1. Ownership of All Impacts and Consequences, Intended or Not

While you might outsource your supply chain, your logistics, or your investments, you do not outsource your responsibility for them. It’s getting harder every day to externalize environmental and social costs that your business imposes on society. Planetary boundaries enforced by nature (such as extreme weather or water shortages) are now costing companies real money. Stakeholder pressure is forcing businesses to internalize their social impacts as well. It’s time to proactively say “we own” everything that happens with our suppliers, with our customers, and at the end of life of our products. It can seem like a big leap, but that’s what it takes to become net positive.

Are you producing energy or manufacturing something cheaply with fossil fuels? Then, you’re more profitable because you’ve avoided the costs that carbon and air pollution impose on society, from reduced health downwind to global climate change. Do you make a food product that’s profitable? Its high margins could depend on slave labor and deforestation in the supply chain. Maybe you offer low-cost investment opportunities for the wealthy, while providing high-interest financial products to the poor? No problem, if you avoid thinking about how you’ve increased inequality.

All of these are predictable consequences. Unintended outcomes can be even more damaging. Tech companies set out to give everyone access to all information, with an ideal of enhancing knowledge and human connection. Unfortunately, without intending to, they also created misinformation bubbles that spread vile, hate-filled ideologies which undermine society. Some bad outcomes were hard to see coming, but that does not get leaders off the hook.

In this new world, you own the impacts of your business from deep in the supply chain to the end of a product’s life, and stakeholders will make sure you know it. When home goods company Wayfair sold mattresses to the US government, the company’s leaders apparently didn’t know or worry that their products were going to detention camps for migrant children—until customers started a boycott and five hundred employees walked out in protest. That was a lot of trouble and brand damage for a $200,000 sale.³

When Coca-Cola used antimony in bottles (which doesn’t affect the drinks), it didn’t think about the health problems it created when people living on landfills burn the bottles. And when Tide designed a colorful detergent pod, the brand didn’t think through how appetizing the candylike package would be to little kids (or that teens would start a deadly viral challenge to eat the pods). The list goes on.

Unilever has faced pointed attacks over skin-whitening products in India. Many Indian women defend the use of these products, saying it’s their choice to pursue an “ideal” of lighter skin. But for Unilever, it was a major mismatch between the message of whitening, and the purpose of a brand such as Dove that helps women build self-esteem and appreciate their own unique beauty. The company took the whitening ingredients out of those face creams a couple of years ago and has rebranded the products “Glow & Lovely” instead of “Fair & Lovely.” But the brand damage was done.

A major lesson from these errors is that it’s better to be proactive and look holistically at how your company treats everyone along multiple dimensions of well-being, even if it leads to some rude awakenings. For example, while Unilever was building millions of toilets in India and bringing electricity to communities to power cooking stoves, the company discovered that some people working on Unilever-run tea plantations didn’t have consistent access to plumbing and power in their homes. You have to get your own house in order before you can tell anyone else what to do.

Owning all of the company’s impacts on people and planet isn’t just about discovering downside risks and problems. There are important upsides to taking a harder look at the business across all impacts: opportunities for efficiency and savings, innovation for growth, and deeper connections with people. Owning everything changes the culture and focus of the business, making it more human. It can spur executives and employees to think about broader impacts, increase the well-being of everyone they affect, and move toward net positive.

2. Operating for the Long-Term Benefit of Business and Society

Short-term thinking is enticing. It’s simpler to focus solely on maximizing profit today than worry about complicated, systemic issues that take years to solve. Many investors want profits now, and the short-term focus is lucrative for executives with vested stock or nearing retirement.

