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Net Positive organizations give more than they take

Net Positive organizations give more than they take

  • 15 February 2022
  • Posted by Marcella Bremer

Here’s a must-read for all leaders, consultants, teams and other professionals: Net Positive - How courageous companies thrive by giving more than they take. “Green strategy” consultant Andrew Winston and Unilever’s ex-CEO Paul Polman make a compelling case for why organizations should do something about climate change and other global issues, and offer ideas for what and how.

By the way, here is an earlier post about the connection between a positive culture and creating a positive impact for environmental and social issues: Companies and culture with positive impact

Why should business solve global issues?

If you expect doom and gloom; don’t worry. The book is optimistic and offers an actionable perspective. There’s something we can and must do. All of us, and all organizations. The ultimate question is this: Is the world better off because your business is in it?

For many, the answer might be “no - not yet” or not completely. And why should you? The argument: “We broke it, we own it”. Business owns the broken world it co-creates, just like when you break something in a shop. The current model of shareholder capitalism generates financial value for business by treating issues such as pollution or inequity as "someone else’s problem.” It has a detrimental short-term focus. Natural resources are depleted and inequality soars. You can’t do business on a dead planet. The cost of inaction is higher than action. The World Economic Forum’s Nature Risk Rising report has identified more than half of global GDP as moderately or highly dependent on nature. Economies also don’t thrive without people with disposable income and inequality destabilizes society. There’s no business case for enduring poverty and a vast business opportunity in lifting billions up.

The business opportunity

Solving global issues is a major business opportunity. Net positive organizations don’t focus on profits with a side of philanthropy. Instead, they embrace purpose in the core of the business and make profit because they contribute to the world and do good. Unilever has a ton of examples, such as their hand-washing education program that reached 1.3 billion people in 29 countries. Regular handwashing can reduce pneumonia and diarrhea and save millions of children before age five from dying of preventable diseases. They educated and trained mothers and kids, did a media campaign on hygiëne and created more brand awareness for their Lifebuoy soap at the same time. They collaborated with NGOs and governments and child death from diarrhea has reduced by 36 %

Growing evidence shows that a long-term focus pays off. McKinsey Global Institute calculated that at companies operating with a long-term mindset "average revenue and earnings growth were 47 % and 36 % higher."

That’s why all businesses face a choice: continue pursuing the shareholder-first model that forces shortsighted decisions and endangers collective well-being or build businesses that prosper over the long haul by serving the world.
One maximizes shareholder returns and obsesses over cutting costs to raise profits now. It takes limited responsibility for externalities — or spillover impacts on others. The other model sees their purpose as serving all stakeholders and aspires to thrive, over the long term. It helps the world tackle the biggest challenges, such as climate change.

That goes way beyond becoming “net zero”. Winston and Polman say: “If being green is about doing less damage, and sustainability about reaching zero, net positive is about making things better.” 

Don’t buy some carbon offsets and claim that your business is net positive. Take any business impact you want to zero out, such as waste, accidents, or carbon. Normally, you would chart progress showing the metric going down. Instead, flip the chart: draw the line rising from negative to zero, so that zero "becomes not a culminating point, but a crossing point, and then keep going into positive territory. That’s the definition of positive deviance in a positive culture!

This way, a net positive business serves others. It follows the Golden Rule, or "Do unto others as you would have them do unto you.” Net positive is a business that improves well-being for everyone it impacts and at all scales — every product, every operation, every region and country, and for every stakeholder, including employees, suppliers, communities, customers, and even future generations and the planet itself. This is a North Star.

Business can do it!

That’s why the world needs a partnership with the innovation, speed, and execution mindset of the private sector with the convening power and reach of governments. 
First, global governance is failing us, right as problems that know no boundaries are growing.
Second, transforming the world will require shifting a ton of capital to cleaner, more just pathways.
Third, people want business to step up. In a global survey by Edelman, three-quarters of respondents say they would like CEOs to take the lead on social change, not wait for governments. A similar percentage want their CEO to speak out on climate, inequality, and other big issues.
Last but not least, we have innate compassion, and empathy feels good. Most CEOs and executives are human. They have kids and grandkids who challenge them about their actions. Do you care enough? Ask yourself: Where are we failing humanity?

Winston and Polman suggest that leadership development is needed. “It starts with leaders who are open to listening (humility) and seek to work with stakeholders toward a larger goal. It’s a new mindset to see that learning from NGOs or critics, trying to influence consumer behavior, supporting pro-sustainability government policies, and embracing the latest science should all be part of the normal operation of the business.”

Some great examples of progressive companies working on environmental and social issues are KEA, Interface, Mars, Patagonia, Tata, and Triodos. Also think of companies as Allianz, Danone, DSM, Fifco, Levi’s, L’Oréal, Marks & Spencer, Mastercard, Microsoft, Natura, Ørsted, Olam, Salesforce, and Trane Technologies. It can be done!

Unleash the potential of purpose

The main case in this book is Unilever. When Polman took over the company was in decline. The organization was internally focused. Despite attempts to create a "one Unilever,” the company was decentralized, and people had more allegiance to their own locations. 
Three weeks into his new job, Polman said to investors, "We’re not going to report quarterly earnings or provide guidance anymore.” That freed up time to re-think the company and sent a clear signal of change. It told managers they could think bigger and make investments in innovation for the future.
After putting the basis in order (eliminating non-value-added costs, freeing up capital for reinvestment) Polman’s team started Unilever’s re-launch with purpose, strategy, and culture.

