still struggle with this? Why are they still skeptical of Unilever? One critical shareholder famously said, “Mayonnaise is just mayonnaise.” Hellman’s mayonnaise is one of Unilever’s products. Critics say purpose is just a distraction for Unilever. I asked Alan Jope about this disconnect.

Alan Jope: Shareholders who want to criticize Unilever are free so to do it. It’s their right. And particularly in the last 18 months, our share price has not performed to its potential. And I think the incident you’re talking about was an investor who was irritated by the lack of share price appreciation that we’d shown and concluded that we were somehow or another distracted with purpose. But that is such a minority view. The vast majority of Unilever shareholders are encouraging – even exhorting – us to stay the course and prove the case. And it’s simply because they believe that it will drive superior returns. There’s already good evidence emerging that so-called ESG investing delivers superior returns. And I think that evidence will only build over time. But I have conversations with Legal and General, with L&G, about our commitment to fair living wage. And they want to understand how it works and how they can drive fair living wages across more of their companies that they’re invested in. Or Aviva coming to us asking about nutritional standards. Or BlackRock sitting down with us, wanting to understand how do you decarbonize your business.

So there’s many, many, many examples of shareholders exhorting us to stay the course. And the particular example of “should mayonnaise have a purpose?” Well, it sounds very lofty when you say it like that. But Hellman’s, as well as being an outstanding product, simply wants to help tackle food waste. Food waste is a massive contributor to carbon emissions. Food waste would be the third largest country in the world in terms of carbon emissions. And it is very much in Hellman’s interest of course, to encourage people to eat up their leftovers with some delicious Hellman’s and avoid food waste. So it’s good for the brand and is good for the planet. And by the way, since Hellman’s started putting food waste at the heart of its business, it has accelerated its performance and has now growing for two years well into double digits. So again, we see the performance following.

Ranjay Gulati: We all know one thing is when you create value, customers have to be willing to pay for that value, or some customers. You made a very interesting observation in one of your earlier conversations around different generations having different levels of resonance with purpose-driven brands. In particular, the millennials and the gen Xs are slightly different than, and I think you’re the first one to really come out and say it in as explicit terms. Could you expand on that idea, and what does that mean for you if some of your customers don’t really care?

Alan Jope: Well, the specific data that we’ve got, and I am generalizing, because of course there’ll be exceptions within any cohort, but baby boomers don’t even claim that they change their brand choices according to sustainability matters. The next generation, gen X, which I just creep into by one year, we’re worse. We’re dishonest. We say that we change our brand habits, our brand choices based on sustainability issues but then don’t, in fact. It does impact millennials. Millennials will for sure preferentially choose brands that they see as making a positive contribution to the economy, to the environment, or society. But they’re not prepared to compromise on performance or value to a point, price to a point. But Genzennials, the 23-year-old and younger now, it is almost the single biggest driver of brand choice.

And the way we look at that is very simple. If we want to be a relevant company for generations to come, for decades and decades to come, we better be thinking now about the brand-choice decisions that are being made by our core consumer of the future. I’m old enough to remember when we talked about millennials as the next generation of ... Well already, millennials are our absolute core consumer. And very shortly, Genzennials will be a very, very material part of our consumer base. And I frankly would rather be relevant to tomorrow’s consumer than yesterday’s consumer.

Ranjay Gulati: So which brands do you offer that millennials love? Are there any specific brands that you would want to sort of single out and say which brands are great for different groups?

Alan Jope: Probably the iconic brand in that space would be Dove. Dove is a brand that started as a cleansing bar. I don’t want to say soap because it’s not actually a soap. It’s directly a certified isethionate. But it started as a cleansing bar. Then it became a shower gel, a body wash, and then it moved into other categories like hair care and deodorants and skincare. And the Dove purpose is all about addressing issues of young people’s self-esteem by trying to address ridiculously unachievable images of beauty that are out there and cause great damage to girls’ self-esteem. And this message, coupled with great products, resonates across the generations, but particularly with millennials and genzennials. So there’s this interesting characteristic of one of our oldest brands being the most relevant to tomorrow’s consumer.

Ranjay Gulati: One of the great challenges for any CEO trying to map out and follow a deep purpose is staying the course. There are those quarterly reports to contend with, shareholder meetings to navigate, stock analysts scrutinizing returns, business professors pontificating, journalists piling on. So purpose becomes a convenient punching bag for critics, even though there are so many other factors involved in a company’s performance. I asked Alan Jope how he contends with these critics.

