Good morning,
afternoon, depending where you are in the world and welcome to Unilever's Sustainability Event and Webcast. Before I say anything more, I'd like to say a few words about safety for those of course that are here in the building. Firstly, there are no fire alarm tests planned for today. If there's a fire or evacuation, a continuous alarm siren will sound. If this happens, please evacuate the building by the nearest designated fire exit, which is out the door here, then turn left and straight ahead onto the street.
Proceed to our collection point at Carmelite Street. Do not stop to collect personal belongings. Our security team will assist you with your exit and provide any additional instructions. Don't return to the building unless advised that it is safe to do so. If there are any other security related issues then there will be an announcement on the public address system.
In general, if you have any safety concern or anybody feels unwell while you're here, then please alert any member of the Unilever team. Now moving to the agenda. Sustainability has been at the heart of Unilever for many years, but this is the first time we've run an event for investors that is solely focused on it. So we hope you find it interesting and we certainly will find it interesting. We have a full agenda which I'm not going to talk through except to point out that we have a 25 minute tea break at 3:15 and we'll finish at 5 p.
M. There will be a chance to ask questions from the room after each session for which you should use the microphones next to your seats, which you'll see there. Obviously, that's for those in the room. With that, let me draw your attention to the Safe Harbor statement, then immediately hand over to Alan Jope, our CEO.
Right. Good afternoon, everybody. Am I on? Yes. Okay.
Our fire assembly point is right outside JPMorgan. And when you're in JPMorgan, I noticed you can pick up the Unilever network. There are such close neighbors. And I have always wondered why they seem to have a particularly close scrutiny and ability to understand our business, but never mind. Friends, commentators, those on the webcast or as our comms team would say, Alan, don't forget you're being webcast.
Please watch the loose comments. This is an exciting moment for us to talk about something very important for Unilever. I hope that I will be able to share with you our rationale behind sustainability, what the business case is for sustainability. And our Chief Sustainability Officer, Rebecca Marmot, will immediately follow me and talk a little bit about how we go about running our business on a sustainable footing. And then together after that, Rebecca and I will jointly hopefully leave some time for questions and dialogue.
But let me start with a word or 2 on the context that we find ourselves in. So business prospers in a healthy world, and we believe that a healthy world needs a healthy business sector. And at the moment, there are many data points that would suggest the world's not in great shape, whether it's fires in California or in Australia, social unrest in previously unthinkable places like Santiago, Chile and Hong Kong, bastions of peaceful society, there's a lot of problems in the world. And our view is that there's 2 sort of superordinate issues. The first is climate change and the second is inequality.
World leaders have not acted effectively on these issues. The rise of nationalism, protectionism, the polarization of society, the emergence of populist leaders can be very much traced back to failures of the system and the impact that inequality and climate change is having around the world. When it comes to climate change, I think everyone's aware that there are catastrophic consequences for the world if the climate if the temperature rises above 1.5 to 2 degrees above pre industrial levels, we'll forget about 1.5 to 2 degrees. We're on track for 3.2 degrees of climate change. And we're already seeing it's not something that's going to come in the future, it's something that's happening here and now.
I'm fed up reading about our latest distribution center in the Southeast of the United States. It's got to be shut down because of an approaching tornado or a cyclone or a hurricane. So extreme weather events are becoming more and more frequent and they're indiscriminate. So the extremely affluent founders that we've paid large sums of money to, mostly on the West Coast of the United States to buy their businesses, it's their homes that are being destroyed by wildfires. So this climate change doesn't distinguish between rich and poor.
Crops are failing. Water crises are now a part of our business. And similarly for inequality, And similarly for inequality, beware the tranquilizing drug of global averages because on average inequality is lessening in the world. But that's simply because 100 of millions of people in India and China are being lifted out of poverty. But it masks the true reality that both wealth inequality and local income inequality is on the rise.
And that's why we're seeing the rise of certain types of government and the rise of huge levels of unrest around the world. And if you take these two factors of climate change and inequality, just think what population growth does to this. I came back last week from a visit to Africa and Africa is currently what just over 1,000,000,000 people And the forecast is that by 2,050 that'll be over 2,000,000,000 people. And by 2,100, it'll be over 4,000,000,000 people. Already Africa has got 29% unemployment, around 50% youth unemployment.
Already Africa has got failing landmasses where crops are becoming less and less reliable. Already there's an exodus of migrants out of North Africa into Europe. So how does that all work when there's 4 times as many people trying to use the same land? And so Africa's crisis is not Africa's crisis. Africa's crisis is the world's crisis because the migrant issue is going to show up on the doorsteps of the emerging world.
So this is not although Unilever takes the long term view, the things I'm describing are short term issues. They are our lived reality here and now. And it's something we've been dealing with for a long time. William Lever, when he founded the business, talked about multiple angles on sustainability, including concepts in handwritten notes from 1913 like the living wage, including talking about lessening the load for women in the very foundation of Lever Brothers. And as you know, we resurrected that my predecessor brilliantly resurrected that Gene and Unilever about 10 years ago when we introduced the Unilever Sustainable Living Plan.
Now up until now, we've had separate business strategies and sustainability strategies. And one of the things that we've been busy with this year is to integrate our business strategy and our sustainability strategy in something you see in the middle there called our Unilever Compass. It lays out many of the foundations of our business, our values, our standards of leadership, some of our core beliefs. And there are a number of multiyear priorities captured in there, which many of which relate to sustainability and all of which are linked to a specific business outcome. So you won't be able to read, but it says clearly on there what Unilever's vision is.
Our vision is to be the global leader in sustainable business. Our vision is to demonstrate how our purpose led and future fit model drives superior This This captures the purpose of Unilever, which is to make sustainable living commonplace. And really our strategy is predicated on 3 beliefs: a belief that brands with purpose grow faster that companies with purpose last longer and that people with purpose thrive. And let me give you a few data points around that. So first, let's talk a bit about purposeful brands, brands with purpose.
What do we mean by brands with purpose? I think it's pretty simple. It's brands that have gone from a model that relied on a bundle of functional and emotional benefits, makes your shirts whiter, makes your skin softer, makes your hair tastier, your hair shinier and your food tastier to a brand that takes a point of view on something that is a little bit more important in society or for the planet. And you know our best examples of that. You're going to hear lots of examples today.
But Unilever's got a kind of unique point of view on purposeful brands, which relates to what the brand says and what the brand does. And we think there's an order effect there, which is a brand has to be responsibly taking action in the world to I guess improve society or the state of the planet before it starts talking about it. So the reason why Dove can talk about improving girls' self esteem is because we've worked with 35,000,000 girls 1 on 1 to in 1 hour seminars that we have measured the effect that it changes their self perception and perceptions of beauty. The reason why Domestas can credibly talk about trying to end poor sanitation is because we've worked with the government governments of places like India to put 16,000,000 toilets in place. The reason why Lifebuoy can talk about saving the lives of children under the age of 5 through proper hand washing is because we've done controlled experiments.
We've taught 500,000,000 people face to face the value how to handwash properly and the value of it and the impact that it has. And only when you've taken these actions when the brand is doing things in the market do we believe you have the license to start talking about it in brand communication and advertising? And I think this is slightly evolved understanding that many of our competitors and other sectors don't really understand. All talk and no action is purpose washing and that's not the Unilever model. We have self defined what we consider to be our purposeful brands.
We call them our sustainable living brands. And basically they have to be clear what their purpose is. They have to be taking action and they have to be telling consumers about it in multiple countries. And in 2015, we had 12 brands that we considered sustainable living brands and they outgrew the rest of the portfolio by 30%. By last year, we had 28 brands that we considered sustainable living brands and they outgrew the rest of the portfolio by 69%.
So we're seeing an acceleration of the performance of our Sustainable Living Brands ahead of the rest of the portfolio. And this study, although that happens to be Unilever data, it's replicated by even bigger studies by people like Kantar and Ipsos. Kantar, they assessed whether brands were purposeful or not and discovered that the brands they deemed to be purposeful were outgrowing the rest of the portfolio of their other brands by 100%. They were growing at twice the rate. But we're actually not happy with that measure because what we're doing is in a way we're declaring our brands to be purposeful.
And we're in the middle of a change right now, which is to in our continuous tracking in market to let the consumer judge whether our brands are purposeful or not. And only when the consumer judges, yes, I can see this brand is taking action that will benefit society or the planet. That's the question we have in our continuous tracking. And when the brand differentiates on that, then we will start to consider it to be a purposeful brand. Okay.
So we profoundly believe that brands with purpose deliver superior growth. But we also believe that companies with purpose last and I guess the evidence in part of that is that we've now got 134 year old business inspired by Lord Leverhulme, which was built on very purpose foundations. And we've got some interesting work going on right now on cohorts. And this is really all about is your business going to stay relevant in society? So baby boomers don't even pretend to change their behavior make brand choices based on issues relating to societal and environmental responsibility.
Gen X, which I just creep into by 1 year, we are maybe worse than baby boomers because we're liars. We say that we care about environmental and sustainable issues, but in fact don't change our purchase behavior or brand choices very much at all. Gen X Millennials do change their behavior based on brands' commitment to social and environmental responsibility, but only so long as it doesn't cost too much or is too inconvenient. And Gen Z, the Gen Zennials who are coming through and those of you who have got sort of kids who are making brand choices and are under the age of 23 will be acutely aware that the position that the brand takes on environmental and social issues becomes the primary driver of brand choice. So this is quite simply a matter of relevance.
We our view is that as that attitude comes through society and our consumer group like a pig through a python, then it's a critical point for Unilever's survival into the future that we take a highly responsible stance on how we run our business. And that's why we believe that companies with purpose will be the companies that last long into for decades decades to come. And then finally, people with purpose thrive. We have built frankly and rather I say this somewhat immodestly, an extraordinary employer brand. We each year we do our uni voice study where we ask people how they're feeling about working for the company.
This year, we had a record response. Over 90,000 employees chose to share their view, that's 82% response rate, so really a very high response rate. And our levels of engagement as benchmark versus other good companies are extremely high. We've put 45,000 people through a one day purpose workshop helping people to understand what is their personal purpose. And those individuals who are able to identify their purpose and align it with Unilever's business have got an extraordinarily high likelihood of staying with the company, of recommending the company to a friend and expressing very, very high levels of job satisfaction.
We've gone from we have a graduate recruitment program in 54 countries around the world. And we've gone from being the number one FMCG Employer of Choice in 17 out of 54 countries to 51 out of 54 countries that we have a graduate recruitment program in around the world. And all this has happened as we've dialed up our expressed commitment to being a responsible and sustainable business. So multiple data points that would suggest that indeed brands with purpose grow, companies with purpose last and people with purpose thrive. So just to talk quickly about the business case for sustainability, the most important thing we believe is that it to drive growth.
That as I've already mentioned brands that are explicit on their sustainable living purpose drive stronger levels of growth. Our Rebecca will talk in a second about customers flocking to us. And by customers, I mean, retailers flocking to us and wanting to partner on these issues. It's been a spur to innovation. So you'll hear from Richard, I hope, about the SIF EcoFill here we go.
This little baby here, which seems to be doing very well driven by our commitment to reducing plastic. I could talk about if you had to gather your water and carry your water to your homes as many people around the world do, then a laundry detergent that's got our Clean Rinse technology and rinses away with 1 bucket of water instead of 3 buckets of water is a very meaningful development. And you won't know this, but in we even have a product under Domestis called Clean Spray, which is when there's not water to flush the toilet, we're innovating with products that you can spray into the toilet between flushes. I don't want to conjure up too many images there. I also have to say another driver of growth is the distribution reach that this allows us.
So many of you will have heard about our Shakti Amas, women in India who live in remote rural villages, who typically have no financial independence, who have become micro distributors for Unilever's products, build up financial independence for themselves and help grow our business. We've now got about 100,000 women in India alone working as micro distributors. Or I was recently on the beachfront in Durban chatting with a woman called Punzile, who was basically destitute and has become an Ola ice cream vendor, an independent ice cream vendor and she spoke with such pride about how she's now putting her 2 sons through private education in Durban by being an ice cream vendor. Small thing, but well, it was quite a heartwarming story and it was it's very good for our ice cream sales in South Africa. But in addition to the growth that we get through sustainability, we are finding that it actually is a net reducer of cost.
So we think we've saved about €800,000,000 through things like less use consuming less materials, consuming less water, consuming less energy, dramatic reducing waste. And so we think that sustainable business is a lower cost business. It definitely reduces risk, supply risk, having sustainably grown agricultural raw materials as well as reputational risk. It's a surprise to me that PETA, the People For the Ethical Treatment of Animals, instead of coming after Unilever for allegations of animal testing are now certifying Unilever as a company working towards animal friendly business practices. And last but not least, we know that sustainable business builds up trust, trust with consumers, trust with customers, trust with partners, trust with employees, even trust of investors.
So I think you know our model. Purpose is central to our strategy, essential to our belief system, but it's not the only element. We're equally committed to a multi stakeholder model that seems to be gathering popularity judging by the words of the American Business Roundtable. And those both in turn have to be accompanied indeed we believe will drive superior financial performance. And this is our model for creating superior long term value.
We believe it is not purpose or profits, it's purpose as a pathway to better profits. It's a model that served us well, but we also think it's a model that's got a lot more to give. So with that, let me stop there, 40 seconds over time, sorry about that, and hand over to that was me setting the tone for the rest of the Unilever team by the way. And with that, hand over to our Chief Sustainability Officer, Rebecca Marmot. Rebecca?
So good afternoon, everyone. I'm Rebecca. I'm the Chief Sustainability Officer. I have to say this is not a normal audience for me. I don't normally get the chance to speak to investors.
Historically, I've been very much engaged with a different set of external stakeholders. And I think interestingly now these ecosystems are colliding. So the fact that I'm here and really pleased to be able to talk to you all today, I think demonstrates the shift from sustainability being perhaps a little bit on the side and now much
more mainstream. So thank you.
So just a bit of sustainability journey that Unilever's been on over the past few years. But as a reminder to those of you who perhaps aren't as familiar with
exactly the
details behind that, this is our Unilever Sustainable Living Plan that we launched back in 2010. And you'll see there's 3 big targets that really set the scene: 1 around improving the health and well-being of more than 1,000,000,000 people, so that's through the reach of our brands and our portfolio 1 around reducing environmental impact by half and 1 around enhancing livelihoods for millions of people right the way across our value chain. So from the farmers in the field through to the manufacturing of the products, through to the way that we market and sell them and eventually when those products are finished with. So it looks very complex, but in fact it's simple. It's about putting a sustainability lens right the way across our value chain across all the different things that are important to our business.
And underneath that, you'll see we won't go into the details of it now, there are 78 very specific time bound metrics that we measure and they relate back to the growth trust risk cost model that Alan was talking about earlier. So Unilever started this journey in 2010 and then I think we started slowly. We made some good progress. And then sort of 2012, 2013,
there was a
massive inflection point with the start of the consultation process from the United Nations, point with the start of the consultation process from the United Nations on the sustainable development goals. So the sustainable development goals were established by the United Nations as an international global framework, which is really the blueprint for sustainable growth economic development for everybody in the world. So they apply to every single country. The predecessor to them was something called the Millennium Development Goals. It was very much a United Nations sort of NGO quite closed ecosystem.
And what the United Nations realized is that business has to be part of the solution if we're really going to tackle the kind of macro level problems that Alan talked about at the beginning around inequality and around climate change. And so they reached out to Unilever and a number of other businesses to talk about how could we use our value chain, how could we use the kind of skills and expertise that you see in the private sector around behavior change, around marketing, around understanding different stakeholder audiences to make a much more positive contribution. And if you look at those different 17 areas, in one way or another, they relate to every single part of our lives and the lives of everybody that you know. From an economic perspective, the private sector saw that not only as a great responsibility, but actually a massive opportunity. So it's estimated by the Business and Sustainable Development Commission that was set up especially to bring business into this process that it's worth around $12,000,000,000,000 every single year from now until 2,000,000 2,030, creating about 380,000,000 new jobs.
So roughly speaking, that's about 10% of the forecast GDP by 2,030. So I think for Unilever and many other progressive businesses, it's a big opportunity for us to capitalize. So we looked at that. We decided that that's how we really wanted to orient our business strategy, but we realized of course that it's everybody's responsibility. We we needed to integrate it properly into our governance structure.
So you'll see on the chart here from the Board down with the Corporate Responsibility Committee through to the work that Alan leads across the Unilever executive and assigning responsibility for different areas of sustainability right across that senior leadership team through to day to day operating groups in the business that look after particular areas of sustainability. So for example, we have an energy committee and you probably or I hope you've all seen, we recently announced the switch to renewable energy right the way across our operations. And then in addition to that, we have a group of external advisers in the Unilever Sustainability Advisory Council who occasionally come in and they call themselves critical friends or they shout at us if they don't feel we're moving quickly enough. And that's people like Bill McDonough who sat up with very, very formative in circular economy thinking, which of course is absolutely integral for us as we start think about the reuse and the regenerative approach that we're taking in our business, not just to our products, but also in things like sustainable agriculture and thinking about regeneration of landscapes and farmlands where we're sourcing. And then people like John Ruggie, who's a professor at Harvard, who set up the UN's founding principles on human rights.
And just yesterday, some of you may have seen, he did a talk at Harvard where he looked at the ESG scorings of the top 20 and bottom 20% of U. S. Companies and you saw that the companies that were scoring the highest scores on ESG were growing about 3.5% quicker than the ones at the bottom. So really all of these very complex and differently connected into systems systems really now coming together. And then lastly, we put our money where our mouth is.
So sustainability is an integral part of Unilever's reward mechanism. So I don't know how clearly you can see, but at the bottom there, 25% of the bonus reward for all managers across Unilever, so work level 2 and above across whole of Unilever, 25% of our award is based on the achievement of 7 very clearly defined sustainability metrics. So there's nothing like a reward to really focus people on making sure that they're integrating this into their jobs. So how do we do this? How do we actually take the business strategy that Alan was talking about and the sustainability strategy and really mold it together into 1?
