A billion people still sleep hungry; what’s the role of capitalism?

Abraham Kutswa, a smallholder farmer in western Kenya. In order to stay in business, companies should help in tackling issues such as food security and deforestation. Photo/FILE 

By Paul Polman

In Summary

• Digitisation and the Internet have given consumers enormous abilities to connect and aggregate their voices. Power is dispersed, but wealth is concentrated.

Capitalism has served us well. Yet, while it has helped to reduce global poverty and expand access to health care and education, it has come at an enormous cost: Unsustainable levels of public and private debt and excessive consumerism and a lot of poor people.

A billion people still go to bed hungry. The richest 85 people have the same wealth as the bottom 3.5 billion.

Digitisation and the Internet have given consumers enormous abilities to connect and aggregate their voices. Power is dispersed, but wealth is concentrated. Further development and population growth will put a lot more pressure on our planet.

Capitalism needs to evolve, and that requires a different type of leaders — leaders who can cope with today’s challenges. Most of the leadership skills we talk about — integrity, humility, intelligence, hard work — will always be there.

But some skills are becoming more important — such as the ability to focus on the long term, to be purpose driven, to think systemically, and to work much more transparently and effectively in partnerships.

There are enormous challenges, but business leaders thrive on them and are well placed to solve them, as they also offer enormous opportunities.

Business is here to serve society. We need to find a way to do so in a sustainable and more equitable way, not only with resources but also with business models that generate reasonable returns. Take the issues of smallholder farming, food security and deforestation.

They often require 10-year plans to address. But if you are in a company like ours and you do not tackle these issues, you will go out of business.

We need to be part of the solution. Business cannot be a bystander in a system that gives it life in the first place. We have to take responsibility, and that requires more long-term thinking about our business model.

Underinvesting in technology

In our effort to achieve that at Unilever, we first looked inward. We had a 10-year period of no growth. That forces you to make your numbers or you are under pressure from your shareholders. You end up underinvesting in information technology systems and training of your people, and your capital base gets eroded.

So how do you change that?

The first thing is the mind-set. When I became chief executive in 2009, I said, “We’re going to double our turnover.” People had not heard that message for a long time, and it helped them get back what I call their “growth mind-set.”

The second thing was about the way we should grow. We made it clear that we needed to think differently about the use of resources and to develop a more inclusive growth model. So we created the Unilever Sustainable Living Plan, which says that we will double our turnover, reduce our absolute environmental impact, and increase our positive social impact.

Because it takes a longer-term model to address these issues, I decided we would not give guidance any more and would stop full reporting on a quarterly basis; we needed to remove the temptation to work only toward the next set of numbers.