Alan Jope: That might be the most important question that we’re going to get to here because the executive team of Unilever, our board, and my drive is to prove three things. We want to be famous for a stable of extraordinarily purposeful brands that are the envy of our sector. We want to demonstrate unequivocally the link between sustainable business and better financial performance. And the third one is that we want to be a beacon for diversity and inclusion. And it places the onus on us to provide an unusual degree of transparency. Our share price has underperformed for the last 18 months, really for two reasons. We are disproportionately impacted by COVID versus some of our peers. Our strong emerging market footprint has meant that the consumption declines from COVID, which have been higher in certain emerging markets, have impacted Unilever more than they’ve impacted some of our peers.

The second thing is we talk about creating shareholder value. It’s a hard thing to boil down to your average person working in our business. So we talk about 4G growth. We want consistent growth, competitive growth – where we’re winning market share –, profitable growth, and responsible growth. And we have stubbed our toe on the consistency of our growth. We’ve had too many quarters where we’ve surprised the market. And so, the marching orders in the business right now are no surprises. Now, in volatile times like this, that’s a tall order. But we have to do a better job for our shareholders on the consistency of our performance. And we profoundly believe and are encouraged by our shareholders that holding the line and staying true to our commitment to sustainable business increases the likelihood of us delivering that performance – not reduces it.

Ranjay Gulati: One of the other sources of confusion is short term versus long term. Some purpose companies say, “But listen, I’m really investing in the long term. Don’t judge me for quarterly performances. Look at me as a long-term business. I’m really investing for the growth.” And others say “No, no, no, no, no. Short-term markers are as important as long-term performance. I want to see short-term deliverables towards the long-term goal. You can’t get a free pass in the short term, pointing me out to the long term.” And there’s a constant kind of back and forth about this: does purpose really only focus you on the long term and maybe neglect sometimes short-term trade-offs?

Alan Jope: Yeah, absolutely. We sit in the second camp. We believe that we have a responsibility to drive strong short-term performance by managing the business for the long-term health of the company. Now, if you go into a period where you need an unusually high level of investment, and that’s going to impact margins a while, then the responsibility, I think, is to tell your shareholders what you’re doing. If you get purpose into your brands, you see the growth rather quickly. So we don’t really believe in this short-term versus long-term trade-off on sustainability. Let me give you two examples where we have live debates right now. Bizarrely, sustainably-sourced palm oil costs more than regular palm oil. Even more bizarrely, recycled plastic costs more than virgin plastic. Now we’ve made strong commitments on only using sustainable palm oil. We’ve made strong commitments on having a high proportion of our packaging that’s plastic coming from recycled plastic.

And so, you can imagine there’s live debates in the company at a time of very high inflation that we’re in right now and extreme cost pressure on should we suspend or abandon those commitments. And they’re of the order of magnitude of a couple of hundred million euros, which frankly is peanuts in Unilever’s P&L. And so, my executive team and I are 100% aligned that we stay the course, and we have to find other ways of offsetting those temporary costs. And part of that is an argument that’s easy to swallow because we are enjoying benefits from the early switch that we made to green energy. So yes, there can be short-term pressures, but certainly in the way our business’s P&L is constructed, they’re easily absorbed.

And we do have a small but outstanding sustainability team who understand these issues deeply and understand how to put sustainability into Unilever. Thirdly, you need to hire people who care about sustainable business. And then, yes, you need to put it in reward and incentives. And one quarter of the long-term incentives of every manager in Unilever, so you’re talking about 15,000 people, is predicated on progress on our sustainability agenda. So you require all of the above, and, I guess, an unblinking commitment from the CEO as well.

Ranjay Gulati: So this leads to my next question, which is a holy grail question for many people right now, which is measuring purpose. What thoughts do you have, and what have you learned about measuring purpose?

Alan Jope: First thing is that a quarter of our long term incentives are based on measurable progress, quantified progress, on seven different sustainable living metrics. So some are on our brands, some about agricultural sourcing from regenerative agricultural spots. There’s a measure on plastic and using recycled plastic. So one measure is in our compensation. The second I’ve already touched on, which is measuring how consumers see our brands. Do they see our brands as making a positive contribution to society or the environment? But the third great asset in our company is our people. And we’ve put 55,000 people through purpose workshops. This is a kind of two-day event where you try to articulate your own purpose.

And what we find is that people who are able to find alignment between their personal purpose and the work that they do – and that’s many, many of the people who come through these workshops – are four times more engaged with the company when we do our people surveys. They report five times better overall wellbeing scores. They report higher resilience. They are typically outperforming their peers. And the last thing’s very interesting is they’re three times more likely to reference Unilever as a place where they would like to see their family and friends working. So I think purpose is highly measurable in the two most important assets that Unilever has are brands and our people.

