Unilever has emerged with a relatively clean bill of health after opening up its books to the anti-poverty group Oxfam for a
two-year investigation of the socio-economic impacts of the company’s
Indonesian operations.
The ground-breaking study of the developmental effects of Unilever’s
consumer goods business in Indonesia during 2003-04 found that, in
general, the company made a number of positive contributions to poverty
alleviation, in particular by creating jobs both directly and in the
wider economy.
Oxfam says the research challenged the view that a multinational’s
expansion in a domestic market is necessarily bad for local
competitors. ‘It appears that during the period under review, competing
domestic industries had expanded rather than contracted,’ it reported.
The study found that as well as directly employing 5000 staff, all of
whom enjoy above-average pay and working conditions, Unilever Indonesia
supports an additional 300,000 full-time jobs in farming, retail,
distribution and logistics. Unilever said that it had been ‘amazed’ at
the scale of the value added to the economy in this way.
‘By examining the jobs and value created at each point in the chain,
we’ve learned a great deal about where companies can have the most
positive and negative impacts on poverty reduction,’ said Lettemieke
Mulder, Unilever’s global external affairs director.
One potential model emerging from the research would be for Unilever
Indonesia to deal more directly with low-income farmers, building on a
direct procurement relationship already established with a small group
of soybean producers for its Kecap Bango soya sauce brand. The approach
offers farmers access to credit and technical assistance, as well as a
guaranteed market. By the beginning of 2004 more than 1000 farmers had
become direct suppliers to Unilever through the programme.
The research also analysed the impacts of Unilever Indonesia on
low-income consumers and found they were better able to access shampoo,
detergent and other basic products.
‘When the Indonesian currency collapsed in 1997-98, Unilever responded
by driving down its unit size and making its prices even cheaper,’ said
David Logan, director of the Corporate Citizenship Company and an
adviser on the project. Low-priced sachet packets now account for most
of Unilever Indonesia’s shampoo sales.
Unilever has no firm plans for similar research in any of its other
markets. Both the company and Oxfam admit the relationship was
difficult at times. Unilever said it had been ‘hard for our managers to
find their values and behaviours subjected to such sceptical scrutiny’.
Oxfam admitted the results had challenged some of its assumptions. It
said it had learned that its analysis of the impact of large companies
‘needs to be more alert to the differences between multinationals’,
although Unilever Indonesia’s approach ‘is very different from some of
the traditional targets of … campaigning, such as extractive or
export-processing industries’.
