Unilever has reportedly reached many milestones in its sustainability agenda, with many more ambitious targets on the horizon. To meet such targets, the company needs to align every aspect of its operations with a green ethos, accordingly. What measures has the company taken in the context of supply chain, which needs to be orchestrated at a massive scale?
We announced the Unilever Sustainable Living Plan (USLP) in 2010, globally and in MENA in 2012 with the target to deliver certain KPIs by 2020. The USLP consists of three main pillars: Health and hygiene, environmental impact and enhancing livelihoods. What we are discussing today is mainly environmental impact. The Unilever Sustainable Living Plan (USLP) is our blueprint for achieving our vision to grow our business, whilst decoupling our environmental footprint from our growth and increasing our positive social impact. We took 2008 as a baseline. So far, this agenda is moving in the right direction. In terms of our CO2 emission, we have saved 34% in global operations since 2009. In terms of water consumption, we have reduced 18% from the factory in cleaning and use of water in products, because we went through many innovations to minimise water utilisation. In terms of our products, we have different formulations [for each product]. [The formulation] we are using globally is more compatible with the cold weather. We cannot roll out [the same formulation] in the Middle East, because there will be a lot of wastage. So, we adapted a different formulation. By doing this, we are minimising waste while giving consumers the same output of our global formulation.
This was owing to the company’s observation that there was a reaction in certain product formulations within the supply chain, owing to the region’s high-ambient conditions, correct?
Yes, exactly. That’s why we went in this direction of customising formulation for the hot weather to minimise wastage, especially when we are transporting to the Arabian market, and to give the same consumer benefit, as well. This, I think, is a strong aspect of Unilever scientists and the R&D team.
From what we understand, Unilever also designed particular products in such a way to minimise space in pallet positions, yes?
Yes, for example, deodorant is very specific because of the nature of the aerosol contents, so we need to design the can itself to suit the material and salvage the raw material, which can be explosive. So in terms of handling the containers of the deodorants and pallet configuration, we have certain designs for Europe and certain designs for the Middle East to ensure the container, and the [proper] ventilation, so it will be safely distributed.
In our warehouses, for deodorants – mainly the aerosols, we have separate locations being managed, [in a] completely different manner, with the right segregation. This is a safety [concern], as well.
An issue we often see in the cold chain is lack of training among people handling sensitive products. For the company, surely such oversights can translate to financial loss. What is Unilever doing to ensure proper training of its workers?
We have different divisions for food, refreshments, home care and personal care products. Every category has its own requirements on how it should be handled. Definitely, we need to train our warehouse team. In some countries, we have third-party [providers], but we treat them as our own operations, and we extend the same training. We need to upgrade their level to a certain standard, and we need to ensure we are delivering the [same] warehousing standards to suit certain products.
The storage conditions for tea are different from the storage conditions for shampoo or home care liquid. You might find either different warehouses [altogether] or segregation in the warehouse to deal with these types of products. To ensure the deliverables to our consumer, we need to train our people.
[It is the nature of] human beings that they get training and, maybe after six months, the ability to maintain the same standards could go down. This is why we need refresher training sessions on the same material. This is an investment we make. If something is disruptive in the operation, we will not wait for refresher training; we conduct a focused training for that immediate process change within the operation.
You mentioned specialised warehousing for various product categories. Could you comment on the importance Unilever places in developing customised facilities that ensure best practices, despite the investment required?
The end user is our target – our reputation with the consumer is the most important thing we care [about]. If you respect the consumer and their needs, maintaining [standards] is the ultimate goal. Last year, we inaugurated one of the biggest global investments for Unilever in Turkey – a warehouse with more than 100,000 pallets, fully automated and robotised. We are also investing in our warehouses in Nigeria and in South Africa.
Are all warehouses customised for the conditions of the region?
Yes, and for the type of products we are offering to the consumers. In Saudi Arabia and Dubai, it’s the same thing. We have a state-of-the-art warehousing system customised for the types of products. As I said, we need to ensure we are offering consumers whatever we promised. So, investment is not a block in warehousing, transportation and logistics. Also, there are lean and green initiatives for freezers. This project has delivered almost 30% reduction in energy with state-of-the-art freezers commissioned in 2011 for our ice cream products. That was stage one. In 2013, we went to another stage of improvement, which led to 50% energy savings. Most recently, our R&D [team] in the United Kingdom developed a new technology for freezers. [Looking at different approaches], we have considered vacuum insulation and different magnetic technology to get 70% savings in energy. If we look at the impact of the technology, it’s as if you are removing around half a million cars from the street.
In line with its sustainability agenda, how is Unilever integrating renewable energy in its operations?