So we use a very simple three stage process. The first is around advocacy. So how do we influence the external environment in line with Unilever's business objectives? How can we talk to the right stakeholders and think about how we shape that environment so that it's optimal for us to grow the business in a sustainable way? The second stage is partnerships.
So who do we need to partner with to bring those brand programs or bring those function programs and things like supply chain and research and development to life. And that's a whole ecosystem of different partners. There may be others in the private sector. There may be NGOs. There may be government.
We've got Matthew Rycroft from DFID coming in to talk to us later to talk about the role of government. Obviously, tomorrow he's quite busy, but to talk about the role of government and how government can also work much more effectively with the private sector. And then lastly, the 3rd stage, which is scale. And for us, scale can mean lots of different things. It can mean rolling out our programs through digital, so much quicker and much cheaper to get information out.
It can mean through the scale and the reach of our brands. So if you think back to the sustainable living plan I showed you at the beginning, on that first big pillar around health and well-being, we've reached 1,240,000,000 people. So that's about a 6th of the planet that we've reached through some of the programs that we've been rolling out. And it can be through and something that I think particularly is interesting this audience through new innovative financing models and thinking about blended finance and how you bring together the best of the private sector with finance, with government, etcetera. So I've chosen 3 examples to try and bring this to life.
1 is from the developing and emerging markets, which is Lifebuoy, one from the developed markets, which is Ben and Jerry's and then I've taken the issue of gender because obviously that crosses right the way across Unilever's ecosystem. So on Lifebuoy, the world's largest soap brand, we set out a mission to help every child reach the age of 5 through the simple act of hand washing with soap. So more kids under the age of 5 die from preventable dysentery and diarrhea than from HIV, AIDS, TB and malaria combined because they just don't have access to soap or don't practice hand washing at the key times during the day. So again, taking the 3 stage process, the first thing that we wanted to do as a business was to look at advocacy. So how could we influence that external agenda in a way that would help us to increase usage of Lifewoy and to raise awareness around the importance of hand washing?
So back to the sustainable development goals. During that process, we did a lot of lobbying work with partners in the United Nations and the NGOs to get a very defined indicator in there on hand washing because we knew that for our business and to be able to roll out Lifebuoy that was really, really important to us. And then we bring that to life through working for example with Prime Minister Modi and the government in India where there's now some very clearly defined advocacy targets in India around the reach of handwashing and access to sanitation and drinking water. Then in terms of the partnership stage 2, we work with a whole spectrum of different partners to roll out schools programs, community intervention programs, all based on the behavior change methodology that Unilever's developed and really marketing Unilever and the hand washing program that we've got as a way to stop dysentery and diarrhea. And then lastly, through scale, we work with a different selection of partners like Gavi, the Global Alliance of Vaccines and Immunizations with funding from the Dutch government to roll out integrated health programs around the world.
So you can see there, I mean, a selection of different sorts of stakeholders that help us to scale, but always looking at what's in this for Unilever, what's in it for our partners and how collectively can we have a greater impact. And of course, as we grow the prevalence of this program, Lifebuoy benefits because it's the world's largest soap brand. We take a slice of that market every time we increase understanding and awareness around washing with soap. 2nd example around Ben and Jerry's. So Ben and Jerry's was a brand that Unilever acquired at the beginning of this millennium around 2000.
And as you know, they're very much a campaigning and activist brand and they've kept that independence and they kept that spirit and ability to have their own separate Board of Directors to make sure that they continue to focus on growing their business really on 2 big areas that they're very passionate about, 1 on climate and 1 on inequality. So again, taking the 3 stage process, when Ben and Jerry's came to the team and we were starting to look at what might we do in Europe, they decided that for them, inequality at the moment in Europe really meant trying to tackle the refugee crisis. And so from an advocacy perspective, we worked with the EU and we did a lot of lobbying, working with consumers, getting consumers to sign petitions, really trying to encourage governments around the EU to resettle refugees and allow them the right to work. The second stage of that was then setting up a very practical program called the ICE Academy, the Ice Cream Entrepreneurs Academy to train up refugees coming into Western Europe around skills training and giving them employment opportunities within Ben and Jerry's retail channels. And And then of course, when it comes to scale, we're now rolling that out across the different European markets.
And next week at the Refugee Summit that's taking place in Geneva, we're launching a special ice cream, you can't really see it very clearly on the screen, called Cone Together, where there'll be a whole campaign that's connected into this advocacy and partnerships around refugee employment. And then lastly on gender. So gender equality is hugely important to Unilever because of the well, we all know the stats around this, but because of, a, in the workplace, the importance that gender balanced teams can have and there is many, many stats available that show that is a better at least to better performing businesses. But right the way across our value chain, thinking about from the women who are working in Unilever's plantations picking tea through to smallholder farmers, through to financial inclusion at the opposite end of our value chain when we're talking about retailers. Having a gender lens on what we do has proven to be extremely important for us in terms of boosting productivity and an increase in sales.
So lots of advocacy work coming out of the high level panel from the United Nations said one of the biggest things that the private sector can do around economic opportunity is to provide jobs and training for women in developing and emerging markets and through the power of our advertising to really change the way that gender is represented. So lots of partnerships and I think over the years, you've been familiar with the work of brands like Dove, where as Alan said, we've reached now over 35,000,000 women through partnerships, training girls and young boys as well around the importance of self esteem and actually not to be too intimidated by images of very mainstream beauty. And then in terms of scaling, I just talked very briefly then about advertising, things like the Anstereotype Alliance, where we convene together a whole host of other FMCGs and private sector companies to set out very stringent guidelines and guidance around gender portrayal in advertising. And of course, although that's a great thing to do in terms of influencing normative change and the role and gender perception in society, we also know that where we have more progressive ads, they lead to an 18% increase in purchase intent among the target audience.
And when we talk about target audiences for Unilever, over 70% of our consumers are women. So all very much connects into social impact and of course at the same time leading to business results. However, having said all of that, we know that we can't do this on our own. And so a lot of the issues that Unilever is trying to tackle, particularly when I'm thinking right across our value chain and in the sourcing of our products, we need to work with others. So we do very much in a pre competitive way work with other companies in the consumer goods sector and beyond around things like deforestation in the supply chain.
So it might be through things like industry coalitions, the Consumer Goods Forum. We're going into a section on the environment just after this. But really looking at how can we, when we work together, make a big difference to some of these core issues that Unilever cannot tackle just on their own. On plastics, which has exploded over this past 6 to 12 months, particularly here in the U. K.
Since the Blue Planet series with David Attenborough. We're doing a lot of work with groups like the Ellen MacArthur Foundation on how can the private sector and government and civil society come together to improve understanding and education around recycling and around collection. Also things like working with the others in the private sector to tackle things like financial inclusion. So for example, we work with on a project called CEO Partnership, people like Mastercard, AXA, I know a number of them are in the room or online to try and look at how do we bring in marginally excluded communities into the formal financial sector. So from a Unilever perspective, when we launched this program in India and we launched in Kenya, we've seen a massive increase, up to 70% sales increase by bringing our small economy.
It's particularly important for our women small scale retailers who otherwise just wouldn't have had the opportunity. Alan talked briefly about the multi stakeholder model from a very much from a business perspective. But as you've heard, what we want to do now is to bring together the sustainability world and the business world and to put a sustainability lens on top of that multi stakeholder model. So if you think about when Alan was talking, for example, about the work that we're doing with retailers, the retailers now are coming to Unilever desperate to work on really innovative sustainability partnerships, something that was probably seen as fringe maybe a year ago, 18 months ago is now absolutely mainstream. So when customers, consumers are going into stores, they're demanding from the retailers information about provenance of the products, how healthy is the food that they're buying, what kind of packaging is being used.
And the retailer often is the face to face interface with our consumers. So there's a whole host of different things in both developing and developing in emerging markets that we're now doing with the retailers. And I think when we look at how that impacts actually into consumption patterns, some of the most recent research that we've seen in from Kantar says that the Gen Z were going to they will stop buying brands and products that they think, for example, are associated with companies that they perceive to be racist. And 69% of those of the Gen Z that were interviewed said they're much more likely to buy from companies that contribute to social causes. So although it might be a nice thing to do, it really does translate into how people spend their money.
And then lastly, I said at the beginning, it's really a pleasure, I hope, to be able to come in and talk to all of you around sustainability and how it's becoming much more mainstream. And you can see there from the selection of headlands and they're all from the past few weeks, by the way, how much more mainstream this agenda is becoming. And it's through working with progressive investors like all of you in the room and online that really we can help to incentivize this much longer term value creation model. You are the people who've really got the power to help us to cement this sustainable business and to make it mainstream. Ideally, I don't want to be talking about sustainable business and business.
It is all just business. So I look forward to hopefully doing a lot more work with you, getting a chance to speak to you and hopefully together moving forward with this narrative and really starting to make a change. So thank you.
We've got time for 1 5 minute question or 5 1 minute questions, right Richard? Anyone got anything on your mind that you'd like to get into? Yes. Would you mind using the mic
Sorry, my question was in relation to the purpose of a brand that you spoke at the outset. And some of these things obviously have evolved over time. The brand might have stood for something in one point and may no longer be relevant. So how do you think about brands like Fair and Lovely in India, for example, and what it stands for, what it stood for and how do you repurpose it?
Yes. So we have a we literally have a spectrum, a way of map of our brands and how far along they are on the purposeful journey. And some might not make it. I've been in the press saying, oh, we're going to sell brands that can't make it. And I think there will be a very small number of brands at the end of the day.
It's just too much of a stretch for them to stand for something that is purposeful and they may be better owned by someone other than Unilever. Other brands will be able to reinvent themselves. So we have a male deodorant brand called Axe and we always used to get in trouble because on one hand we had Dove that was talking about girls' self esteem and we had AXE that was running advertising, which portrayed misogynistic, inappropriate images of women. And actually a long time ago, about 5 years ago, we completely changed that and AXE started talking about find your magic and portraying huge diversity on images of masculinity. And actually, if I would have said to most people in this room conjure up an Axe ad or a Lynx ad in the U.
K, Probably most of you would think of some inappropriate kind of girls guy sprays, girls come scantily clad, girls come flocking towards them. And we haven't run one of those in the U. K. For 7 years or 6, 7 years. It takes ages to change perceptions.
And so we're kind of midway through that on Axe. And this idea that you can suddenly pivot a brand to stand for something different is mistaken. It takes years of consistency. The Dove campaign for Real Beauty is 15 years old now. To me, it feels like yesterday, but it's 15 years ago that started.
Now we as I mentioned to you, we're shifting from us declaring victory on when a brand is purposeful to letting consumers declare when a brand stands for something more important. And we've already got the data, of course, on that. And there's only a few brands in our portfolio, and you'll be sick of hearing about them, that really differentiate with consumers. So up at the top are Dove, Lifebuoy, Ben and Jerry's, very clearly seen by the consumer as standing for something bigger. But the number one purposeful brand in our portfolio worldwide is Fair and Lovely.
Now that might be a surprise to some people because people love sitting in particularly Western commentators sitting in comfortable offices or press dugouts in the West, love to comment about how Fair and Lovely is imposing colonial views of beauty on poor, unsuspecting Asian women. The users of Fair and Lovely across the continents of South Asia, Southeast Asia and increasingly into Africa They also understand that they provide an entry level affordable point into beauty regimens with the step up in well-being and self esteem that come with that. But most importantly, they're also the ones who see on every single pack of something called the Fair and Lovely Foundation that gives young girls in India and other places access to free educational resources so they can educate themselves using a feature phone and get certified qualifications that allow them to break out of the family poverty trap where those girls are basically held in service of their families. So I know I'm speaking quite passionately about a controversial brand, but it gets right up my nose when people who don't understand Fair and Lovely have a go at it. And in fact, it's one of our most purposeful brands.
That was a little bit the 1, 5 minute question, but I'd like to are there any other things that we would like to get into? Yes.
If I may, you alluded to it just then of the notion of disposal if Unilever isn't the right owner for a brand. It's a debate that we have across the sustainable investment community of engagementinnovationinvestment versus divestment. How do you think about the notion that you're not really improving anything by just offloading this to some other owner? And how and why would you not rather just reinvent the formula, for instance, talking about Marmite as a just as an example rather than just hand it to someone else?
So I rather walked onto that set of barbed wire and thanks for the chance to clarify. So the first thing is, let me remind what I said that we believe the vast majority of our business will be able to move into responsible platforms. And we will have you brought up the point about reformulation. We will have formulation standards. Rich will talk a little bit more about packaging standards that will be held at a Unilever level.
And there are many progressive things that we're doing at a Unilever level including, for example, radical transparency of what's in our products. If you go to our websites, you'll be able to find extraordinary level of detail down to 10 parts per million of what's in our product and that lets people judge for themselves what they want to consume. When we are doing and we are actively looking at disposals, we've talked about that quite openly. By far, the first lens that we look through is prospect for long term growth of that brand or that segment or that category. And in fact, it's like in our reviews of the portfolio and what we might want to get rid of, I think sustainability profile will be a very low level consideration because fundamentally we believe that most of our brands and categories can be run on a sustainable basis.
In fact need to be run on a sustainable basis to and then where that's not the case, I think a slow death rather than a disposal is more likely to happen. We'll divert resources into better prospect brands. But the hard nosed amongst your community would probably correctly point out that Unilever has lost value by hanging on to assets that we didn't love. We've, yes, destroyed value by hanging on to assets that we don't love a little bit too long. And so at the margin, there will be, I suppose, a small number of disposals that we make just because of the combination of poor sustainability profile and poor growth profile.
But pleased that will be the 1%. The 99% will be us driving our business for sustainable a sustainable future. Graham, you want to say anything else about that particular question? Okay. All right.
All right. Even though it says we've got 2 minutes left, I know that it's time to get up a very exciting are you introducing the panel or am I? You're introducing the panel.
Okay. Thank you, Alan, and thank you, Rebecca. So Alan and both and Rebecca both referred to climate change as being one of the big issues facing the planet. And now we're going to dig a bit deeper into that subject. And we're going to do that by getting on stage an internal panel of experts on climate change who are now about to bring their chairs onto the stage.
And Rebecca is going to lead them in a question and answer session and there'll be a chance for everybody to answer to ask some questions on climate change. So you've got any, then start preparing them because here are some experts to talk about it. Rebecca, over to you.
So thank you, Richard. So we are going to do a bit of a deeper dive now into climate change. I'm joined by Mark Engel, who is Chief Sustainability Officer here at Unilever Lausanne, Executive Vice President in Finance and Controller Karen Hamilton, who is our Vice President of Sustainable Business and Thomas Lingard, who is Global Sustainability Director with specific responsibility for Environment and the Climate. So Mark we talked a little bit about the U. S.
LP the Unilever Sustainable Living Plan, but I'd like now to go a little bit deeper into particularly what we've done on climate and the environment over the past 10 years.
Yes. Look, when we launched the Unilever Sustainable Living Plan in 2010, we said we want to grow the business, we want to reduce the environmental impact and increase the social handprint, you immediately come to climate as one of the main planetary issues. And as Alan also said, it's very linked, by the way, to inequality and livelihoods, etcetera. And so we started to formulate our climate strategy then. And the first job we did is actually we analyzed 1400 of our products on the total life cycle analysis of carbon footprint.
So because we are not an energy intensive industry, so you can say, well, why are you focused on carbon? And but when we did that work, we actually found out that in our operations, we have about 1,500,000 tonnes of carbon that has been reducing every year. You add on top of that the distribution to get these products from our factories to on shelf basically, you add another 2,500,000 tons of carbon. When you then go back up the chain and you go to the suppliers and you say, what is the carbon footprint of all our raw and packaging materials? There's 25,000,000 tonnes of carbon.
And the biggest thing is actually in your home, when you make a cup of tea, when you wash your hair, when you wash your clothes, is almost 70,000,000 tonnes of carbon. So whilst our carbon footprint of Unilever is only 1,500,000 tonnes, But the total carbon footprint associated with all of our products is almost 100,000,000 tonnes. So and because of that, we set ourselves a target at the time of wanting to half the carbon footprint at the most stretching level, which is at the 100 and not at the 1.5. And that's how our climate journey started on carbon. What
have we actually done then at Unilever over that period?
Look, I think there is when you look at it, obviously, when you look at upstream, no deforestation in our commodity chains. And the main commodity chains for us are palm oil, paper and board, soybean oil, cocoa and tea. Those are the chains that are associated with deforestation. And we've done a lot in the last 10 years there to the extent that we're almost there in terms of deforestation free. Then, of course, it's all about the protection and regeneration of nature, so the whole climate smart agriculture, use of less water, use of less carbon footprint, use of less pesticides.
In our own operation, it all has been around carbon. And then downstream in the consumer use is mostly around product innovation. So products that are made from renewable materials, products that have more of a circular design, products that washing at lower temperatures, product compaction. So it really is around products that help consumers with their part of the footprint lower it down. So that's the kind of breadth of our climate program at Unilever.
Lizanne, obviously, I'm a huge supporter of all of this work, but it costs money. What's the business case behind doing this?
Alan sort of articulated the business case for sustainability and it's the same framework that we use for climate well as sustainability. So the four aspects are growth, cost, risk and trust. And then if you look at it particularly through a climate lens and if we talk about risk first, we've talked about the amount of carbon in our sort of whole value chain, so carbon pricing is something that is being talked about and many, many governments are thinking about introducing carbon pricing. If we were to incur carbon pricing costs that would have significant impact on our business model, on our financial model. So all the work we're doing to actually take carbon out of our operations and further down the train because all the costs are intertwined and will come back to us is really, really important in future proofing us for the future.
So that's one aspect if we think about one of our key sort of climate risks. If you think about the cost aspect, Alan talked about lots of savings. We saved over sort of £60,000,000 £600,000,000 worth of savings since 2,008 in this area. I'd love to say that it was 3 or 4 big projects, but it's not. It's hundreds of little things that are happening in each of our operations around the world, whether it's LED lighting in all of Australia, whether it's solar panels, whether it's using wastewater, whether it's actually just looking at our processes and the efficiencies and driving that, it's really about simple cost savings using less.