Even CEOs who talk about their legacy may still go for quick wins, since tenures are getting shorter all the time—more than one-third of the largest public companies in the world had at least three CEOs in just ten years.⁴ It’s a long process to build a net positive company that serves society. Much of the benefit could come after the current execs leave. The companies themselves are not lasting as long either. A combination of short-term earnings focus and technology has cut the lifespan of S&P 500 companies from sixty-one years in 1958 to eighteen years (and dropping) today.⁵ The number of public companies has fallen by half since the mid-1990s.⁶

Two other factors, both stemming from company boards, are also driving CEO’s to focus on the short term. The average duration of executive compensation plans globally is a shockingly low 1.7 years.⁷ And in a survey of senior executives, boards were the top source of pressure for short-term results—above investors.⁸ It’s not surprising that in this environment, business leaders focus on the near term.

We’re not saying a company should ignore short-term needs for profitability or put off profits to a later date as a sacrifice to serve society now. But leaders need the freedom and opportunity to solve big challenges, which will take many quarters of hard work. You cannot tackle climate change or inequality running the rat race of quarterly reporting. The systemic thinking and deep collaboration that we need will not emerge from short-term thinking.

Creating long-term value means not shooting for the moon in a given year, but investing every year to get the compounding effects and benefits of consistency over time. During Paul’s decade as CEO, Unilever achieved ten consecutive years of top- and bottom-line growth. If you can invest in factories or intellectual property that way, why not invest in collaborations and the future of humanity. A short-term focus kills value-creating opportunities. So, if you need every choice to prove out financially within a quarter, this may not be the story for you.

The Unilever Sustainable Living Plan (USLP), launched in 2010 with a ten-year horizon, has forced long-term thinking at the company. It’s a tool for converting a long-term philosophy on how to run a business into action, and a road map to shift the business toward serving others.

Some executives say long-term planning is useless in a fast-changing world with sudden shocks (such as pandemics). But companies should stretch their thinking, using tools like scenario planning. The point of doing this kind of work is not to develop a detailed strategy for what the company does for ten or twenty years. Instead, think about who you are. What are your personal and corporate values that won’t change? Why do you exist and how do you help build a thriving world? In short, what is your purpose?

There’s growing evidence that a long-term focus pays off. A study from McKinsey Global Institute and FCLTGlobal calculated that at companies operating with a true long-term mindset, “average revenue and earnings growth were 47% and 36% higher, respectively, and market capitalization grew faster as well.” The long-term companies also increased R&D spending and rode out stressful times better.⁹

We believe that more companies have failed because of short-termism than have tripped up because they were too visionary. The pressure to constantly outpace competitors on short-term financial metrics has driven companies to stray from what’s clearly right. Well-known examples include Boeing losing its focus on safety, and Wells Fargo putting sales metrics ahead of ethics. These actions destroy trust. Companies can come back from disaster and rediscover who they are, but the brand damage is real.

Some might justify a short-term focus, ironically, because the problems seem so large. The more urgent or bigger the need becomes, the more reactive and short-term we behave. It’s the fight-or-flight instinct. But as safe as it seems to stay focused on the now, it’s better to run the business with a long-term perspective and a clear moral compass. It will help the company be proactive and lead the shifts that are coming instead of being victimized by them. The company will be more resilient, riding out the storm or profiting from it … for the long haul.

3. Creating Positive Returns for All Stakeholders

Early corporate responsibility efforts focused on public relations and community affairs. The goal was to keep NGOs or other stakeholders at bay and avoid conflict. Today, most large companies work in good faith with outside groups, but still start mainly by asking, “What’s in it for us?” A net positive business puts stakeholder needs first. This shouldn’t feel strange. The core reason any company exists is to satisfy customer needs and make their lives better. So, extend that logic, and think also of employees or communities not as groups to appease, but as people you can help thrive.

This principle is at the core of becoming net positive, since the “positive” means better outcomes for stakeholders. In practice, it’s about innovating and offering new products and services that improve lives and heal the planet. Or about helping employees find their purpose and improve their health and well-being, while building a diverse, inclusive company. Or helping suppliers make their businesses more efficient and sustainable, which builds tighter relationships and spurs joint innovation. Or helping communities thrive, going beyond the old argument that companies do enough by providing jobs and paying taxes (global communities may need much more than that, including support for local schools or building water and energy infrastructure).

