Unilever Business Ethics 236m6a

Unilever Corporate Crime The Unilever Pakistan Limited (UPL), formerly Lever Brothers Pakistan Limited was established in Pakistan in 1958. The town of Rahimyar Khan was the site chosen for setting up a vegetable oil factory. Unilever Pakistan is the largest FMCG company in Pakistan, as well as one of the largest multinationals operating in the country. Now operating six factories at different locations around the country. The Unilever's Head Office was shifted to Karachi from the Rahimyar Khan site in the mid 60's. Today, Unilever Pakistan is a force to reckon with. Its contribution to Pakistan's economic development cannot be overestimated. Now operating six factories at different locations around the country, the company contributes a significant proportion of the country's taxes. It employs a large number of local managers and workers. It provides a pool of well-trained and highly motivated manpower to other segments and has introduced new and innovative technologies into the country.

Market share/importance: Unilever’s mission statement is ‘meeting the everyday needs of people everywhere’, and the multinational definitely has a huge and expanding global reach. Unilever proudly declares that every day 150 million people are choosing their brands ‘to feed their families and clean their homes’. Unilever is one of the world’s top makers of packaged consumer goods and moves countless products like deodorants, fragrances, soap, margarine, tea and frozen foods all over the world. The corporation sells products in over 150 countries and has annual sales of approximately

$

46

billion

(£31,5bn).

Unilever controls subsidiaries in at least 90 countries and employs 295,000 (in 2000) people [1]. Unilever is one of the world’s top three food firms -after Nestle and Kraft- and the world’s second largest packaged consumer goods company –behind Procter & Gamble. However, in spite of Unilever’s vast size and presence worldwide, the company’s actual visibility is surprisingly low. Anonymity hides the company’s importance. Unilever does not retail under its own name, preferring brand names to create the illusion of diversity. Who does not know brand names like Magnum, Omo, Dove, Knorr, Ben & Jerry’s, Lipton, Slim-Fast, Iglo, Unox, Becel, and

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Unilever Corporate Crime Lever2000? They’re all part of the ‘Unilever armada of brand names’. To make sure the brand names do not go unnoticed, Unilever spends huge amounts of money on marketing and advertising. Advertising has always been a keystone of Unilever’s businesses. The Dutch-Anglo company is likely to be the world’s number one r. (Advertising Age estimate a 1999 global media spend of $3.7bn (£2,539bn), of which $3.1bn (£2,127bn) was outside the US, making Unilever the world's #1 r).

Strategy In September 1999 Unilever announced its intention to focus on fewer, stronger brands to promote faster growth. The company is whittling its brands down to 400 (from 1,600) including familiar brands such as Dove, Lux, Lipton, Magnum and Calvin Klein fragrances. (Consulting firm PricewaterhouseCoopers has been hired by Unilever to sell off ten of the firm’s 70 food brands). The concentration on innovation and brand development on a focussed portfolio of 400 leading brands is part of Unilever’s latest growth strategy, called ‘The Path to Growth’, designed to accelerate top line growth and step up the rate of margin improvement in five years time. In February 2000 the company announced a series of linked initiatives (organizational changes, restructuring) to align the entire organization behind these growth ambitions. The shake-up of its top management, splitting the company into two, separate global units –food and home, and personal care-- was one of these initiatives. And Unilever has started selling off any subsidiary businesses which are making less than average profits, and ‘decentralising’ control of subsidiaries, with the corporate HQ in Europe just monitoring profit levels – and making sure they are maximised. This heavy focus on profit means cost-cutting - especially minimising workers’ pay. Another key component of the growth strategy is e-commerce. Unilever wants to step up the use of the Internet in order ‘to improve brand communication/marketing and on-line selling & to simplify business-to-business transactions throughout the supply chain’. India’s Satyam Computer Services Ltd has recently won an information technology services contract from Unilever. Unilever also made deals with Compaq, IBM, Microsoft, Excite@Home, Ariba Inc. (leader in all phases of business-to-business e-commerce) and WOWGO to enable a faster adoption of global e-commerce opportunities. In February 2000, Unilever and iVillage formed a new Internet company. Unilever committed £130 million to e-business initiatives in 2000 and hopes to create a ‘mall that never closes’.

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Unilever Corporate Crime

1. Promoting consumerism Unilever spends a lot of energy and money on marketing and commercialisation of consumer products all over the world (‘Paint the World Yellow’ – the Lipton marketing campaign which provide everything with the Lipton Logo, from surfboards to Chevrolets—was a tremendous success, according to Unilever. It created a much bigger Lipton Logo awareness amongst consumers.) Since the Northern consumer market is saturated (so not much room left for expansion of market shares) Unilever aims at maximising the processing of food, which means adding value to ‘improve’ products and then charge more for these products. Unilever changes the product only slightly (e.g. strawberry toothpaste), or just changes the visual language in order to sell exactly the same product. Naturally this process involves heavy advertising. Many of the ‘improved’ products are basically useless, and there is no demand for them (the demand is being manufactured by the multinationals themselves). In short, Unilever tries to bring as many products as possible to the market without asking itself the question ‘is there a real need for the products we produce?’ Flooding the world with ever more (useless) products is a pretty immoral sales strategy. Only think of the ecological costs that come along with it (processing of products, packaging, waste processing, transport, etc. all involve high ecological costs). If people in the South start consuming the same amount of products and services as people in the North, the natural environment will definitely not survive. The only real and sustainable solution to environmental problems is less production and less consumption. Unilever and other multinationals are main actors being responsible for the ongoing trend in the opposite direction!! Besides, heavy advertising generates psychological effects like feelings of inadequacy, disorientation, mood disorders, and cynicism. In effect, advertising involves tremendous non-value added costs, in other words, a tremendous waste of resources.

