Prospects for sustainable growth
In Unilever we are convinced that businesses which both address the direct concerns of citizens and the needs of the environment will prosper over the long term. This thinking lies at the heart of the Unilever Sustainable Living Plan and our Compass vision of doubling the business while reducing our environmental footprint and increasing our positive social impact. As sustainability becomes embedded, there is growing evidence that it is also accelerating our growth. It certainly contributed to another strong year for Unilever in 2012.
This growth can benefit the hundreds of thousands of small businesses who work with us around the world. Some of these are smallholder farmers; others are micro-entrepreneurs who either sell or distribute our products. Most are in the developing world.
The role of multinationals in economic development has been the subject of much debate. We believe that businesses like ours can play an important role, not only in generating wealth and jobs around the world, but in sharing technology, developing best practice and setting high standards of corporate behaviour on issues such as respect by business for human rights.
Our performance in 2012
2012 proved to be another challenging year for the global economy. Commodity markets remained volatile and costs rose significantly in excess of expectations. The threat of the world’s largest economy going over a ‘fiscal cliff’ and the euro crisis added uncertainty and undermined fragile consumer confidence. Most developed markets experienced sluggish growth, contrasted by relatively healthy consumption and growth in aspiring markets.
Against this backdrop, Unilever performed well in 2012.
Turnover increased by 10.5%, taking Unilever through the €50 billion barrier, a significant milestone to becoming an €80 billion company. Emerging markets grew for the second consecutive year by more than 11% and now account for 55% of total business. Personal Care and Home Care showed double-digit growth, in line with our strategic priorities. Despite commodity cost increases of over €1.5 billion, and the heavy investments made in supporting our brands, growth was profitable, with 0.3% improvement in core operating margin to 13.8%.
Sharing the benefits of growth
Our business contributes to the economic well-being of many individuals, both though direct employment and when linked to our business relationships along the extended value chain of suppliers, distributors and retailers.
The impact on livelihoods is greatest in developing and emerging markets. This is because our supplier and distribution networks involve millions of small-scale farmers, distributors and retailers. Most smallholder farmers grow their crops on less than 2 hectares of land. They are often held back from improving their incomes because of their lack of knowledge of up-to-date farming practices. If smallholders have access to training, better quality seeds and fertiliser they can significantly increase their yields.
This benefits Unilever too. As we grow our business in developing and emerging markets, we will be sourcing more agricultural materials grown by smallholders. If they prosper and their incomes improve, they will be able to invest and we will have greater certainty of supply and, often, better quality raw materials for our food products.
We have expanded the number of smallholders we reach with training and increased our investment. But we still have much to do to demonstrate the impact of our work on their livelihoods, and how we are engaging with women farmers. Smallholders and their practices are diverse which makes the task of measuring the benefits of our interventions more difficult. Nevertheless we want to co-develop a simple, cost-effective method to show that our interventions do improve smallholders’ livelihoods.
In 2012 we commissioned an independent assessment to evaluate our impacts on livelihoods, focusing on the outcomes of Rainforest Alliance Certification.
See smallholder farmers and small-scale distributors for more.
Growth depends on our people, and the standards we set
Sustainable, profitable growth can only be achieved if the right people are working in an organisation that is fit to win, underpinned by a culture in which performance is always aligned with values and people behave with integrity. We are increasingly an agile, flexible and diverse business with people who are motivated by doing good while doing well. We are building capability and leadership among our people – and we are attracting some of the best talent in the market place.
See how we develop our people and engage with their concerns for more.
Our Code of Business Principles and Unilever’s Supplier Code set out our commitment to human and labour rights and specifically to treat our employees and business partners with dignity, integrity and fairness. Like many other companies, we have been undertaking a comprehensive assessment of how best to operationalise and implement the UN Guiding Principles on Business and Human Rights, including a review of our Code Policies and ensuring alignment with our Unilever Sustainable Living Plan.
See how we are developing our approach to human and labour rights for more.
Creating value
As well as the 173,000 people that we employ directly, our business generates economic benefits for many different stakeholders around the world.
Our products are on sale in over 190 countries. This generates income and sustains employment for the many retail customers and distributors who bring our brands to consumers.
We have carried out studies in Indonesia, South Africa and Vietnam to understand our economic impacts in these countries. Reports are available to read here.