In 2015, when Paul Polman [CEO of Unilever] joined the COP 21 Summit in Paris, he revealed Unilever’s mission to be carbon-positive by 2030. He continues to raise the bar for the company. When he promised that we will be growing our sales without increasing environmental impact, nobody at the time thought it could be delivered. But we are delivering. On the move to be carbon-positive by 2030, all scientists in Unilever are mobilised in this effort. We revealed a target in 2008 to have zero waste to landfill by 2020. We delivered that by December 2014 in 250 factories, globally – six years ahead of the target.
On your question about renewable energy, I’ll give you, as an example, the Dubai Personal Care (DPC) factory, which was inaugurated on December 21, 2016. We are consuming nine megawatts of energy in the factory, two of which are from renewable energy – solar energy powered by solar photovoltaic and solar thermal systems. The beauty of the system is that during the weekend, when the factory is not running, we are getting the power from the solar panels and injecting it back to the DEWA grid. DPC is one of the first factories in the region to have both solar photovoltaic and solar thermal systems, and is the largest private solar park in MENA.
This is the start of the journey of becoming carbon-positive by 2030. As I told you, there are different implementation measures [of our plans] per country and region. In Europe, they have different [renewable energy] solutions. For example, Unilever UK manufacturing sites are now powered 100% by renewable energy. Eighty-seven per cent – or 165 gigawatt-hours (GWh) – of the electricity from renewable sources used by Unilever factories in the UK is generated at a Scottish Highlands-based wind farm in Lochluichart. The wind farm is owned by renewable energy company, Eneco UK. Even biodiesel fuel, in Brazil, they are progressing very well in this regard. There are a lot of challenges, but renewable energy is part of our mission, and it is considered high on our agenda.
Could you comment on what the company is doing with regard to the disposal of refrigeration equipment under the Zero Waste to Landfill blueprint?
I’ll first talk about the initiative in terms of the factory. There are different pillars we need to achieve to reach zero waste to landfill, which includes minimising, or altogether eliminating, the use of certain materials and knowing what we are able to segregate. The UAE is part of this journey. We manage to eliminate all the waste from Lipton Jebel Ali and all factories across the MENA region. Either we use it again in the factory or we contact a recycling company that specialises in certain elements, be it paper, metal, plastic or batteries – that’s how we achieved zero waste to landfill.
When it comes to the freezers, since we started the ice cream business in the UAE we have recycled almost 100 freezers in the past two years. There is a certain process in recycling freezers, globally managed by Unilever, and if we don’t have the capability we contract a company to follow the same process.
First, we must consider the refrigerant. We need to suck the refrigerant from the compressor [and transfer it] into a compartment, so the vessels can be reused. We get the oil from the compressor, which is sent to a recycling company. After you get the refrigerant and the oil, you go to the metallic component itself. There are different parts, and each component goes to a specialised recycling company – brass, metal, glass, the cabinet itself. At the end of the day, you see the freezer dismantled, and everyone has use for a certain part of that freezer – nothing is wasted, nothing goes to the landfill.
There are concerns within the private sector that pursuing aggressive environmental practices might be too costly and eat into profits. As Unilever, could you comment on the investment involved in implementing your sustainability agenda and what drives the company to continue doing so?
This is the same question that is flying around across the globe. As a company, we need to grow – and we do. Our focus on the USLP agenda is not diverting us from our growth, that’s number one. Now, on the investment behind USLP, as a company we do believe in our social responsibility towards the environment. Is it costly? It is, but we are getting the payback, and this is a critical point that if [properly] understood, can move people towards a positive agenda. In Unilever, we have increased in volume, globally, by 28% in the last five years. By the end of 2016, 31.6% of the energy used across our manufacturing operations came from renewable sources. Additionally, 16% of the energy that we generated directly on our manufacturing sites was from renewable sources. Through producing and generating renewable energy, we saved around 700,000 tonnes of CO2 emissions from going into the atmosphere in 2016. This is equivalent to nearly 40% of our total manufacturing CO2 emissions, worldwide. In our factories in the MENA region, we have improved our volume by 33%. We may have increased the volume, local and imported, but we have maintained the same energy consumption. In fact, we have reduced the energy consumption per tonne, and that’s without considering everything we are doing, such as renewable energy, LED lighting and solar power. We are also harvesting sunlight [using devices] to make it into powerful lighting in the warehouse. We have reduced, for example, almost two kilometres of conveyers in the factory, [which helps] reduce energy [consumption]. So yes, we are investing, but we are getting the payback, and we have saved in energy consumption. In Egypt, they are increasing utility cost. Without looking to these solutions and improving operations, we cannot compensate the increase in utility costs. Reducing energy helps reduce total bill, this is the kind of payback we are getting in our operations. It may be tough investing, but I think it is the right thing to do. There is a long-term responsibility. Definitely, we need to change a lot of things in today’s world. Whatever that was available 10 years ago, is different from today, and it will be different 10 years from now. The world is moving in a rapid direction, and we need to comply accordingly. We cannot stand still.