Exploring the Links Between
International Business and Poverty Reduction: A Case Study of Unilever
in Indonesia
Foreword: Unilever
The first question asked about this report is: why did you do it? The answer for Unilever is two-fold. First, our business engages in many ways with poor people around the world as producers and consumers. Second, the Millennium and Johannesburg Declarations (2000, 2002) place poverty eradication at the centre of global strategies for sustainable development. To play our part, and support the Declarations, we needed to increase understanding of the impact of the operations of a business like ours on the lives of poor people. Different industries interact in different ways with society. We believed that there were useful lessons to be learned from exploring how industry structure, operating practice, and, indeed, individual company values could, through wealth creation and the provision of goods and services, play a part in sustainable poverty reduction.
Our project partners, Oxfam GB in the UK and in Indonesia, Novib Oxfam Netherlands, and Jason Clay, the report author, brought a new perspective to our operations as we explored our interactions with Indonesian society. They have relentlessly challenged the impacts of the business model, the basis of management data, and the values behind our working practices. We have responded to these challenges step by step, creating in the process a growing body of shared information about our interactions with society, which this report describes. Not unexpectedly, it has not always been possible to reach agreement; where this is the case, the different viewpoints are stated. Nor did we believe that we needed to articulate a defence of all aspects of our business activity. This report offers a joint study of the complex reality of some key aspects of local business operations in a developing country, and the many opportunities that these present to support the development process.
At times it has been hard for our managers to find their values and behaviours subjected to such sceptical scrutiny, and to see their achievements, when operating in a complex business context, so lightly passed over. But as we have worked through the scepticism, there has been a growing realisation of two things: the passionate commitment on both sides; and the fact that, while the organisations have different starting points, both have a contribution to make.
This report is offered, not as an answer, but as a data-rich study of just one (albeit extraordinary) company, Unilever Indonesia, and its interactions with the people, business, and economy of just one (albeit extraordinary) country, Indonesia. It is the product of a learning partnership which demonstrated how much insight can be gained by working together. I hope that the desire to learn in a spirit of goodwill and common endeavour will be extended by the reader to this text, and that it will contribute to a greater understanding of the links between wealth creation and poverty reduction.
I am indebted to my predecessor, Niall FitzGerald, and Oxfam GB Director Barbara Stocking, who together inspired this joint research work, and to Maurits Lalisang and the team in Indonesia, in particular Tonny Pranatadjaja and Unilever Indonesia’s former chairman, Nihal Kaviratne, for their unstinting support. I thank the project team in Indonesia, Europe, and the USA, who have worked so tirelessly for the project’s success.
Patrick Cescau
Group Chief Executive, Unilever
Date of original publication: September 2005