unilever a critically evaluative criteria of sustainable extraction

7/30/2019 Unilever a Critically Evaluative Criteria of Sustainable Extraction

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University of Hertfordshire

Business School

MBSP0194 Evaluating Strategic Marketing

Assignment No. 1

Unilever

A Critically Reflective and Scholarly

Perspective on Sustainability in the Extraction

of Talc for Cosmetic Products

Authors Sarah Mellon & Fabio Oliveira

Student Number 06144782 & 06132095

Hand In Date 24th November 2006

Course MSc Strategic Marketing

Tutor Chris Brown

Word Count 2066


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Introduction

The concept of sustainability centres itself on economic development being mindful

of its surroundings, embracing issues such as environmental concerns, global

warming and energy (Brundtland Report, 1987), in order that future generations

needs are not compromised by the activities carried out today (WCED 1987).

According to Nigel (1998), sustainable development is a social and institutional

response to the environmental (or ecological) dimension of global change.

Sustainability as a market concept

The public has been pressuring governments and companies to reduce the levels of

pollution and detrimental activities that have an impact upon the environment.

According to Nigel (1998), the pressure for sustainable development has been

brought about by two distinct problems. The first concerns the resource and energy

demands of industrial activity in developed and rapidly industrialising economies.

The second problem is the cycle of poverty, mainly experienced in developing

countries. The costs of continuing devastation and pollution are increasing annually

from the global economy and industries.

These pressures have led to companies adopting the concept of corporate social

responsibility (CSR) in order for many to ameliorate their public image. Davis

(2006) suggests that CSR requires integrity to be sustainable so the image projected

must be consistent at all levels of the organisation, the community and society.

Unilevers Sustainability Strategy

Due to their power of being such a large multinational, Unilever, one of the worlds

largest consumer goods companies, with ranges of foods, household and personal

Mellon, S & Oliveria, F Evaluating Strategic Marketing 2


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care products, has a lot of pressure to perform business in a socially responsible

manner. Perhaps due to this, Unilever widely promotes their strong focus on

sustainability. They have also established a mission to attain sustainable growth in

order to achieve better results for their stakeholders, as declared in the companys

statement:

As a multi-local multinational we aim to play our part in addressing global

environmental and social concerns through our own actions, and working in

partnership with stakeholders at local, national and international levels.

They carry out sustainable activities in all three aspects of sustainability includingenvironmental, economic and social projects (Veleva, 2003). Some of the projects

they have been involved in include the cleaning of rivers in Indonesia, helping to

combat HIV/AIDS in Kenya, helping to tackle climate change with the researching

into advanced refrigeration, and sustainable fishing in South Africa (Unilever, 2006).

In 2001, Unilever spent 57million euros on community projects (BBC, 2002). These

efforts towards sustainability have seen their food production businesses at the top of

the Dow Jones Sustainability Index (DJSI), and also being ranked third in the 100 top

companies that count for corporate responsibility (Foodproductiondaily.com, 2004).

These measures, as well as Unilevers own voluntary measurements should ensure, as

Veleva (2003) discusses, that progress is actually being made rather than just being

talked about, as well as helping create a very positive company image.

These actions taken by Unilever appear to show their great concern in the sustainable

development of their business. There are however many other possibilities to explain

their reasoning behind the extent of their action. One possibility is the increased

public concern for the environment, which has led to the recent concept of green

marketing (Prothero, 1996), which could explain Unilevers motives. Unilever uses

this idea to help establish superior customer value, as they are seen as having the



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highest standards of responsible and sustainable behaviour. However critics believe

that these reports and projects embarked on by companies are only greenwash, in

order to improve their public image (Veleva, 2003). This could be why they are

under a great deal of pressure from watchdogs, and environmental groups such as

Friends of the Earth and Greenpeace. Smith (1990) explains that this pressure group

activity has led to the boycott of products both for environmental and social reasons,

therefore outlining one of Unilevers motives for acting in a sustainable manner, in

order to avoid any bad press which could lead to the boycott of their products.

Furthermore, Unilevers sustainability strategy benefits the company, as being the

leader of the industry on the DJSI has led to an increase in investments. This

investment is linked to the increase in shareholder value, as according to Dow Jones(2006), leaders of this index usually show superior performance and favourable

risk/return profiles, so would therefore be more favourable to invest in.

Unsustainable Practices

Despite the aforementioned efforts, Unilever has been the subject of bad press for

several unsustainable practices. For example, the dumping of mercury toxic waste

into Indian rivers, child labour in developing countries, and the illegal mining of talc.