And that's been very effective for us and we need to continue to work on that process. I suppose the other one is trust. I think we all understand that if we trust an organization, if we trust people, we have a much better connection. We understand what they're trying to do better and therefore it has an inherent benefit. We've talked at length about talent, attraction.
We actually find attracting young talent, Our sustainability messages, our climate messages are absolutely fundamental for that and we've seen the results and reaping the rewards of being able to recruit the very best. Obviously, we're here today. The investor community is becoming more interested. S and P, ESG ratings, I know Al's got announced the other day. This is all about building trust in the communities that we need to thrive as a business.
Last but not least, consumers. If you think about the consumer interest in the companies they're buying from, the brands they're buying, it's just enormous. The amount of information that we have about our products, our brands and our company, I always carry around because I'm the controller, Unilever's annual report accounts. That just rose bigger year on year because of people's desire for more information and to understand us better as an organization.
I mean, so on consumers, we are an FMCG company. There's been an explosion of stuff in the press, in the media around climate. Karen, how do we try and deal with some of those issues in a consumer friendly way and tell the stories about what we're doing with our brands?
Yes. So I think you're absolutely right that we've seen a real step up in consumer interest and we're seeing that from a number of studies whether that's Ipsos or Pew and particularly amongst Millennials, Gen Z and also Generation S, the Silver Generation. So what we can see is rather like Alan was referring to a kind of spectrum of our brands in terms of purpose, we also have a spectrum when it comes to action on climate. So we have some brands where climate is absolutely at the heart of the proposition. Ben and Jerry's is a very obvious one.
Climate Justice and Social Justice, they've been campaigning for, for decades. And you'll remember some of the work that they've done and perhaps some of the campaigns you've heard of like if it's melted, it's ruined, which they campaigned on it during the Paris Climate Talks. 7th generation, you may be less familiar with our home care brand mainly based in the U. S. And in 2019 they have tied together with a group called the Sierra Club.
And what they realized in 7th Generation was that just as Mark was explaining, their greenhouse gas footprint is very linked to the way that their products are used in the home, especially their laundry detergents, washing in the washing machine. And they wanted to do something which would address that at a root level. So they campaigned for a shift to renewable energy in 100 cities across the U. S. During 2019.
Together with the Sierra Club, they've reached 100 cities who've committed now to get to 100% renewable energy by 2,030. And in doing so, they also saw an uplift in the penetration of their own brand and positive response from consumers and recognition from that. So I think that's, if you like, a good example of one of the brands that's really put climate at the heart of the proposition. But as we see consumers becoming more interested and we know from research that over 80% of consumers are saying, look, I need some help, We believe that more of our brands can take action on climate change either through their claims to help or through and or through their products. And that's the other part of the spectrum.
So I think that in fact, what we're going to see is that climate will become the new plastics for consumers and that it will become a factor for many brands in their consumer goods industry. So if we take Simple, our skincare brands, they are telling consumers that 100% of their products are made from renewable energy and letting consumers know Love Beauty Planet is doing the same. And then when it comes to products, we have innovated on a number of fronts, laundry with compaction and concentration of the powders and liquids. And we're making some quite radical step changes there and have done over the last decade. But even just in 2019, we shifted by 10% to 20% in terms of that concentration.
Removal of the phosphate ingredients is another example. Air powered hair sprays, concentrated hair sprays. And then finally in the area around helping consumers who are affected by climate change and will need to adapt. We think the biggest space there is actually in water because a lot of our products need water in order to work if it's a shampoo or it's a bar of soap. And so we've introduced dry shampoos, leave on conditioners, fast rinse conditioners.
And we've also introduced a number of really interesting innovations when it comes to laundry. Our latest is called Magic. We've launched it in Tamil Nadu in India, very a state in India, which is really at risk of water scarcity. And there the washing is done mainly by hand in buckets, 1 bucket to wash the clothes, 4 buckets to rinse. We've introduced an additional product, if you like.
So it's a new product in our portfolio, which cuts down the rinsing from 4 buckets to 1. So expansion for us and a real benefit for the people who are doing the laundry.
That example of how our products are helping consumers with their climate change problems in terms of water scarcity is quite an interesting evolution in the thinking. So if we think back originally to when climate change started to be talked about, it was very much about companies' impact on climate change. And that's why we have all the mandatory disclosure we do on carbon emissions. So what are businesses doing to the environment? And what we see now is a shift in thinking and an evolution of thinking and an addition to the thinking.
So we needed that thinking, but really to say actually how dependent our company is on the environment. And that is really sort of a shift in evolution that we now need to think on. The focus just on carbon emissions has been great and there's been great improvement particularly in the U. K. Environment.
But shifting our thinking, shifting how we think about the risks to the business. And so if we think about some of the work that Graham and I have been heavily involved in, in terms of the task force for climate disclosures that's been led by Carney and Bloomberg is really about making sure that companies are disclosing and thinking about how they are dependent on the climate and carbon pricing is one of those factors as well. We've done lots of work in this space, lots of deep dives to try and understand what water scarcity actually means for us, what agricultural yields means for us. And so a couple of years ago, we started looking at our raw materials. We started off with soy.
We're now doing a lot of work on tea and palm oil really to understand. When you look at it overall, our initial findings are that changes in 1 to 2 degrees won't change our business model too much. But I have to say that we've learned a tremendous amount and it's making us think about how we source things and how we look at demand going into the future. So some really interesting findings to embed into the business.
Thomas, earlier I talked about advocacy because what we're trying to do at Unilever is to influence the external environment. But on Climate, how does Unilever play a role? Because we're one company. Climate change impacts everybody. It's not something that national governments can control.
So how do we tackle that? What do we do?
Sure. Well, climate advocacy has been part of our climate strategy right since the launch of the U. S. LP. And as Mark explained, this whole value chain approach, we're effectively been setting ourselves targets for things way outside our own control.
And you only can deliver on those targets if you bring the rest of the world with you. And that means companies, that means governments. And particularly, I think in the run up to the Paris Climate Summit, we were engaged quietly in the background before that, but we realized that it was not going well. We wanted to be part of a leadership group of companies encouraging governments to set a really ambitious framework because so much will flow we thought from the Paris agreement. And we came out in the January of 2015 with a bold statement in favor of net 0 by 2,050 emissions as the target the world should be striving for.
And really, it was only some of the kind of hard NGOs that were pushing for this net 0 by 2,050 target at that time. That's broadly consistent with keeping temperatures to no more than the 1.5 degrees above pre Industrial levels that Alan talked about. And that started to have this effect of socially normalizing that because it was big businesses now asking for this. And if you talk to the people close to the Paris Agreement, if you talk to Christiane Figueres, who ran the UN negotiations, she will tell you that the voice of business in that process was fundamental to getting a global governmental agreement to strive for that target. Since Paris, of course, that's just the U.
N. Agreement that has to be put into practice around the world. We've been very active in different markets pushing for now the local versions of that to be enshrined into law. You have the U. K.
Now with a net 0 by 2,050 target. The Uniglobal was active in pushing forward. You've got conversations in the EU getting a little bit differently in the U. S, but you're making progress at a state level and city level in many places. But we also get engaged on crunchy issues directly relevant to our business.
So on renewable energy, we're part of a coalition called RE100. It's run by CDP and the Climate Group. And so it brings together over 100 businesses committed to renewable energy, both to share best practice in how you do that, but also to lobby in countries where we maybe need a little bit of opening up of the energy markets that allow us to sign the kinds of purchase power agreements for renewables that we want to buy. So on forest, we work with the Tropical Forest Alliance, which is a kind of advocacy and partnerships coalition of donor governments and tropical forest countries and companies like Unilever and others in consumer goods to put in place new approaches to ending deforestation. And slightly techie but really interesting example around hydrofluorocarbons, which are really nasty climate gas.
Some of them are used as refrigerants, used sometimes over 1,000 times more potent than carbon dioxide as a warming gas. And 10, 15 years ago, all the ice cream freezers, all the chiller cabinets in the world would have used those as their refrigerants. And we've got together with Greenpeace, with you and Environment, with Coke and Pepsi and Red Bull and did partly a technology platform sharing, but also an advocacy effort to develop new technologies and then get the regulations changed to allow HFC free freezers to be used around the world. That's now our standard refrigerant platform for all of our ice creams for Ben and Jerry's and Magnum and Cornetta and so on. And we've got over 3,000,000 of those units now around the world.
So Mark, how does this impact our sourcing? So
lots
of the areas that we're sourcing from, there are climate change issues. Has that had an impact on how we do our sourcing? Are we sourcing from different places? What does it mean?
To extent, yes, because when you look if you take an example on palm oil, we have really chosen Sumatra as our sourcing hub. We have invested $150,000,000 in an upstream palm oil upstream and tailor the formulation. So there's also a product development benefit of doing that. But this whole jurisdictional approach of understanding where your stuff is coming from is absolutely vital. That's also one of the reasons why, let's say, the CGF target of the no deforestation is not yet there.
It is because the whole mapping on where does the stuff physically come from rather than relying on certification or mass balance in these kind of systems. And that's what we've been focusing on for the last 5, 6 years. And so on palm oil, we are nearly there. On Brazil, sorry, we are getting there. In the U.
S, sorry, we are already there. And on paper and board, still very much in the certification space. But we are avoiding the high risk areas of deforestation. So we're sourcing paper from Norway, for instance, where we can rely on the government to make sure that there's no deforestation being done and we're avoiding more risky conditions. So it's definitely having an impact on how we source and where we source.
But at the same time, it is you do need to realize that whilst you're getting your own house in order, your point about the systemic change that we need to drive, we need to drive together with other people because if we don't source from a certain country, then other people will because they're commodities. So we need to drive systemic change together with other companies, together with governments and together with civil societies and NGOs. And on those five change, I think that's one of the key challenges that we still have ahead of us.
Karin, Mark just talked about the CGF, the Consumer Goods Forum, which of course is all the consumer goods companies and retailers who are working together on some of these pre competitive issues. But how do consumers understand all of these issues? Because sometimes there is a lot of information out there, not all of it's correct. So how do we help consumers to navigate around this sort of maelstrom of environmental issues? I mean, you talked a little bit about it through the advertising, but do you really see a shift now with consumers caring about this and wanting to find out more?
Yes. Well, I think certainly as citizens and as consumers, people want to make a shift and they're asking, well, how do I do it? And part of it, I think, for when it comes to the goods that we buy is, of course, the trust in the brand. And that is, at the end of the day, what the brand stands for is that you that there are brands that you assign a trust to. Increasingly, we are providing more information to consumers in a digestible form and making transparent, 1st of all, our ingredients as Alan referred to, but equally also what are we doing in terms of renewable energy in our factories and sustainable sourcing of our ingredients.
I think Hanneke will go on to talk about our brand Clonore, for example, and all of the work it's doing with its vegetables and vegetable sourcing, which is very profound and which we share with consumers primarily on pack and on the website because those are 2 of the areas where people will interact the most.
Lots from us. I wonder if anybody has any questions in the audience. If you have, would you like to put your hands up and just press the little button so the red light comes on? Yes. Just at the side.
So when you talk about or think about doing carbon pricing within the organization, is that something you're thinking about at Scope 3 or the 1,500,000 or 1,000,000,000 or whatever tons you were talking about? Or are you thinking about doing that at Scope 3 level?
Yes. So look, the first thing to say is before carbon tax comes in, we've actually since 2016, we have actually introduced an internal carbon tax in the company, whereby every carbon emitter, every site, every location is actually contributing an internal carbon tax of €40 or €40 a ton into a fund. And we use that fund actually to eliminate our energy footprint. So we are because what we saw very quickly is that the greenest and cleanest energy is the one that you don't use, and you also then don't have to pay for greening it. So that's what we've done internally.
Now if and when it comes to carbon tax, of course, what will happen is that the carbon tax in your home, you will be responsible for as a consumer. The carbon tax in Unilever's operation, we will have to pay. The carbon tax by the transport sector will be in the pricing of the trucks, and the carbon tax in the Upstream will actually come through in the pricing of the raw and packaging material. And but what we're trying to do also working with our suppliers is that in the time frame we have when all these as long as all these externalities are still free, and we have a very clear assumption that, that will change in the near future, is that we're actually using some of that money to change the business system. And so in our supply base, we have reduced the energy by almost 20% and therefore, the carbon footprint.
In our own operation, we've reduced the carbon footprint by more than 50% in the last 10 years, and we're now going at it in the transport sector by electrification of vehicles and advocating in the EU to get more tighter standards on European trucks on the road so that the carbon footprint goes down before actually the externalities will be priced by a taxation level. And so it's but to your question is, let's say, who's going to carry the cost? Well, the one who will produce will carry the cost. But at the end of the day, it will all add up in the cost of a product and therefore, the price of the product, course.
Just to add to that, a couple of brands are where, as I said, are at the end of the spectrum where climate is absolutely the heart of their proposition, have been experimenting with an internal tax on carbon across through to Scope 3. Ben and Jerry's and Love Beauty and Planet. And they're very transparent with consumers as well about their value chain emissions. Ben and Jerry's invests its carbon fund if you like, its taxes into work with farmers of dairy farmers on manure and how to capture carbon processes related to manure. And Love, Beauty, Planet equally is also investing in climate and packaging programs.
So we're doing some experimentation in that area.
I'd just add that, as Mark said, we're not a wildly energy intensive business. So the introduction of carbon pricing isn't some kind of sort of existential risk to Unilever. But you tend to find in the political debate around the introduction of carbon pricing that those who might face the most pain are the loudest. And we feel it's really important as a representative of the rest of the economy that we also speak up to say, yes, actually this would be a really good thing in helping accelerate the transition to low carbon. And if only the people who get hurt by the instruction of regulation are allowed, then the governments will not be inclined to act.
And that's why Unilever, since the beginning, has been part of the Carbon Pricing Leadership Coalition convened by the World Bank and the UN Global Compact, just to put that case forward. And there's now lots of good research showing that you can do carbon pricing without impacting competitiveness if it's done in the right way.
Can you just press your buttons? Everyone can hear online. Thank you. Thank you. Or shout, that's fine.
Well, thank you very much for your time. My question was, I was wondering if you could dwell a bit more on your work with regards to palm oil and sustainable sourcing. I mean, I appreciate you've done a lot in this space, but that there are kind of ongoing concerns and allegations made that Unilever as well as other household brands source from where they buy their palm oil from producers that contribute to deforestation and heat pollution in Southeast Asia. And I know that you've severed links with suppliers that are linked with these practices and you're very transparent in publishing reports about public grievances and things like that. But like what are you doing to enhance monitoring and traceability over this?
Yes, I will do that. So the question is to ask to tell a little bit more about palm oil given the fact that it's still a very controversial topic in the media. In the press, what is Unilever doing about it? And tell us a little bit more how you work with suppliers, etcetera, etcetera. So I think I mean, our palm oil journey is has been, let's say, going for a long time.
I remember the day I was appointed as Chief Procurement Officer in 2,008 and I came here for my 1st day at work, we had the gorillas on the building from Greenpeace, and that really started my own awareness of this journey in palm oil. We've been founding members of the RSPO, the Roundtable for Sustainable Palm Oil, when they introduced certificates which were necessary to get, let's say, the conversion to sustainable plantation started. For a very long time, Unilever has been buying 80%, 90%, 70% of the world's certificates, etcetera. And when we then found that there was enough tipping point to go physical segregated, we've been basically on the journey of making sure that our palm oil comes from certified and traceable sources. And we've also, last year, as the first company in the world, actually published our whole palm oil supply chain.
We've published 1800 palm oil mills where we are sourcing our palm oil from as because we very strongly believe that the bit that is missing in making sure that the industry transfers to a more cleaner practice and a no deforestation practice is for companies to be transparent about it. So we've been very transparent and put everything on our website, including the geo coordinates, and that lets everybody in the world basically have a chance on to scrutinize and to verify what we are doing. And but the fact of life is that there are still an enormous amount of wildfires in Indonesia and in Kalimantan. It is still legal in Indonesia, if you're a smallholder, to actually start a fire. You ask yourself how can that be possible, but that is something that in Indonesia, as long as you're not an industrial player, you're still allowed to burn up to 1 hectare.
But the problem is once there's fire, it's very difficult to put it out. And so the industry is still rife with a lot of controversy. Where we are now at the moment is we are seeing that digital and, let's say, the satellite mapping that we are getting now on a daily basis is actually transforming the whole industry to another level. So the integration of data on knowing where all the concessions are of our suppliers that are then putting into the map, knowing, let's say, following the truck movement by Google's mobile phone tracking technology and therefore, linking the oil that comes into our factory in North Sumatra and where does it coming from, you are essentially transforming the industry because the whole notion of a certificate where basically a physical person would come in with a checklist and say, yes, everything is fine, but what happens a week later, nobody knows. It makes that kind of obsolete.
So the technology in terms of satellite imaging and and combining data of wildfires and concession maps and all this kind of stuff is really transforming the industry at the moment. We have a much better view now real time on what is actually going on in our supply chain, and I think that will be the next iteration of creating a more sustainable palm oil industry. What you also see is that the big players in the palm oil industry have all made the change. It is now more the sort of the smaller players, the privately owned players, the smallholders, don't forget there are 2,200,000 smallholders in Indonesia that also have palm oil plantations. And there's a big economic development thing there as well because for a smallholder, having a 2 hectare palm oil plantation makes a difference whether you can send your children to university or not.
So to balance that whole and so we've been focused very much in the incorporation of the smallholders into the system because we see that the big companies are getting it, but we need to make sure that we integrate that as well. So I think, let's say, transparency, traceability and digital conversion on real time monitoring on what's going on in your supply chain is going to dominate, let's say, going forward. But there is always because there are so many wildfires still happening today, That's why you keep reading in the newspapers about, well, there's been a fire there and it's been associated to that. And this is an inherent problem of the industry, but we're fighting very hard to change that by all the, let's say, these initiatives that we bring.
Yes. I think you'll add a lot of liquid particles in plastic bottles when it comes to your detergent business. Andre put it well when he said you're selling petrochemicals in plastic bottles. How quickly can you move to biosurfactants? And is the supplier base there already?
