Select Committee on Foreign Affairs Minutes of Evidence


Memorandum submitted by Unilever plc

1.1 ABOUT UNILEVER

  1.1.1 Unilever was formed in 1930, when Lever Brothers of the UK and Margarine Unie of the Netherlands merged their operations whilst retaining two parents, now called Unilever PLC and Unilever NV. It is one of the world's truly international companies. The company has operations in nearly 90 countries, and trading activities in around 60 others. Unilever employs 270,000 people of more than 100 nationalities, including around 169,000 employees outside Europe and North America, with a wide range of religious and cultural backgrounds.

  1.1.2 Unilever today is one of the world's largest fast-moving consumer goods companies, its products serve people's everyday needs for food and cleanliness, around the world. The company is particularly strong in foods, detergents and personal products, with the company's brands to be found in half the households on the planet.

  1.1.3 Unilever has an annual turnover of almost £30 billion. Approximately 46 per cent of Unilever's sales are in Europe, 21 per cent in North America and 33 per cent in the rest of the world. However, with 85 per cent of the world's population living outside Europe, the United States and Japan, the company estimates that within ten years, developing and emerging markets will account for 50 per cent of its sales.

  1.1.4 Unilever has a long history of positive engagement in the societies in which it operates. The company's presence in countries around the world is longstanding, stretching back over ninety years. The company was first involved in South Africa in 1904, in China in the 1920s, the Philippines in 1927, Chile in 1928, Brazil in 1929, Thailand, India and Indonesia in the early 1930s.

  1.1.5 Unilever sees itself as a "multi-local multinational". The company has grown through strongly autonomous local operating companies which are responsive to local markets and consumers. Unilever brings to these local operations access to global technology and financial resources as well as shared corporate values. Importantly, Unilever's involvement in, and commitment to, countries around the world has been long-term, based on sustained, long-term investment in local markets and in the people the company employs.

  1.1.6 Few international companies have such a decentralised style. The proportion of expatriate managers at any one time is under 10 per cent. Many managers have expatriate experience during their careers and, coming from many different countries, they exert an internationalising influence across the company.

1.2 THE UNILEVER VIEW OF RESPONSIBLE BUSINESS PRACTICE

  1.2.1 Unilever's view of responsible business practice reflects the company's history and culture, the nature of its business and the way it operates around the world. In other words, its attitude to corporate responsibility has been shaped by a range of experiences over a period of time.

  1.2.2 The first influence is as a "multi-local multinational", with deep roots in different cultures and daily contact with millions of consumers in different countries. As a result, the company has a strong sensitivity to different cultural values, reinforced within the company by the international career development of managers.

  1.2.3 The second influence is as one of the world's largest fast-moving consumer goods companies. One hundred and fifty million times a day Unilever companies have to convince the consumer that he or she should choose their product. The nature of a consumer business means that, every day, the company faces a continuing process of consumer judgement and endorsement of its brands.

  1.2.4 The third influence on Unilever's approach to responsible business practice flows out of the first two. Our consumers implicitly expect our companies to operate in a responsible way. In a world of mass communication, a company's business standards anywhere are potentially subject to the mass scrutiny of its consumers everywhere.

  1.2.5 As Unilever Co-Chairman, Niall FitzGerald, said in a speech to the Commonwealth and Europe Conference in 1997: "When it comes to the ethical principles in our Corporate Purpose, we do not have the luxury of cutting corners, even if we wanted to. For a company of Unilever's size, there is no hiding place from the jury of international opinion—nor would I wish there to be".

  1.2.6 However, in the absence of, and in view of the difficulty of arriving at, a generally accepted and unambiguous system of global values and standards, companies which operate internationally need to articulate their values and formulate their own standards to guide their corporate behaviour. These supplement the different laws and regulations in the different countries in which they operate.

1.3 UNILEVER'S CORPORATE PURPOSE AND BUSINESS PRINCIPLES

  1.3.1 Unilever's operations in diverse markets are underpinned by a shared set of values expressed through a common Corporate Purpose and a single Code of Business Principles.

  1.3.2 The company recognises its wider corporate responsibilities as a core element of its Corporate Purpose, stating that: "We believe that to succeed requires the highest standards of corporate behaviour towards our employees, consumers and the societies and world in which we live".