At the national level, most companies only talk to politicians to lobby for what they think is good for the business. Most commonly, that translates into fighting all regulation. It’s not a good strategy anymore, if it ever was. The focus should be on helping the countries they operate in to develop—creating industries to attract capital, helping reduce corruption, fixing broken tax systems to increase revenues and build a level playing field for business, and so on. A more functional country and economy will be better for all.

It’s not wrong to seek advantage, profit, or growth from these enhanced relationships—net positive applies to business as well. Partners in civil society may expect a company to act like a nonprofit in its efforts to serve the world. One of Paul’s earliest external meetings as CEO was with the executive director of UNICEF. She asked Unilever to donate bars of soap for neonatal kits being distributed to reduce the rate of death in childbirth. Paul said, Look, I don’t have “soap,” I have Lifebuoy—I’ll give you all the Lifebuoy you want. At first, the director was shocked and said it was self-serving to brand the effort. Over time, the NGO got comfortable with including Lifebuoy, and today, UNICEF and Unilever have a long-lasting global partnership on sanitation and helping communities thrive.

Providing branded products as part of a larger program that improves well-being is win-win, and there’s nothing wrong with that. If the work to serve a need in the world is done authentically and genuinely, why shouldn’t the brand get credit? If Apple or Dell provides technology to a community as part of a development program, they’re sure going to use their own computers. Positive outcomes for all should be profitable. But, more important, it has to be to remain viable for the long term. It’s a good thing if the core business is engaged in programs like this. Marketing and brand budgets are much larger than corporate foundation funds. The more your company grows through these efforts, the more good work you can do. Bigger business, bigger impact.

We also need to find win-win solutions for the critical stakeholders that normally do not have a seat at the table, such as future generations and the planet itself. We should be handing our kids and grandkids fewer problems, not more. Using up resources and creating an unlivable climate is a horrible thing to do to them. We’re also leaving them a world with hundreds of millions of people in poverty because we’re not investing in sufficiency for all. The planet, with all its species and ecosystems, is the biggest stakeholder of all. It can’t speak, but it does communicate. Today’s extreme weather is a warning about what’s to come. As many say, Mother Nature always wins.

There’s an important nuance and strategy to all of this. Creating positive returns for stakeholders does not mean satisfying all of them at the same time, or focusing equal attention and resources on each. You can’t prioritize everyone at once. Some years, you may spend more to develop employees. Other times, you invest in brands and products that serve consumers well, so they grow in the coming years. Or you may hold back some short-term returns from shareholders to invest in communities or in rapid carbon reduction and renewable energy. But the long-term outcomes for each group need to be positive, and that includes shareholders.

The idea here is to optimize outcomes for multiple stakeholders versus trying to maximize for just one. It’s the obsession with value creation for any single group that knocks things out of balance.

4. Driving Shareholder Value as a Result, Not a Goal

The great Peter Drucker reportedly once said, “Profit for a company is like oxygen for a person. If you don’t have enough of it, you are out of the game. But if you think your life is about breathing you’re really missing something.”¹⁰ Years earlier, Henry Ford also commented that a business run solely for profit must die, because it has no reason to exist and, he said, “the best way to make money in business is not to think too much about making it.”¹¹

It’s time to wake up from our fifty-year zombielike obsession with profits. Shareholder value should be a result, not an objective. The single biggest hurdle to building a long-term company that serves the world is the relentless pressure for quarterly performance. It warps companies and the economy. Some institutional investors, such as pension funds and national sovereign funds, take a long-term view and worry about systemic risks like climate change. But the dominant influence on public companies—which ripples through every business—remains the equity investors and analysts.

These shareholders want smooth, rising earnings, and companies play games to satisfy them. With the rise of stock options as incentives for senior executives, it became even more tempting to manipulate earnings in ways both legal and shady. Stock buybacks, for example, are mostly a gimmick to boost short-term earnings and distract from the fact that you’re not investing in things that will make the business more valuable.

