How Fortune’s ‘Change the World’ Companies Turn Doing Good Into Good Business
When Unilever announced its first-half results for 2017 this summer, it had plenty of good numbers to crow about. Revenue, at 27.7 billion euros ($30 billion), was up a healthy 5.5%, growing well ahead of the company’s competitive set. Moreover, it was turning those sales into a river of profit, with earnings per share up 24% from the previous year.
But in late August, when I spoke with Unilever CEO Paul Polman on the phone, it was another data point he was most excited about: 1.8 million. That’s the number of people who apply to the Anglo-Dutch consumer products giant for a job each year, with a prodigious share of them being millennials.
The company, I should point out, makes soap. And antiperspirant. And mayonnaise. Not that there’s anything wrong with those things—but, hey, would you call them sexy?
So what’s Unilever’s appeal, then? “According to the data,” Polman reveals, “60% more or less—I’m rounding it—say it’s the Unilever Sustainable Living Plan, and the bigger purpose that we have as a business.” The Sustainable Living Plan is the company’s blueprint for growing the business while reducing waste, water, and energy use, sourcing raw materials in a smarter way, helping local farmers, and striving for other earth-friendly goals. The wide-eyed applicants who are sending résumés by the trainload may not pine to sell packaged goods to the well-packaged masses—but Polman figures, “They say, ‘At the end of the day, I’m going to make a difference that is bigger than I could have done myself.’ ”
For Polman, the investment proposition behind the Sustainability Plan is easy to compute. “Be it in employee attraction, corporate image, education, engagement, I think it pays back,” he says. “It’s still difficult to explain it to your shareholders, obviously, but ultimately the people that you employ—or the people you are able to attract—is actually the backbone of your success.”
That investment decision, importantly, also seems to get the backing of Unilever’s board of directors: “At the board level, at the senior management level, they are apparently 100% behind this,” Polman tells me—a proposition tested as recently as February, when Kraft Heinz made an unsolicited offer for the company. (Polman says that the board made clear to the interlopers that Unilever’s “business model of longer-term-compounded value creation, by focusing on multiple stakeholders,” is the model that the board still believes in—“even when the pressure is a little higher.”)
While the board’s opinion could one day change, Polman is right about one thing: There is ample evidence to suggest that companies that focus on long-term sustainability outperform those with a shorter-term outlook. Institutional investors are getting the message too (see our story on page 48).
Companies not only can do well when doing good, they often do. (We’ll let the copy editors figure that sentence out.)
Which is one more reason, if you needed any, to spend some quality time with the list that follows—which Fortune put together with invaluable help from our partners at FSG and Shared Value Initiative. The 56 companies on our 2017 Change the World list, which includes six smaller rising stars, are tackling problems obvious and not-so-obvious—from Accenture, which is using data to reduce E.R. visits, to DSM, a Dutch life sciences company, that is fighting greenhouse gas emissions from a notorious source: cow flatulence. They include IBM, which is helping urban high schools close the STEM skills gap, and 23andMe, which is empowering consumers to learn about their genetic risks—and the lifestyle choices they can make, in some cases, to lower them.
We explore JPMorgan Chase’s bold and urgent campaign to revive one of America’s iconic industrial cities and Levi Strauss’s effort to make life better for some of the 300,000 garment workers who make its jeans. And we seize a rare opportunity to sit down with Apple CEO Tim Cook, who shares his philosophy on why the iPhone and its ecosystem of apps are a potent force for good.
All of these companies, we believe, are changing the world—but please read on and judge for yourself.
How We Chose the Companies
The Change the World list recognizes companies that have had a positive social impact through activities that are part of their core business strategy. We prioritize companies with annual revenues of $1 billion or more. Fortune writers and editors, with help from our partners at FSG and Shared Value Initiative, evaluate and rank the companies by these three factors:
1. Measurable social impact: We consider the reach, nature, and durability of the company’s impact on one or more specific societal problems. This category receives extra weight.
2. Business results: We consider the benefit the socially impactful work brings to the company. Profitability and contribution to shareholder value outweigh benefits to the company’s reputation.
3. Degree of innovation: We consider how innovative the company’s effort is relative to that of others in its industry and whether other companies have followed its example.
Head writers: Erika Fry, Jonathan Chew
Contributors: Sydney Agus, Christina Austin, Clay Chandler, Geoff Colvin, Barb Darrow, Grace Donnelly, Robert Hackett, Matt Heimer, Beth Kowitt, Adam Lashinsky, Michal Lev-Ram, Sy Mukherjee, Aaron Pressman, Lucinda Shen, Anne VanderMey, Jonathan Vanian, Phil Wahba, Debbie Yong, and Claire Zillman
A version of this article appears in the Sept. 15, 2017 issue of Fortune with the headline “Change the World.”