Unilever CSR Analysis: Sustainability and Governance Insights Case Study

Evaluating Unilever’s CSR Policies and Stakeholder Engagement

Part 1: Written Report

Introduction

This research seeks to examine the corporate social responsibility (CSR) policies, practices, and reporting of a global company in the UK as well as the composition of its ruling body, the distribution of duties and stakeholder engagement. In addition to that, the research in this study aims to pinpoint the top sustainable business practices and offer suggestions for advancement. Unilever, a consumer goods business that operates in more than 190 nations and places a large emphasis on CSR initiatives, has been selected as the subject of this research (Unilever, 2022). The research will shed light on Unilever's environmental strategy and offer useful data for other organisations looking to enhance their CSR procedures. Moreover, the report will cover Unilever's CSR policies, execution, reporting as well as governing body structure and duty allocation. Additionally, the study will look at the stakeholder contact and organisational regulation environments, assess those aspects and make development recommendations.

Organisation Overview

According to Unilever (2023), the global consumer goods business Unilever was established in 1929 and is British-Dutch. The business has operations in more than 190 nations and provides a vast array of goods, such as meals, drinks, housekeeping supplies, and personal care items. Dove, Knorr, Hellmann's, Lipton, Axe, and Magnum are a few of the company's well-knowns. Unilever places a strong emphasis on CSR and sustainability, establishing challenging goals to lessen its environmental effect, advance sustainable sourcing, and enhance the lives of those in its supply chain. A Sustainable Business Committee at the executive level of the firm oversees the execution of its sustainability strategy across the entire organisation. In 2021, Unilever had €52.4 billion in sales and a €7.1 billion profit (Macrotrends LLC, 2023). The business has offices in London and Rotterdam and more than 148,000 employees globally. Unilever has received numerous honours and recognition for its dedication to sustainable business practices, including being designated the most sustainable corporation in the world by Corporate Knights in 2021.

Analysis of CSR Policies, Implementation and Reporting with Recommendations

In the consumer products sector, Unilever has positioned itself as a pioneer in corporate social responsibility (CSR) and sustainability. The business has established challenging goals to lessen its environmental effect, advance sustainable sourcing, and enhance the standard of living for those in its supply chain. There is always space for growth, though, and a critical evaluation of Unilever's CSR policies, execution, and reporting can point out areas in which the business can improve. The CSR policies of Unilever are extensive and encompass a broad variety of topics, such as societal impact, ethical sourcing, and environmental sustainability (Unilever, 2023). The business has set forth specific goals for minimising its environmental effect, such as using only renewable energy and sending zero trash from its factories to landfills by 2030. Additionally, Unilever has a responsible sourcing strategy that guarantees its suppliers follow moral guidelines, such as upholding human rights and protecting the ecosystem.

Unilever has made strides towards its environmental objectives, but there is still space for growth. Unilever can improve its CSR practices by establishing more specific and quantifiable goals, giving more thorough feedback on progress, and working with vendors to ensure ethical and sustainable practices throughout the supply chain. To begin, Unilever should establish more precise and measurable targets that correspond with its sustainability aims. The company's goal of producing 100% recyclable, compostable, or reusable plastic containers by 2025 is an excellent illustration of a precise and quantifiable objective (Unilever, 2023). Unilever, on the other hand, could go even further by establishing comparable objectives for other areas of its business, such as lowering water consumption or boosting the use of green energy. Unilever can better focus its efforts and monitor its success by setting precise objectives.

Second, Unilever should provide more specific input on its progress towards meeting its environmental targets. The annual Sustainable Living Report is informative about the company's success, but it could be more comprehensive. Unilever could provide regular updates on progress towards particular objectives, including details on any difficulties faced and how they are being handled (Unilever, 2023). To enhance transparency and accountability, this information could be published on the company's website or through other means.

Analysis of Governing Body, The Structure of the Board and Management and The Delegation of Responsibilities

As per Rehman and Hashim (2021), corporate governance refers to the system of rules, protocols, and controls used to direct and administer a company. Because it oversees the management and ensures that the company is operated in the best interests of shareholders and other stakeholders, the board of directors is crucial to corporate governance. In light of this, the Unilever Board of Directors has established a solid governance structure that complies with international best practices. The obvious distinction between the Nils Andersen (Chairman) and Hein Schumacher (CEO) responsibilities in Unilever's governance structure is one of its advantages. This guarantees that no one person has excessive authority and that the Board can effectively supervise the company's administration (Unilever, 2023). A major portion of the Board's members is independent non-executive directors, which encourages openness and responsibility. These directors are more qualified to give the Board unbiased counsel and direction since they are not involved in the day-to-day operations of the organisation.

