Unilever Corporate Crime

The Unilever Pakistan Limited (UPL), formerly Lever Brothers Pakistan Limited was established

in Pakistan in 1958. The town of Rahimyar Khan was the site chosen for setting up a vegetable

oil factory. Unilever Pakistan is the largest FMCG company in Pakistan, as well as one of the

largest multinationals operating in the country. Now operating six factories at different locations

around the country. The Unilever's Head Office was shifted to Karachi from the Rahimyar Khan

site in the mid 60's.

Today, Unilever Pakistan is a force to reckon with. Its contribution to Pakistan's economic

development cannot be overestimated. Now operating six factories at different locations around

the country, the company contributes a significant proportion of the country's taxes. It employs a

large number of local managers and workers. It provides a pool of well-trained and highly

motivated manpower to other segments and has introduced new and innovative technologies into

the country. 

Market share/importance:

Unilever’s mission statement is ‘meeting the

everyday needs of people everywhere’, and

the multinational definitely has a huge and

expanding global reach. Unilever proudly

declares that every day 150 million people

are choosing their brands ‘to feed their

families and clean their homes’. Unilever is

one of the world’s top makers of packaged

consumer goods and moves countless

products like deodorants, fragrances, soap,

margarine, tea and frozen foods all over the

world. The corporation sells products in over

150 countries and has annual sales of

approximately $ 46 billion (£31,5bn).

Unilever controls subsidiaries in at least 90 countries and employs 295,000 (in 2000) people [1].

Unilever is one of the world’s top three food firms -after Nestle and Kraft- and the world’s second

largest packaged consumer goods company –behind Procter & Gamble.

However, in spite of Unilever’s vast size and presence worldwide, the company’s actual visibility

is surprisingly low. Anonymity hides the company’s importance. Unilever does not retail under its

own name, preferring brand names to create the illusion of diversity. Who does not know brand

names like Magnum, Omo, Dove, Knorr, Ben & Jerry’s, Lipton, Slim-Fast, Iglo, Unox, Becel, and

1

Unilever Corporate Crime

Lever2000? They’re all part of the ‘Unilever armada of brand names’. To make sure the brand

names do not go unnoticed, Unilever spends huge amounts of money on marketing and

advertising. Advertising has always been a keystone of Unilever’s businesses. The Dutch-Anglo

company is likely to be the world’s number one advertiser. (Advertising Age estimate a 1999

global media spend of $3.7bn (£2,539bn), of which $3.1bn (£2,127bn) was outside the US,

making Unilever the world's #1 advertiser).

Strategy

In September 1999 Unilever announced its intention to focus on fewer, stronger brands to

promote faster growth. The company is whittling its brands down to 400 (from 1,600) including

familiar brands such as Dove, Lux, Lipton, Magnum and Calvin Klein fragrances. (Consulting firm

PricewaterhouseCoopers has been hired by Unilever to sell off ten of the firm’s 70 food brands).

The concentration on innovation and brand development on a focussed portfolio of 400 leading

brands is part of Unilever’s latest growth strategy, called ‘The Path to Growth’, designed to

accelerate top line growth and step up the rate of margin improvement in five years time. In

February 2000 the company announced a series of linked initiatives (organizational changes,

restructuring) to align the entire organization behind these growth ambitions. The shake-up of its

top management, splitting the company into two, separate global units –food and home, and

personal care-- was one of these initiatives. And Unilever has started selling off any subsidiary

businesses which are making less than average profits, and ‘decentralising’ control of

subsidiaries, with the corporate HQ in Europe just monitoring profit levels – and making sure they

are maximised. This heavy focus on profit means cost-cutting - especially minimising workers’

pay.

Another key component of the growth strategy is e-commerce. Unilever wants to step up the use

of the Internet in order ‘to improve brand communication/marketing and on-line selling & to

simplify business-to-business transactions throughout the supply chain’. India’s Satyam

Computer Services Ltd has recently won an information technology services contract from

Unilever. Unilever also made deals with Compaq, IBM, Microsoft, Excite@Home, Ariba Inc.

(leader in all phases of business-to-business e-commerce) and WOWGO to enable a faster

adoption of global e-commerce opportunities. In February 2000, Unilever and iVillage formed a

new Internet company. Unilever committed £130 million to e-business initiatives in 2000 and

hopes to create a ‘mall that never closes’.

2

Unilever Corporate Crime

1. Promoting consumerism

Unilever spends a lot of energy and money on marketing and commercialisation of consumer

products all over the world (‘Paint the World Yellow’ – the Lipton marketing campaign which

provide everything with the Lipton Logo, from surfboards to Chevrolets—was a tremendous

success, according to Unilever. It created a much bigger Lipton Logo awareness amongst

consumers.) Since the Northern consumer market is saturated (so not much room left for

expansion of market shares) Unilever aims at maximising the processing of food, which means

adding value to ‘improve’ products and then charge more for these products. Unilever changes

the product only slightly (e.g. strawberry toothpaste), or just changes the visual language in order

to sell exactly the same product. Naturally this process involves heavy advertising. Many of the

‘improved’ products are basically useless, and there is no demand for them (the demand is being

manufactured by the multinationals themselves). In short, Unilever tries to bring as many

products as possible to the market without asking itself the question ‘is there a real need for the

products we produce?’

