SO THAT’S HOW CEOS CHANGE THE WORLD… THEY MESS WITH TIME
Before Unilever’s famous sustainability plan, its new CEO attacked the 90-day rhythm that made short-term behaviour rational.
When Paul Polman arrived at Unilever in 2009, you could argue that it was like leaving home to run an errand only to return to the same home but with the front door painted differently. After years at Procter & Gamble, Polman once again found himself working for another centenarian company that also made everyday household goods that, for the most part, did not inspire Harley Davidson tattoo-level loyalty in its customers. That company was Unilever, and despite its decades long track record and desire to be around for decades more, likes its Beauty and Household care competitor from Ohio, it viewed the world in terms of how it could survive the next ninety-day cycle.
The business was underperforming with its share price stagnating while markets rose. Turnover had fallen sharply from earlier levels. And for the first time, Unilever had brought in an outsider to run the company. Polman was entering during the financial crisis, had never been a CEO before and, by his own later account, was “scared stiff.”
His first move was therefore perfectly conventional: he picked a fight with the financial markets.
Unilever stopped giving forward earnings guidance and moved away from full quarterly reporting. Polman later recalled that the share price, which had risen when his appointment was announced, promptly fell after the change. He had not sought permission from the board beforehand. His calculation, expressed with typical mischief in a 2026 interview, was essentially that “the first day they hire me, they’re not going to fire me.”
This was the first step in a long journey that would see Polman transform into the poster boy (i.e., full-grown man) for stakeholder capitalism, the Sustainable Development Goals, climate leadership and the idea that business should give more than it takes. And this step? Let’s call it the changing of the clock — because clocks create behaviour. Tell an executive that their performance will be judged primarily against the next quarter and they do not have to be greedy, stupid or unethical to begin acting short-term. They merely have to be rational.
Investment that will pay off in seven years becomes harder to defend. Training someone to be the next CEO tomorrow becomes a cost you shouldn’t have to shoulder today. Routine maintenance becomes postponable (even though everyone knows that when it becomes critical, that short-term cost will be exponentially higher). Research becomes negotiable because isn’t a group of highly educated people in a meeting room not bright enough to predict what customers and markets need? A supplier offering a slightly cheaper contract wins despite creating risks because if those risks even materialise, it will be a future problem for a future someone.
People do not need to become bad human beings for a system to produce bad outcomes. They merely need to respond intelligently to the incentives placed around them.
Polman understood this instinctively. As he put it years later, people often want to do the right thing, but the constraints surrounding them produce dysfunctional behaviour. A leader’s job, in his formulation, is to work on the forest rather than trying to adjust the trees inside it.
So he began changing the forest.
Unilever altered executive compensation to reward longer-term performance. Management concentrated investor relations on shareholders willing to hold for longer periods and quarterly theatre was reduced. The company began trying to widen the constituency against which corporate success was judged: consumers, employees, suppliers, communities, the environment and eventually future generations rather than shareholders alone.
Polman was explicit about the logic as early as 2009. Short-term financial pressure, he argued, was producing inefficient capital allocation; Unilever would stop playing quite so enthusiastically to that rhythm and change compensation accordingly. Then came the part that made him famous.
In 2010 Unilever launched the Sustainable Living Plan, an attempt to grow the business while improving health and livelihoods and reducing its environmental footprint. It eventually contained more than fifty time-bound targets across health, hygiene, nutrition, greenhouse gases, water, waste, sourcing, livelihoods and working conditions.
As a reporter I must admit, I love the headline: Purpose-driven CEO creates bold sustainability programme.
Employees rally. Brands grow. Shareholders prosper. Capitalism receives a good dose of soul. Everyone goes home reassured that goodness and EBITDA have finally settled their differences. But despite my clearly sarcastic recounting of this new utopic state, there were genuine achievements reaslised.
By the end of the programme, Unilever said it had reached more than 1.3 billion people through health and hygiene initiatives. Greenhouse-gas emissions from its own manufacturing had fallen by 50 percent, all electricity purchased from the grid was renewable, and efficiencies in materials, energy, water and waste had avoided more than €1 billion in costs.
Shareholders were hardly sacrificed at the altar. In early 2017, Unilever reported a total shareholder return of 190 percent since 2009; Polman’s own current account of his full tenure puts shareholder returns at 290 percent.
