By Alison Buckholtz
Paul Polman, the CEO of Unilever from 2009-2019, is the coauthor of Net Positive: How Courageous Companies Thrive by Giving More Than They Take, which was published late last year. His ideas about the role of purpose-driven, net-positive companies draw from the pioneering sustainability strategy he set in motion at Unilever alongside his leadership role helping businesses achieve the Sustainable Development Goals. In Net Positive, he argues that businesses must earn their “license to operate” — and their profits should derive from solving the world’s problems rather than creating them.
In the book, he outlines how this can be done, and why this approach is better for business than the longstanding “shareholder-first” model. He spoke to IFC Insights from his home in Geneva. This interview has been edited for length and clarity.
Q: The concept of a net-positive company relies on the belief that business can do good in the world. What’s at the heart of this idea for you?
A: The aim of the book is to reframe what “good” looks and to provide practical tool on how to get there. We are trying to create a movement where Net Positive becomes the standard. A combination of the enormous wealth creation of the last few decades, alongside population growth, has challenged the planetary boundaries and our very own existence. We have discovered that you cannot have infinite growth on a finite planet. And anything that you cannot do indefinitely is, by definition, unsustainable. We see the effects in climate change, destruction of biodiversity, food security, air pollution, and enduring poverty. Many companies and governments are in the CSR (corporate social responsibility) mode of being less bad. When we have overshot the planetary boundaries the only thing that’s acceptable is to think about how to be restorative, reparative, regenerative. We call it Net Positive.
I would argue that the origin of business was to address the world's problems, not to enrich the shareholders, but somehow in the last few decades, we've forgotten that. In the financial crisis especially, many people felt that banks were too big to fail, but people were too small to matter. We missed the opportunity then to change course. With Covid, a direct result of us destroying biodiversity, we don’t want to miss the opportunity to address these burning issues, like climate change, or inequality. Having discovered that the cost of inaction is now greater than the cost of action, it has become the growth opportunity of the century.
Q: How do you advise changing the status quo for businesses that are new to the idea of being net positive?
A: We need to step up. Covid has shown us that we cannot have healthy people on an unhealthy planet. Nor can we have jobs on a dead planet. Business can’t succeed in societies that fail. One of the requirements is that we work together at a different level than we've done until now. We cannot solve these issues of climate change or food security, of poverty, of inequality, just by optimizing our current systems. If the system itself isn't designed to work for us, we need to start working on broader systems changes, like making the financial market again subservient to the real economy, valuing next to financial capital also natural or environmental and social capital, driving global solidarity like making vaccines available to all and financing the transition in developing countries.
The role of IFC there is absolutely critical. Valuing environmental and social capital in their investment decisions, as much as financial capital, is key. As we treasure what we measure, it requires changes in our accounting system. The establishment of the SSB (Sustainable Standards Board) at COP 26 was key. To implement these broader changes, we need to embrace the bolder partnerships. No one can do it alone.
Q: How has Covid-19 had an impact on people’s ideas about the interdependence of healthy people, healthy companies, and a healthy society?
A: With Covid, people have started to realize the interdependence of biodiversity, human health, climate change, racial inequality, and the economy. Contrary to what people thought, we've actually seen an acceleration toward more responsible business models, an acceleration in ESG (environmental, social and governance principles). And people increasingly are starting to move from risk management, to seizing the opportunities, recognizing that we are at a point right now, where the cost of not acting [to address the impact of] COVID is significantly higher than the cost of acting. I believe that's one of the reasons the financial market is starting to move.
Q: What in your life and career laid the groundwork for your stakeholder-first, people-first stance? It’s unusual for a CEO.
A: Well, what drives me to fight for a more sustainable, equitable and inclusive world is really some of the values that I've been given. I grew up [in Holland] 10 years after World War II. Unfortunately, education was taken away from my parents. They put themselves to the service of others, knowing that by doing so they would be better off themselves as well. And over my career, I've seen very many crucibles that made me even further believe in the need for business to be a force for good and to be having a firm place at the table. First of all, business accounts for 65 percent of the global economy, 80 percent of financial flow, and 90 percent of job creation. We simply cannot address the many issues that need to be addressed in this world if we don't embrace the responsible part of the private sector and form broad partnerships with civil society and governments to address needs.
