Paul Polman
Paul Polman is a Dutch business executive who served as chief executive officer of Unilever from January 2009 to December 2018. He is among the most prominent advocates of the view that large companies should be run to serve society as well as shareholders, and his tenure at Unilever is the most substantial attempt yet made to run a company of that size on that basis.
Since leaving Unilever he has co-founded the advisory and investment firm IMAGINE, chaired the International Chamber of Commerce, and co-authored Net Positive: How Courageous Companies Thrive by Giving More Than They Take (2021) with Andrew Winston.
Early life and education
Polman was born on 11 July 1956 in Enschede, in the eastern Netherlands, the son of a tyre company manager and a teacher. He has said that he originally intended to become a priest or a doctor, and that the seminary he considered was closed before he could enter it.
He studied economics at the University of Groningen and subsequently took a master's degree in economics and a master's degree in business administration at the University of Cincinnati.
Career
Procter & Gamble
Polman joined Procter & Gamble in 1979 as a cost analyst and spent twenty-seven years with the company, rising to group president for Europe and holding the position of president of global fabric care. The period gave him a thorough grounding in the branded consumer goods business and in the American management practices that the company is known for.
He was regarded as a candidate for the chief executive position and did not obtain it, which prompted his departure.
Nestlé
He joined Nestlé in 2006 as chief financial officer and subsequently as executive vice president for the Americas. His time there was short but placed him, unusually, as a senior executive at two of the three largest consumer goods companies in the world before leading the third.
Unilever
Appointment
Polman became chief executive of Unilever in January 2009, the first outsider ever appointed to the role in the company's history, and took charge in the depths of the financial crisis.
His first substantive act, taken within days, was to abolish quarterly profit reporting and to cease providing earnings guidance to the stock market. The reasoning was that the quarterly cycle drove decisions that damaged the business over any longer horizon, and that a company whose products are bought weekly by more than two billion people should be managed over decades. He said publicly that investors who did not want a long-term view should put their money elsewhere, a remark that attracted a great deal of attention and that shaped how his tenure was interpreted thereafter.
The Sustainable Living Plan
The Unilever Sustainable Living Plan, published in 2010, was the central initiative of his tenure and remains the most ambitious programme of its kind adopted by a company of comparable size.
It set three objectives to 2020: to help more than a billion people improve their health and wellbeing; to halve the environmental footprint of the company's products; and to enhance the livelihoods of millions of people in its supply chain. Crucially, the environmental target covered the whole life cycle of the products, including their use by consumers, which is where most of the impact of a shampoo or a washing powder occurs and which no company had previously accepted responsibility for.
The results were uneven, which Polman acknowledged. Targets within the company's own operations, in manufacturing emissions, water and waste, were largely met or exceeded. Targets depending on consumer behaviour, principally the water and energy used in washing and showering, were not, because the company could change the product but not how people used it. Sourcing targets for palm oil, tea, soy and other agricultural commodities were substantially met, though the verification of sustainable palm oil in particular remained contested.
The commercial argument Polman made was that the brands with a stated social or environmental purpose grew considerably faster than the rest of the portfolio, a claim the company reported repeatedly and which critics noted was difficult to disentangle from the fact that the brands concerned also happened to be in faster-growing categories.
The Kraft Heinz bid
In February 2017 Kraft Heinz, backed by 3G Capital and Berkshire Hathaway, made an unsolicited approach to acquire Unilever valued at about US$143 billion. It would have been among the largest acquisitions in corporate history, and it represented a direct collision between two philosophies: 3G's method was aggressive cost reduction through zero-based budgeting and rapid headcount reduction, which is the opposite of everything Polman had argued for.
Unilever rejected the approach and Kraft Heinz withdrew within days, which was unusually fast for a bid of that size and was attributed to political resistance in the United Kingdom and the Netherlands and to the acquirer's unwillingness to pursue a hostile transaction of that scale.
The episode nonetheless changed Unilever's behaviour. The company accelerated cost reduction, raised its margin targets, increased shareholder returns, and sold its spreads business, which had been a core part of the group for a century, to KKR for €6.8 billion in 2018. Polman's critics observed that a company confident in its long-term philosophy had responded to a rejected bid by doing several of the things the bidder would have done.
Structure and departure
Unilever had operated since 1930 under a dual Anglo-Dutch structure with two parent companies. In 2018 the board proposed unifying it under a single Dutch entity, which would have removed the company from the FTSE 100 and forced British index funds to sell. Shareholder opposition in the United Kingdom was sufficient that the proposal was withdrawn in October 2018, a significant public defeat. Polman announced his retirement the following month and was succeeded by Alan Jope in January 2019. The simplification was eventually completed in 2020 under a British structure.
After Unilever
Polman co-founded IMAGINE, a social venture and advisory business working with chief executives on climate and inequality. He has chaired the International Chamber of Commerce, served as vice chair of the United Nations Global Compact, been a member of the B Team, and acted as a United Nations advocate for the Sustainable Development Goals, in which capacity he participated in the negotiation of the goals themselves.
Net Positive, published in 2021, argues that companies should aim to give more to the world than they take, and sets out what the authors regard as the practical implications: paying a living wage throughout the supply chain, paying tax without avoidance, lobbying in favour of regulation rather than against it, and accepting responsibility for impacts outside the company's direct control.
Criticism
Polman's record attracts criticism from two directions.
From investors, the objection is that Unilever's total shareholder return during his ten years, while positive, did not markedly exceed that of competitors who made no comparable commitments, and that the company's growth slowed in his later years. The rejection of the Kraft Heinz bid is defended by supporters as the preservation of a business and criticised by others as the denial of a substantial premium to shareholders.
From environmental and development organisations, the objection is that the Sustainable Living Plan, however ambitious, was fundamentally about selling more consumer products in more places, that the plastic packaging Unilever puts into the world rose in absolute terms over the period, and that a company selling single-use sachets across South Asia and Africa cannot reasonably be described as reducing environmental harm. Polman's response has been that the alternative is not that the products are not sold but that they are sold by someone doing less.
A third criticism, of the genre rather than of him, is that voluntary corporate commitments substitute for regulation and are abandoned when conditions change, an argument strengthened by the retreat from environmental and social commitments across the corporate sector after 2022, including at Unilever itself, which diluted several of the Sustainable Living Plan's successor targets under later management.
Assessment
Polman is the most consequential test case for the proposition that a very large public company can be run on an explicitly long-term, stakeholder-oriented basis.
The evidence he provided is genuinely mixed and he has been more candid about that than most advocates. He demonstrated that abolishing quarterly guidance is survivable and that a company can commit publicly to targets covering impacts it does not control. He did not demonstrate that doing so produces superior shareholder returns, and the Kraft Heinz episode showed how quickly the discipline of the market reasserts itself when a company's margins fall behind.
What is not in doubt is his influence on the argument. The stakeholder capitalism debate of the following decade, the adoption of science-based emissions targets across the consumer goods sector, and the expectation that a large company will publish detailed non-financial reporting all owe a good deal to the precedent Unilever set, whether or not the results matched the ambition.