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Social performance of Unilever

04 Jan 2017Business Essays

Introduction:

Every business house, no matter how big or small it is, has some social responsibilities which are needed to be met essentially. The prime goal of a corporate house is not only to run a profitable business and use community resources for its own gain, but also to provide adequate return to the society by taking active part in the development of the society within which it operates. A corporate house should respect and protect human rights and take efficient measures to ensure that they are not engaged in any kind incident relating to abuses of human rights. Not only that, a business house should also work in an environment friendly way. It should ensure that environment does not get deteriorated by its operation; rather it should take some effective measures in order to improve environmental conditions. The United Nation has also recognized social participation of corporate houses.

It has taken a huge step in launching the world’s largest initiative for making corporate citizen socially responsible by introducing global compact in 2000 which enacted some universal principles that corporate houses should follow in order to operate in the global market in a more stable way and to build more prosperous and flourishing societies. This global compact launched by the United Nations actually engages players in the private sectors to “identify and spread good corporate practices in the areas of human rights, labor rights, protection of the environment, and anti-corruption.” (Rasche 2009, 513)

The global compact includes ten principles in the areas of human rights, labor eight, environment, and anticorruption that a corporate house should follows. In the areas of human rights, a business house should extend support and respect the protection of human rights within the area of its influence, and ensure that they are not engaged in human rights violations. In case of protection of labor rights, a corporate house should pay respect to the right of collective bargaining and the freedom of labor association, should eliminate all types of compulsory or forced labor, should engage in effective abolition of child labor, and should avoid any sort of discrimination with respect to employment and occupation.

As far as the environmental issue is concerned, every business house should undertake precautionary approach to meet environmental challenges, should take initiatives for promoting greater responsibility towards environment, and should encourage the development and implementation of environment friendly technologies. And finally, in the areas of anti-corruption, each business should take active measures against all kinds of corruption including bribery and extortion. (United Nations 2010)

This paper will try to analyze how far one of the world’s most renowned corporate houses, Unilever, has performed towards meeting its social responsibilities, in other words to say, this paper seeks to examine to what extent Unilever has been successful in adhering the principles of the global compact.

Social performance of Unilever: Unilever is world famous multinational company that owns a number renowned brands in the market of food, home and personal care, beverages etc. It operates on a global platform with a well persified product portfolio including famous brand like Persil, Dove, Flora, Knorr etc. it mainly manufactures food products along with home and personal care products. Its market has become so huge that its market has extended to as many as 150 countries. It has a huge employee base including 227,000 people worldwide. It is fully multinational company in the sense that in every continent, except Antarctica, it has its factories and operational companies. Over the years in order to extend its market power it has been following the method of acquisitions and take overs. Through a number of big acquisitions it now owns as many as 400 brands. (“Brands for Life” (Unilever 2010, 1))

Being such a large corporate house, the corporate social responsibility of Unilever is also supposed to be huge and it has rightly recognized its responsibility towards the society besides fulfilling its profit making objective. But recognition of responsibility is not enough, rather it is necessary to focus more on those activities which can help identifying the company as a socially responsible corporate house. Thus let us look at the performance of Unilever towards fulfilling its social responsibilities.

As far as the company’s responsibilities towards protecting the environment is concerned, the company has taken some effective steps towards producing its products in environment friendly ways. For example, it has taken some effective steps towards fulfilling its commitment of buying required palm oil from sustainable sources which are environmentally certified in order to meet the requirement for its businesses in entire Europe, Australia and New Zealand. In 2010, the company has been able to secure sufficient GreenPalm certificates for buying sustainable palm oil.

GreenPalm is actually a certificate program for trading in palm oil which has been designed to tackle all sorts of environmental and social problems that are associated with he production of palm oil. However, in spite of gathering enough of GreenPalm certificates, the company has been criticized by Greenpeace fro causing deforestation. In 2008, Greenpeace UK Accused Unilever for securing palm oil from those suppliers who produced palm oil in such a way that the rainforest of Indonesia got damaged. One of the palm oil suppliers of Unilever was also accused of deforestation for the plantations of palm trees which threatened a species of monkey. (“Environmental sustainability” ((Unilever 2010, 1))

Although there are some criticisms and accusations against Unilever in the areas of environmental issues, one vital point should not be ignored that in all these cases Unilever responded in a positive ways by searching effective methods which should adhere environmental norms. In fact, the attempt of securing enough of GrenPalm certificates is an example of such an effort. Apart from buying palm oil from environmentally certified sources, the company has also taken a vital step towards bringing revolution in the tea industry by making the commitment of buying all its tea from ethical and sustainable sources.