As it has been stated in the report of Collaboration (2021), to make decisions effectively and from a wider viewpoint, the board of Unilever is diverse, representing a range of gender identities, nationalities, and backgrounds. The Board is better able to comprehend and address the requirements and expectations of many stakeholders because of this diversity. Additionally, there are defined lines of authority and accountability in place for the delegation of tasks inside the organisation. This makes it possible for the Board to concentrate on its oversight responsibilities while management is in charge of running the business daily. Unilever's governance system may be improved in several areas, though. Some shareholders have criticised the CEO pay practices of the corporation, claiming they are exorbitant. Moreover, to make sure that it is in line with the business' sustainability goals and represents the interests of all shareholders, Unilever should take into consideration altering its compensation policy. This would show how dedicated the company is to sustainable business methods and boost its standing as a socially conscious organisation. According to Canals (2022), the particular duties and responsibilities of each Board member and committee, as well as greater information on the Board's decision-making procedures, are two further areas where Unilever may enhance its governance reporting. Greater transparency and increased stakeholder confidence would result from this.

Awareness of the Regulatory Framework which Applies to the Organisation and Analysis of How this is Reported Upon

The highly controlled environment in which Unilever operates necessitates that it adheres to several local and international laws and rules. Provisions for anti-bribery, consumer security, health and safety, data privacy, and environmental preservation are included in the regulatory framework that oversees Unilever (Unilever, 2022). Breaking these laws could result in severe legal and social repercussions because they are there to protect consumers, workers, and the environment. Moreover, to ensure obedience to these regulations, Unilever has established stringent compliance policies and procedures. The company's global code of business standards outlines its dedication to moral conduct and compliance with all applicable laws and regulations. Monitoring compliance with these policies and processes is the responsibility of the Company's Board of Directors. A Chief Legal Officer and a Chief Safety Officer are also employed by Unilever and they are in charge of managing safety in all facets of the company (Unilever, 2023).

Unilever gives information on its regulatory compliance through a variety of methods, including its annual report, environmental report, and regulatory documents. The company provides in-depth details on its procedures and policies for assuring compliance, as well as the steps it takes to monitor and disclose compliance (Unilever, 2021). The company's sustainability report gives comprehensive information about Unilever's compliance with social and environmental laws. The study details the company's initiatives to reduce its environmental effect, ensure the sourcing of moral raw materials, and promote social well-being in the regions in which it operates. Moreover, information on Unilever's compliance with financial reporting standards, anti-bribery laws, and corruption laws can be found in its government reports (Unilever, 2022). In its financial statements, yearly reports, and other government filings, the business details its compliance procedures and dedication to stop unethical behaviour. Additionally, Unilever makes public any significant governmental inquiries, penalties, or other legal proceedings brought against the business.

Unilever reports on its regulation conformance thoroughly and openly overall. On its policies, practices, and attempts to track and report on compliance, the business gives extensive information. However, the business might think about supplying more details on the particular laws and rules that apply to its activities and how it is abiding by them. To show its dedication to compliance and responsibility, Unilever might also give more specific information about its monitoring and reporting procedures (Unilever, 2021).

Communication Between Unilever and Their Various Stakeholders

According to Baran and Woznyj (2020), any organisation must successfully communicate with its stakeholders if it is to be successful, especially in the complicated and quickly changing business climate of today. As a multinational company operating on a worldwide scale, Unilever has come to understand the value of communicating with all of its various constituents, including clients, partners, staff members, investors, neighbourhoods, and governments (Unilever, 2022). The company's marketing efforts do, however, have both assets and flaws, according to a critical study. Unilever's dedication to accountability and openness is one of its major competitive advantages in stakeholder engagement (Unilever, 2021). To effectively communicate with stakeholders, the business has established a variety of outlets, including its website, social media accounts, annual and sustainability reports, as well as frequent meetings and consultations. These platforms show the company's dedication to responsibility and openness by giving stakeholders in-depth information on its performance, operations, and environmental efforts.

The company's focus on having a two-way dialogue with stakeholders is another asset of Unilever's stakeholder communication (Unilever, 2022). For instance, the company's website has a section for stakeholders to offer input and ask inquiries, demonstrating the company's readiness to hear out and address stakeholder concerns. Similarly to this, the company consults with its stakeholders frequently through events like stakeholder forums and town hall meetings, which give participants the chance to offer feedback and suggestions on the company's projects.

Unilever's stockholder correspondence does have some flaws, though. The lack of contact with stakeholders in emerging nations, especially those where the company has a sizable footprint, is one of the business's greatest weaknesses. The business makes extensive marketing efforts, but its primary focus is on customers in developed nations. Lack of involvement with stakeholders in developing countries may impede the company's efforts to advance sustainable development given that these stakeholders may have different requirements and concerns (Unilever, 2022). Another issue with Unilever's partner relations is the company's failure to consider the social and environmental implications of its supply chain. Despite its efforts to safeguard the environment, the company devotes the majority of its marketing resources to its core business activities, such as manufacturing and shipping. Due to the company's lack of attention to the social and environmental effects of its supply chain, stakeholders may become worried about the company's total social and environmental impact (Unilever, 2023). This could endanger the company's attempts to promote positive growth.

