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Responsible Capitalism

ALEXANDRA KOCHERGA
<Contributor>

On February 14, 2013, the Ritz Carlton Hotel hosted the Thomas J. Bata Lecture. The event was organized by the Schulich School of Business and Osgoode’s very own Edward Waitzer was a discussion panellist. The guest of honour, however, was Paul Polman, the CEO of Anglo-Dutch consumer giant Unilever, whose brands include Dove, Axe, Lipton Tea, Breyers, and more. Polman delivered an inspiring speech advising the need for, and the possibility of, “responsible capitalism.” For those skeptics who see capitalism and sustainability as polar opposites, you have a few things to learn from Polman’s optimistic view of the future of business.

Polman is believed to be the most influential advocate for challenging the status quo of business and showing that business as usual is no longer a possibility. Polman believes that in the modern world, capitalism needs to be reframed for the common good. He is often accused of being a socialist, although he considers himself a “capitalist at heart.”  At the heart of his thinking is not simply the desire to do good for the world, but to also do good business. Under his vision, companies in the past have thrived at the expense of the environment and society and it is time that business models are revised to contribute to society and support ecosystems and biodiversity while still being successful.

Of course, Polman doesn’t believe that Unilever alone can accomplish this intrinsically difficult task. The involvement of politicians, businesses, and citizens is necessary in order to effectively address the challenges of social injustice, climate change, resource scarcity, ecosystem degradation, and biodiversity loss.

 

Polman believes that governments should encourage longer term investments in the financial sector. Shareholders that are encouraged to invest in companies for longer terms will care more about the prosperity of the company rather than focusing on making a quick return. He believes that greater prosperity of a business can be achieved if the company is on board with this notion of responsible capitalism. One of his suggestions is by implementing this motivation for longer term investments into the tax system. Regardless of the method, he believes there are possibilities for government to be involved.

He also thinks that consumers should be directly integrated into the process: firstly, by being encouraged to modify their personal habits, such as taking shorter showers and washing clothes in lower temperatures, and secondly, by being encouraged to switch to more sustainable products. According to Polman, Unilever has already learned that consumers will not buy products (even if they are “green”) if they do not taste good and if they have to pay a premium. However, he is optimistic about consumers’ willingness to stop buying from companies that are not behaving responsibly. If consumers begin to move toward sustainable products, other businesses will hopefully follow suit in the move toward responsible capitalism.

As part of Unilever’s personal move toward responsible capitalism, on top of consulting with Greenpeace and the World Wildlife Fund on a weekly basis, Unilever has embarked on its ambitious Sustainable Living Plan which, among other things, has a goal to source 100% of its agricultural products from sustainable sources, and a plan to double their revenue whilst reducing their absolute environmental footprint by 2020. This is an incredibly ambitious goal, but, according to Polman, when you set your goals extremely high, it motivates you to work extremely hard to attain them.

Of course Unilever is nowhere close to being a truly sustainable company. However, Polman’s drive and vision to making capitalism not just about making money but also about contributing to the common good is one of a kind amongst CEOs of global corporations.