Flooding the world with ever more (useless) products is a pretty immoral sales strategy. Only

think of the ecological costs that come along with it (processing of products, packaging, waste

processing, transport, etc. all involve high ecological costs). If people in the South start

consuming the same amount of products and services as people in the North, the natural

environment will definitely not survive. The only real and sustainable solution to environmental

problems is less production and less consumption. Unilever and other multinationals are main

actors being responsible for the ongoing trend in the opposite direction!! Besides, heavy

advertising generates psychological effects like feelings of inadequacy, disorientation, mood

disorders, and cynicism. In effect, advertising involves tremendous non-value added costs, in

other words, a tremendous waste of resources.

2. Misleading marketing

Rebranding the same or slightly changed products for sale can legitimately be labeled

misleading, likewise the introduction of new products that supposedly improve the daily lives of

consumers (‘you will feel better starting the day with…’) or strengthen their self-image (‘you are

worth it, aren’t you?’). The UK Advertising Standards Authority (ASA) has recently accused

Unilever for false advertising. The ASA ruled that Unilever misled British consumers in the way

the company presented the health benefits of its cholesterol-lowering margarine, Flora pro-activ.

According to ASA, Unilever’s Van den Bergh Foods unit overstated the benefits of Flora pro-activ

in one press advert that claimed it could reduce LDL cholesterol by 10 to 15 percent. After the

3

Unilever Corporate Crime

ASA ruling, Unilever agreed to make the required changes and not advertise in the same way

again. (Sanctions against advertisers who break codes of practice in Britain are ineffective. The

ASA has no statutory powers. It can report persistent offenders to the Office of Fair Trading, but it

is reluctant to use this deterrent (Monbiot, 2001)

3. Market domination

Multinational corporations evidently have tremendous market power. They can decide what

products are to be manufactured, what crops are to be grown, and above all, they can dictate

prices. Local businesses and jobs are destroyed along the way, because that is the law of the

jungle. For example, take tea. Unilever is the world’s largest tea company, and owns 18,000

hectares of plantations in Kenya, Tanzania and India. It controls 20% of the market (most likely

these 1999 figures have changed), through its ownership of the Brands Lipton’s and Brooke

Bonds. Consequently, it has major power over the tea price. In the mid 80’s, when the Indian tea

price started to rise, Unilever and other corporations acted to bring it down by temporarily

boycotting Indian tea. When the Indian government tried to set a minimum export price, the

multinationals collectively withdrew from the market, forcing the government to retreat, and slash

the price.

4. Environmental pollution

Unilever claims to be concerned for the safety of its operations and the environment but this

attitude clearly does not stretch to India. Unilever has recently been accused by Greenpeace of

double standards and shameful negligence for allowing its Indian subsidiary, Hindustan Lever, to

dump several tonnes of highly toxic mercury waste in the densely populated tourist resort of

Kodaikanal and the surrounding protected nature reserve of Pambar Shola, in Tamilnadu,

Southern India.

Greenpeace activists and concerned residents cordoned off a contaminated dump site in the

centre of Kodaikanal to protect people from the mercury wastes that have been recklessly

discarded in open or torn sacks by Hindustan Lever which manufactures mercury thermometers

for export, mainly to the United States. According to Hindustan Lever, from there, the

thermometers are sold to Germany, UK, Spain, USA, Australia and Canada. The factory, set up

in 1977, was a second-hand plant imported from the United States, after the US factory was

shutdown for ‘unknown reasons’.

4

Unilever Corporate Crime

Unilever states that its policy is to "exercise the same concern for the environment wherever (it)

operate(s)", "ensure the safety of its products and operations for the environment" and "provide

whatever information and advice is necessary on the safe use and disposal of (its) products". Yet

workers at the Indian factory are offered no protection from the mercury spills and several

workers have complained of health problems which, they allege, is caused by their exposure to

mercury in the workplace. Mercury is highly poisonous and exposure to even the small amount

through air, water or skin, exerts severe effects on the central nervous system (brain) and

kidneys. Foetuses and young children are particularly vulnerable to poisoning by mercury.

Not wanting to play down the various violations of environmental acts by Unilever’s subsidiaries,

the promotion of consumerism (and excessive use of packaging materials, transportation of

products worldwide, etc.) should be ranked highest on the company’s environmental criminal

record. Taking the ecologically destructive effects of consumerism –aggressively promoted by

multinationals like Unilever- into account, all efforts of these companies to ‘save the environment’

can only be regarded as greenwash practices.

5. Hypocritical Health Campaign induced by Self-Interest

In an effort to avoid tobacco-style lawsuits, food giants including Unilever, Procter & Gamble and

Heinz are to use internet, TV and press ads to warn consumers that eating too much fast food will

make them fat. Food companies are worried if the problem continues they could face the threat of

similar lawsuits to those being brought against tobacco firms. There is also concern governments

may try to crack down on fast food advertising or impose mandatory health warnings. Other

companies involved are Kraft Foods, one of America's biggest makers of snack foods, Pepsi,

Monsanto, Coca-Cola and McDonalds. All companies at the forefront of promoting unhealthy food

worldwide [ready-made microwave meals (instead of fresh, whole foods), genetically engineered

crops (as opposed to organic crops), etc.] and in the process shaping agriculture to suit industrial

needs (as opposed to the needs of farmers, local communities, the environment, or consumers).

5