Or is this a decade long process? Or can it be done quicker? And where's the consumer in this?
Yes. I'll leave the consumer to Karen. But let me just say, so a, I think there's a lot of science that still needs to be completed. So we're at a very exciting stage in bioscience that is required to make that switch. But we already have products in the market.
In Chile, we've launched the rhamnolipids product. That is an all natural product where we've replaced the petrochemical by
a biochemical.
But of course, one of the things that we also need to be realistic about is that if you replace all the petroleum by palm oil, you're robbing Peter to pay Paul because the in fact, we are we then are really short of land banks for palm oil. So and there are not too many so there is sugar, there is palm oil and there are some other carbohydrates that would be suitable for that. But there is the whole sourcing issue. Also, we have to realize at the same time that we are replacing meat with plant based on the other side of our business. That is also going to, let's say, put a strain on the carbohydrates that we are growing.
So I think Home Care is very much leading with that. There's a lot of thinking. But we do need the bioscience. The suppliers are very keen to change. So the people that we work with and combined with those, the smaller new start up and scale up players in bioscience are very much there.
But it will take some time for us to do that. And the main reason is the scale that we need. The scale that we need to do that and to make sure that we get sustainably sourced and working product that works as well as petrochemicals because nobody wants a laundry product. That is only half the efficacy. I think that's one of the challenges.
But Karen, maybe you can talk about the consumer end a bit.
Yes. I think from the I mean, the consumer perspective, there's clearly a trend in particularly in Home Care and Beauty and Personal Care towards natural products because that's something that's a benefit that people want. But at the same time, what we're also seeing is that citizens are saying that they want to see action on climate change and they want to take action themselves. They want to see action on plastic pollution. And so when it comes to plastic bottles, for example, I think that consumers will also be looking for how to close the loop, not only what might be Biotech Solutions or Renewable Materials Solutions.
And I think as understanding about climate change becomes greater and the options become wider, we might also see that there are other kinds of technology alongside some of the biotech and naturals technologies that we can deploy to directly tackle the climate emergency through our formulations.
Well, the of course, the there's a couple of things that so there is the cost and there is the price. And they are 2 very different things. And particularly, when you're looking at your commodity markets, where most of the petroleum based chemicals are commodities, but and most of the biotech are still niches. So there is very much also again, will there be an industry transfer for this, and that will, let's say, no doubt affect the price. On the cost side, we already know that economically, it's possible.
So in that sense, there's nothing prohibitive around the cost of biochemicals and bioscience, but there is, of course, scale and supply and demand, and there is still a lot of development that needs to be done. So I don't think that the cost issue is actually the big blocker. It's more the technology and then the scalability that needs to happen because the people who own the technology don't have the capacity to scale. And the people who have the capacity to scale, so there's obviously people need to partner up, and that will take a little bit of time. And I think that will determine the rate of change that we're going to see.
Any more questions? Yes. I
just wanted to confirm, I think you'd said €40, not €14,000,000 for the
€40, yes.
€40, yes. Scenario analysis around this area is sort of very trendy right now. And it feels despite people like Trump, there's more of a bipartisan effort through organizations like Baker Schultz, so that a carbon price at least in the U. S. Might be a reality over the next 5 to 10 years.
When you look out, what kind of sort of price inflation that you're thinking that €40 goes to? And I guess I'm also curious what the social implications are in a sense, right? Is it are there areas like the ice cream business that are pretty price inelastic that would carry that burden rather than essential products for lower socioeconomic customer segments?
I think, as we said before, we're not particularly carbon intensive even all the way along the value chain. So even if that carbon was priced at €50, €100 a tonne, right the way through, my hunch is that's not going to be a big increase in cost, not outside of the normal fluctuations of raw material prices that we deal with anyway. I think that would I think if you're talking about petrol, diesel for transport, I think that's going to be a much bigger impact. And we know that governments are thinking really actively about how do you manage the social impacts of these transitions, where you've seen governments try to do quite ambitious things on carbon pricing and not thought about the social implications and how that's going to be received and what extra allowances and tax breaks you put in for the hardest hit at the bottom of society, you see the kickback. So I think we're learning that as you do carbon pricing, you have to get that social justice part in right upfront and not as an afterthought.
But I don't my sense from what we've seen already is that's not going to be the main issue being lit.
If I can just sort of build on that. The carbon offsets at the moment in the market are sort of $3 to $5 you can buy historic offsets. When you look at the WWF, they've basically said EUR 22 a ton is the kind of gold standard that can sort of stand the test of are you really doing the right thing. But it's still quite on the low end. But we think that sort of between 50,000,000,000 and 70,000,000 is probably in a 10 year framework, probably a better planning assumption where you need to go.
But one of the things that we need to all be very mindful of, and I said this also at the Capital Markets Day, is that the trick is in the word net because the if none of us are going to cut our emissions, but all of us are just going to keep happily doing what we're doing and we think that we can offset everything, there is simply not enough land, not enough resource to offset what we're doing today. So the thing that we're really focused on is not it would be very easy to make an announcement and say, well, we're going to be offsetting tomorrow and we call ourselves a carbon neutral company. But the point is that we need to focus on cutting emissions because the net zero deforestation by 2,000 and 50 for the world is not going to work if the emissions stay at 100%, and we think we can all net that off. And I think that's one of the things that we've been focused on very much in saying and I think we've cut our emissions in our own operation by 28% in the last 10 years because we do realize that we need to cut as well as offset or inset.
Yes.
So following on from that, what do you think is the most difficult challenge in actually getting to net 0 by 2,050? What's going to stop that actually happening?
You want to have a go to Thomas on that?
Alan
and I were talking about Machiavelli
quote the
other day, which is which I won't get verbatim right, but it's something about when you try to bring in a new order, you have lukewarm supporters, but really violent objectives from everyone who's going to lose out from the change. So I think this is what you also see playing out politically now is that as people the penny is dropping on climate change, you're starting to build this support for what needs to be done to decarbonize the economy in a fast way, but you also start to get some quite nasty kickbacks from people who are trying to slow down progress. And that's why we've been so active in these different climate advocacy groups around the world because we think we need to try and match the level of voice. We might not match the level of kind of lobbying investments and so on. Some of the big players will try to just say, well, are you sure?
Do you really want to go that fast? Have you thought about all the consequences? But it's undeniable. You can't argue with the science now. If you look at the IPCC and the governmental panel on climate change reports about what even 1.5% isn't great, to be honest.
2% is pretty bad. 3.2% is catastrophic. And we're lend our leadership voice to that and we encourage others to do the same, we work up and down the value chain. No one can predict the future accurately. We'll be doing other things, sort of, I think.
But you have to be optimistic, right? You have to be optimistic that if we are all loud enough about the change and we can help consumers and citizens around the world bring political support to the change that's necessary, then miracles might be possible.
I think as well, I would add, when you look at some of the parallels, and Rich is talk a bit later about plastics, there comes a tipping point where consumers push and push and push and that then results in action in companies. And if you think for example, with so many people from the financial community here representing pension funds, etcetera, the Secretary General was talking a few weeks ago about investing in fossil fuels. And it is is that right? You're really encouraging investors to think about that. So actually, not that I'm shifting responsibility in any way shape or form, we absolutely have to get our own in house in order and right the way along our value chain, we're doing lots of different things.
And as well, it's not just about carbon offsetting, to Mark's point, we're looking now at things like regenerative aquaculture. So actually how do we put back more than we're taking out of the environment? And there is also a shift towards that regenerative model. But I think as well from a financing perspective, I thought it was really interesting what the Secretary General said is a very blatant call to action around stopping
investment in industries, which are
known to be having a negative environmental impact. But
consumers
and what they're demanding. For governments, it's very difficult. Governments are operating often on a much shorter term prognosis than companies. They're thinking about the next 2 or 3 years and about servicing the needs of their electorate. But we've seen in the U.
S. As well what was really a very fossil focused industry and energy sector, actually now there is a realization that actually alternative energy sources are going to create jobs. They are going to boost the economy. So I think once we start to also talk about the positives of the chains and not just the negatives in not doing so, to me it's a really important marker, and I think ultimately, that will be the tipping point.
I think that for me, the biggest risk is that it's too far away. And so it's too easy to put it on the back burner for everybody. 2,050, think about it yourself, we will all be long be retired. So there is going to be a real risk. You see that on the palm oil commitment.
There are many companies that made palm oil commitments by 2020. And it's 2019, and there are still people scrambling, and it's just too late. And so I think the big thing and that's also at Unilever, we've always said, if there a choice to lead or to follow, it is much better to lead than to follow. And so that's the reason why we're also doing that on carbon. And I think it would be really beneficial if we're much more explicit that if you want to hit that on 2,050, what do you need to do by 2025, by 2,030, by 2,040?
Because I'm just really worried that people will just say, well, that's an awful long time away and will not start to act now. And I think that is and so that's really the choice that we've taken. But the planet doesn't care whether a ton of CO2 comes from Unilever or from somewhere else. So that but I think that's a real risk, in my opinion.
So could you see a situation being needed to expedite the process where companies like Unilever need to invest more alongside other investors to, I don't know, build infrastructure, build renewable capacity to go to achieve that, to putting back more than you're taking out?
Yes. I mean, I think ultimately, yes, it's not going to be just business or just government or just regulation. Yes, 100%.
So it's very much and we talk a lot about ambition loops. It's about the choreography of all the different actors in the system. It's a bit like Lisanne's point that we haven't achieved what we've achieved through 1 or 2 big projects. It's been lots and lots of little things, and climate change will be the same. So companies coming out with bold targets on renewable energy inspires governments to go, Oh, well, maybe it is okay to have a stretching renewable electricity target because we can see all of these big multinationals that want to buy renewables.
Say the same thing on forest. You get companies saying, well, we only want to buy deforestation free palm oil. It makes governments go, okay, we need to be able to provide that. So this interaction of governments and businesses and civil society is together what's going to drive that. And the financial system is a huge part of that.
I get geekily excited about the TCFD work that Graeme and Lisanne are involved in because while it's got possibly the worst name in the world, it's an initiative being long and clunky, it's just a huge unlock to get the whole of the financial system, seeing climate change as another lens on risk, another way of thinking about the bread and butter of pricing in, what in future is going to climate change going to mean financially to these companies. And it's initiatives like that around the world that are slowly going to shift money from old industries to new industries and help accelerate that change.
One more quick. Brett O'Kozhoni had your hand up. Thank you.
How resilient is your manufacturing footprint and general business if it turns out that the world actually will heat up by 3.2 degrees, you operate in some regions that might be affected by climate change. So just wanted to understand how resilient is your whole manufacturing footprint in dealing with rising temperatures? Thank you.
Well, look, we sell in 190 countries, and we have manufacturing in manufacturing footprint. But the issue, of course, is that the sourcing footprint is a very different matter because unfortunately, palm oil doesn't grow in the UK. UK. So if, let's say, the Far East would be heavily affected with drought, then of course, the scale of that would be far larger. So I think what we're seeing is that because we live in a VUCA world today, and as Alan was saying, you have hurricanes and droughts and all kinds of stuff happening today.
And I think we are managing that really well. So in that sense, we do have the flexibility in manufacturing. It's also with all these trade and trade tax structures. We have to move manufacturing, move sourcing all the time, and we know how to do that. But the question is what does a 3.2 degree world look like?
I think that is what the uncertainty is. And because it is is it really the end of the world? Or is it a little bit what we're seeing, but it is 20% worse of what we're doing today? And that I wouldn't like to take a bet on what that looks like. But if we have to believe the reports, then that doesn't it doesn't sound very encouraging.
So I would be saying, look, I think for where we are today, we're in a good space. But I do think that if the experts say that we need to keep within 1.5 degrees to keep, let's say, the current world going as it is, then I wouldn't like to think about what it would like in a much more extreme scenario because we do see, let's say, the odd crisis here and there everywhere. If that is happening every day, then I think we would have probably a much bigger issue.
So that is exactly what the TCFD scenario analysis is. We've spent a lot of time encouraging within the guidelines to encourage use of scenario analysis. Lisanne and team spent a huge amount of time last year for the first time in Unilever putting a 2 degree analysis and a 4 degree analysis. It's on Page 33 of our reporting accounts. You can see exactly what we think the impact will be under both.
The impact under both scenarios are quite different because under 2 degrees, you get more regulation. It goes right back to the previous gentleman's question about $75 or $100 carbon tax per tonne. It talks about increasing price pressures, cost pressures. By the way, on Page I did the math while we were talking. On Page 35, you can calculate exactly what the impact of $100 carbon price on Unilever's scope 1 and 2 emissions is, is about $150,000,000 So the comment that was made about it's not that big by Thomas is probably right in the context of 100 and EUR 45,000,000,000 market cap company.
It's all there guys. All we have to do is encourage everybody to follow the sensible efforts that are out there and the TCFD is just one of them. But it's particularly impactful because it gives you the scenarios that you're looking for. We didn't do 3.2, but we did 4 degrees. And actually, to your point, Marc, all the detail is there of what these scenarios would entail.
It just requires the effort to go through it and think about it in the context of the lens of your business.
Okay. Right. Let's stop there. Thank you very much, Rebecca. Thank you very much to the whole panel.
That was great. Thank
you.
So while we move furniture in the room, can I just there was a question there about palm oil? Just to mention something that about 6 weeks ago, we recorded a webcast from our Chief Procurement Officer talking about our approach to sustainable palm oil and that will give you a good half hour on the subject. If you really want to understand much more about it than we were able to handle in 3 or 4 minutes here. And we will be doing a number of other webcasts on sustainable issues through this year. So look out for them if you really are interested in these subjects because we want to try and get into more depth on some of these.
Okay. Well, that was climate on the big world issues. Can we now switch and talk to one of the biggest consumer issues of the day, the biggest consumer issue of the day, I think, and that is plastics. And I'd like to introduce Richard Slater, our Chief R and D Officer.
Okay. So hello, everyone in the room here and joining online as well. So I'm Richard Slater, as mentioned, Chief R and D Officer. I've been at Unilever since April of this year, having worked in a number of other large consumer companies. And one of my responsibilities is to represent the company for plastics and plastic waste.
So great to be talking to you today. Those that are in the room here, in the break, we have some further examples next door. So please come in, talk, ask any further questions. And there should be time for questions as long as I don't waffle on for too long in my intro. Note to self, okay.
So why are we talking plastics and why is it so important to us? Well, for us in Unilever, it is not only the right thing to do for people and the planet, we think it is a true investment in the long term growth of the business as well. And what I really hope you take from my short presentation today is that we actually see this as a source of incredible growth opportunity, not simply risks to be managed as a business. And also, Mark mentioned the comment of far better to lead on the challenging issues than follow. And actually, I really, truly believe Unilever has taken a leadership role here.
And through that, we've got opportunities to innovate. One of the things you should see is doing this at scale on our biggest brands, not simply taking smaller or niche brands with a sustainability role. There is a role for that, and that's fine. But the real challenge is doing this at scale. And why plastics?
I think many of you in the room and online, you're joining this because you're very engaged in this topic and it's important. So I won't labor the point, but I think it's interesting just to step back for a second. So packaging has been important to consumers for some time, but plastic has really, in the last couple of years, hit the forefront. And I think it's just such a visible and tangible issue, plastic waste in the environment, compared to carbon and CO2 and greenhouse gas, which can be quite intangible. You can't see it.
You can't feel it. Now if there's plastic waste in the environment, you can see it. You can feel it. There are programs that show it in the ocean. It becomes very emotive.
And I think finally, people actually now have the choice. You can take a choice to find a different brand, find a different retailer. So it's become a very, very important topic, very tangible and actually has been quite easy for people to take alternative choices. And we should say as well plastic remains a really useful and important material. Of course, it's lightweight, it's energy efficient, it brings quality to products, it's affordable.
The problem is when plastic, because it's so durable, gets into the waste stream and doesn't get reused or recycled. So we've got to take a holistic approach to this. We're simply replacing plastic with a like for like material that is heavier, more energy intensive and also isn't recycled is not the way to go from all of the discussion we just had earlier. Now really importantly for us, there's all of the kind of environmental and doing the right thing for the planet considerations, but really people now are seeking out more than half of people are seeking out sustainable packaging choices. Research has shown this again and again all around the world, not just in the West.
And we're also seeing when we innovate on this, and you'll see a few examples, we're actually seeing fantastic purchase intent step ups through innovating on this area. So Unilever has been at this for some time. It's not a new phenomenon. And actually in 2010, as part of what Rebecca presented earlier, we made a commitment to halve our plastic us half the waste associated with our products, and that included packaging. And we've made great strides on that, and that included plastic, of course.
In 2017, Unilever was one of the first companies to sign up to much more stretching commitments here, and this was a recognition of taking a leadership role again. These were to ensure that all of our plastic is recyclable, reusable or compostable by 25% and to use 25% recycled content in our products as well. And these were a thoughtful goal. So the idea here was to create a stream of recyclable material and then to create a market for that as well for our products. Since that point, many companies and many partners and NGOs have signed up to this commitment as part of the Ellen MacArthur Foundation, and that's great to see.
But more recently, we've realized that's not enough. It's still plastic is still getting into the environment, and it's still an incredibly hot topic for consumers and still an issue to deal with. So again, really proud to say in October this year, we announced further stretching goals that build on 2017. These were to half our use of virgin plastic by 2025 versus 2018. And as part of that, to take 100,000 tonnes of plastic out of our system as an absolute reduction.
And then the second goal we committed to was take responsibility to process help collect and process more than our packaging footprint. So very, very stretching goals. We think the right ones, we also think these are going to both spark innovation and growth for us but also some systematic change in the industry here. So what's our approach? So a little bit of the why and what we're actually committing to, but how do we go about it?
So firstly, we have a very clear framework in Unilever. I think this is one of the secret sources for doing this at scale, which is a framework of less, better and no plastic. And Rebecca was talking about sustainability not being some sort of side topic or a separate strategy. What I can say on plastics is that's absolutely the case. So all of our global teams, our categories, our countries and our functions have plastic commitments as part of their targets and objectives and have this program fully integrated.
