Last Updated 04 Aug 2021

Hul’s Marketing Strategies

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INTRODUCTION

We provide millions of Indians with a great variety of affordable and quality products which better their lifestyles. Our strategic approach – small actions, big difference – illustrates our responsibility towards our multiple stakeholders, and the deep and reciprocal impact we have on each other.

Dear Stakeholders, 2009 was a challenging, yet transformational, year for business. The global economic and financial crisis highlighted the wider challenges of what it means to be a sustainable business. Businesses must grow and generate profits, but this cannot be the only role of a business. At its core, business is about people and an understanding of their needs and aspirations. This is what will make a business thrive in the long run. An approach any narrower than this may bring short-term dividends, but will come at the cost of long-term value.

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One is reminded, in this context, of the absolutely inspiring words of Lord Leverhulme, the founder of Lever Brothers – "I believe that nothing can be greater than a business, however small it may be, that is governed by conscience; and that nothing can be meaner or more petty than a business, however large, governed without honesty and without brotherhood. " This belief has stood Lever Brothers, and now Unilever, in good stead through over 100 years of its existence.

In the 76 years of our presence in India, we have participated actively in contributing to society not only with product innovations that make people feel good, look good, and get more out of life, but also with our social initiatives – from health campaigns to developing micro-enterprise opportunities. In 2009, we received the highest number of patents in India and continued to focus on product and process innovations to derive improvements and better the quality of our consumers' life through our brands.

Future sustainability strategy Issues like poverty, low awareness about health and hygiene, scarcity of water and natural resources, are barriers to growth. Hence, it is imperative to address these issues in ways that go beyond simple charitable or philanthropic actions. If the impact needs to be scaleable and sustainable it will also require an organisational culture where people are not just sensitive to the issues we face, but also recognise that addressing them has become central to business strategy and sustainability.

The simple truth is that in the long run you cannot have a thriving business in a failing society. Once this truth is accepted, we can drive actions that will contribute to India's, and the developing world's, sustained and equitable growth. Hindustan Unilever will strive to remain at the forefront of these transformational initiatives. Our business processes and brands have an impact at every stage of the value chain – from sourcing raw materials, manufacturing, distribution, to consumer use and disposal. Therefore, we are implementing changes in our processes that will positively influence the entire value chain.

Through our brands we will change the behaviours and habits of millions of our consumers. The collective transformation will make a big difference in society and to our business. Although we have made excellent progress on many fronts while addressing the needs of our stakeholders, the highlight has been the impact generated by Pureit water filter in 3 million homes and the contribution of our employees who volunteered 1,15,000 hours for community service. These individual actions may seem small, but have helped our business cumulatively create a substantial difference to our stakeholders.

Through this report we would like to share our efforts with our stakeholders. We invite your feedback, which is important for us as we progress on this journey.

OUR BUSINESS AND BRANDS

HUL's heritage dates back to 1888, when the first Lever product, Sunlight bar, touched Indian shores. Today, HUL is India's largest fast-moving consumer goods company with a strong portfolio of foods, home and personal care products that touch the lives of 2 out of 3 Indians, everyday.

Products like ours rely on an increasingly constrained set of natural resources, whether it is fuel, water, or other raw materials. In Hindustan Unilever Limited (HUL), the principle of Corporate Responsibility (CR) is an integral part of our commitment to all our stakeholders – consumers, customers, employees, the environment and the society that we operate in. Today, India is battling multiple issues like water scarcity, poverty, and problems arising out of low awareness of health, hygiene, and nutrition. If these issues are not addressed soon, they will create insurmountable barriers to business growth.

We believe that helping society prosper and ensuring a sustainable future for the planet goes hand in hand with our goal of ensuring growth that is competitive, profitable, and sustainable for our organisation. Our contributions have to be substantial and sustainable, which is why we are not just banking on our philanthropic programmes, but are transforming our core business practices as well. Even the seemingly small innovations in our brands and business processes can lead to a big difference in society as we touch the lives of two out of every three Indians.

For example, if one household uses Surf Excel detergent, it can conserve two buckets of water per wash. A million Indian households using 1Hansa Research, Guide to Indian Markets, 2006 Surf Excel can save enough water for meeting the basic hygiene needs of many Indians. Thus, small individual actions multiplied with our large consumer base will make a big difference in combating the issues society faces. Our brands small, everyday actions billions of consumers at the category, brand, and marketing plan level. We have a very strong and trusted position in India and we can leverage this to our competitive advantage. Ensuring sustainable practices in our operations: To secure a thriving future, we need to establish sustainable sources for raw materials. Being a company that is heavily dependent on water, agriculture, fuels and petrochemicals, we must plan now for a future in which water could be scarce, agriculture could be under pressure, and fuels will be expensive. Our consumers add up to two-thirds of the Indian population, hence addressing sustainability issues is a high priority. - Building a good reputation through responsible leadership: CR is one of the key components of reputation and trust.

