Business Chief Legend: Paul Polman
Anyone worth their sustainability salt knows the impact Paul Polman made at Unilever. CEO of the consumer goods giant for a decade (2009-2019) and the first outsider to lead the Dutch-Anglo company since its founding in 1929, Polman developed an ambitious plan, to separate the company’s growth from its overall environmental footprint, and to increase its positive social impact. It was a risk, but one that ultimately paid off.
Unilever’s pioneering and now-famed decade-old Sustainable Living Plan not only helped the company reach 1.3bn people through its health and hygiene programmes, but also delivered consistent top and bottom-line growth, both positioning Unilever as a sustainability leader and demonstrating that a long-term, multi-stakeholder model can exist alongside excellent financial performance. In fact, under Polman’s decade-long leadership, Unilever was one of the best performing companies in its sector.
This delivery of – and commitment to – long-term, sustainable capitalism isn’t something Polman left at Unilever’s door, however. Both, while he was leading the charge at the company and since departing, Polman has practiced what he’s preached, and since his retirement from Unilever in 2019, continues to preach what he has practiced.
Because Polman not only pulled off Unilever’s pioneering plan, proving ‘corporate can be clean’ to the wider business world, but he played a significant role in developing the UN’s Sustainable Development Goals, and established the Business and Sustainable Development Commission, whose flagship report mapped the economic prize for firms that align with the goals
And such significant ‘responsible business’ achievements have resulted in a significant number of awards, not least France’s prestigious Chevalier de la Legion d’Honneur for his role in the historic 2015 Paris Agreement, a British Knighthood, and 13 honorary degrees.
Since his retirement from Unilever in 2019, Polman has dedicated himself to advocating the Goals he helped develop with the co-founding of Imagine – a social venture that aims at galvanising industry leaders around the 2030 Sustainable Development Goals.
So, when he’s not working with organisations to help them realise business as a force for good or rallying business leaders into purposeful action, he’s actively mentoring young leaders (as Chair and Counsellor of One Young World), and putting his money where his mouth is, both as an active philanthropist to a number of causes and a charity founder (Kilimanjaro Blind Trust).
And with the pandemic having “put us back probably 20-30 years on the sustainable development goals” as Polman recently told CNBC, with whom he co-founded the ESG Council in April, Polman is even more fired up in convincing business leaders to accelerate their corporate responsibility efforts. Kudos to that.
Billionaire Kumar Birla Champions Regional Supply Chains
As the head of the Aditya Birla Group, a US$46bn firm that operates in 36 countries, Kumar Mangalam Birla is no stranger to splashy strategic moves. Yet his recent announcement that he no longer wants to acquire globally distributed supply chains stood out. While many companies have struggled to cope with shipping backlogs, his firm has chosen to pivot and focus on regional networks. Said Birla: ‘We wouldn’t look at a company or a business where you source in one corner of the world and sell in another’.
He cited protectionism, the pandemic, and the limited movement of products and people around the world as ABG’s primary causes of lost profits. And they aren’t alone. Over the past year, 900 of the U.S. and Europe’s biggest IT, defence, and financial services firms have lost an average of US$184mn apiece.
An Era of Global Disruption
Over the past few decades, low shipping rates and rapid delivery times have lulled multinational firms into a false sense of security. In the early 2000s, companies chose to take on significant global supply chain risks in exchange for increased profits. First, it made sense to manufacture higher-value goods, such as electronics, in low-cost regions throughout Southeast Asia, India, and Africa. Second, first-tier suppliers started to outsource the manufacturing of specific components to second-, third-, and even fourth-tiers—leaving supply chains with extremely limited visibility.
So when COVID-19 disruptions struck certain regions, companies were caught unprepared. Usually, these events come few and far between. But over the past ten years, we’ve seen a number of ‘black swan’ events that have thrown the supply chain industry into chaos. Here’s a quick history of the most significant events in recent years, thanks to the MIT Sloan Management Review:
- 2010. China creates export quotas for rare earth elements.
- 2011. The Tōhoku Earthquake hits East Japan; flooding sweeps throughout Thailand.
- 2016-present. Trade wars between the U.S. and China hurt suppliers.
- 2020-present. COVID-19 pandemic shuts down international shipping ports.
Now, Kumar Birla is one of many who want to re-evaluate how we run our supply chains. Though his company has acquired 40+ companies in the last quarter decade, Birla intends to build up local hubs rather than expand operations.
Why Pursue Regionalisation?
Combine Chinese economic dominance, global supply chain vulnerabilities, and major government policy shifts around the world, and you have a storm brewing on the horizon for big multinational firms. As Brookings noted, ‘the biggest risk for trading opportunities in the developing world is growing protectionism in more advanced economies, often dressed up as national security protection’.
Altogether, from the U.S. to the European Union, governments are trying to protect their domestic supply chains, secure adequate stockpiles of materials, and build world-class local networks. Consider Biden’s recent executive order, which seeks to bring semiconductor manufacturing back to home soil, or Japan’s bid to open more memory chip fabrication factories near Tokyo. The Aditya Birla Group intends to react in kind. Said Birla: ‘We’re looking at regionalism as a very big theme’.
Will Others Follow Suit?
In the post-pandemic economy, global businesses must decide whether to expand or contract. On one hand, the Alibaba Group’s Cainiao Smart Logistics Network recently launched a direct flight between Hong Kong, China, and Lagos, Nigeria. On the other, the Japanese government is desperate to make its chip manufacturing domestic. Indeed, as two supply chain strategies diverge in a post-pandemic world, the one businesses take may make all the difference.
Yet Birla is confident that regionalisation is the right call. According to his words at the Qatar Economic Forum, even necessary cross-border transactions should be smaller in scope. And as the Bloomberg Billionaires Index now lists his net wealth at US$10.4bn, up 52% from 2020, he may have the cash to test his theories out. ‘Regional hubs, regional presence, regional employment, catering to regional demand’, he stated. ‘We’re a global company rooted in local economics’.