Unilever, as well as a number of other companies in the cosmetics industry, including

Avon, and Johnson & Johnson, have been found to be involved in purchasing

illegally mined talc from suppliers in India. Talc is one of the ingredients that make

up several of their cosmetics products. Its purpose is to give cosmetics stability,

texture, skin adhesion, slip and water resistance (Golcha Group, 2005) and it can be

found in skincare products such as makeup and soap, including Unilevers range of

Dove products.

The use of talc as raw material for manufacturing cosmetics by the extraction of

soapstone has had a great impact on the environment, devastating huge areas,



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including natural sanctuaries, such occurred in 2003 in the Jamwa Ramgarh Wildlife

Sanctuary in Rajasthan, India. This area is a protected nature reserve, however it was

found that local companies had nevertheless been allowed to operate in an

unsustainable manner (Environmental Investigation Agency, 2003). According to

Friends of the Earth (2003), these operations are threatening tiger habitats, increasing

their vulnerability to local extinction, as well as destroying the forest and watersheds

which has negative effects for the local people. Furthermore, talc has been seen to be

toxic, a skin irritant, and has been linked to cancer in the press (Cancer Research UK,

2006). This process therefore appears to come under Level 3 Facility Effects of

The Lowell Centre Indicator Hierarchy, meaning that this activity has environmental

impacts (Veleva, 2003). It is important for Unilever to use this indicator in order tohelp achieve more sustainable production systems, particularly as there is a strong

link with using these indicators to resulting in improved performance (Gahin et al,

2002).

For a company that appears to have such a strong stance on sustainability, this

behaviour certainly does not agree with the definition of sustainability, as it is

compromising the ability of future generations to meet their own needs (WCED,

1987) with the destruction of the protected environment. Furthermore, it is important

to note that Unilever reached the top of the DJSI in the food production category, it

does not reflect their sustainability performance in the personal care market, therefore

perhaps they are not putting as much effort into this area.

An increasing number of consumers are looking at more natural, ethical products, and

have become very sceptical about the behaviour of companies (Aiking, 2004).

Therefore, it is recommended that Unilever adopt more sustainable practices to

satisfy the growing environmental concerns of humanity (Johri, 1996). If an

alternative, more sustainable product/process is not used, it may well damage

Unilevers reputation and decrease the level of superior customer value that they

provide, which will have an adverse impact on their competitive advantage.



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Research has been undertaken for the purpose of this assignment, in order to find a

more sustainable ingredient or way of extracting this ingredient, which will not have

such an affect on its local environment. One problem however might be that talc is

relatively cheap for the multinationals to purchase, therefore any alternatives must

take this into consideration. However this cost saving would be a lot less than the

incalculable value of a tarnished public image, and as Schlegelmilch (1996) suggests,

a growing number of consumers are more willing to pay higher prices for green

products, therefore higher costs could be accounted for.

Product concept and the initial marketing brief

In general, the cosmetics industry is investing in sustainable projects, and has a clear

interest to do so. Unilever invests great sums of money in sustainability, and has key

performance indicators in chemical oxygen demand, water, energy, CO2 from

energy, hazardous waste, boiler/utilities and Ozone-depleting potential.

One alternative researched for this project is the use of Nylon-12, a synthetic

substance that could be an excellent substitute to the natural talc powder in cosmetics.

Similar to talc, this substance also has tremendous absorbent powers. It remains on

the skins surface to absorb skin oil as it is secreted, making the skins surface

imperfections less apparent. Nylon-12 is an artificial substance that can be produced

by the plastic industry with sustainable manufacture process and can be more easily

monitored and measured than mineral extraction. Some cosmetics company such as

Procter & Gamble and Revlon are already using this substance in their products.

There are many advantages for the Cosmetics industry to change the ingredients of

their products from talc to Nylon-12. The industry will reduce the risk of future

shortages and the impact on the environment. According the Industrial Mineral

Association, the use of non-renewable resources may mean that these will not be



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available for future generations, and extractive operations can have a lasting negative

impact on the environment if not managed efficiently. Moreover, mining remains

one of the most hazardous occupations causing more fatalities than other

occupations (IEE, 2001).

Impact on the different business processes, and Issues to Implementing these

Changes

Unilever appears to be committed to managing their social and environmental

impacts responsibly, working in partnership with stakeholders and contributing to

sustainable development. The mission that determines the strategies and positioningin the marketplace, suggests that Unilever role is to add vitality to life with brands

that help people feel good, look good and get more out of life.