A good reputation can be a major competitive advantage and can build employer brand and consumer loyalty. big difference We will further demonstrate that successful business strategies are driven by responsible business practices. The key to this approach is developing a CR framework which integrates the social, economic, and environmental agenda with our business priorities – growing markets, maintaining the competitive edge, enjoying goodwill in the communities we operate in, and building trust and an exceptional reputation.

Hence, in the future, the three cornerstones for CR integration with business at HUL will be: - Growing markets responsibly: We will address issues related to hygiene and nutrition through product innovations and awareness. Gathering information about the concerns expressed by consumers, communities, and stakeholders can help us identify opportunities for innovation.

COMPETITIVE, PROFITABLE & SUSTAINABLE GROWTH

Business drivers Growth barriers Sustainability integration Strategic objectives executed through our growth enablers

BRANDS

  • Grow markets
  • Fuel market-relevant innovation
  • Raw material security
  • Efficient supply chain
  • Poverty
  • Low awareness on health & nutrition
  • Climate change
  • Water scarcity
  • Raw material scarcity
  • Investor analyst evaluation
  • Employer brand
  • Building trust
  • Beneficiary stakeholders

PEOPLE

  • Develop employees as change agents for sustainable growth
  • Ensure health & safety of our people
  • Instill values
  • Advocate sustainability values in future leaders

PROCESSES

  • Shaping the sustainability agenda by leveraging partnerships
  • Drive eco-efficiency in our operations and extend principles with business partners
  • Engage and communicate with stakeholders in a responsible manner
  • Grow markets responsibly
  • Create a positive impact through our brands Consumers Business partners
  • Employees Ecosystem
  • Society Investors
  • Ensure sustainable practices
  • Leadership in sustainable sourcing of agribased products
  • Lead water conservation in Indian villages
  • Corporate reputation
  • Responsible leadership

Our brands, people, and processes act as enablers of our corporate responsibility strategy and will help us grow markets, fuel innovation, create societal legitimacy and build our reputation, thereby ensuring competitive, profitable and sustainable growth, and a positive impact for our stakeholders.

STAKEHOLDER ENGAGEMENT FOR IDENTIFYING ISSUES THAT ARE MATERIAL TO US

We appointed SustainAbility International to conduct stakeholder engagement on our behalf. They analysed and assimilated the expectations of stakeholders regarding issues that matter to them.

These expectations were similar to the areas identified by us, where HUL's contribution could create a significant impact.

SCOPING THE AREAS FOR INTERVENTION

While the issues are many, it is necessary to address them in a systematic manner to make a real difference. Instead of spreading thin across all issues, we have chosen to work on five areas to ensure a deep impact. These areas have been arrived at using the output from our stakeholder engagement process and areas which we are poised to address through our business. Key messages from stakeholders: - ‘Target. Allocate resources. Achieve those targets.

This is more critical than just being visible & talking about it. ’ - ‘We feel that some Indian companies can be leaders in their respective sectors. HUL has the potential to be such a leader. ’ - ‘Invest for your markets – don't do social work, it isn't your ballgame. ’ - ‘Please make money out of it. When you make money out of it, things are going to change. ’

MAPPING ISSUES

  • Stakeholders Priority Issues
  • Water conservation in Indian villages
  • HUL Hygiene & Nutrition
  • Social Investments
  • Health
  • Poverty
  • Water scarcity
  • Waste management
  • Affirmative action
  • Corruption
  • Ethics
  • Labour rights
  • Corporate Brand Issues to Watch Packaging waste
  • Climate change
  • Commercial Initiatives
  • Hygiene
  • Nutrition
  • Livelihoods
  • Product Brands
  • Basic Issues
  • Eco-efficiency in manufacturing
  • Business Basics In our manufacturing: CO2, Water, Waste Business Operations
  • Apart from the above five areas, the basic issues such as product safety, labour rights, employee health & safety, etc. have always been our areas of focus and action.

OUR COMMITMENTS

Execution enablers Product brands Strategic action Our brands will lead as agents of change Activities Reduce environmental impact through our brands Drive hygiene for a healthy India - Lifebuoy soap will create awareness about hygiene - Pureit water filter will protect Indian families with safe drinking water Help consumers make a healthy choice through nutritional labelling programme Goal 2015 To eliminate PVC from our brand packaging Responsibility - GC member Leadership Team, Home & Personal Care Grow markets responsibly To cover 150 million Indians cumulatively /3rd of our foods & beverages portfolio to be ‘Healthy choice’ certified (as per 2007 benchmarks) All business leadership trainees Leadership Team, Foods Employees Develop employees as change agents for sustainable growth Strengthen ‘Rural stint’ programme for all new recruits wherein they will deliver constructive social projects Encourage employee volunteering Engage with modern trade on sustainability Scale up Shakti Entrepreneurs and increase their earnings Sustainably source key agri-based raw materials like tea, tomato, palm oil as per Unilever goals and plans

Leadership Team, HR (Employee Relations) 50% of employees Endeavour to drive the sustainability agenda with key modern trade partners Extend the Shakti programme to 75,000 entrepreneurs and work towards improving their earnings - Over 50% of tomatoes sourced from India will be from sustainable sources - Purchase all palm oil from certified sustainable sources - Purchase all tea for our Lipton tea bags from certified sustainable sources Processes (Sales) Shaping the sustainability agenda by leveraging partnerships Leadership in sustainable sourcing of agri-based products.

