British and American investment funds are demanding Unilever to increase its value for shareholders. Reading that, a particular cartoon by the New Yorker sprung to mind. A man in torn clothes explains to three equally ragged children why they’re sitting around a campfire in a ravaged landscape, with nothing but a can and a rock. “Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders.”
A spreadsheet has no values
A spreadsheet has no values
Certain Unilever shareholders want their beautiful moment in time. Short-term profits should replace those annoying sustainability targets, which, incidentally, guarantee long-term profits.
Shame, shame, shame
The demands do shed some light on our future. Do we pass down an economy to our children that fulfils everyone’s – including Mother Nature’s – needs? Or do we continue to walk down the path that will reach a dead(ly) end by the end of this generation? The latter has given us a taste of its ravages in 2008, except now there won’t be anything left to save. Companies, banks, the planet and the lives of millions of people shall be foreclosed this time. But remember, shareholders had their beautiful moment in time. Like when you thought eating that XL pizza supreme by yourself was a good idea. Afterwards, you only feel shame.
No other industry shows a clearer picture of the ravages caused by an extractive economic system than the food and agriculture industry. Fertile grounds are lost at 1380 hectares per hour. That’s the equivalent of Gibraltar turning into a barren wasteland, twice. Water sources are exhausted. Seas suffer from overfishing. Biodiversity levels are plummeting at 1000 times the natural rate. Farmers are leaving their profession en masse because there is no value in farming.
Unilever knows this as well. Unilever makes its money selling food. They know that the survival of their company depends on the survival of the planet. That’s why Unilever launched the Sustainable Living Plan: every food product has to be sustainable by 2020. This is not to crown Paul Polman with a laurel wreath, but you have got to give it to Unilever's CEO: he has shown some guts. He discontinued the quarterly reports and told his shareholders that “if our long-term vision doesn’t fancy you, feel free to sell your shares”. Polman manned the helm in the entire sector these past years and the entire ship followed.
Shareholders or co-owners?
Will Polman’s vision stand firm? I certainly hope so, but there are reasons to worry. Sustainability in a company starts with its owners. A company that has the majority of the stocks on the market is forced to satisfy its shareholders’ whims. And shareholders are not co-owners, but investors.
How do we reintroduce a long-term vision in business models? How do we ensure the shift of the CEOs’ attention from quarterly reports to generational reports? Today, we notice that family businesses score higher on their long-term vision than others. Cooperative business too, as their shareholders value consumers’ or suppliers’ needs above all else.
The answer to these questions can be found in new business models that unite shareholders and stakeholders. It is easy to write a 50-page essay to explain all this in minute detail, but the core principle is simple: values. Who are we as a company? What do we want? What do we stand for? Don't bother claiming that “the goal of a company is to make profit”. Profit and business go hand in hand like wine and cheese. Profit is not a goal. It is a necessary means to an end, which is continuing to do the things that are needed, important or simply fun.
We are the government
We are no longer in a reality that pits “the NGOs” against “the companies”, or “the companies” against “the government”. Already today, you will find that examples abound of people collaborating to make products more sustainable, more transparent and fairer. The companies pioneering in their efforts to make their products more sustainable require a government that raises the bar for every player. And a government is the only referee that can protect consumers on a similar scale against harmful concentrations of power.
Admittedly, trust in the government is probably at an all-time low. Yet, lest we forget: we are the government. We, the people, who project our values and aspirations into legal norms that shape and enable the behaviour of companies and persons.
As long as the helm of our economy is manned by people who find their values in spreadsheets alone, we’re not getting anywhere. Good luck, Mr. Polman. I have profound respect for the way you stuck your neck out. I sincerely hope my pessimism is ungrounded.
Photo: Rafael Matsunaga (Flickr/CC)