I think that's one of the reasons we're doing this at such scale. But probably more interestingly and importantly, what are some of the examples? So some of you might have spotted some of the products next to me here. So I want to bring it to life with some real projects, and hopefully, you'll see what we're doing in practical terms. Okay.
So the first is less plastic. I'm actually going to take a small risk here and do a live demo, but I thought I won't take that risk myself. And I was thinking actually, who's the most foolproof person I could use? Who would demonstrate that anybody can do this and use a SIF refill? So if a CFO can do it, anybody can, right?
So Graham, do you want to do you mind helping me out here? So, okay. So this is our stiff products, one of the yes. I loosened the top for Graham, knowing Graham was going to do it, so full disclosure. So I'll explain it in a second, but I actually want Graham just to use it first.
So if you can pop the wreath along, and I'm going to stand here with my fingers crossed.
Okay.
I'm sure there's a big wow and woo in the room at this point. Thank you. Okay, exactly. So well done, Graham. Thank you.
What's that? We didn't think about that. Phew. Okay. Thank you.
That worked. Thank you. Well done, Graeme. So a truly foolproof pat there. So no more so, no.
So let me just talk about it for a second because you've seen the wow, you've seen that it works, but there's an important point behind this. So I really believe when we innovate in this area, we need to make it easy and simple for people. We can't expect people to compromise massively on performance, on cost or really changing their habits 180 degrees. So one of the challenges, how do you shift habits along but really make sure it's simple and easy for people to use. So people want a more sustainable choice, and that's a clear insight.
We actually had a technical insight on this one as well because we realized for years, we've been specifying our bottles and our trigger sprays to last for thousands of uses without really thinking about it. It's the sort of thing we do in R and D. We build on it. We do the next one. And so what we realized is if we could just get the usage of that going, then there was something to benefit the environment and consumers.
So these refills will sit along the shelf alongside the starter kit. You dilute it in your home. It's a simple product to use. The concentrate works just as well, if not better than the current product. It's actually cheaper on the shelf for people, and it also will unlock options like e commerce as well.
So 75% less plastic, but importantly, 97% less water being transported around with each pack. So in the U. K, where we've launched this, we estimate around 1,500,000 bottles worth taken off just from one small launch in a few accounts. It's going extremely well. So hopefully, we'll see this elsewhere.
The second example is OMO. So this is in 7 out of 10 households in Brazil. It's the number one laundry brand. And we talked about concentrates earlier. Actually, Karen mentioned this.
One of the big challenges, of course, is people looking for value rightly on the shelf. So if you sell a small concentrates bottle, it can be quite challenging to get that value perception across. And then what we found as well when we've launched these products is, on occasions, people use too much because of the habit, and then the product runs out too quickly again. So the value perception is gone. There is a habit in Brazil of diluting cleaners in the home.
In fact, even diluting dilute cleaners in the home. So we thought we'd build on that. We actually sell a 3 liter starter kit with refills now to really make it obvious that you're buying a refill and a starter kit, allowing people to dilute in the home up to a 3 liter volume. So they're seeing the value perception. It's building on their existing habits.
However, again, 75% less plastic per pack and loads less water being transported around a large country. So again, we're piloting this in a number of accounts. I think what's important is we've got a lot of test and learn approaches going on there. So we've iterated both of these product developments by launching, learning and building that in. So just an example of less plastic.
Now better plastic is all about making sure that the plastic we do use is fully recyclable or reusable, and we use as much recycled content as we can. And we've got many examples of this going at scale now, which is fantastic. So sunlight, as you can see there, the number one dishwash liquid in South Africa, has been recyclable for some time. It's now using 100% recycled content. So it's fully circular as a pack, which is fantastic to see.
And then really excitingly, recently, we launched Dove, going to 100% recycled content in Europe and in the U. S. This is a massive project initiative for us. It's literally into the tens of thousands of tonnes of plastic that will be saved through this. We have to create entire new streams of HDPE high quality recycled content to enable this project.
So again, it's always a challenge, but you can do this at the small scale. When you do it at the large scale, you really have to innovate and create new partnerships and new streams. So a couple of other examples as well. At scale, Hellmann's in the U. S.
Will be launching in Q1 next year 100% recycled material pack. This is an interesting one because it's food grade. So it might sound easy, but you've actually got a certified food grade, high quality material, has to work, has to be clear on the shelf. So we've actually partnered to create a new technology here that takes PET back down to its molecular state and allows it to be rebuilt as if it were virgin plastics. And that's the sort of technology that will help unlock more and more recycled material as we keep innovating here.
Another example of better plastics. Some of you may have read or seen this, but black plastic has had a bit of bad press and a bit of a problem, particularly in the West in terms of recyclability. And that's because the automated machines that sort waste don't pick up black they don't see black, they're infrared. So we actually designed or co designed and partnered a new pigment that's put into the masterbatch for this that enables detection. That's actually going to save 2,500 tonnes of plastic just in the U.
K. Alone before it's rolled out. And we've licensed that technology out to others as well because we want to make the shift across all of Black Plastic, not just Unilever's portfolio. So many, many examples and many brands that are doing this now, but the point is we're doing this at scale on our biggest brands now. And then finally, this is the area that I think often gets the most interest, which is no plastic.
Now if only all of the examples here were as simple as just taking plastic out, it would be an easier time that we have. But there are times where you can just look at a problem from another angle and make a change. So on Solero Lollies, we launched in the U. K. Naked Solero this summer.
And actually, we've wrapped Solero in plastic for years. We found that by cleverly creating a cardboard pack that separates them and testing the launch, people were quite happy to buy these products without the wrapper, fantastic, and that takes plastic out of the system. The same goes for Dove in terms of naked bars and shower bars as well. So wherever you can, take plastic out of the system, sorry. We haven't put plastic into our Solero, by the way.
This is a mock up. Someone did ask me earlier, so I just want to clarify that. Okay. Then you think about a brand like Knorr, which Hanneke may talk about, and how we can make all of the laminate material fully recyclable around the world, enormous volumes and a really big impact and where possible, moving that to paper as well. So big changes on big brands.
But there's a point by which you can no longer lightweight materials or you can no longer keep taking plastic away entirely, products need packs. So how do we think about it differently? We can think about some innovative options like the minim deodorant, which is part of our loop pilot. So the idea here is typically and shamefully with our deodorants, often within a few weeks of use, we throw those away. Many of you will probably do that in your bathrooms at home.
So how about creating a permanent beautiful looking pack made of aluminum or glass that then is refilled each month? You can buy it in store via e com. So this is a concept that we're developing at the moment and looking to test. So this could be very, very minimal plastic or even no plastic, one simple example. We also have another format we've developed as part of the LOOP pilot as well, which is waterless and plasticless tooth tabs.
So effectively a completely new format. Now this won't be for everybody, but a number of people probably will, we believe will, and our early research says they will take a choice and try this. And this can go along with options like bamboo toothbrushes to avoid the fact that pretty much every plastic toothbrush gets thrown into landfill today. So many, many options on no plastic, and it's going to take a lot of innovation, and it's going to take us trying, testing, learning, scaling what works and not being afraid to actually fail on a few of these things as well because they're changes to habits and behaviors. I guess the final area is also looking at refill and reuse options.
So we've piloted in many countries around the world, refilleries in stores. So for example, in the Philippines, the All Things Hair Refillery, where people come into store with a permanent pack, pay by weight and take that away. So what we're doing on those things, actually, retailers are incredibly open to these partnerships because they want excitement and people back into store. Again, not everything works with these, but actually, we're seeing great promise, great engagement and actually a number of opportunities we can scale there. And finally, as Rebecca said earlier, we don't do all these things in isolation.
We do these by partnering around the world. So just a few examples. Waste collection. This is Indonesia where we have an initiative called Food Waste Banks and Plastic Packaging Waste Banks. People bring their waste along.
They actually get deposit the waste, And by weight, they gain credits. And as a community, it's effectively like a bank. You can store up those credits, cash them in and then get benefits for the community or for the individuals. So it's encouraging waste collection in a system that doesn't actually have a great infrastructure today. There's thousands of these across Indonesia sponsored by Unilever.
And actually, we're collecting thousands of tons of waste. So this isn't a few kilos here and there. And if you think about India, we're doing this scale tens of thousands of kilos sorry, tens of thousands of tonnes of plastic being collected through Unilever's initiatives. And that's around the world. So that's Brazil, Africa and actually Europe as well and the U.
S. Then in terms of technical partnerships, the one I didn't mention earlier is ice cream. Because if we think about recycled material going into an ice cream, not only does it have to be food grade, it has to enable freezing, heating and withstand all of the supply chain. So again, an innovative technology to partner to create virgin like polypropylene that can then be used at food grade and used in ice cream. And more and more of our ice cream containers are now moving to this chemically recycled polypropylene.
So this isn't going to be solved purely by doing more and more mechanical recycling. We're going to need these investments in advanced manufacturing and advanced recycling technologies to make this happen. And then finally, retailers, where we can I have a real problem with the kind of term educate consumers, educate people on this? We actually just need to take a step back from that and realize that we're all people who use these products in our own lives, and we don't always have half an hour to work out what needs to be recycled, what needs to go into what bin and how to separate everything. So my contention on this is we have a big role as companies and organizations to make it incredibly easy for people to do the right thing, to choose brands that do, do the right thing, as I've talked about earlier, but also very, very clear instructions, labeling and help actually to educate.
So this is a partnership with Walmart in the U. S. Where we're looking to educate on how we can get recycling rates up, particularly for plastic, and also avoid contamination in those streams. So even where recycling infrastructure exists, we know that people aren't recycling to the levels that they could. So just a few examples of many, many tens of partnerships that we're doing.
I've gone pretty quickly through that because I really wanted to give proper time for some questions. So I think we can open it up at this point and go from there. Thank you.
Yes. I wanted to ask it sort of flows on from that very last point you were making about how do you actually get people to recycle? Because if you think about it, there's a whole bunch of systems we have. You think about kind of plastic recycling codes. Does anybody know what they mean?
Can you actually get a straight answer from your council as to which one goes in your bin and which one doesn't? It was interesting you mentioned about your trying these efforts of having these kind of banks where Bill is taking to. Do you think fundamentally that you see a world where actually you're going to have to essentially, as a company, take control of people bringing plastic to you and almost kind of we tried this kind of idea of government doing it well and it hasn't worked. And do you see a much stronger role for actually business and kind of fundamentally the people like you to actually have to step in and almost do this for the world?
No, great question. So I think you can do a lot, I think, with standardizing and simplifying labeling. I think if you think about things like food traffic lights in certain markets like the U. K, it started to become quite obvious, and I think people are used to it now. So if we think about a few years of very standard instructions as to what you put where, where there is a good waste infrastructure, I think that can really make a difference.
So and we have a role clearly to play in that across industry and as a company. Then your second question is interesting because it's kind of a yes, but from a different angle. So it's not necessarily that I see Unilever physically doing the collection, physically going hands on care. No one's sorting this out. We're going to go do this.
But also, it's not a case of us we're able to sort of step back and say, well, it's the government's responsibilities or people should do the right thing. It's somewhere in for example, we make investments in funds that look to build infrastructure where it doesn't exist today. So we're looking at markets like Indonesia, Southeast Asia, Africa, the Americas, where infrastructure isn't great, if we're honest today, on waste infrastructure collection. So how can we spark investment from others and start to build an economical case for that? And actually, we shouldn't forget that the offtake agreements that we make as Unilever, when we start to move ADOV to fully recycled and we need tens of thousands of tonnes of material, it's creating tremendous economic opportunities there, and it's creating markets.
So it's part of what we're trying to do with our offtake agreement as well. So a lot of influencing, maybe not as operating the systems ourselves. Thanks.
Hi. Can we talk a little bit about plastic sachets and so flexible packaging in general? Because obviously that's the most problematic area. So you mentioned the refill station pilots in a pilot in the Philippines. But how much progress can you make in terms of your own redesign of your own packaging?
Because obviously, we've seen a ban or a failed ban on single use in India but may come back. So obviously, it's a big exposure, big potential problem.
Yes. Being frank, it is one of our most challenging projects. So when we've said everything will be recyclable or reusable by 2025, that includes sachets and laminates. So that material and those products are completely front and center to our commitment. So for India, for example, one of our biggest markets, we are moving very quickly all of our sachets to being recyclable.
So single material effectively. There is also then the other side of that. So you make it recyclable. Is it collected and recycled? It's a separate question.
You have to do the first, and that's what we're doing, but you also have to work on the second side of that. And to be completely frank, we've got a lot of brains energy activities working and innovating on to how you create an economic model for that. The waste banks and collections are a good example of that. You can reward more certain types of materials, not simply by weight, and that's one way we're looking at it. But we do have to try out a few different solutions because it's got to be realistic for the people who are doing the collection.
And as Alan will point out and we saw in South Africa just a couple of weeks ago, if you're collecting by weight, you and that's your livelihood, you're going to pick up what gives you that most quickly. But we're not leaving that alone. We are going at it.
Thanks. And can I ask
a follow-up question? It's interesting to see chemical recycled plastic already being commercialized. I assume it's Ionic or Loop Industries or one of these guys. So how quickly do you think it can scale and ramp up? And how big a contribution can it make to the solution?
Yes. Yes. So they are the sort of companies, yes, exactly, that we're partnering with. And I think the first thing is you've got to go in first and early and put it on to big because then that creates the demand. So we are seeing incredible interest from partners and organizations into this space, including some of the big players who aren't traditionally in it.
My personal belief is it's going to become an incredibly important part of it, but it is going to take a few years of investment before we get there. And I actually also believe mechanical recycling isn't going anywhere and is going to need to be maintained and increased and get more and more efficient over time as well. So it's an add on, not a replacement for mechanical. But frankly, if we're going to really solve this on food products, on high end personal care products, we're going to need what you call sorry, chemical recycling technologies to come in on top.
Hi. Because the soft drinks industry is pushing for deposit return schemes to encourage recycling. And I just wanted to understand the role that you think those could play for your products and whether you're part of those same discussions.
We have to obviously reflect the portfolio that we have and the breadth of formats is different to some of the other players in the industry. So I actually would say we're open and trying many, many different ways of making this more circular. And I think what you find in what I think is fantastic in Unilever is there isn't really ever this closed mind, well, that's not our way of solving this. We tend to start with an open ear and to listen and see what others are doing. So I think in terms of reuse return models, some of the examples I showed here are actually versions of that.
When you think about buying a base kit and then reusing and returning the loop pilot, for example, is actually an option to return the product, have it cleaned, it comes back. Whether we do a one for 1 system on our portfolio in our range, I don't think that's the only solution we would go for. And I don't think it's quite as straightforward as when you've got one particular format in enormous volumes and not so much of a variable range. So yes, it could be part of it, but it won't be, I think, our big breakthrough solution. Okay.
Just got time for 1 or 2 more, I think, here. Well, firstly, change the color is a big decision on a brand. It's got a lot of equity built up for years. So that's one consideration. The other consideration is using dark materials and using black is a fantastic way to use mixed mechanical recycled material.
So if everybody came out of dark materials and out of black, actually, the ability to use so called jazz material, so the mix, as I can see, will go down dramatically. So actually, it's really important. We thought the right way to deal with is continue the use of that material, keeping being able to use it, keep our brand equity and find a way to fix it. On the other question, obviously, very, very, very complex question that you ask with that. In general, we're supportive of sort of well thought through extended use responsibility and tax used in the right way, and it is quite local as well.
So we do have it's very much dependent on the market. We're actively partnering with governments on that. We believe legislation and this sort of responsible legislation will be part of the solution, but it does differ so much by market. It could be tax in one place. It could be extended responsibility in another.
Thanks. Yes. Okay. I think that's time. So thank you, everybody.
Hope you enjoyed that.
So a big thank you to Richard. Maybe our next webcast ought to be on the subject of plastics because a lot of interest in it. So we'll think about that. We'll sign you up Richard. Right, we now have a break through till 3:40, so that's just over a 20 minute break for those in the room and the webcast will start again in just over 20 minutes.
Thank you very much. Okay. Let's start again then. We're just running a couple of minutes late, which is pretty good, I think. We're going to change tack a little bit now and I'd like to welcome Hanneke Faber, who is President of our Foods and Refreshment business to come and talk about health, well-being and nutrition.
Thank you, Hanneke.
Thanks, Richard, and it's great to be here. You've seen many of our experts, many of our functional leaders earlier on. It's great to be here to talk a little bit about how our sustainability strategy comes to life in our foods and refreshments business. We do not have a business strategy and a sustainability strategy. They really are the same thing.
So hopefully, you'll see that coming out. A few things that I'd like to talk to you about today. First of all, just a little bit of background about the market. Foods is a large and growing market with immense opportunities to be a force for good, which is our strategy. And second, I'd like to talk to you how we will win in that market and we'll do that by really shifting our portfolio or innovation and our brands to boldly healthier spaces.
So a bit of background. This is an exciting market. It's large and growing, about €2,500,000,000,000 worth of foods and drinks are being sold every year, growing at about a 4% CAGR. And we expect that to continue because the world has to feed almost 10,000,000,000 people by 2,050. I think the other exciting thing is food is sexier than ever.
Hundreds of millions of pictures being posted on social media every day. And when my 15 year old and I and the rest of our family have dinner and I start eating, she stops me because Instagram eats first. Yes, so if food is so sexy, beauty used to be the sexy place, I think food is a sexy place to be now. But this category also has significant challenges. Obesity and malnutrition, about 800,000,000 people in the world who are hungry and 1,000,000,000 who are obese, about 2,000,000,000 who are actually overweight.
And as a foods industry, we have a real responsibility there. Climate crisis, we talked about in droves, but 25% of global greenhouse gas output comes from the foods industry. And that's mainly cows, cows ruminating methane and deforestation, which also links to cows, because you need all that soy to feed to cows. So we're a big player in the climate crisis. And finally, waste.