  1.3.3 This principle is amplified in the Code of Business Principles. The two Chairmen's introduction to the Code reminds employees that "Unilever enjoys a reputation for conducting its business with integrity and with respect for the interests of those our activities can affect. This reputation is an asset, just as real as our people, factories and brands". The commitment to high standards of corporate behaviour reflects both an understanding of corporate responsibility and an understanding of the commercial value of corporate reputation.

  1.3.4 The Code of Business Principles sets out corporate policy on standards of conduct, obeying the law, treatment of employees, conflicts of interest, public activities, product assurance, environmental issues, competition, financial reporting, and bribery. It is an internal set of principles which every employee has to abide by—and employees and management are explicitly protected against any negative consequences if they adhere to the principles or if they draw attention to breaches in these.

  1.3.5 The Code of Business Principles is designed for internal use, for which it must be understandable and straightforward to make it an effective operational tool. As a result it does not include specific reference to the many codes and treaties that comprise international law and obligations. It does however state clearly that Unilever will obey the law.

  1.3.6 It is the responsibility of the Board of Unilever to ensure that the principles embodied in this Code of Business Principles are communicated to, understood and observed by all employees. An independent Internal Audit function supports the Board in monitoring compliance with the Code.

1.4 RESPONSIBLE CORPORATE BEHAVIOUR: PRINCIPLES AND DILEMMAS

  1.4.1 The broad approach to corporate responsibility outlined, and the Corporate Purpose and Code of Business that flow from it, provide the framework within which Unilever companies operate and address public issues. Reflecting the company's history and the way it operates, this framework is both principled and practical, consistent yet flexible. That is important because the reality of operating conditions presets a range of practical dilemmas.

  1.4.2 For example there have been occasions in the past when Unilever has been unable to do business without getting involved in corruption. On these occasions the company had no option but to pack its bags and pull out.

  1.4.3 At the same time Unilever has been established in many countries for a long period of time. Governments have changed from one kind of regime to another. It is impossible to pull out at each change because of the company's responsibilities towards employees, customers, suppliers, and the local communities in which it operates.

  1.4.4 These are not simple decisions. A company has to consider its broader responsibilities to employees, partners and suppliers when it is confronted by such dilemmas.

  1.4.5 By operating in a country over a long period of time—recruiting and investing in local managers; training local workers and investing in local communities; applying its values and principles; and engaging in dialogue with other organisations—a company can do much to strengthen society in the countries in which it operates. However, if Unilever cannot work according to its standards and values, then it will leave.

  1.4.6 Companies cannot fill the vacuum of moral authority that may be left by governments and ethical and religious institutions. However Unilever recognises its responsibility to ensure that, within its sphere of activities and influence, its principles and standards are maintained.

1.5 WORKING WITH OTHERS

  1.5.1 One important way in which Unilever pursues the principles enshrined in its Corporate Purpose and Code of Business Principles is by working with others.

  1.5.2 Ongoing dialogue with government, non-governmental organisations and other bodies in the countries in which Unilever operates is an important part of this. Working alongside a range of organisations in society Unilever companies are encouraged to play a full role, to share their experience with government and non-governmental organisations and thus to contribute to a stronger society.

  1.5.3 Unilever is engaged with others in addressing issues of corporate responsibility and public policy. Many of the best examples are very local, very practical projects geared to specific improvements—whether environmental, educational, social or economic.

  1.5.4 One example is a tree-planting initiative in Thailand which saw one million trees planted in 1996, creating jobs in rural areas, replacing opium fields with orchards, and helping to halt the drift of the rural population to the cities. Another example is an initiative in the company's Elida Gibbs factory in Vinhedo, Brazil, geared to improving the basic levels of literacy and education of Unilever employees in the factory. A third example is the Asha Daan home for the dying and destitute in Mumbai, India created from warehouses made available to the Missionaries of Charity by Hindustan Lever. The warehouses were converted to a residential home and clinic and employees of the company are actively involved in the Missionaries' work.

  1.5.5 On issues of overall corporate responsibility, Unilever is involved in discussions with organisations from the World Business Council for Sustainable Development (WBCSD) to Amnesty International. A practical example flowing from the company's dialogue with international non-governmental organisations is the Marine Stewardship Council. Unilever worked to set up the MSC in partnership with the World Wide Fund for Nature to ensure sustainable fish stocks and sustainable fishing communities.

  1.5.6 Guided by its values and business principles, Unilever sees such dialogue and partnerships with other organisations as an integral part of its broader corporate responsibility.

18 May 1998



 
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Prepared 21 December 1998