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A collection of posts relevant to agricultural and environmental matters such as farming, agribusiness, water, sanitation, natural resource management, and sustainability.

Tuesday, November 16, 2010

CSR That Works: Interview with Hindustan Unilever's former Chairman and MD, Vindi Banga

By Nilima Achwal

I had the unique opportunity to chat with Vindi Banga, former Chairman and MD of Hindustan Unilever Limited , Unilever's $3.9 billion subsidiary in India. Unilever -the corporation that brings us Axe deodorant, Vaseline, Surf detergent, and Lipton tea, among many other everyday products-holds a 52% equity share in behemoth Hindustan Unilever.

Hindustan Unilever's mission is to "help people feel good, look good and get more out of life with brands and services that are good for them and good for others." Most companies would have been content, with such a mission, to continue "business as usual." However, in 2001, the company took its mission to a whole new level.

Banga, who came on as Chairman of Hindustan Unilever in 2000, was a close friend of C.K. Prahalad, and the company was inspired by the visionary's ideas. Soon, Hindustan Unilever launched the Shakti Entrepreneurship Program, which today employs between 60,000 and 70,000 women entrepreneurs in villages to sell Unilever products at affordable prices to the base of the pyramid. For the first time, villagers had access to soap, detergent, and toothpaste. What's more, the women entrepreneurs were actually educating their communities on hygiene issues while selling their products--for example, by explaining how to brush children's teeth-and through community-wide health awareness days. See this case study for details.

Nine years later, Banga tells us about its successes, reminding us that corporate social responsibility can be a powerful vehicle to poignant social impact-indeed, it is corporations that have the power to scale up quickly, expanding their social impact to millions.

 

So, I asked Banga:   

Was the Shakti program self-financing? Did it bring in profits for Hindustan Unilever?

Yes to both. To get it off the ground, we needed a subsidy for the first 2-3 years, but soon the business grew and became sustainable. In effect, Prahalad's BoP approach worked.

Since it was self-financing, would you classify Shakti as CSR?

Yes, Shakti is a good example of CSR for two reasons. One, it created a whole new way of life for 60, 000 to 70,000 women, with the opportunity to gain a handsome living. It had a direct effect on their social stature. And millions of people had access to personal care and home products. Two, it's self-sustaining from the business it generates. That's the best type of CSR you can have!

What advice would you give for a large corporation looking to expand its reach to the BoP?

Find ways of engaging that benefit the business AND BoP, so that it's a win-win situation! In terms of distribution and marketing, the beauty of our model was that we were actually using the BoP to distribute products; the BoP was part of the solution.

Did you consider the "social good" of each product that you directed at the BoP? For example, an item like soap might improve health, whereas something like make-up might not have the same value.

All products improve quality of life! Make-up improves self-esteem, which is especially valuable at this part of the pyramid. There have been criticisms of Fair and Lovely skin whitening cream, while the West uses skin tanning products every day! The base of the pyramid has an equal desire for the same products that the rest of us use.

Do you think the Shakti program had an impact on HUL in terms of company culture or employee morale?

Definitely. Whenever we presented Shakti within the company, there was always spontaneous applause-people felt so good to be a part of a company that was good both in business and in society. The shareholders were very happy as well.

Do you think it's difficult to create a whole new initiative inside an established corporation that has established processes?

Depends on the leadership. Lots of mainstream companies are not good at doing it, since they are focused on optimizing their current processes. We incubated the project within the company with its own leadership so that they had the freedom to come with innovative business models. Also, the team had regular access to myself and the company Board, to ensure that they had the support they needed.

What's your biggest insight from the Shakti program?

The single biggest insight is-Never underestimate human potential. At the beginning, there was a lot of hesitation, since these women were often illiterate or had no math skills. It turns out they were very quick to learn and smart-within 48 hours they would get it. The second thing was that their motivation was so high that it compensated for any lack of ability.

What was your biggest challenge?

We had to find the right women to be Shakti entrepreneurs and get the whole model going. NGOs across India helped us out immensely in finding the right self-help groups (groups of women that convene to save money, solve disputes, etc) and the right entrepreneur within those.

Do you think the products were fulfilling a latent consumer demand, or you do think HLL was effectively creating a demand for the products?

A little bit of both. A few people had a chance to go to the city and buy some products, but it was another thing to have the product at your doorstep. Also, since the entrepreneurs would educate mothers about brushing teeth and washing hands, they created the demand.

Now, I understand that you are at the equity investment firm CD&R  in London.  Do you have any plans in the works to invest in social enterprises?

No-since we are operating with global funds, we would rather invest in corporations with high standards of CSR.  It's more difficult to invest in a social enterprise since it is difficult to find the investors to support it, and there is the chance that the venture might not be profitable.

Thank you, Vindi, from the NextBillion community for your insights!

 

In fact, CSR at Unilever did not stop with Shakti. Unilever Global has just recently announced some ambitious goals for 2020, including to:

  • cut by 50% the environmental impact of its products in terms of water, waste and greenhouse gases,
  • source 100% of its agricultural supplies from sustainable sources, and
  • improve the health and well-being of one billion people across the world.

Judging from its track record, I would not be surprised if Unilever delivers, inspiring other corporations to emulate its model and raising the standards for doing business worldwide.  Unilever is just one of many corporations (GE and IBM, for starters) that exhibit the powerful, emerging movement toward not just corporate social "responsibility," but positive and meaningful impact by corporations.

Soon, CSR will no longer denote a few million dollars of charity. It will weave through the very fabric of business, comprising an integral part of every company's business model. And once multi-billion dollar industries are committed to thoughtful social change, anything is possible.

Hindustan Unilever Limited created a revolution in rural distribution and awareness of products, in terms of scale, long-term sustainability, and deep social impact. Unilever has declared powerful goals for future. Take it as a warning to the cynics-don't write off CSR just yet.

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