We had to feed almost 10,000,000,000 people, but we're wasting a third of all food today. And that is all the way along the value chain from the farm to the consumers' home. Now at Unilever, our foods and refreshments business, we believe has a great foundation to drive positive change. We have compelling scale. Rebecca talked about scale.
We're about a €20,000,000,000 business. We're growing and almost 50% of that business is in emerging markets. So it's a really good split between the developed and the developing world. And we just opened our new headquarters on the campus of the University of Wageningen in the Netherlands last Friday, with the King of the Netherlands. And that is really the food that the Silicon Valley of foods.
Wageningen, in every survey you'll look at for Agricultural and Food Science University, is the number one ahead of places like UC Davis in the U. S. And the big Chinese universities. It's a fantastic ecosystem to be in. We're there with professors, with students, with scale ups, with startups, with other corporates and we really believe that's going to pick up the pace of innovation to address some of these big challenges.
We have a strong brand portfolio and categories. We're the number 1 in ice cream, number 1 in mayonnaise, number 1 in scratch cooking, which are stocks and bouillons and number 1 in tea around the world. And we have 7 really large brands that have enormous reach, 7 brands that are over $1,000,000,000 or almost $1,000,000,000 from Knorr to Wahls to Lipton, all the way to Ben and Jerry's and Brookline T. And we so those are really big brands. We also have a really exciting set of more recently acquired brands.
Brands like Paka, like the Vegetarian Butcher. We'll talk a bit more about those. They're growing at about 3 times the pace of our big brands. They need to, that's why we bought them, but they're also really purposeful. So we'll come back to those.
So here's our strategy. And again, this is our business strategy and our sustainability strategy. They are not different things. They are the same things. Our ambition is to help people taste to help our food and our people taste good, feel good and be a force for good.
And when I say force for good, I mean more force and more good. That's what we need in the business. More force in terms of faster growth and more good to address some of these big challenges where the foods industry really has an important role to play. And we'll do that by making 3 choices in terms of being boldly healthier. A portfolio shift to boldly healthier spaces, boldly healthier innovation And we like to talk about all of our brands as being movements.
That's the same thing as purposeful brands, but they got to turn into activist movements. So and that strategy is very much built with the SDGs in mind. So there are 6 SDGs that this strategy is inspired by. Of course, 0 hunger, of course, good health and well-being, but also responsible consumption, climate action, life below water and partnerships. I cannot emphasize enough how important that is and Rebecca also talked about that.
So let's talk about all three a little bit. Let's start from the portfolio shift. We got to grow faster by shifting our portfolio to tailwinds. That's what we call them. And tailwinds can be in many spaces.
Channels is the first one. About 60% of our business today is in traditional retail supermarkets. 40% is in out of home. Out of home is growing a lot faster than traditional retail. So shifting our business to out of home, to restaurants, to work places, to convenience, is really important.
And doing that on top through e commerce, things again, we just in the last couple of years, we built almost 100,000,000 ice cream business with what we call ice cream now, which is delivery.com. So with Uber Eats, with Deliveroo, with Dingdong Fresh in China, because on your couch at 9 p. M, it is always summer, and you can get your ice cream delivered that way. So shifting to these growing channels is a first tailwind shift. 2nd is categories.
Some of our categories are growing a lot faster than others. So shifting to those is another key strategic impetus for us. So impulse and premium ice cream. Scratch cooking, people want to cook from scratch again, which is great, and we can help them do that. Herbal and green tea as opposed to black tea.
And finally, snacking, also a huge growth space, both in frozen snacks and other healthy snacks. Emerging spaces, 2 really important. 1, plant based, of course, a huge thrust for us. I'll talk about it. And personalized wellness, this is DNA based eating.
It's in its infancy. No one's really cracked it, but we do believe this space will be a big growth space for the future where you can really eat healthier just for you in a personalized way. And finally, of course, geography, again, an important shift. We'd like to have a bit more of our business in emerging markets. Our other 2 Unilever businesses have a much larger part of their business in emerging markets, so shifting there will be important as well.
So an example of tailwinds. The Vegetarian Butcher. This is an acquisition we did earlier this year. It's a small brand in the Netherlands. It was founded by Jaap Korteweg.
He's on the slide here. Jaap is a 9th generation farmer. And Jaap, in the late 1990s, had an epiphany. He was there was a what they call the pig disease, swine flu. There was swine flu in the Netherlands and Jaap was asked to store 15,000 dead pigs in his cold storage on his farm.
He did it, but he became an overnight vegetarian. Unfortunately, he loves meat. So he started this small company to make fake meat back in the late '90s. He's built it, built it into a lovely little business. He's the market leader in the Netherlands.
He did do a little bit of export. It's not just burgers, but he also does what the clock chicken, Magic Mince, Unbelievables, you name it, a very large range of fabulous meat replacements. We acquired, The Vegetarian Butcher in January really with the idea of combining this beautiful plant based brand and Unilever's might in terms of global presence and distribution. We're pretty excited because as early as August, we signed a partnership with Burger King to bring the vegetarian butcher as their burger, their Whopper into 26 markets in Europe. So this is, I think, a great example where a tailwind plant based and acquisition and Unilever strengths come together.
So got a little video to give you a bit more background on that.
Jeff. Hi. Here you go.
Grab a whopper. Here we go. Lovely weather, by the way. So, yeah, great to see you again on a historic place, your farm,
where it
all began.
So, tell us a bit about it.
Well, I'm a 9th generation farmer, grow up between the cows and fattening bulls, a big meat lover and now the vegetarian butcher with the mission to become the biggest butcher in the world as soon as possible.
So for those that don't know the Vegetarian Butcher yet,
what
is the Vegetarian Butcher?
What we try is to develop the new meat, plant based meat for real meat lovers, not for vegetarians who don't like meat, but people who like meat very much.
Quite a journey and a shared journey by now between ourselves. I remember the day and I said, you know, you want to become the biggest butcher in the world. What better to team up with Burger King? Now, you know, I mean, here we are making a partnership announcement and going all across Europe.
Yes. And that's because of the cooperation with Unilever. You did it. That's your power. It's a worldwide company.
So, yes, enough talking now.
The real proof
is in the tasting. Let's give
it a go.
For real meatballs, I think. Absolutely.
Yes. And I'll just show you the Burger King ad because it hasn't come out in the U. K. Yet. In a few weeks, this will be live here as well.
This Burger King Whopper has no beef. Introducing the Rebel Whopper with a patty made from plants. Kind beef. Take a look. Try it yourself.
It's totally not beef,
I swear.
There's no way. There
has to be beef.
Go tell your friend you ate plants and a Whopper
So that's live now. It went live in most markets mid November and it's going really well. So this is of brings all things together, plant based acquisition out of home, all the tailwinds that we believe can grow our business faster. Now plant based is a focus area for us across our portfolio. It is not just the vegetarian butcher.
We've been investing in R and D significantly from 2013, because replacing dairy, of course, we're a big dairy business as well, and meat is hard. It's hard to get products that are as creamy as real dairy or as juicy as real meat. So we got a large R and D contingence on that. And we're proud to say that Verity Investor Network ranked us number 1 of all the big companies in terms of being ready for the protein transition. And we see that with consumers as well.
So we've launched a whole bunch of things really over the last couple of years that don't use cows basically. Ben and Jerry's non dairy, Magnum Vegan, Hellman's Vegan Mayonnaise, all won prizes including from PETA, which Alan mentioned. And just recently, Knorr Mealmakers really helping people eat more vegetables. And just this week, won a big award for best vegan product in Germany from Healthy Living. So again, not just a vegetarian butcher across our brands, plant based is a big focus and a big R and D focus for us.
Now let's talk about boldly healthier innovation across the portfolio. First of all, the basics. Our products have to be nutritious. So we've set what we call highest nutritional standards, which are inspired by the WHO's dietary guidelines, but adapted to our categories. What do those mean in our categories?
As late as 2013, only 31% of our products adhere to our own highest nutritional standards. And by the way, those are all about things like salt, sugar, categories and trans fats. Next year, we'll be at 60%. I am determined to get this much closer to 100% in the not so distant future because this is just really important given the scale and reach that we have. We're already doing quite well.
We're rated number 2 by AT and I in terms of access to nutrition. So this is okay, but we ought to make faster progress here. These are the basics, just offering good nutritional products. Here you see some of the progress that we've made. Less salt, really important.
2 thirds of our products now help you get less than 5 grams a day. Less sugar, super important. Things like Lipton iced tea where we've recently reduced sugar by 20% and less calories. On that one we've done really well. All of our kids' ice cream is now under 110 calories.
And also for your knowledge, all of our adult ice cream, including those delicious magnums are under 250. So those are truly a responsible snack. Don't eat 5 a day, but one is just fine. But beyond those basics, what's really important is that we also offer positive nutrition. And that means step changing to find stunting and other diseases caused by just lack of nutrients around the world.
And we do that by targeted nutrition and fortification. So for example, by adding iron to our products, it's really sad. 100% of women around the world, not just in developing markets, has iron deficiency. So adding iron to products can actually really, really help. 50% of people around the world has iodine deficiency.
And when you're a woman who has a baby and you have iodine deficiency, the IQ of the baby is 10 points lower. So these are things that we can relatively easily add to our products. It was one of the reasons we bought Horlicks, with the acquisitions about to close early in next year, again, because it adds fortified ingredients, vitamins to products to just not allow that kind of stunting to happen. And we run big campaigns across many markets. Just let me show you Indonesia and Knorr.
And again, our buoyant reached so many households, more than 3,000,000,000 usage occasions a year. So fortification there really, really makes a difference. Again, not just a developing world issue. I'd say that the issue in the developed world is none of us eat enough vegetables, and therefore, we are actually also malnourished. I just looked at the numbers from the Netherlands.
You're supposed to have 5 servings of fruits and veg. The average is like 1.4. So that is way too little. And we can play a real role there. So I love this example.
These are Dutch NOR meal kits. We sell 50,000,000 of these a year. This is how the Dutch cook basically. 10 years ago, on the back of this and again the Dutch follow instructions well they all use these recipes. Had you used 60 grams of vegetables a person to make this.
Today, it's more than 200 grams of veg. And so this is encouraging veg by stealth. But it really works in terms of getting people to eat more vegetables. Now we don't just need to eat more vegetables, we also need to eat more diverse vegetables. So the world really eats only 12 crops.
And really, altogether, we only eat 3 crops. So 60% of all our calories come from corn, rice and wheat. So diversification is good for our health, but also very much for the health of the soil. So Knorr's Future 50 program encourages that. And then we do lots of work on inspiring people to just eat more and more differentiated veg.
So one more video of that. Hold on. Let's just do that one again so you hear it from the start, if we could.
What?
What's he say? You don't like veggie? Yes. Again, so that's a live campaign from the Netherlands. The final piece is every brand of movement in our portfolio.
And we're lucky in that in our portfolio, I would say in Foods and Refreshments, we have some of our most purposeful brands in Unilever. So these are just a couple of pictures from the last few months. But on your left, you see Ben and Jerry's. That's our store here in London on the day of the climate strikes. And the employees of the store by themselves decided that they'd close-up shop that day.
They put that sign in the window. It wasn't great for sales, but I love it that our people are so activist and the coverage they came from it more than made up for one day of lost sales. So that's a great example of really bottom up employee driven every brand of movement. On the right side, you see Tim Westwell. He's one of the co founders of Pukka, which is a more recent acquisition.
In September, we launched Pukka Peace, which is a new herbal tea for that brand. And to celebrate the launch, Tim went on a peace strike in Covent Garden for a number of days. And again, just great inspiration for brands that are truly movements and believe in something, stand for something, on top of, of course, delivering fantastic products. There is no ice cream more delicious than Ben and Jerry's. And if you haven't tried POCO, oh boy, there is no tea that's better.
So it's not just our small brands. So POCA definitely is one of our smaller brands. It is also our big brands. So what I'd like to do is actually end up here with showing you a number of our big brands and how they are bringing purpose to life. Hellmann's is all about fighting food waste and mayonnaise is a great way to fight food waste.
Work Blanche in India, which is by far the market leader in tea in India is all about tolerance and inclusivity. And finally, this is a really new piece from JoCo, the market leader in tea in South Africa, on tolerance and inclusivity as well, but very much about against fighting violence against women, which is a huge issue in South Africa. So I'll show you the 3 ads that are on air in Brazil, India and in South Africa. So I hope that gave you a little bit of a sense of our strategy, both our business and our sustainability strategy. And hopefully, you'll walk out with me to see that food is a really large and growing market, sexier than ever, huge opportunities to be a force for good.
And the ways we win really into boldly healthier spaces. That's in the end is what the consumer wants as well. So thank you and I think we have time for a couple of questions if there are any. If there's none, that's all right as
well. Yes.
I'm not sure if this is within the context, but you say the industry is growing 4%, you're growing 2.5%. How do you bridge that gap?
Yes. This is exactly how we bridge the gap. We're not happy about
And the building blocks that get you there, just run us through and the time frame we
can expect? So it's shifting our portfolio. We're still playing in too many spaces that aren't growing fast enough. So you saw it there, the right channels, the right categories, the right spaces and the right geographies. We are in faster growing spaces.
We need to shift more of our portfolio there. So that's definitely the first one. 2nd is to be boldly healthier. Too much of our portfolio is not healthy enough yet. So again, we'll focus on that.
And the final one is really having our brand stand out with work like this. And we see when we do work like this, all of which is fairly recent, we grow faster. Yes. Yes. We're really supportive of our brands being B Corps and most of those were acquired brands that were already B Corps.
They tend to be more purposeful brands. We have decided as a company, maybe Graeme can comment on this, not to pursue being a B Corp as total Unilever, but it's great to have a number of brands in our portfolio like Paca who are.
Do you want
to add anything there, Graeme?
Yes. So we've been engaged in a very active dialogue with the B Corp people for quite some time now about whether it's possible for a very, very large company to make the step to be a B Corporation. We don't believe it is. We believe that our sustainable living strategy and the integration of that in totality into the Compass is sufficient and it's distinctive. And so whilst we maintain a dialogue with them, right now, we're comfortable that a number of our smaller brands and independent brands are B corporations.
But we've not found an unlock yet that would take Unilever all the way to being a B corporation.
Thank you. If nothing else, great. I'm going to hand over to Alan. Thank you.
Okay. Well, I am absolutely delighted that Matthew Rycroft, who is the Permanent Secretary at the U. K. Department For International Development or more easily known as DFID, has agreed to join us today as guest speaker, especially Matthew today. I'm sure you and your department have got many things on your mind other than supporting Unilever, but we really appreciate it.
DFID is the U. K. Government's department that's responsible for overseas aid and develop and leads the work of the U. K. To achieve the sustainable development goals.
DFID works closely with Unilever and other businesses recognizing the need for a multi stakeholder approach. So listen up, sustainable development goals, multi stakeholder approach, do you see some alignment between some of DFID's principles and some of the things Unilever believes in? We're very proud of the long standing relationship that we have with DFID. We've done quite a lot of joint advocacy on issues like deforestation, women's empowerment, climate change. By the way, the Joko film that you just saw, fighting domestic abuse of women in South Africa, resulted in an immediate uplift in sales.
It was such a resonant subject matter. Difin and Unilever are working on various programs together including one called Transform, which is a £40,000,000 public private partnership and it aims to improve the lives of 100,000,000 low income people by 2020 next year. To date, Transform has supported over 45 innovative projects in 11 countries reaching 500,000 people scaling rapidly. Now Matthew himself has had a glittering diplomatic career including in reverse order being the British permanent representative to the United Nations from 2015 to 2018, being Chief Operating Officer of the Foreign and Commonwealth Office, serving as British Ambassador to Bosnia and Herzegovina and prior to that various roles in the U. K, Geneva, Washington, D.
C. So Matthew is going to speak for a few minutes about business and the increasing emergence of sustainable finance and then is going to throw it open for questions. I'm going to let Matthew talk about the boundaries of what he can talk about given that we're in what we would call a closed period, what the government might call PERDA. Thanks, Matthew, and over to you, Matthew Atgrove.
Thank you very much, Alan.
Thank you very much to Alan for that great introduction warm and great to meet you all. I thought I might begin by going back a bit to when I was the British ambassador to the U. N. As Alan said, I started that job in 2015, which was the year that the Sustainable Development Goals were decided. And that was because it was 15 years after the year 2000, and the Millennium Development Goals that have been agreed in that year had sort of come to their end.
They haven't all been met, but very significant progress had been made. Broadly speaking, the level of people living in extreme poverty had halved over that period of time, which is really outstanding achievement. But as we collectively looked at the challenge for international developments and our mission to end poverty, we realized that we needed to broaden out. And so the Sustainable Development Goals do 2 things. They, 1st of all, seek to complete the work of the Millennium Development Goals, really targeting extreme poverty, helping the poorest countries through the provision of services that those countries cannot afford to pay for themselves, like education and health and so on.
But secondly, and this is the innovative sustainable bit, is really thinking not so much about the symptoms of poverty, but about the underlying causes. And when you think about those, you very quickly get into the agenda that Hanneke has just been talking about, about sustainability, about the impact of climate change, about the need to look after our oceans, our forests, thinking about our cities and all of that sort of stuff, as well as thinking about other causes of poverty like conflict or corruption and poor governance. So a much broader definition of the sorts of things which the International Development sector is now involved in. It's a very it's for those of you who know, it's I think you would agree too that the Sustainable Development Goals are brilliant, but they are a little bit complicated. There are 17 of them and underpinned by 169 targets.
So the clue to remembering them is not to worry about those, but to think about the 5 Ps that summarize what they're about. And the 5 Ps are, 1st of all, people. This is really all about the poorest people in the world. And despite the progress that I mentioned, there are still over 700,000,000 people, about 10% of the world population, living in extreme poverty on less than $1.90 a day. Planet, the stuff Henrik was talking about.
If we even if we do a brilliant job looking after those people, it wouldn't be a lot of good if the planet is no longer inhabitable. And even on current projections, I think by is it by 2,030 or if not, by 2,050, 800,000,000 extra people are going to be living in extreme poverty because of the impact of climate change. So that's a very significant reverse. If you look at the graphs over the last decades, as I was saying earlier, the pace of change has been very dramatic at reducing the level of stream poverty. That is leveling off.