During my career, I worked in Newcastle [U.K.], where shipbuilding steel and coal had gone belly-up. That was the first time that I saw second-generation unemployment, with people who had never seen their parents work. The only thing a 14-year-old girl could get was pregnant. I also saw the cost of poverty or exclusion in many parts of the developing markets. Being in Mumbai at the Taj during the terrorist attacks, I saw what poverty does, what desperation does, and how important that is to creating these more inclusive economies.
Q: You come back to the idea of partnerships again and again. Why are partnerships so important to you?
A: As the African proverb says, “If you want to go fast go alone, if you want to go far go together.” When I was the CEO of Unilever, where we have an incredible presence in these emerging markets, I saw the power of partnership. If you really want to address issues that affect the bottom of the pyramid for example, it requires us all to work together. The international financial institutions that do concessionary financing and manage part of the risks, the governments that make sure that the rules of laws and the right frameworks are in place, the NGO’s that ensure human rights are respected. Many things that business is held accountable for cannot be solved at the company level. Think deforestation, human rights, plastics in the ocean, energy transition. It requires us all to work together for the benefit of the common good. That’s in business’ interest as well. It requires trust that starts with awareness and consciousness of what’s going on in the world and taking individually and collectively responsibility for it.
I am reminded often of what Helen Keller said when people told her that it must be terrible to be blind and deaf. She said, and I’m paraphrasing, “Frankly the worst thing is not being blind, the worst thing is having eyes and not being able to see.” And I think there are still too many people in this world that are shielded by the barriers of comfort in the smaller and smaller islands of prosperity, not seeing this growing sea of poverty around them. I believe personally that we don't have a crisis of climate change or inequality, or food security, but that the real crisis that we have is actually a crisis of greed, of apathy, of selfishness. And it is therefore important that everyone lift their level of consciousness to create a higher of awareness, and rise to the challenge. It’s above all a leadership crisis.
Q: If a company wants to embrace some elements of a net-positive business model, where should it start?
A: First and foremost, familiarize yourself with the issues, understand what is going on out there, figure out where you as a company want to make a positive contribution, measure your impact that you have in the total value chain across all of the elements. Then to start to work in your own company, setting clear goals and targets, ideally making them public, hold yourself accountable. And increasingly embracing the broader partnerships to try to address these issues. Many of the companies have started that journey, are well on the way and are increasingly performing better as a result. The companies that don't are likely already heading toward the graveyard of the dinosaurs.
Q: What’s the role of IFC, the World Bank Group, and other development finance institutions in moving toward a sustainable society?
A: What is important if we want to address these broader issues is that we do that with global solidarity, especially in addressing issues that impact emerging markets. This is where the IFC comes in. It's important to ramp up the financing. It’s important that we spend it on the right things. It requires strategies that make climate a priority. IFC has done amazing things in setting standards for infrastructure. But what about standards for nature-based solutions, or social cohesion and inclusion?
There are a few areas I would specifically highlight. The first one is to increase significantly the bilateral climate financing. The second is to step up the multilateral concessionary funding. I believe we can now unlock significant funding, if you are willing to take the first parts of the risk. The work around the Global Energy Alliance to end energy poverty for the poor is a good example. It crowds in private sector funding at scale and is a great example of a multiplier where you can solve the issues of energy poverty for the emerging markets.
Q: In your new role at Imagine, you help companies become “a force for good.” What do you tell CEOs who come to you for advice?
A: That we probably have the biggest opportunity in front of us by focusing on implementing the SDGs (Sustainable Development Goals), especially climate change and inequality. That it boils down to leadership — what I call courageous leadership. Courage comes from the French word coeur, which is “heart.” That’s what leaders need to succeed in today's environment. Successful leaders have a high level of awareness what is going on, operate with empathy or compassion, and show humanity, and humility. They don’t shy away from doing what is truly needed. Courageous leaders take responsibility for their total impact; they set targets that are needed to win, not to avoid losing. They embrace partnerships with others, are purpose driven and think intergenerationally.
Reality is that we are short of these leaders. Rumi, who was a Persian poet in the 13th century, said it very well: “Yesterday I was clever, so I wanted to change the world. Today I am wise, so I am changing myself.” And that's probably the most important part of the journey.
Published in February 2022