Being the owner of the world’s best selling tea brand, Lipton, the company aims at getting all its tea bags environmentally certified in the global market by 2015. This move marks the first step by any tea company in bring new sustainably certified tea in the market on a large scale. The company has established Lipton as a potential brand which can reassure its consumer about the tea sources. It always engages in improving the quality of the tea in an environment friendly way. However, one thing should not be ignored that while the company has trying to secure its raw materials from sustainable sources in order to protect environment, some times it gets accused of dumping of chemical waste.

For example, Hindustan Lever, its Indian subsidiary, frequently has criticized for dumping chemical waste even in those places which are protected nature reserves. (“Environmental sustainability” ((Unilever 2010, 1))

In spite of having some allegations in the areas of protecting environment, the company has been able to establish itself as the first company which has placed due care towards using environment friendly raw materials for its products. This would essentially increase markets for its products and make the company more profitable and thus stakeholder can now get higher pidends. (Brammer, et al. 2005, p. 13)

Unilever is also very active towards extending help to the community within the sphere of its influence at the time of need. For example, on January 15, 2010, Unilever had made a monetary donation of $500,000 in partnership with the United Nations World Food Programme to the devastating earth quake victims of Haiti. The company is, however, sometimes criticized for boosting racism through its advertisements. For example, in a recent advertisement of its skin lightening product, fair & Lovely it shows how a dark-skinned lady who used to be ignored by her employers and other men suddenly becomes attractive to all men and get glamorous career, this advertisement seems to be demoralizing for dark-skinned women.

Not only that, the company has also introduced a new ice-cream in Austrailia with the name Mohr im Hemd which was earlier used for a chocolate speciality in order to refer naked wild Africans. The company however, refutes such allegations and claims that it has used the name after conducting a broad market study without having any critical feedback. (“Respecting Rights “ (Unilever 2010, 1))

As far as its responsibility towards protecting labor rights is concerned, some important allegations has been made against the company, particularly against its subsidiaries in India and Pakistan. These allegations concerned the issues of use of child labor, site closures, freedom of labor associations, and collective bargaining. Where everyone is soughting for banning child labor, being one of the world’s most renowned MNC, Unilever is accused of using child labor in its manufacturing units. This kind of incident may take the company to the court which would not be very good for its reputation and stakeholder might sell their stakes in the company in the fear of bad outcomes. However, the company has been able to resolve most the complaints. ((“Respecting Rights “ (Unilever 2010, 1))

As far as the areas of protecting human rights are concerned, the company has taken some effective steps. A very interesting point to be noted here is that although the company is criticsed for using child labour, in some areas it has taken some steps to stop exploitation of children. Fopr example, in Brazil, it is working with local community and governments to eliminate exploitation of children in the tomato plantations of its suppliers. Since 2003, the company has been able to protect as many as 22,000 children. The company has also taken some initiatives to improve the health and safety of the farm workers. (“Respecting Rights “ (Unilever 2010, 1))

Conclusion:

On the basis of the above analysis, it can be concluded that Unilever is quite aware of its social responsibilities and has made several commitments towards meeting these responsibilities. In fact, it has already started working in these areas. However, it would not be completely right to say that it has placed responsibility towards the society over its profit making objectives as the company still falters in some areas in properly meeting its commitments towards the society. While in one hand it has committed to protect labor rights, on the other hand it is quite active in employing child labor as it would reduce its production costs.

The company seems to be more concerned about building its reputation as a socially responsible company by making enough of commitments than fulfilling them on a priority basis and hence very often it is accused of encouraging racism, violating labor rights, violating human rights, damaging environments. However, it should not be ignored that towards protecting the environment it has seriously taken some effective steps.

Works cites:

  • Unilever. 2010. Respecting Rights. http://www.unilever.com/sustainability/employees/rights/ (accessed 6th august, 2010)
  • Brammer, S., Brooks, C. and Pavelin, S. 2005. Corporate social responsibility and stock return. UK Evidence from Disaggregate Measures. http://www.hedgefund-index.com/brooks-corporatesocial.pdf (accessed 6th august, 2010)
  • Unilever. 2010. Environmental sustainability. http://www.unilever.com/sustainability/environment/ (accessed 6th august, 2010).
  • Unilever. 2010. Brands for Life. http://www.unilever.com/brands/?WT.GNAV=Our_brands (accessed 6th august, 2010).
  • United Nations. 2010. Global Compact. http://www.unglobalcompact.org/aboutthegc/thetenprinciples/index.html (accessed 6th august, 2010).
  • Rasche, A. 2009. Business and Society. Business Society 48; 511.

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