Sustainability & INDIA INC

Publication: The Economic Times Mumbai; Date: Apr 25, 2012; Section: Business Of Brands; Page: 4

HUL Bets on Innovations to Reach Sustainable Goal Unilever can achieve some of its audacious sustainability targets only if it relies more on product innovation & research, and perhaps less on the mercurial ways of consumers NAREN KARUNAKARAN NEW DELH

The dry shampoo that Unilever, the € 46 billion FMCG giant, is currently introducing in various markets is a significant step in the company’s commitment to halve the water associated with the consumer use of its products by 2020. It also drives home another critical aspect in its sustainability agenda: that it can achieve some of its audacious targets only if it relies more on product innovation and research, and perhaps less on the mercurial ways of unpredictable consumers.

So, giving consumers a dry shampoo that doesn’t need water is a far easier way of reducing water consumption in the bathroom than pleading with them to use less water. The dry shampoo is spray on, absorbs oil from hair, and also lends volume.

Nitin Paranjpe, CEO and MD of Hindustan Unilever, unveiling the first year’s progress on the Unilever sustainable living plan (USLP) on Tuesday, as part of a simultaneous global release, admits reducing greenhouse gases, water and waste associated with the consumer use of its products has been rather challenging. It’s a matter of concern and may jeopardise the ambitious sustainability goals the company has set for itself (see table).

Unilever has not only committed to reduce emissions from its manufacturing plants, but has taken upon itself the responsibility of the entire value chain, from suppliers, distributors to its consumers. Around 68% of the company’s carbon emission is directly related to consumer use, while the manufacturing process contributes only 3%.

The company has progressed well in what it controls directly: sustainable sourcing, improving livelihoods of farmers, converting used plastic sachets waste to fuel, through a ‘breakthrough’ pyrolysis process.

Its sourcing record, barring sunflower oil, is commendable. “We may meet 100% sustainable sourcing of palm oil by 2012, three years before our 2015 commitment,” Paranjpe told ET. Today, it’s around 64%. Unilever is now working on a traceability plan to make the process more robust and credible. Under the circumstances, the success of the USLP hinges on the responsible conduct of its consumers, which is a daunting proposition. Therefore, the focus on the innovation bit of the strategy where consumers turn responsible by default. For example, the Comfort One Rinse introduced in Vietnam that reduces the use of water from three buckets to one; a leave-on hair conditioner that doesn’t need to be washed away; detergents that clean at room temperatures, doing away with the need for hot water at 70 degree Celsius in washing machines.

Unilever has great expectations from the dry shampoo. “It’s an incredible consumer proposition,” says Paranjpe. “A large number of women cannot wash hair every day because it’s not convenient.” He, however, refuses to discuss pricing or its launch in India.

“We need more, we need innovations,” he asserts. “The entire issue of consumers is not only about behaviour change; much of the challenges can be addressed through new products.” This is in line with the proposition made recently by John Elkington, the sustainability guru, that good choices by consumers ought to be default choices. Over two billion consumers use a Unilever product every day.

But there is only so much an inhouse R&D infrastructure can do in terms of product innovation. Moreover, the progress would be slow if only in-house expertise was tapped.

Unilever, therefore, last month, unveiled its online open innovation initiative. Open innovation involves negotiating and integrating externally developed intellectual property into a business, and opening company R&D labs to outside individuals or institutions for collaborative work. “The world is full of brilliant people with brilliant ideas, and we want to tap into that,” says Roger Leech, Unilever’s open innovation scouting director. Within a couple of weeks of launch, the platform has received over a 100 credible submissions from across the globe, and surprisingly about 5% are from its staff.

Unilever, as in the USLP, has put out a list of clear ‘wants’, all focused on sustainability—fighting viruses, reduction of salt in food products, preserving food naturally, storing renewable energy, sustainable showering, and of course, ways and means of altering consumer behaviour.

This new-found emphasis on product innovation doesn’t mean Unilever is giving up on influencing consumer behaviour, which revolves around how a message is communicated to them. HUL has garnered immense learnings from its years of experience in conducting the Lifebuoy handwashing programme.

For example, consumers have to be exposed at least three times in a period through television, movies, mobile vans, or whatever. It has to be then followed with a onetremely challenging is weaning consumers from high-salt food products. Unilever has been gradually reducing salt levels in its products without changing its taste, but this approach has limits. The 2011 USLP progress report highlights it: “The gradual reduction (of salt) over time is only really effective if the whole industry moves together. If it does not, people will desert our products for more highly salted ones.” on-one interaction where the efficacy of hand-washing is demonstrated. Only then is change seen. It’s bearing fruit. The Madhya Pradesh government, impressed by the fact that the incidence of diarrhoea has dipped by 25% in a recent study, now wants to implement this across five districts in 5,000 schools. “It’s cheaper than other government interventions,” says Paranjpe.

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