Sustainable sourcing of raw materials is one area where Unilever has shown tangible results in 2012. According to the company, 100% of its palm oil is now sourced 'sustainably', three years ahead of schedule. What this means is that each of its palm oil suppliers meets 11 requirements — certified by an independent agency — such as not employing child labour, providing fair wages and minimising use of water and pesticides. Unilever has also made significant progress in sourcing tea (Lipton brand, 75%) and cocoa (Magnum brand, 64%).
Its Indian arm, Hindustan UnileverBSE 0.17 % (HUL), procures 60% of tomatoes for its Kissan brand of ketchup from sustainable sources, for which it has joined hands with the Maharashtra government to work with 618 farmers. Unilever's goal is to source 100% of raw materials sustainably by 2020. In 2012, that figure was 36%, up from 24% in 2011. "This (the sustainability drive) will enable us to decouple business growth from resource use and re-couple it with societal good," Nitin Paranjpe, CEO of HULBSE 0.17 %, told ET a day before the report's release. It also makes for good business.
For example, since 2008, Unilever has saved euro 300 million in costs through eco-efficiency programmes in manufacturing operations, which is part of a plan to halve its environmental footprint by 2020. Initiatives ranged from small actions like ensuring lights are turned off to larger investments such as biomass boilers. But, along with tangible successes, there are challenges. The biggest challenge is how to change consumption habits of its consumers.
For example, laundry and bathing account for 77% of Unilever's water footprint. But consumers are still using the same amount of water while using a Unilever soap or detergent as they were in 2010. "One of the things we realised is changing human behaviour is not easy," says Paranjpe. Towards this end, the company is stepping up efforts to find new business models to drive product innovation and research.