Many investors are not your long-term friend. The average holding period of stocks has plummeted from eight years in the middle of the twentieth century to about five months in 2020.¹² If we keep shareholders in the driver’s seat, we cannot build a system that optimizes for well-being for all, which requires long-term thinking. Unfortunately, even in the face of existential long-term challenges like climate change, global companies are getting more short-term focused, not less. One major study concluded that if businesses adopted more long-term thinking, they “could earn an additional $1.5 trillion per year in returns on invested capital.”¹³ That’s an awful lot of shareholder value.

There’s a philosophical reason to hit pause on the shareholder obsession: the markets are often completely disconnected from economic reality. During the pandemic of 2020, after a short crash, the big indexes quickly returned to all-time highs, even as the world’s economy shed the equivalent of roughly 400 million full-time jobs.¹⁴ So, if you believe that a stock’s value eventually ties to the value of future cash flows—which it’s supposed to—then you don’t need to pitch shareholders to buy the stock. Increase those long-term flows, and the buyers will come. And if the stock market is not connected to actual corporate performance and cash flows, then it’s a casino, and why bother speaking to short-term shareholders at all.

We still have some distance to go before most companies see that shareholder return should be a result, not the sole objective. Investors still hold a dominant position in the psyche of CEOs, says Andrew Liveris, the former CEO of Dow.¹⁵ Unfortunately, the data backs him up. A 2019 Stanford survey of CEOs and CFOs showed that while 89 percent believe it’s important to incorporate stakeholder interests in their business planning (the good news), only 5 percent said that stakeholder interests were more important than shareholder interests.¹⁶

CEOs and CFOs clearly see the short-term way as the path of least resistance, but eventually it catches up with you. As Ecolab executive chairman Doug Baker told us, short-term pressure has its place in running the business, but if you focus solely on the short-term, you get what he calls “easy meetings, hard life”—that is, the investor calls are great, but you end up with bigger problems down the road.

5. Partnering to Drive Systemic Changes

You can’t improve outcomes for all stakeholders if you don’t identify, understand, and take ownership of those outcomes. But this does not mean taking sole responsibility or going it alone. You’ll need partners in the journey to fix those cracks in the world.

All companies—and especially multinationals—touch more of the planet and many more people than they realize. For most, their main impacts fall outside of their direct control. So, tackling a company’s footprint, let alone solving the systemic issues threatening our well-being, requires cooperation. A single company working alone on big issues like human rights or decarbonization may be able to solve 30 or 40 percent of the problem in its own operations. But getting to a 100 percent solution requires changing the underlying system.

For example, in some parts of the world, such as regions of India, China, or Africa, getting to zero carbon is nearly impossible. They’re still dependent on coal and diesel, or maybe just starting to ramp up renewables. You’re not going to move your factory, so the logical step is to develop a broader coalition to change what energy options are available to all.

Plastic waste is another thorny problem that connects multiple sectors of the economy and billions of consumers. Going it alone won’t do much. A company can collect ocean plastic for a single product and get some marketing bang out of it, but that doesn’t solve the larger issue. Likewise, ensuring a living wage and eliminating child labor in the supply chain will not happen without extensive collaboration across a sector and deep changes in cultures and governmental policies.

Some sectors have an increased need for collaboration. The food business is filled with complicated challenges which are increasingly laid at the door of consumer-facing companies. A CEO of a food and beverage giant once told Andrew that a good product used to be one that tasted good and was safe. That was it. Today, he said, a good product also has to be responsibly sourced, manufactured, and distributed. This expanded view of responsibility is now table stakes. The next level of taking ownership in the food sector is tackling larger societal problems, including immense food waste and poor nutrition and health around the world. There are now a growing number of partnerships to address these problems.

