Davos: Unilever chief in plea on climate change
David Wighton | The Times | January 29, 2010
A participant heads for the World Economic Forum where business leaders were implored to take a longer-term view and to act on global issues such as sustainability and climate change
Paul Polman, the chief executive of Unilever, made an impassioned plea to fellow business leaders yesterday to ignore the demands of short-term shareholders and lead from the front on sustainability and climate change.
He told a session at Davos that he did not mind if hedge funds sold Unilever’s shares because of worries over short-term profitability. “They would sell their grandmother if they could make money. They are not people who are there in the long-term interests of the company.”
Mr Polman, who joined Unilever a year ago, said he was brought in to ensure long-term success not to focus merely on shareholder value. This required him to take costly actions to ensure it had a sustainable business, for example in terms of palm oil supplies. “We want to be in business for the next 500 years.”
It was time to move beyond “shareholder value” as the guiding principle behind corporate leadership, he said. Chief executives needed courage to move out of their “comfort zone”.
Mr Polman added that his decision last year to stop providing earnings guidance to investors, which resulted in a 6 per cent fall in the share price, was part of a concerted effort to move the focus away from short-term returns. This might have driven hedge funds to sell Unilever’s shares but there were “socially aware” investors that companies could attract. “I can be a hero for six months by driving up the share price. But we are running the company for the long term.”
Leo Apotheker, the chief executive of SAP, the German software company, agreed it was “time to talk about stakeholder value” not shareholder value. “This will be a hard transition for many chief executives because they are not trained to do that. It will be tough but we have to do it.”
Mr Apotheker said that the Copenhagen conference on climate change had been a “massive failure” which had shown business could not wait for others to take the initiative.
Maurice Levy, the head of Publicis, the advertising and marketing group, said companies had to take the lead on sustainability and warned that consumers were “hugely disenchanted” by the gap between corporate rhetoric and actions. “If we are not proactive we will have a big issue with our consumers.” He said that he had ordered his executives not to get involved with “greenwashing” campaigns where clients attempt to exaggerate their green credentials.
Mark Parker, the chief executive of Nike, said that companies could not wait for consensus on environmental issues. “We have to step up and help educate consumers.”
Unilever and Nike are among the companies behind a Davos initiative focused on “sustainable consumption”. Mr Polman said companies had to take the lead over issues such as deforestation — one of the successes of the Copenhagen conference — because consumers were “powerless” on their own.
Trevor Manuel, the South African National Planning Minister, said that action on climate change required very difficult decisions from governments, companies and consumers. He pointed to the fact that South Africa has huge quantities of dirty coal and that renewable energy was much more expensive for it. He said now was the “moment of truth for this generation of corporate leaders”.
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