Unilever uses target scorecard measurements to evaluate indicators such as chemical

oxygen demand, hazardous waste, water, energy, and CO2 from energy and

Boiler/utilities. Moreover, Unilever acts together with all the stakeholders involved

in the process. Their strategy to be the multi-local multinationaldetermines how

they are effectively competing, and delivering superior customer value through the

analysis of the external environment, identifying the key value generators, applying

the necessary modifications and alterations in the products and communication, and

the efficient management of the supply chain (Kotler, 2002). Furthermore, a

marketing strategy which includes environmentally-friendly packaging and eco-

labelling must be at the heart of any companys forward planning. This is where

environmental differences will be communicated and where a companys

commitment will often be judged (Welford et al, 1993).

The development and delivery of this modification requires the commitment of

application from R&D, marketing, suppliers, and manufacturers. Therefore the

following recommendations have been proposed:



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- R&D evaluation and analysis of the impacts in the manufacturing process,

with an external benchmark;

- Marketing and manufacturing departments working together with the

suppliers, to analyse and evaluate the impact of production in terms of

quantity, costs and process alterations.

- Marketing and Public Relations evaluating the impact in local communities

where the talc suppliers are operating, in terms of unemployment and

environmental recuperation.

- Learning and understanding the outcomes and communicating to the

community, employees and suppliers.

- Understanding the customers values and applying this in the development of

the products.

- Communicate changes to the customers through alterations in the packaging.

Internal marketing is another relevant aspect for achieving the success of this

alteration. Internal Marketing has come to be seen as a mechanism for reducing

departmental and inter-functional friction, as well as overcoming resistance to change

(Ahmed, 2004).

Conclusion

In conclusion, it is vital that companies explore sustainable development and

corporate social responsibility, in order to attempt to increase their competitiveness

and to improve their superior consumer value offering. This will reflect the growing



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concern among consumers about environmental issues as they are becoming

increasingly suspicious of multinationals activities.

Another important aspect concerns the investigation of companies relationships. The

company should understand their role as a part of one whole system where its

responsibility includes the management and monitoring of their partners activities,

including their suppliers, employees, and other commercial partners.

In conclusion, companies should place a strong emphasis on sustainability,

incorporating it as part of their corporate culture. They should also work with their

partners to develop new strategies to reduce their impact on the environment, in orderto increase their competitiveness in line with consumers increasing environmental

concerns, improve their public image, and to prevent any further depletion of the

external environment.



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Mining Operations Internationally A rapid review of the Literature. London:London

School of Hygiene & Tropical Medicine

Welford, R & A Gouldson. (1993)Environmental Management & Business Strategy.

London: Pirman Publishing

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Barnett, J. (2003) West's love of talc threatens India's tigers. [Online] URL:http://observer.guardian.co.uk/international/story/0,6903,982537,00.html [Accessed

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Dow Jones (2006) DowJones Sustainability Indexes. [Online] URL:

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Environmental Investigation Agency. (2003) UK Cosmetics Industry Risks Tiger

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Food Production Daily Europe. (2004) Unilever tops lucrative sustainability index forfifth year running. [Online] URL: http://www.foodproductiondaily.com/ news/ng.asp?id=54640 [Accessed 05/11/06]

Friends of the Earth. (2003) UK Cosmetics Industry Risks Tiger Forests. [Online]URL: http://www.foe.co.uk/resource/briefings/cosmetics_tigers.pdf [Accessed

05/11/06]

Golcha Talc. (2005) Golcha Soapstone Producer/Manufacturer. [Online] URL:

http://www.golcha.com [Accessed 05/11/06]

Household Products Database. (2006)Nylon-12. [Online] URL:http://householdproducts.nlm.nih.gov/cgi-bin/household/brands?tbl=chem&id=1572

[Accessed 01/11/06]

Industrial Mineral Association. (2006)Mining Sustainable Report. [Online] URL:

http://www.ima-eu.org [Accessed 05/11/06]

http://householdproducts.nlm.nih.gov/cgi-bin/household/brands?tbl=chem&id=1572http://www.ima-eu.org/http://householdproducts.nlm.nih.gov/cgi-bin/household/brands?tbl=chem&id=1572http://www.ima-eu.org/


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Ingredient Glossary (2006)Nylon-12. [Online] URL:http://www.nuskin.com/corp/science/glossary.shtml [Accessed 01/11/06]

Unilever. (2006) Our Values. [Online] URL: http://www.unilever.com [Accessed04/11/06]

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unilever a critically evaluative criteria of sustainable extraction

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