Ranjay Gulati: Companies large and small always talk about the importance of their employees. The question of course is distinguishing rhetoric from real investment in employees, especially in a time of rapid social and economic change. This is one area where, in my view, Unilever stands out.

Alan Jope: We had made our commitments to the future of work before this dreadful pandemic. But of course, the world has just gone through an enormous experiment in dramatically shifting where, how, and when work gets done. And we do believe in those values and attributes that you just described. But I think there’s some bigger points. The first point is I think we all realize that the jobs that we do today are not the jobs that we’re going to be doing tomorrow. And we are deeply committed to reskilling and upskilling our people for their future careers inside or outside of Unilever. We know, of course, as a business, you do have to do unpleasant things like restructure factories. And we’ve made a commitment that when we lock the gates on a factory, we want 100% of the displaced employees to already be future-fit for the next stage of their life.

Some will choose to retire with their severance payments. Many will choose to go to work for ... I will help them find jobs with other companies. Many take money to reskill themselves. A particularly popular one at the moment is we have many factory workers who, when we’re shutting down a factory, reskill either as truck drivers – there’s a huge shortage of truck drivers in the world – or actually on information and analytics. And so, we’re very committed to reskilling and upskilling people for a future of work. But the other thing is we are also piloting new employment models. And so in New Zealand, for example, we’re trialing a four day work week on an 80-120 basis. We expect you to work 80% of the hours for 100% of the pay, but we expect 120% of the output. And I must admit it is going rather well, our pilot in New Zealand.

But we’ve also introduced something called U-Work, which is where someone can stay on the Unilever payroll, work a minimum of six weeks of the year, retain some level of benefits and pension, but have space to go do an academic experience, try and start their own business. Hundreds of people take out this U-Work approach. And it’s great for us because, in addition to the mandatory six weeks, they’re available for surge work. Or we’ve created an internal marketplace called Flex, where we advertise interesting work, and people from around the business can volunteer to get involved in those interesting projects on top of their existing responsibilities. So you’ll notice I haven’t even talked about return to the office. I think that’s quite a trivial point. The big point is work is going to change.

We need to get out of thinking about nine ‘till five, five days a week. On the payroll, we’ve got 150,000 people working in that mode, but actually there’s 5 million people work for Unilever more or less full-time in our extended ecosystem. And we need to think about different employment models, different ways of work, flexible ways of working. That’s where the future is going. It’s networks of people working together, not just people working on a payroll and coming to the office every day.

Ranjay Gulati: So let’s talk about you, Alan, about you and your personal purpose. I know you have one, so why don’t you tell us what it is. What does it mean? How did you come to that realization of what it is? And how is it going to give you kind of a source of energy and direction and clarity in what you need to do?

Alan Jope: Ranjay, you’ll have heard me now for a little while now talking about with great pride and confidence and somewhat lack of humility about Unilever. I’m so proud of our company. I really hate talking about myself, but I will attempt to answer your question. So I went on one of these purpose workshops that we put 55,000 people through. And I came out of it knowing that what I’d generated was not correct. I came out that some rather bland statement about leading teams that feel energized, blah, blah, blah. And then over the next few months, I was kind of reflecting on it. And I think it came to me where most of my good ideas come, which is in the shower. What I absolutely love in life is adventures. I love adventure travel. In fact, next week, I’m about to go on the next two-week leg of our around-the-world adventure motorcycle race travel. We started in Anchorage, Alaska. We’re on our way to Sydney, Australia. We got as far as Patagonia, shipped the bikes to Cape Town and we’re heading up east Africa starting next week. I’m thoroughly looking forward to that.

I’ve had the great privilege of working for Unilever. I grew up in very modest circumstances in Scotland. The idea of living and working in London was a bit of a dream, far less being packed off to live and work in New York and Bangkok and Shanghai and Singapore and now coming back to this extraordinary job. And what an adventure that has been for my wife, my kids, myself. It’s a extraordinary gift that the company has given me. And I absolutely love, frankly, I love risk. So the convergence of adventure being something that’s important to my personal life, adventure being one of the reasons why I’ve stayed with Unilever for over 30 years now. And I do like leading. I’m not afraid to be put in the front of the room. And so my purpose I characterize as, “lead the adventure.” And it serves its purpose. And I do think it’s true to who I am and what motivates me.