Conclusion

In conclusion, Unilever has performed admirably in terms of stakeholder engagement and regulation compliance, but there is still space for growth. Its transparency and responsibility have given it a major competitive edge, and its dedication to a two-way conversation with stakeholders is admirable. The company's communication platforms, such as its website, social media profiles, and reports, show transparency and provide detailed information to stakeholders. However, Unilever's dearth of engagement with stakeholders in emerging markets, where it has a major influence, is a weakness that could stymie its efforts towards sustainable development. It also needs to give more attention to the social and environmental consequences of its supply network. While Unilever's dedication to community involvement and regulation conformance is admirable, the company must continue to improve to thrive in today's complicated and rapidly changing business climate.

Part 2: Report with Reflection

Analysis of the Issue or Decision of Unilever which is in line with the Strategic Objectives as this can be in the Present, Past or Future.

According to Polman and Winston (2021), Unilever is a global company that operates in the highly competitive consumer goods industry. Historically, a lack of stability in the company's supply chain practices has been an issue. Unilever recognised that its operations had significant social and environmental consequences and that these issues needed to be addressed for the company to meet its strategic goals of achieving sustainable development while also having a positive social and environmental impact. To handle this problem, the company launched several initiatives, including the Unilever Sustainable Living Plan (USLP), which seeks to decouple the company's growth from its environmental footprint while increasing its beneficial societal effect. By 2020, the plan aims to improve the sustainability of the company's products, decrease its environmental effect, and better the livelihoods of millions of people (Unilever, 2023).

Unilever's supply chain practices have received a lot of attention. The company understood the value of working closely with its vendors to better their green practices, reduce their environmental impact, and ensure that their workers are handled ethically and fairly. To help its vendors in achieving the company's environmental standards, Unilever developed a set of responsible buying policies and procedures. Furthermore, the company offers instruction and support to its suppliers to help them improve their sustainability practices. Unilever's attempts to improve supply chain sustainability have been effective. The business has met its objective of getting 100% of its palm oil responsibly, and it has made headway in obtaining other goods like soy, tea, and cocoa sustainably. Since 2008, the business has decreased its greenhouse gas pollution by 43% per tonne of output and attained zero trash disposal across all of its industrial activities (Unilever, 2023).

Despite these achievements, Unilever still confronts hurdles in meeting its sustainability targets. The business works in a complicated worldwide supply chain and encounters difficulties in ensuring that all of its suppliers adhere to its sustainability standards. In addition, the business must continue to innovate and produce new sustainable products to satisfy the changing requirements of consumers and the ecosystem.

Critically Reflect on Understanding the Risk of Unilever and How This Has Changed and Developed During the Module

Throughout this module, I have acquired a better grasp of risk management at Unilever and how different risks can affect the company's strategic goal of expanding into new markets. I started with a rudimentary knowledge of risk management, but through the coursework and talks, I've gained a more thorough understanding of the various kinds of risks that can affect a business, such as financial, operational, reputational, and regulatory risks. One of the most essential teachings from this course is that risk is an intrinsic component of any business operation, and it is critical to recognize, assess, and manage risks effectively to accomplish business goals. I learned the value of having a well-organised risk management strategy that includes finding and assessing risks, creating risk reduction strategies, and monitoring and modifying risk management activities.

I've also acquired a better grasp of the different kinds of risks that Unilever may encounter as it expands into new markets as a result of the coursework. Organisational risks include, for example, supply chain delays, practical problems, and labour management challenges. Unilever may have difficulty finding dependable vendors and may face extra compliance and administrative responsibilities as a result of local laws. In addition, I discovered that reputational risks can have a substantial influence on a company's success. If Unilever fails to comply with local laws and regulations, if its goods do not satisfy local customer tastes, or if it is viewed to abuse local communities, it may face negative risks. Furthermore, unethical business practices like bribery and corruption can harm a company's image, resulting in bad media coverage and customer reaction.

As I dug deeper into the material, I realised that the aforementioned dangers could have a substantial effect on Unilever's growth plans. Supply chain interruptions may cause product delays and cost increases, while organisational issues may result in poor product quality and harm the company's image (Jauhar et al., 2023). Noncompliance with local laws and regulations may result in penalties and legal action, while unscrupulous business practices may result in bad media coverage and customer reaction. Currency changes and political unrest could have an impact on the company's revenue and restrict its ability to enter new markets. I got a better grasp of the significance of risk management in decision-making through the discussions in weeks 5 and 7. In week 5, I examined the risk management of Unilever's growth into new markets and found a variety of hazards, including supply chain problems, operational issues, and reputational risks. This conversation taught me the importance of recognising and assessing risks, as well as creating risk mitigation methods.

In week 7, I learned about using stakeholder input to mitigate image risks. As indicated by Zamlynskyi et al. (2021), in managing reputational risks, I realised the significance of effective dialogue with partners such as customers, workers, and vendors. This conversation made me understand the importance of partner management in reducing reputational risks. Overall, this programme has been a useful learning experience for me. I now comprehend the significance of risk management in decision-making and recognise the need to consider various kinds of risks when making choices. I've also learned about the various risk-management techniques Unilever can employ when entering new marketplaces. Finally, I have acquired a better understanding of the importance of effective communication and partner management in mitigating reputational threats.

References

Part 1

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Part 2

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