We don’t eat 40 percent of the food we produce, which is an incredible waste of resources, especially since the food system contributes up to 30 percent of global greenhouse gas emissions and uses 70 percent of the world’s fresh water. In response, the Champions 12.3 coalition, which includes Nestlé, Kellogg, Tesco, and Unilever, aims to meet the Sustainable Development Goal 12.3 target of cutting food waste in half by 2030. The battle starts with the right people at the table.

Similarly, we can’t solve nutrition and health challenges without a broad mix of players. Our world has two problems that are, oddly, at either end of a spectrum—more than 650 million people are obese, while 460 million are underweight, and two billion have micronutrient deficiencies.¹⁹ More than fifty million kids under five suffer from “wasting,” meaning they are below typical height and weight.²⁰ Many countries struggle with “stunting,” the damage to mental abilities from lack of nutrition in the first thousand days of life.²¹ To deal with the deficiencies, Unilever helped create the Scaling Up Nutrition initiative, a collective effort of multiple stakeholders to end malnutrition. Unilever has fortified sixty billion servings of their food products (with a goal of 200 billion by 2022) with vitamins, iron, and iodine. Goals like this can help solve numerous problems at once.

The larger systems changes can only happen in partnership with groups outside of a company’s control—peers, community members, NGOs, governments, consumers, suppliers, and more. Done right, a network of stakeholders creates multiplier effects that help build something bigger and faster. An effective network needs trust, which you earn by being transparent about your challenges and failures. Building that trust and launching successful partnerships also requires fulfilling the first four principles of a net positive business. If you don’t take ownership, think long-term, work for the benefit of others, and put shareholders in proper perspective, how big will the thinking be? Why would stakeholders trust you?

Collaborations addressing the biggest systems also need the right legislation to succeed. Policies can create perverse effects or be ineffective if there’s not a binding framework to stop free riders. Companies need to take a productive seat at the table on policies such as climate targets, human rights standards, child labor laws, tax laws, and subsidy regimes that create a level playing field.

The inspiration and framework for tying all of these elements together should be the Sustainable Development Goals. We can use them to reframe the social contract, rethink the role of business in society, and redesign the policies we need. The SDGs push us to go deeper and seek a planet and society in balance.

Organizational “A Game”

In combination, the five principles are the core of the net positive model. Making these principles nonnegotiable will mean the difference between solid sustainability players doing some good work, and world-class companies that create much more value for humanity. Our problems are big, so we need businesses and their leaders to play at a different level and bring their “A Game.”

The top-notch companies will also need to nail the basics. Underlying the five net positive principles is a more fundamental one supporting them all: nothing about the new model undermines the need to properly run a business. Your products have to taste good or work well or make customers look good. They need to be affordable for the quality and service they provide. Hiring the best people is a must. The business will need the discipline to build efficient supply chains and manufacturing, smart distribution channels, innovative R&D, effective marketing, and so on. Pursuing net positive is only possible if it’s built on top of a strong foundation and an uncompromising culture of performance.

People at companies like Unilever often feel the burden or challenge of keeping the high standards of the sustainability vision. But instead of thinking of the net positive principles as additional work on top of the basics, consider it the model that everything flows through. A company can ruthlessly focus on costs at times, but only within this better model, not as the core strategy. To help build communities, for example, you need to make careful choices about where to spend your budget, but the idea of improving the well-being of those communities remains unquestioned. Finally, investments in the business, in product quality, and in innovation are necessary as well, but they should focus on delivering long-term benefit for many stakeholders. There may need to be occasional, short-term compromises—you can’t do everything at once—but the vision is to be better in nearly every way, using regular check-ins on progress. Done right, you’ll see a compounding, growing advantage from a better business model.

Net positive is the big leagues. We have to be pioneers, create new territory, and continuously reinvent the company and the future. Without this level of thinking, you can easily get left behind. It also requires true dedication to building a better business, but “better” can mean many things. For a net positive business, it includes delivering profits and transformative change beyond its own direct, short-term interest. A better company creates well-being for people and planet.

What Net Positive Companies Do to Develop More Responsible Core Principles