Ranjay Gulati: One of the elements you said, taking risk and adventure, another word that gets used a lot to describe great leaders is courage. Because courage is taking action in the face of fear, not absence of fear. How has purpose helped you think about in terms of acting, taking bold action, and decisive action?

Alan Jope: I do not define who I am by the job that I do. My family is much more important to me than my job. I feel an extreme responsibility to the people in Unilever. But at the end of the day, we are a consumer products company. And I think a good, thick Scottish skin, a healthy set of friends and family, and a deep belief that our company – we get it wrong all the time, but it’s never with ill intention – we really are trying to do the right thing for our stakeholders, the right thing for our employees, the right thing for our business partners, the right thing for the communities where we do business, and, yes, the right thing for our shareholders. So it’s not poorly intended. And so according to my biometrics ring that I wear, I sleep on average seven hours and 13 minutes a night. And I believe it’s because when we take risks and things go wrong, I have mechanisms to keep it in perspective, not least of which is the support of a wonderful family and some great friends.

Ranjay Gulati: I argue that having a deep purpose empowers companies to thrive financially and organizationally while unleashing their full potential as a force for good. But there’s been a backlash to this general idea. Some business experts sneer at it as simply woke capitalism. They counter that business alone is the business of business. But Alan Jope says companies can’t avoid the three big crises facing the world right now: climate change, the degradation and loss of nature, and growing social inequality.

Alan Jope: And most of the other problems that we have are derivative of that. So Black Lives Matter has its roots in inequality. And the biggest action that we are taking on that is we’ve committed that, by 2030, everyone in Unilever and our extended value chain will earn at least a fair living wage. Now, a fair living wage is more than a minimum wage. It’s enough to clothe, house, feed, and educate your family. And it took us - actually, we assumed that we paid a fair living wage within Unilever to everyone, but it turned out we didn’t. So it took us a couple of years to get Unilever up to fair living wage. And we are now very clear: we will not do business with companies that are not committed to paying a fair living wage to their employees. And that gives a multiplicative factor on our reach and impact. And actually, show me a company that’s comfortable saying externally they’re not prepared to pay a fair living wage. But honestly, this is a transformational idea, and we hope to shift whole industries towards paying a fair living wage.

Now, to the broader point that you’re making about getting dragged into all these difficult, horrendously complicated, and dangerous issues, here’s our view. It’s impossible for business leaders these days to avoid political issues. Climate change is a political issue. Inequality is a political issue. But we should stick to issues that are relevant to our business. So of course, race and ethnicity matters to Unilever because we’re serving people with beauty products that are intrinsically linked to the color of their skin. Of course, climate change matters to Unilever. It’s a lousy place for us to do business when crops are failing as they are right now, when we’re getting adverse weather events that are destroying our distribution centers or causing other problems. So we understand that we will be drawn into political issues.

We should try to stick to things that are relevant to our business. And we should assiduously avoid getting drawn into party politics, where we get involved in naming sitting politicians or taking sides in partisan debate. That’s becoming harder and harder to do. And this point about woke capitalism, we’ve done really quite a lot of work to understand that. It is particularly prevalent in three countries: US, UK, and Brazil, where this emerging rhetoric is parodying the polarization of the political environment. And it’s particularly media that lean to the right are quite enjoying now taking potshots at companies and people who advocate for positions that would be more typically associated with a more liberal position. It is a tiny, tiny phenomenon mainly in the media, and not represented in consumer’s views whatsoever. And it’s particularly true in only three countries around the world. So we are unbowed. We are staying the course.

Ranjay Gulati: Alan Jope is the CEO of Unilever. He spoke to me from London. Here is a company that’s been working on its purpose longer than most. Unilever has been through difficult trade-offs that a firm must navigate in actually living its purpose. How does a business leader like Alan Jope make it all work? How do you engage an entire organization, especially one as big and diverse as Unilever? And how do you balance delivering for shareholders while also staying committed to all your other stakeholders? Unilever is a great case study of a company, a very big and innovative company showing how it can be done. I’ve likened the challenges of walking this path of purpose to treading along a razor’s edge. You’re constantly making trade-offs, trying to stay on balance. There’s a lot to get right and not much room for error.

You’ve been listening to Deep Purpose, a podcast about courage and commitment in turbulent times. You can go to my website for more of my conversations with leaders in the business world navigating the 21st century business environment. You can also find out about my book, titled Deep Purpose. That’s deeppurpose.net. This podcast is produced by Steven Smith with help from Lauren Modelski, Melissa Duncan, Craig McDonald, and John Barth. The theme music is by Gary Meister. I’m Ranjay Gulati.