2. Misleading marketing Rebranding the same or slightly changed products for sale can legitimately be labeled misleading, likewise the introduction of new products that supposedly improve the daily lives of consumers (‘you will feel better starting the day with…’) or strengthen their self-image (‘you are worth it, aren’t you?’). The UK Advertising Standards Authority (ASA) has recently accused Unilever for false advertising. The ASA ruled that Unilever misled British consumers in the way the company presented the health benefits of its cholesterol-lowering margarine, Flora pro-activ. According to ASA, Unilever’s Van den Bergh Foods unit overstated the benefits of Flora pro-activ in one press advert that claimed it could reduce LDL cholesterol by 10 to 15 percent. After the

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Unilever Corporate Crime ASA ruling, Unilever agreed to make the required changes and not in the same way again. (Sanctions against rs who break codes of practice in Britain are ineffective. The ASA has no statutory powers. It can report persistent offenders to the Office of Fair Trading, but it is reluctant to use this deterrent (Monbiot, 2001)

3. Market domination Multinational corporations evidently have tremendous market power. They can decide what products are to be manufactured, what crops are to be grown, and above all, they can dictate prices. Local businesses and jobs are destroyed along the way, because that is the law of the jungle. For example, take tea. Unilever is the world’s largest tea company, and owns 18,000 hectares of plantations in Kenya, Tanzania and India. It controls 20% of the market (most likely these 1999 figures have changed), through its ownership of the Brands Lipton’s and Brooke Bonds. Consequently, it has major power over the tea price. In the mid 80’s, when the Indian tea price started to rise, Unilever and other corporations acted to bring it down by temporarily boycotting Indian tea. When the Indian government tried to set a minimum export price, the multinationals collectively withdrew from the market, forcing the government to retreat, and slash the price.

4. Environmental pollution Unilever claims to be concerned for the safety of its operations and the environment but this attitude clearly does not stretch to India. Unilever has recently been accused by Greenpeace of double standards and shameful negligence for allowing its Indian subsidiary, Hindustan Lever, to dump several tonnes of highly toxic mercury waste in the densely populated tourist resort of Kodaikanal and the surrounding protected nature reserve of Pambar Shola, in Tamilnadu, Southern India. Greenpeace activists and concerned residents cordoned off a contaminated dump site in the centre of Kodaikanal to protect people from the mercury wastes that have been recklessly discarded in open or torn sacks by Hindustan Lever which manufactures mercury thermometers for export, mainly to the United States. According to Hindustan Lever, from there, the thermometers are sold to , UK, Spain, USA, Australia and Canada. The factory, set up in 1977, was a second-hand plant imported from the United States, after the US factory was shutdown for ‘unknown reasons’.

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Unilever Corporate Crime Unilever states that its policy is to "exercise the same concern for the environment wherever (it) operate(s)", "ensure the safety of its products and operations for the environment" and "provide whatever information and advice is necessary on the safe use and disposal of (its) products". Yet workers at the Indian factory are offered no protection from the mercury spills and several workers have complained of health problems which, they allege, is caused by their exposure to mercury in the workplace. Mercury is highly poisonous and exposure to even the small amount through air, water or skin, exerts severe effects on the central nervous system (brain) and kidneys. Foetuses and young children are particularly vulnerable to poisoning by mercury. Not wanting to play down the various violations of environmental acts by Unilever’s subsidiaries, the promotion of consumerism (and excessive use of packaging materials, transportation of products worldwide, etc.) should be ranked highest on the company’s environmental criminal record. Taking the ecologically destructive effects of consumerism –aggressively promoted by multinationals like Unilever- into , all efforts of these companies to ‘save the environment’ can only be regarded as greenwash practices.

5. Hypocritical Health Campaign induced by Self-Interest In an effort to avoid tobacco-style lawsuits, food giants including Unilever, Procter & Gamble and Heinz are to use internet, TV and press ads to warn consumers that eating too much fast food will make them fat. Food companies are worried if the problem continues they could face the threat of similar lawsuits to those being brought against tobacco firms. There is also concern governments may try to crack down on fast food advertising or impose mandatory health warnings. Other companies involved are Kraft Foods, one of America's biggest makers of snack foods, Pepsi, Monsanto, Coca-Cola and McDonalds. All companies at the forefront of promoting unhealthy food worldwide [ready-made microwave meals (instead of fresh, whole foods), genetically engineered crops (as opposed to organic crops), etc.] and in the process shaping agriculture to suit industrial needs (as opposed to the needs of farmers, local communities, the environment, or consumers).

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