And if we're not careful, it's going to go back up again in the not too distant future because of the issues related to the planet. The 3rd P is about peace. We cannot do all of this if there is conflict. If you're a country that is trying to get out of poverty, the worst thing to do is to be in a war, either with yourself or with a neighbor. Very strong correlation between countries in conflict and fragile and those who are unable to get over poverty.
The next P is about prosperity, growing countries out of poverty. And a lot of the work that Alan just described between DFID and Unilever is really infused with that spirit, that it's not just about giving people aid. In fact, we want to do as little of that as possible. It's helping countries grow themselves out of poverty through investments, through jobs. I'll say a bit more about that in a moment, and allowing them to stand on their own 2 feet.
After people, planet, peace, prosperity, the 5th P is partnership. And that too is where I think the Divisions Unilever story is so powerful because if you'd like, we symbolize a bit of the public sector and a bit of the private sector coming together with very different starting points, very different missions, but actually converging on a very compelling set of joint actions, knowing from our side that we cannot achieve those goals unless we find a way of bringing businesses into the picture. So let me just say a little bit about how we're trying to build that partnership to deliver that P and then open things up into a conversation. So when you look at those goals and project out to 2,030 and try and work out how much money is needed in terms of investment, it comes to $2,500,000,000,000 per year. Now even if every country that's a developed country were to be as generous as the U.
K. And to meet the 0.7% of GNI commitment every year, even if that were to happen, that would still only add up to about 10% of that number. So you can tell, can't you, that it's not going to be about international development. This is about private sector investments, about host governments, however poor they are, doing their bit through tax collection and so on. It's about remittances from diaspora.
It's about the big philanthropists like the Gates Foundation. It's everyone coming together to play their part in order to close the financing gap. Government, of course, can help play a very significant role, not just with our own Official Development Assistance, but with our activity more in the trade space, helping to create the sorts of environments that permit and facilitate and accelerate investment. But in the end, this has got to be, in my view, private sector led. It's the private sector that will create the wealth that will allow that prosperity to lift people out of poverty in the poorest countries in the world.
It's the mobilization of private capital that is going to be so crucial to this task. And yet, at the moment, the opposite is happening. There's a net flow of capital out of the continent of Africa rather than into it at the moment. So the picture is going it's not just bad. It's bad and getting worse.
So we've got to act decisively to improve the climate for investments and impact investment. And here are a few things that we think need to happen in order to do that. First of all, we've got to get the policies in place. We've got to be able to help the what I think of as the leading edge of the private sector do this really well in ways that work, in ways that are good for the bottom line, good for the purpose that Hanneke was talking about, good for the customers, good for the shareholders, good for the staff who work here. But that requires some form of objectivity.
It's no good just being able to carry on with existing activity and say that, oh, by the way, it's also helping with the sustainable development goals. It's also helping to save the planet or whatever. This greenwashing or other there are other words for it is not good enough. So we've got to find a way of objectively measuring development impact as rigorously as all of you in this company and others would be used to measuring risk and return. That's a surprisingly difficult thing to do, but there are lots of initiatives out there trying to do that.
In fact, if any, there are probably too many. We now need to corral them into 1 and get a single framework for measuring exactly what counts as development impact for the private sector. And we've been working with organizations such as the World Benchmarking Alliance to do exactly that and also to shine a spotlight and to help use the power of transparency to get a bit of a competition going amongst leading companies in the private sector through benchmarking to see who is doing best in this area. The second thing that we need to do is to make sure that there is a pipeline of investable deals, of investable projects in the sorts of countries, particularly Sub Saharan Africa, where we need this step change in investment. DFID owns something called the CDC, which is our investment arm, and that is roughly doubling.
We've been roughly doubling the size of the CDC recently. It is seeking to create that spirit of derisking, entrepreneurship, of going in side by side with other parts of the private sector to give confidence to those co investors. And over the past 3 years, CEC have mobilized over $2,000,000,000 of private sector capital. Thirdly, after policies and pipelines, you can see there's a lot of Ps going on today, is products. We're working with the City of London to develop innovative financial products that can mobilize more capital for impactful businesses in developing countries.
We launched last year the Green Growth Equity Fund, which is a joint U. K.-India fund designed to promote sustainable energy projects. And India and the UK have invested over £240,000,000 of anchor capital into the funds, which is expected to raise up to £500,000,000 from institutional investors. That's just one example. And then the 4th thing that we need to do, the 4th P of this set of P's is about people and about making sure that in this country that we give our own people what they say they want.
So we actually did a bit of market research ourselves earlier this year and discovered that 7 in 10 of British savers and investors, so just people who've got a pension or some sort of investment, would like that investment to do something good for the planet for development alongside making a return. I think that's a very good start for those companies like Unilever or others present here today who want to go with the flow of that phase of public opinion. So that's why we're so passionate about this. Let me just say a couple more things about the DFID and Unilever joint working. We, as Alan said, set up this Transform program, which works with social entrepreneurs to develop life enhancing products and services that lead to sustained improvements in their health, in livelihoods, environment and the well-being of underserved communities.
We've reached over 1,000,000 lives to date, and we're planning to broaden it out to tackle also plastic waste, which is the scourge of the planet that David Attenborough was talking about, wasn't he, when he was here for an amazing award a few weeks ago. I was in Rwanda last month looking at how another bit of your business is investing in tea in that part of the world for reasons which I didn't quite understand even after being told multiple times about it. The Rwanda is about perfect for growing really high quality tea. I think it's a combination of the altitude and the soil and so on. And but of course, there's a huge number of people in Rwanda and countries like it who do not have jobs.
So anything that is labor intensive, like plucking tea, absolutely perfect sort of win win win. It's good for the company. It's good for the people. It's good for the development agency, in this case, the Department For International Development. So lots of fantastic work going on, but much more to do.
And so the final thing I want to say before it rings up is that looking ahead, after the our election tomorrow, on 20th January, we are planning a U. K.-Africa Investment Summit, which we hope will involve many of the people in this room as well as heads of state and government from the continent of Africa and the big multilateral institutions coming together to try to fix some of these problems that I have identified. And I'd be delighted to hear your views now about what we should be doing then or indeed anything else that I've mentioned. Thank you very much. So who would like to kick off?
And the thing Alan was referring to was that we have this pre election period going on just for one more day, which means that basically I can't say anything very interesting. So sorry about that. Basically, I can say I can talk about current policy. I can talk about what we have done in the past. Anything forward looking, I could basically only say it if it's a sort of thing which any plausible government after our election would say.
So just bear that in mind when you judge how interesting or boring my officers would be. Who wants to kick off? Any comments or questions? Anything for the African vessels? Yes, please.
I'm going to refer back to something which came up earlier in this conference that you didn't hear, but a lot of the research tends to suggest that baby boomers basically are prepared to say they actually don't care about sustainability and not prepared to put their money into it. Generation X say they care about it, but don't actually do anything about it. Millennials care about it, but are prepared to do something about it if basically the conditions kind of arise, doesn't cost too much, it's not too inconvenient. And then kind of Gen Z, who are the ones who are prepared to say, well, look, we're going to put our money into this regardless. What that means for us in terms of kind of the people we serve is that, obviously, if we're serving them and trying to serve their own their interests and basically do what they are asking us to do, there's a potential challenge there in terms of actually this money that's out there being funneled into the sort of projects you want because if actually you think the majority of wealth is probably at the higher end of the sort of Baby Vuma Gen X end of that spectrum.
How does government try to look at that and try to address that gap? And really, how it what techniques do you have for actually being able to do what you say you want to do?
Yes. It's a great question. And I think the short answer is that we haven't cracked that. I think that when you look at the popularity of development spending in the U. K, you can see there's a very big gap.
And probably, it correlates with it in the sort of way that you have defined the willingness of different generations to put their money into this sort of development impact. And I guess the really big question is whether as the Gen Z generation grow older, do their views shift to coincide with the views of older people now? Or do they keep those views with them and then the whole population shifts generationally? I'm pretty sure on this set of issues, it's going to be the latter, but I'm still don't have evidence for that. The reason I'm so sure is that, of course, something is happening externally.
The world is changing. Climate change is ever more present. I mean, when you just look at one other thing that the Department for Industrial Development does, we do the humanitarian response whenever there's an emergency, whether it's an earthquake or tsunami, whatever, or increasingly, a drought or a flood. And when you look at the projections, tens of millions of extra people per year are going to be needing that sort of humanitarian assistance. And almost all of that extra bit is not conflict, bad though that is, it's actually climate.
So I think there is reason I mean, there's reason to be very worried about the world, but there's reason to be hopeful that as younger people get older, they will stick with this passion to invest in ways that help save the planet and do the rest of the SDGs. But I think it's a to But I think it's a to directly answer your question, I think it's got to be a shared endeavor. There are no easy fixes. I don't think government voices are going to be particularly influential reaching audiences that haven't already been reached. There are some fantastic activists.
There are great movements of people. Think of Richard Curtis, the filmmaker who does a huge amount to really bring the SDGs to life. He and others have got behind this idea of a decade of delivery starting next year, so 2020 to 2,030, given that the first 5 years of this 15 year period has not been good enough in terms of the pace of change. So we've got to ramp things up, but everyone is going to have to come into this. And I think everyone's ideas are going to be welcome on how to do that.
Do you want to go next?
Are you trying to collect all this money from the city and the Africa Summit, the India Summit, get to the right people or have an impact on the right people rather than getting stuck in corruption or bureaucracy? That's a great question. And when you so
international development, there are you can roughly divide the population into equal thirds, roughly onethree strongly support what's going on at the moment, roughly onethree are against it and will sort of always be against it because it's abroad and they don't think it should be spent. And there's a middle third who are currently not massive fans of international development spending, but they are persuadable, but they haven't yet been persuaded. And the reasons they haven't been persuadable are firstly that they worry that too much of the development assistance goes ends up in the wrong places through corruption. And actually, the second reason is also interesting, which is that they think that the scale of the problems in the world are just so big that even if we were really generous, we wouldn't be able to solve those problems, that all we can do is a drop in the ocean compared to the scale of challenge. And actually on that, I think on both of those things, there's work that can be done.
On that second issue, there is a lot more that can be done just in terms of framing the progress that's been made. I mean, it is really significant how much progress has been made, not just on the poverty rates that I was talking about earlier, which is absolutely dramatic when you look at the graphs. I mean, fewer people in extreme poverty and way more people out of poverty than ever before. That's a really significant achievement of the last generation or so.
But people don't know
that story. People don't know about all of the diseases that have been eradicated or contained. They only hear about the one that's just had the outbreak. And so there's a whole sort of mindset shift that needs to go along with better evidence out there for everyone about the true state of the world. Now on the corruption, there's all sorts of things that we can do.
None of it is perfect. There is always a risk. I think if you seek to make the biggest impact, you will ever be you need to have quite a high risk appetite, quite a high threshold and accept that there are some things that you do that will not work. You've got to be a bit entrepreneurial. I would argue more entrepreneurial than we are about what we do, accepting that certain things will fail.
Of course, we cannot condone corruption. We cannot do anything that we know is going to lead to money in one on one particular project, not ending up where it should. But taken across the whole portfolio, I think we've got to be sensible and realistic about how much just accepting that this is the sort of environment that we're operating in where it will be very, very difficult to account for everything. And then the other thing that we can do, which we do a lot of, is helping countries, particularly as they get that little bit up the lead table, helping them build up their own institutions so that they can do the drive against corruption, so that they can be in charge of their own destiny, including on your point about transparency and so on. But that's I mean, it's a really again, it's a really tough thing to do, but I feel like we are we're in the foothills, but we're moving in the right direction.
Someone over here? Yes.
Thanks. Yes. I think all the main parties have got some kind of net zero target. So hopefully, you can talk about this. But how could the U.
K. Government broaden its net zero ambitions out to more countries globally? And also, how might that involve multinational companies like Unilever?
Great question. So I think, yes, I think all the main parties have net 0 targets, some of them earlier than 2,050. When you look at the implementation plan even for 2,050, it's a tough ask. There is a huge amount that needs to be done every year between now and 2,050 to meet the 2,050 target. I'm talking about domestically in this country, in particular, in relation to transport,
housing,
energy production and land use. I think those are the 4 biggies. And all of those sectors need transformations in order to meet net 0 by 2,050. But having led the way in terms of major economy with this target, we have got to achieve that domestically, and we've got to use that domestic ambition, that domestic delivery to argue for ambition overseas. I think our biggest opportunity in the coming year will be COP26, exactly a year from now.
We've got COP25 going on at the moment in Madrid. COP26 will be in Glasgow. And that is the moment 5 years on from the Paris Agreement where every single country that signed that agreement is supposed to come back saying what is our nationally determined contribution going to be to cutting emissions to meet the 2,050 target. And so we will be using our convening role, whoever we is in terms of the government, get as high an ambition as possible for COP26. And like I was saying earlier, that is a that's got to be a cross sector We, that's not just the government.
That's got to be all of us. I think Unilever is going to have a very significant role to play in preparation for COP26 coming together as part of a cross sector coalition for ambition for the reasons that you've just been talking about. I think we've got time for a couple more. Should we just do 2 together?
Yes. I had a question regarding your comment around greenwashing that could be regarding the SDGs or some of the other markets. And I guess I wonder in your efforts to steer capital to development, how orthodox are you around those expectations? I say that because I'm not no one wants to see bad behavior or particularly asset managers game it. But I wonder because these markets are so new and the taxonomies and definitions are there's no universal kind of approach.
Do you have to become pragmatic in one sense and accept some degree of noise and disagreement in what you mean by this? And a great example is the BOEs talked about green securitization and solving for the just transition and the low carbon transition. So in that process, do you have to accept a lot of noise and Yes. That's a great point.
I
Yes. That's a great point. I mean, I as I alluded to earlier, there is a plethora of initiatives going on at the moment to try to create frameworks within which the whole of different sectors could operate. I hope that we can create a single framework, which will help. I suspect it'll take quite a long time to get there.
In the meantime, I definitely don't want anything I said to be read as thinking that we want to sort of hold back the most innovative or the most ambitious. So yes, I absolutely think that we're in for a period where it's quite confusing for a bit. There will be some market setters who will be ahead of the curve. There'll be others who'll be seeking to sort of water things down, I imagine. But in the end, I would hope that the private sector yourselves will come up with the best possible solutions to this in ways that will really resonate not just with your shareholders, with your customers, but also with people who work here.
There's a very fierce looking clock counting down. Is that how strictly am I supposed to stick with that? Should we just do one more quick final question? Do you want to go now?
I just wanted to ask, in your conversations with the private sector, what challenges do you face? What pushbacks do you get when talking about trying to achieve the SDGs? Is it time line? Is it cost? Is it what do you find are the big issues that you have to overcome?
I mean, it definitely varies depending on which sector, what sort of company and what sort of geography. But the really big things that come out for me are well, absolutely the things that you've mentioned, but also the sort of even the ones who really want to try to invest in some of these developing markets, either there's an absence of regulation or some other barrier to entry. The ease of doing business is extremely difficult in some places. Corruption that you were talking about earlier, all of these things get in the way. And then the other thing, different sort of problem is just the fact that the whole of the SDG framework is quite confusing.
So I think even companies that want to do the right thing find it hard to know what is the really best single thing that they could do. It's a really challenging environment, I think. And I think that is perhaps an area where we on the government and the multilateral institutions side, might be able to do a bit of a better job to try and work out what would be the really compelling interventions that would have multiple impacts across a range of these goals.
Thank you very much.
Matthew, thank you very much indeed for coming in especially on the day before general election to share your thoughts on DFID, on development, on the SDGs. You have done absolutely amazing work in DFID. We continue to be proud to partner with you. And as a farewell gift, we would like to just give you our best wishes that you receive a government that continues to care about development, about the SDGs and about the long term future of the world because it really matters. So, Matthew Aycroft, thank you very much.
GP, you're up.
I thought that was absolutely brilliant. I thought it was really great of Matthew to do it particularly today. I got excited that the 5 Ps is like the that's the simplest expression of the SDGs I've ever heard. And then he upped the ante and he went to 9 Ps that I counted. And then he introduced a 10th, which is plausible government.
So I
thought, good luck. That's let's see how that goes. Look, I'm going to talk a little bit just for 15 minutes maybe about the sort of CFO view in all this. I'm Graham. I'm Unilever CFO.
I recognize a few of you. A lot of the buy side have just left the building because they usually run out whenever I start talking. Anyway, let me talk a little bit about how we think about sustainability when we make business decisions in Unilever. Now you've seen this chart before. I think it was either Alan or Rebecca that popped it up.
But it is fundamentally and has been for quite a long time in our sort of framework of thinking about the business around this question of growth, and we get excited about growth, and that's why it gets the biggest area on this chart, cost, risk and trust. And I'll give you just a couple of specific examples. Let's take plastic reduction or sustainable palm oil ecosystem. Richard has talked about plastic quite a lot. Mark spoke a lot of the challenges of a sustainable palm oil system.
I'm often asked whether our commitments to using recycled plastic or sustainable palm oil come with additional costs. And it's become quite a theme actually these days by the buy side in particular and now even a little bit by the sell side, which I think is very encouraging. It's really encouraging that I'm getting asked these questions. Is a simple answer to them that these are simply investments behind product innovation and consumer preference. I hope that I hope Anika's presentation in particular gives you a sense that we believe that we need to invest in these things because our consumers, particularly Gen Z consumers, but our consumers will care about it.
And therefore, these are essential investments from the point of view of the CFO who thinks a lot about capital allocation and value creation in our business. We have to make these investments to ensure that we remain relevant to our consumers and that we provide the products that they want to buy and that therefore we're able to drive our growth. Now they do come with an upfront cost and maybe an ongoing cost, but they do pay back later through greater consumer preference. They drive your competitiveness and hence you get growth through either more volume or through higher prices and they very much show up in the growth element of the matrix. And from my perspective as the CFO, I think Unilever is in a particularly good place right now to make these investments because it won't have escaped.
