Unilever plastic packaging used in products like shampoo and conditioner bottles contributes to ocean pollution.

• The consumer giant has cut down on plastic use by 15% and is using bioplastics and refillable metal bottles for items like deodorant.
• The global plastic packaging market is on pace to reach $300 billion, but many of Unilever’s newest top-selling brands are the ones aligned with its Sustainable Living Plan.

On any given day, 2.5 billion people use Unilever products that span 400 brands. That success has created a huge target on the company’s back as the sustainability movement gains more traction with consumers shunning plastic pollution. Sajjad Hussain | AFP | Getty Images From the farthest reaches of the Arctic to the deepest depths of the ocean, plastic pollution really is everywhere. Plastic pollution in the ocean is a particularly big problem: an estimated 100 million ocean animals are killed each year because of plastic in the ocean, and we currently have no reliable way to extract those plastics. But plastic is also a huge part of our everyday lives, in often invisible ways. Now, one of the world’s biggest plastic polluters is racing to reinvent its business–and the way we think about this ubiquitous material–one package at a time. The sea change is top priority for Unilever to ensure customers remain loyal to the 90-year-old global brand. On any given day, 2.5 billion people use Unilever products that span 400 brands to feel good, look good and get more out of life. But the multinational with a market cap of over $158 billion recognizes that its growth has come at the expense of the environment. The company invests over $1 billion annually on research and development, of which new plastics innovation is a component, but declined to tell CNBC how much its plastics initiatives specifically are costing. It is benefiting the company: In 2018, the 26 Unilever brands that are aligned with its sustainability initiatives grew 46% faster than the rest of the business and also outperformed in turnover growth, according to the company. In November 2010 under the guidance of now-former CEO Paul Polman, the company launched its industry-leading sustainable living plan, which has guided the company’s approach to product design and redesign ever since. Oversight of this global initiative starts at the top: reporting directly to the company’s CEO and executive leadership, a steering team meets five times per year and is accountable to the executive for the sustainable living plan’s goals. They rely on a series of internal groups devoted to everything from sustainable packaging to water use. Unilever also runs its own Safety and Environmental Assurance Centre (SEAC) that takes a science-focused look at the environmental impacts of products throughout their life cycle, including when they go down the drain.

Transforming plastic

Since 2017, one of the plan’s main focuses has been plastic. That’s when Unilever signed on to an Ellen MacArthur Foundation initiative called The New Plastics Economy, committed to making all of its plastic packaging either reusable, recyclable, or compostable by 2025. Doing so will ensure that plastic packaging stays within a “circular economy” where it can be produced and reused, rather than becoming waste. That means not only developing the technology to make plastics that can be effectively recycled, but also transforming its global supply chain. Both are major challenges. “I’m convinced that we are going to move more as a society into some of those spaces around reduce and reuse, and [Unilever] will be at the forefront of doing that,” says Richard Slater, chief research and development officer for Unilever. Slater, who took over the role in April 2019, says Unilever’s commitment to sustainability was a big reason he was drawn to the company. Inside the company, this attitude toward plastic shows up in a framework used throughout the business, referred to as “less/better/no.” It’s visible in their finished products: shampoo bottles that contain around 15% less plasticthanks to the introduction of bubbles into the material; replacing traditional plastics with bioplastics made of materials like cornstarch; and goods that use no plastic in their packaging, like refillable deodorants that come in a metal tube. Addressing the issue of packaging is a great way to start changing the way plastic is used, says Shelie Miller, a University of Michigan professor who studies packaging and sustainability. “Packaging is produced to become waste,” she says. “That makes it unique among manufactured goods.” It’s hard to know exactly how much of the plastic problem is due to plastic packaging, says Melanie Bergmann, a marine biologist and plastic pollution expert at Germany’s Alfred Wegener Institute. However, packaging on consumer products is a significant problem, she says, and unlike many other sources of plastic, “something we can tackle relatively easily.”

Rethinking supply chains

Transforming its plastics packaging market has required ongoing change in the company’s supply chain, both in working with existing suppliers to change their practices and with new partners like Terracycle’s consumer goods distribution system Loop, which will be testing consumer uptake on products like refillable aluminum deodorants for some of Unilever’s top brands. The Loop Initiativehas buy-in from some of the world’s biggest brands, including Unilever competitors Procter & Gamble, Nestlé, Coca-Cola and PepsiCo. Terracycle’s partners involved with the initiative include logistics company UPS, European retailer Carrefour and resource management company Suez. On the materials side, too, the drive to develop better plastics has seen Unilever partner with startups like Ioniqa, which bills itself as a “high tech chemical company”, and broader industry initiatives like the Bioplastic Feedstock Alliance, a World Wildlife Federation-led initiatives to develop biodegradable plastics that don’t compete with food security. The company is also “engaged with several bio-plastic suppliers,” according to a company spokesperson. Unilever also is pushing forward on in-house initiatives such as developing a new pigment for black plastic such as that used for the company’s TRESemmé line of shampoos and conditioners. Traditional black plastic is not detectable by the infrared sorters that recyclers use and must therefore be thrown out. Unilever’s solution is a new kind of pigment that can be detected by the sorters, allowing its black plastic bottles to be recycled at traditional recycling facilities. Within industry, “Unilever is really seen as a leader in sustainability,” says Miller. “They have a track record of being a leader in efforts to reduce overall environmental impacts, so it’s not surprising that they are ahead of the curve here.” From the investment perspective, this is one of the most lucrative markets to get into. However, creating a circular plastic economy for its many products isn’t a simple undertaking. “One of the challenges we face in many places around the world is availability of material, ” says Louis Lindenberg, Unilever’s Global Packaging Sustainability Director. “We’ve had to work with our supply chain partners to identify what material is required where, how much is available, what the gap is, and how we fill that gap.” One example is in Brazil, whereUnilever recently partnered with local recycler Wise to expand local recycling capacity in order to get the recycled materials it needs to meet its commitments, Lindenberg said. There’s no guarantee that the things they try will get consumer uptake. The company’s found high consumer acceptance for initiatives like moving towards things like 100 percent recycled or recyclable plastics, Slater says. But on the no-plastic side, with things like the Loop initiative and other refill and reuse systems, “we really are more in pilot mode there.” Initiatives like these are also what will keep Unilever competitive into the future, says Slater. In its 2018 annual report, the multinational named plastic packaging as a “principal risk” to its business. “Both consumer and customer responses to the environmental impact of plastic waste and emerging regulation by governments to tax or ban the use of certain plastics requires us to find solutions,” reads the message to shareholders. By 2025, the year when Unilever and other signatories to the New Plastics Economy agreement have pledged to transform their packaging, Grand View Research predicts that the global plastic packaging market will reach a market size of $269.6 billion USD, up from a 2017 valuation of $198 billion. Key drivers of this market are the convenience and low cost of plastic packaging, but according to numbers produced by Transparency Market Research, consumers are willing to pay nearly 10 percent more for sustainable packaging. “Consumers are looking for sustainable packaging, says TMR senior market analyst Ismail Sutaria. “At the same time, the packaging should be easy to use.” At the moment, the food and beverage sectors have the biggest market share for sustainable packaging, he says, with cosmetics and personal care not far behind, meaning that Unilever stands to benefit strongly from investment in this area. Increased focus on sustainable packaging will get the eye of investors on a company, Sutaria says. “From the investment perspective, this is one of the most lucrative markets to get into.” By working to change the plastics market, Unilever is paving the way for its own future.