It is tempting to turn those numbers into proof that Polman’s philosophy was correct — there were (most likely) environment factors which had a role to play as well: currency movements, portfolio decisions, acquisitions, emerging-market growth, commodity prices, the broader equity market and a hundred other variables. All of these things were outside of Polman and Unilever’s control. Which makes it even more impressive that the company performed remarkably well in parts of the system it directly controlled. Factory emissions could be attacked through investment and process change. Electricity contracts could be switched. Waste could be redesigned. Internal incentives could be altered.
That’s where a clean boundary of the company appeared.
Unilever had originally sought much deeper reductions in the greenhouse-gas impact of products across their entire lifecycle. By 2020, greenhouse-gas impact per consumer use had fallen only around 10 percent against the 2010 baseline. The company reached only 67 percent sustainable sourcing of agricultural raw materials against its 100 percent target. Water impact associated with consumer use had not improved at all (you can’t really influence what people wash, how often, using which third-party’s machines, … you get the idea). Unilever learned there were areas it could influence and areas it could not, and some outcomes depended on wider changes by energy systems, suppliers, consumers, regulators and other players.
There, buried beneath a decade of sustainability reporting, is the more profound insight hidden within the “Polman story”. Changing your own system is difficult. Discovering that your system sits inside somebody else’s? That’s a b*tch.
Polman could change Unilever’s reporting cadence. He could influence executive incentives. He could allocate capital, set targets, choose suppliers and persuade thousands of employees that “making sustainable living commonplace” belonged inside the commercial strategy.
He could not personally decarbonise a national electricity grid, force somebody to take a shorter shower or wash their clothes on the “cold” setting, reform agricultural markets, or eliminate the pressure of global capital merely by telling investors he preferred patient ones.
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That last problem arrived rather spectacularly in February 2017, when Kraft Heinz launched an unsolicited $143 billion attempt to acquire Unilever. Kraft’s model, backed by 3G Capital and Warren Buffett, was associated with the aggressive cost-cutting school of shareholder value. Polman rejected the proposal as having no financial or strategic merit, and Kraft retreated within days.
But Unilever received the message.
Immediately afterwards, management acknowledged that the episode had forced the company to confront the balance between long-term sustainable value and short-term delivery triggering a wide-ranging review. The system — the bigger one that Unilever sat in, was a hostage too, pick your classification — it had pushed back.
Which is why Polman becomes less interesting when he is turned into a saint.
His language can be sweeping. His belief in business as a force for good occasionally carries the evangelical confidence of a man who once considered becoming a priest. The corporate world also absorbed parts of the purpose movement he championed and promptly demonstrated how easy it was to turn purpose into advertising copy while leaving incentives untouched.
I am not arguing against what Polman attempted… if only there were more Pauls attempting more arguments of this nature. But we do need to understand what the effort was in aid of.
Should executives care beyond what happens in their penthouse boardroom? Definitely.
Does the current system machinery need a redesign so that “caring” does not put a hostile takeover target on your back? Certainly.
But overall leadership-to-deployment models need to change too. Most organisations still approach change through communication first. A CEO announces the values, HR launches the programme, a paragraph is added to the website change, and employees attend workshops explaining the corporate behaviours expected of them. (Someone inevitably produces a tote bag, too.)
Then everybody goes back to a workplace where promotion, remuneration, budgets, meeting cadences, reporting structures and power still reward the behaviour that management has just spent two days asking them to abandon.
The story says one thing, but the system says another. In such a scenario, would you bet your pension on the former or the latter?
Polman was willing to disturb the clock and lose investors who disliked the longer horizon. He was willing to publish targets the company did not yet know how to achieve. He was willing, eventually, to show where those targets fell short. And perhaps most importantly, the experience forced him toward a larger conclusion: changing one corporation is insufficient when the behaviours you need depend upon capital markets, governments, energy networks, suppliers, consumers and social expectations operating together. Which is why I continuously seem to run into him at every event I cover in Davos, Paris, London, New York. Between him and Al Gore, at least someone is (still) trying to change the conditions under which the rest of us our trying to build something that’s better.
And sometimes leadership begins with something as mundane, consequential and dangerous as resetting the clock.
#StoryCaffeine #PaulPolman #Leadership #SustainableBusiness #SystemsChange ☕🦓
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