Unilever changed the board to support a long-term, multi-stakeholder model and 70 of the top 100 executives were “refreshed". They identified growth areas and the top changed its language: they used words as purpose, multi-stakeholder, and long-term. Their new strategy framework, the Compass, was a two-page document laying out the basics of winning in consumer goods.
The Compass made clear why Unilever existed and provided discipline, a common set of values, a bias for action, and clear standards of leadership — like a growth mindset, investing in people, and taking responsibility. A company run by principles, within a framework, is more effective than one run on rules. 

They simplified structure for speed. Unilever reorganized to reduce decentralization and complexity. Unilever wanted to feel like a single company with powerful brands, not independent silos, but remain agile enough to win in highly competitive local markets. 
The structural changes were easier than shifting beliefs. Many employees felt skeptical about a new CEO, the turnover in the executive ranks, and the new mission. Until they engaged with the mission: 170,000 employees wrote a "3 + 1” plan for themselves: three business goals tied to the Compass, and one personal area to work on.

Unilever offered a week-long program to the top 1,800 people who were invited to look at at their personal purpose and passion, their skill gaps, and how to manage their well-being. Unilever helped executives become authentic leaders. They switched from an internal focus on self-serving interests to an ”outside-in" view, centered on the citizens the company served. This culture is the glue. Alan Jope took over from Paul as Unilever’s CEO. He says he couldn’t stop the USLP if he wanted - it’s part of the culture now. A consistent culture is stronger than the CEO. It’s a long-term effort: Unilever needed 8 years to develop this culture.

The Unilever Sustainable Living Plan

The basis is the Unilever Sustainable Living Plan (USLP), launched in 2010 with a ten-year horizon. The three big USLP goals were boundary breaking: help a billion people improve their health and well-being, halve the environmental footprint while doubling sales, and enhance the livelihoods of hundreds of thousands of people. That’s why Unilever needed systemic thinking and deep collaboration with external partners.

Unilever went public with their goals. They had more than fifty public targets, a choice that was heavily debated. But with trust in business so low, being more transparent was the best way to restore it. What also helps: once a target is out there, it’s not voluntary anymore.
Polman: “If the goals in a plan like the USLP are big enough, then it’s clear you can’t do it alone. NGOs and others will hold you to a higher standard. Taking the lead makes you a target. It’s mostly a good thing, because you attract partners and you can ask for help and improve.” 

Unilever used external advisory boards to get blunt advice and built fertile partnerships with governments, UNICEF and Greenpeace, even though this NGO has campaigned against the company many times. Unilever’s advice: Work with society by proactively inviting them in.
It can be painful, but companies should discuss the hardest issues, including the human rights travesties of modern slavery and child labor. Oxfam concluded that Unilever had adequate policies, in theory, but significant problems in reality, and they worked on it. Being transparent and vulnerable helps to restore trust and repair what’s broken.

So, external partnerships are key. Nowhere is the need for collaboration more urgent than in battling climate change. Think long-term and systemic. A food company might spend money today to meet healthier food guidelines by reducing salt, fat, and sugar. A short-term view would say it’s not worth it. But the investment can pay off in growing markets for healthier food. There’s a "greater good” argument as well — unhealthy societies don’t thrive. 
In the Middle East, Unilever worked with governments on desalination projects to help reduce water shortages. Giving more people access to affordable water is good for a business selling toothpaste, shampoo, and soap. It helps competitors also, but Unilever did fine. The company also built a stronger bond with suppliers to innovate together.

Unilever invested in trust during the initial Covid lockdowns by setting aside € 500 million to support its suppliers and extend credit to customers. Treat suppliers as partners and family, not as low-cost providers of commodities, and look for joint value creation versus value transfer.
Work actively with peers to change industry norms, reduce combined impacts, and greatly improve outcomes and the sector’s image. Don’t be afraid of competition: your company is unique and might be faster to market, or have a better image with clients, and so on.

The next step is going beyond your industry sector. Global challenges such as climate change, food security, pandemics, inequality, biodiversity or cybersecurity know no boundaries and require collective action to solve. For this, we need all three pillars of society — public sector, private sector, and civil society.

Being a friend to the communities you work in is not philanthropic. It’s the right thing to do, but also builds the business. It creates trust and goodwill - as the Lifebuoy soap program showed.

Winston and Polman urge organizations to address the nine issues that nobody wants to talk about: not paying enough taxes, corruption, high executive compensation, paying the wrong shareholders, unprepared boards, human rights, trade association lobbying, money in politics, and the current lack of diversity and inclusion.

But let’s take one step at a time. Let’s begin with developing a positive culture. Work on the below five principles, guided by Winston and Polman and the examples and practical advice they offer.

Five key principles of a net positive company:
    1.    Take responsibility for your full impacts 
    2.    Work for the long term benefit of society
    3.    Create positive outcomes for all stakeholders
    4.    Improve shareholder return as a result, not an objective
    5.    Embrace transformative partnerships

Once you’re done, advance to the next level. There are 6 society-level challenges that an advanced net positive company will take on:

    1.    Be even more responsible: do more good
    2.    Challenge consumption and growth
    3.    Rethink the measures and structures of success (such as GDP)
    4.    Improve the social contract: focus on livelihoods
    5.    Bend the curve on capitalism and overhaul finance
    6.    Defend democracy and science, two critical pillars of society

Don’t be discouraged. Start today. Read this book, full of examples and proof. It is doable. Join the epic journey of human kind - so let’s save the world and ourselves. We must start now.

© Marcella Bremer, 2022. All rights reserved.

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