Many of you have noticed that we've been on a journey to balance out top line growth and margin delivery in the company since 2016. We've already increased our operating margin by over 300 basis points. We will achieve the objectives of our 2020 plan next year, sometime in 2020, but we're largely done already. And therefore, as I said at our Capital Markets Day, we have got a base from which further growth and growth acceleration, and we acknowledge that we are 70 basis points, 100 basis points light of the growth we'd like to see at the moment, but we're still growing at a pretty healthy clip. And we have a value creation model that allows us to generate a lot of value off that basis and even more so if you're sitting on a nice healthy margin, an appropriate margin.
It's important in thinking about that to think about the cost savings journey that we've been on as a business. We've stepped up our level of savings delivery to about €2,000,000,000 a year. And we foresee through the very strong underlying programs we've got there, ZEP, V5S, our change program, the restructuring investments we're making, that we can continue at that clip of cost savings going forward. It's very important. And Alan and myself and the rest of the ULE see a big opportunity here.
I mean, you know that many, many people join Unilever because of the way in which we think about our business and the way in which we run our business. So we have a tremendous opportunity with the higher margin in the business to drive the enthusiasm of the cost savings and productivity journey in the business, the benefits we get from the technology curve that if you do it right can throw off tremendous benefits of your business and generate the fuel to make the investments back in the company in plastics, in sustainable palm oil, etcetera, all the other things that we need to do. These are big investments, but we need to energize this company behind our mission of making those investments. And in order to do that, we have to continue to generate the fuel to do that. And we're coming, as I said, from a good position because we've got our margin in good shape.
We're positioned well. If you looked at what we said about our value creation model at our Capital Markets Day, we're primed for great value creation. And we will be able to fund these investments, we think, through that enthusiasm that we generate in the company for productivity savings going forward. I'll take another one. That's plastics and other things as I think about it.
But if you think about the ambition to be carbon positive by 2,030, Mark mentioned it earlier, but for quite a while now since 2016, we've been charging ourselves at an internal carbon price of about $40 on all of our business. So each of our divisions, each of our 3 divisions gets hit with a haircut in their capital allocation every year. And we just take that and we bang it into a clean energy fund. And to date, we've done about €75,000,000 to €80,000,000 of capital reallocation in the business since 2016 by doing just that. It seems like a bit of a sledgehammer intervention, but it's really quite cool because I know that the capital budgets are all pitching for too much anyway.
So this is an authorized and logical haircut that comes in. In our capital allocation, fund the clean energy projects, and that means that Mark has had the ability to get out through the CleanTech Fund and make the investments. There are going to be a couple of examples. We've put it's normal stuff. It's biomass boilers in the Tema factory in Ghana and it's solar power, solar thermal actually for hot water generation in our factory at Cuernavaca in Mexico.
But there's many, many examples of that and that's how we've been able to do that. Thinking about measuring progress, it's a brain ache of a chart this, but it was interesting to hear Matthew talk about the SDGs, 17 of them, 150 odd, 160 odd metrics behind it. We did almost the same with the Unilever Sustainable Living Plan. We had 9 pillars within the U. S.
LP, and we've got 7 metrics, and we report upon those annually, and they're all available on our website. But just to illustrate the sort of year of it and the progress, these are the 9 pillar metrics. With all measurement of performance and setting of targets, and this is when it gets core CFO material, you have of good and bad performance, but overall good progress against the goals that we set. And to be honest with you, when I became the CFO back in 2015, I got a little bit worried about this. It's a discussion that myself and my predecessor had had about all the targets we had put out there because your natural instinct as a CFO is to promise what you can deliver, and you expect to be held accountable to a very high degree for delivery of what you say.
That's especially true on the financial side. But I've been positively surprised by this, particularly where we've come up short. And I'll talk about a couple of those in a minute. But I would be very positively surprised at the way people support transparency in this space. People would rather see you being very transparent and very ambitious in what it is that you want to do and then come up short then sit there sort of managing the message in this space.
I've been really surprised personally at the level of deep understanding and support there is out there if you're prepared to, as Richard said, lead in these things and take on the risk. There's a couple of examples here of great progress you see there. I think we circled it, yes. I mean that 1,240,000,000 people improving their health and hygiene, and as I think Rebecca said, the incidence of life threatening diseases like diarrhea, it's just a simple fix. And through a brand like Lifebuoy, we've really been able to really save lives there, which is pretty fantastic.
We made great and this is one that is both risk and cost quite appealing for a CFO. We reduced our waste per tonne that we take to landfill or we have to dispose of by 97% in the 10 years since 2,008 because we sort of got it down to that level back in about 2018. And we've done that despite significantly higher volumes. So we continue to make really, really great progress there. But in other areas, we have had slower progress, and that's what I was mentioning earlier.
Take a reduction of only 2% in our water impact per consumer use. The original target there, if you were sharp eyed in the original U. S. LP from back in 2010, was to half our environmental impact per consumer use. And what we found is it's very difficult and probably beyond our means to really influence consumer behavior in that way.
But as that energy becomes clean energy within the system itself, that's where the big impact on that will sit. And I thought we would be in some hot water for having come up so short against the target, but everybody understands that influencing the totality of consumer behavior with people washing their clothes and taking showers, etcetera, and brushing their teeth is quite a hard thing to do. And we've made we have made, however, really significant reductions in the water that we do use in our operations. That's down by 44%. More CFO talk.
This is just normal CFO logic. I'm asked an awful lot by other CFOs about how we do this. I'm spending time tomorrow at A4S on exactly this point, but it really is just normal. It's just day job stuff. You've got to make sure you get really clear definitions in place.
You've got to make sure that there is a clear owner for every metric and that you have to make sure that your measurement adheres to those things. It's okay to come up short. It's not okay to keep changing, measure things. It's not okay as it isn't okay with any form of reporting to fiddle around with it. You need to be consistent.
There's got to be rigor behind every metric. You've got to have a comprehensive processes. We've got very big processes sitting behind these. Frankly, it matches what we do from a financial metric and reporting. And you've got to have real integrity behind the numbers.
And you met Lisanne earlier. She was on the discussion panel on climate, but she's the controller of Unilever. That's a really big job. Lisanne makes the calls about what's right and what's wrong when it comes to all of our reporting in Unilever. It's something that I was taught early on when I was doing a similar job that sometimes it's not the CEO or the CFO who should make those calls.
It should be made independently elsewhere in the business, and she has that responsibility for the whole of Unilever, and she has it when it comes to reporting these metrics as well. And then you saw earlier, there's really good governance on this. The Corporate Responsibility Committee and the Audit Committee are very, very deeply engaged. It's all externally assured by PwC on a sort of rotational basis. And you heard from Rebecca a very important point, I think, that reward at Unilever isn't based just on our financial performance.
It is based to the tune of 25% of our long term reward. It's connected to progress against these sustainability targets. And like I said, work level 2, just to give you a sense, that's every manager in Unilever, that's 14,000 people, including Alan, myself and everybody on the ULE. So it's very deeply ingrained in it. The U.
S. LP originally was a 10 year plan. It started in 2010. It comes to a close next year. We're working on building new metrics within the new Compass.
We've announced and Richard talked about our commitments on plastic. We've got new commitments coming out as part of the new compass. So we're navigating ourselves at the moment. It's complicated, but we are going forward with a plan that is much more tightly integrated. It is just the strategy of Unilever.
The new compass is the strategy of Unilever. There is no separate plan, etcetera. It's a bit simpler. It's bolder in its outlook. It's more focused, but it is quite simply the strategy of the company.
Assessing performance from the outside, and look, I think we've skirted around a couple of times today on the fact that there's a huge amount of effort out there. There's some very worthwhile great bodies of work have taken place, and we support many of these. In fact, back in 2015, when I came into this job, we had frankly signed up for all of them, and we continue to support all of them. But you need to be choiceful in what you do, and some are more important than others. We all want to see sustainability become more integrated into the way that you as investors assess companies.
You're very interested in it. You're very number centric. You're performance focused. And therefore, this industry of measures has built up, etcetera. And it can be pretty overwhelming at the end of the day, but you do tend to choose who you work with and go forward and do it.
That's an example. We just went through and I saw Anna, I don't know if she's still here, but Anna Overton was here earlier from S and P. We've just been through S&P's new oh, hi, Al. How are you? Nice to see you.
EST evaluation. I have to say it was a great process for us. You've done many of them. It's the first time we've been through it. It was demanding.
It was a fantastic dialogue. It was exactly what you'd expect from our ratings process. We got the highest I don't know if it's highest score, but it was quite high, wasn't it? Was it 18, 89 so far? So we put it out there for other people to beat it, by the way.
It'd be really good if others would come and knock us off that perch. But there is, frankly, a lack of standardization and a lack of comparability, and we're all finding our way through this. I've sort of I'm a bit of evangelist for 1 in particular, and that's the TCFD. We mentioned it a couple of times today. I've sort of chipped in on a couple of points on it.
Just a couple of words about it. I became a Vice Chair of it when it was set up 4 years ago. And I was in that moment where I realized that we'd been signed up for everything and that no way we were going to be able to support everything. And I really felt we were crying out for something that would set above all the good work that had taken place. And so we worked very hard as a TCFD to create something that was a sort of unifying force that was accessible to everybody.
And I believe it is a tremendous unlocking platform for you to have that dialogue that you're looking for with companies. We talked earlier about scenario analysis. A lot of the questions you've asked today, I can show you in our reporting accounts, and we've only started thinking about how we continue the TCFD reporting. So believe me, I grew up as a Scottish accountant. For me, kind of substance over form.
TCFD had a lot of U. S. Representation. For them, it's about form over substance. It's a combination of both.
It's qualitative, quantitative in the annual report, bring it into the dialogue that you have with boards and bring it into the dialogue that you have with management teams all the time. Ask them a question. If they can't answer the question, push them on why they can't answer the question. Above all, and I know you probably know a lot about it, but this mix of qualitative and quantitative data, this narrative really important. Lisanne mentioned earlier, all that Scope 1 through Scope 3 stuff that we've been putting in our filings for years years years.
That was when the question was, what impact are you having on the climate? Now we're in such a pickle that the question is, what's the impact of this impending climate change on you? And I think that Mark Carney was an absolute genius with that tragedy of the horizon because it is literally tragedy of the horizon that we're facing now. And you need to ask those opportunities are. I'd also encourage you to do it in a sector specific way.
This is about peer analysis. This is your bread and butter. Do I invest in this player in a sector or the player in a sector? So this is about GSK versus Pfizer versus AstraZeneca. This is about BHP Billiton versus Rio Tinto.
It's about Unilever versus
Nestle versus Procter. Don't try and go cross
sector with it. Get very sector versus Procter. Don't try and go cross sector with it. Get very sector specific. It's all about and I'm dying to hear when we finally get Cinnit is really important, the 2 degree scenario, the 4 degree scenario, that's scenario analysis that's in it is really important.
The 2 degree scenario, the 4 degree scenario, that's what we chose to do. Either Mark or Lisanne, I mentioned the fact that we chose 1 commodity last year to do really deep econometric modeling on. We looked at yields. We looked at pricing impacts. Frankly, as Thomas said, climate change and the impact from a carbon perspective, we're not so carbon intensive in our actual operations itself, but the impact of a 2 degree world or a 4 degree world or a 3.2 degree world is pretty striking.
And just thinking through those scenarios in this place was just it was fantastic. And it's I think it's one of the best pieces in our annual report. And it will get bigger and bigger and bigger, and it's just a lovely place for you to start discussing. As Luzanne said, I think we're doing tea this year, and we'll get to palm oil, I think, at some point as well for a really deep dive. Just to say here the TCFD, 9 21 companies have signed it.
It's 11 almost 11,000,000,000,000 of market cap, 450 financial firms, £120,000,000,000,000 in assets on the balance sheet. A lot of that's banks because that's where you get the concentration of risk around this, of course. But most of you have probably signed it. And really, somebody mentioned it earlier, this question of how long term pension money suddenly flips to the short term through the journey from asset owner to asset manager, That was 100% represented in TCFD, and I think that's a really big question that we need to lean into as we think about long term implications versus short term performance delivery. Final point on it, this pension point.
We've got quite a big set of pension liabilities in Unilever, but we've got a big set of pension assets. There's going to be €21,000,000,000 of pension assets in the company. And just making sure that we are thinking about how we invest that money and the managers that we employ and how we think about long term investment on it. That sort of squared the circle for us all the way through. Going to end there.
I'm just about out of time. A couple of messages for you. I'm delighted of the fact that we're finally reaching the tipping point. It's very clear to me that we've hit a tipping point just in the last year, 18 months. This ESG question has just skyrocketed.
2nd message for you is this is just normal CFO stuff. It really lends itself. If you've got a good value creation model, you understand capital allocation, you've got a clear business strategy, you want to fund the business strategy. The only question you've got is long term view versus short term view. It's a pure horizon challenge, but it's not difficult to do and it's not anything outside the ordinary.
And personally, I'm just looking forward to when that wall of money that I know you're all employed because it's coming, that wall of ESG investment that can't invest in certain sectors, can't invest in our sector. And when you invest in our sector, I want you to invest in our company because I look forward to that reduction in our cost of capital and I look forward to that wall of ESG money just coming our way. So I'll leave it at that. John? I'll take a question if you're kind.
Nick?
1 of the 2 key challenges you talked a lot about climate change and not a lot about inequality. One of the key areas that corporates can help is by paying a fair amount of tax. Can you just talk us through what the OECD's proposals are now when it comes to consumer facing corporations?
That's a big piece of it. So we're 1st of all, we're doing a lot of thinking about this, obviously. I hope you're well appraised of the work that's happening at the OECD in response to what started out as digital taxation, got a fairly clever response from the U. S, extending out consumer facing companies. But this is a fundamental challenge and long overdue.
Actually, I was at the 100 group last night and there was a 100 group response that went in that I really encourage you to read, very thoughtful and I agree 100% with their response to the OECD proposals. They're to be welcome. There's no question. The world needs a different taxation system in a world where there's sort of national aggression, allied to this bizarre situation where companies are not paying tax, where their economic activity and benefit is existing is a real problem. So a couple of things about that though that first of all, you've got to avoid a situation where a company put tax into place.
Companies are agnostic really about where they pay their tax, but you don't want to pay it twice. So how OCD can put together, which is a comprehensive that allows that to take place in a sensible way and make sure that the landscape for large countries and small countries is properly operating, I think, is very, very important. But we're supportive of the work and actually, it's overdue. Just to share with you, so Unilever's ETR is 26%, 27%, something like that, 26%. And that's an important driver of value.
And actually, one reflection, not many people ask you about fiscal differences in your company when in fact it can be a massive driver of long term value differences between companies. If you just took Unilever's operations around the world, where we make our profit and multiplied it by the national rate of taxation, you would start with a number about 26%. But then what happens is as the waterfall goes through, you get national friction. You get distribution taxes. You get unrecoverable costs.
You get inability to charge appropriate amounts for brands and royalty fees, etcetera, and that skyrockets up. And that's the challenge for international companies. You then have to work down to what your natural rate of tax is, And that tends to happen through transfer pricing models. It tends to happen through financing models, etcetera. That's how that waterfall works.
But the key point is you kind of want to end up where you started. And if the OECD are able to make sure that where you start is where you finish without having to go through that journey, I think that would be a terrific thing. Would you go as far
as to say that when the OECD are successful, Unilever will look relatively more attractive?
I believe so, Yes. That's another reason I'm quite excited about it because 26% seems like a pretty fair rate of taxation to me. I worry when companies have got sustainable rates that are material below that. I think that's how the question is how you get there. You and I have had discussions in the past, and I don't know, I can conjecture out there, but companies ought to pay their taxation.
We pay, I think, I don't know if Janine's here, but CHF 3.7 £1,000,000,000 a year, I think, is our total tax contribution. So that's worthwhile. That's a multi stakeholder
model. Great.
Leave it. So We'll have a note to end on. Thanks, Graham. Okay. Let me not labor with my closing remarks.
So we're a bit over time. I want to get you out more or less on time. So first of all, thank you very much to those on the webcast who have invested the time, in particular to those of you who have bothered to come along this afternoon. It's a huge amount of your time you've given up. And you know where we stand on the issue and therefore it's very, very rewarding and reassuring to for us to see such an engaged and frankly knowledgeable group of people coming along to get into this dialogue.
So I mean that sincerely when I say thanks for coming. Secondly, just to mention some of the things we've heard this afternoon. I think you've heard quite compelling case on why we see sustainable business as better business. Rebecca took us through our core approach. You heard a panel talking about climate change, one of the big issues, du jour.
I think Richard gave a good explanation of how we're thinking about this plastic challenge and really accelerating the way that we're dealing with that. Hanneke talked about foods as a force for good, and we recognize that too much of our portfolio today is in a space that isn't as strong a force for good as Hanukkah and our Foods team would like. You heard Difid talking about one example of a partnership between the public and private sector. And trust me, that's real honest to goodness, good work happening on the ground, helping people, and it's the government putting their hand in their pocket to help grow our business in some ways. And Graeme gave you as an inimitable CFO view of why this makes good economic sense.
I hope along the way you felt a depth of expertise in Unilever. I think in this space we do know what we're talking about. Our experts like Karen, like Thomas, like Rebecca are constantly called upon to talk to other industries, to talk to government bodies, to talk to coalitions about how you do sustainability as a private sector business. But actually I got quite tickled hearing our controller talking with quite some authority and conviction about carbon footprint and climate change. To me, that's a really healthy sign that up and down the organization may be in unsuspecting places.
We have pockets of real expertise. Just to underscore the point on purpose versus profits, we've made our choice. We believe that purpose led future fit is our only way to financial success. There might be other companies for which you've got a different way to financial success, but we believe that being purpose led, future fit, run as a sustainable enterprise, that is our only choice on how to achieve financial success. So as we draw in towards the end of the year, let me wish you and your families all the best for a happy and healthy holiday season, also for a prosperous 2020.
And maybe at this moment, I can put in a special plug for COP26 in Glasgow. Thank you very much everybody.