New Rules, New Game: Unilever’s Socially Responsible Brands Boost Profits - The Minute

May 11, 2015 5:15 PM ET
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Some mainstream economists still question the value of integrating ESG factors into the P&L of companies. Their arguments usually quote Milton Friedman’s ‘60s truism that a corporation's responsibility is to make as much money for the stockholders as possible. They often don’t mention Friedman’s ‘70s qualifier, that those profits are to be made in sync with the basic rules of society, including those of “ethical custom.”

Today, even hardcore Friedman-ites are admitting that the idea of ethical custom has changed. The new rules of the game require the integration of ESG factors for a sustainable business model. That model creates value by incorporating values. Case in point: Paul Polman, CEO of Unilever, reports that of its 400 brands, those with the strongest socially responsible reputations—Dove, Lifebuoy, Ben & Jerry’s, and Comfort—have seen sales grow at a high single-digit or double-digit rate over the last three years. They accounted for half the company’s growth in 2014 and grew at twice the rate of the rest of the business. On the cost side, Unilever has saved €400 million since 2008 through eco-friendly measures at its factories, and last year, saved €200 million through sustainability changes in its operations. That’s value produced by values you can count.

I’m John Howell for 3BL Media. 

Video source: New Rules, New Game: Unilever’s Socially Responsible Brands Boost Profits