Leadership Team, Customer Development Ensure sustainable practices at HUL Brand HUL Leadership Team, Supply Management Employees Promote sustainable practices at HUL Drive workplace safety for our employees and sensitise manufacturing business partners on the same Create awareness of human rights amongst all employees All HUL and manufacturing business partner units 100% employees including workmen Above 25% reduction of CO2 from energy by 2012 in our own factories on per tonne basis against 2004 baseline In all our own factories where it has the potential to yield results

Head, Environment & Safety Leadership Team, Legal Head, Environment & Safety Processes (Manufacturing) Reduce environmental impact of our operations and extend the principles with our business partners Conserve water in Indian villages Build responsible leadership Reduce CO2 from energy Implement rainwater harvesting in our own sites We will endeavour to harvest rainwater and build awareness and capability on water conservation Enable and encourage social business entrepreneurship through strategic volunteering of employees and mentorship Communicate sustainability agenda transparently

Responsible leadership Brand HUL Future leaders and employees Process (Communication and Engagement) Conserve 20 billion litres of water Support social entrepreneurship programmes in academia Head, Corporate Responsibility Leadership Team HR (Talent development) Engage and communicate with stakeholders in a responsible manner Institute an external stakeholder panel for HUL Head, Corporate Responsibility Awards & Recognitions (2009)

Awarded Customer and Brand Loyalty Award by Business India & Business Standard Three HUL brands featured in the top ten, and seven in the top twenty list of Brand Equity's Most Trusted Brands survey Received CNBC AWAAZ Consumer Awards in three categories: - Most Preferred Personal Care Company - Most Preferred Home Care Company - Value for Money Brand Through the seasons, the bees work hard for the welfare of the hive. Their every action is geared towards nourishing and protecting each other, and growing together.

Through our brands, we hope to address the issues of low awareness of hygiene and nutrition, and impact the lives of our consumers.

CONSUMERS

Making a difference through our brands Despite advances in science and increasing prosperity, millions of people still lack access to basic sanitation, nutrition and healthcare. We believe that our brands can grow by addressing some of the most important social and environmental challenges facing the country today. In 2005, we started to embed the sustainability agenda into our brands by using a process called Brand Imprint. It is a rigorous, diagnostic process hat analyses the social and economic value, as well as the negative impacts of a brand. This process has been carried out across all our key categories. Social and environmental considerations are now integrated with innovation plans for our major brands. We believe we can make a difference – through our brands and behaviour change campaigns in the space of nutrition and hygiene, and by providing consumers, from all income groups, access to a better life.

Our Pureit water purifier provides water 'as safe as boiled' without the need of electricity or pressurized tap water. Pureit eliminates waterborne germs that cause diseases, and is a more sustainable and affordable alternative to safe drinking water than boiled or bottled water. In 2009, we expanded sales of Pureit in all 28 states in India, increasing access to safe drinking water from 5 million people in 2008, to more than 15 million people in 3 million households. We are working with UNICEF to offer safe drinking water in schools and day-care centres in low-income communities in southern India.

We are seeking sustainable and scalable ways of expanding safe water education and offering products in both, urban and rural, communities. In 2009, Pureit received international recognition in the UK government-backed innovation awards (the 'iawards'), winning in the consumer product category for 'an innovation which supports society and positively impacts the lives of its consumers'. The Government of India's premier health assessment agency, the National Institute of Epidemiology (NIE), conducted a year-long scientific study in Chennai on the impact of Pureit in containing diarrhoeal disease in the slums that were affected by the tsunami.

The NIE scientifically established that homes using Pureit had a 50% lower incidence of diarrhoea. Notably, this health benefit was delivered even in the absence of any other health, hygiene, or sanitation intervention.

THE IMPORTANCE OF HANDWASHING

Studies show that washing hands with soap is one of the most effective and inexpensive ways of preventing diseases. It can reduce fatalities from diarrhoea by almost half and that from acute respiratory infections by a quarter. Our Lifebuoy soap brand leads our hand-washing campaigns.

Its vision is to change the hygiene behaviour of 1 billion people across the world by 2015 through encouraging people to regularly wash their hands with soap. Lifebuoy is the largest selling soap brand in India with over 70% Indians using Lifebuoy at least once a year. In 2009, Lifebuoy carried out a country-wide campaign to promote good health practices by actively encouraging people to inculcate good hygiene practices, such as washing hands with soap at least five times a day. Every year, diarrhoea and acute respiratory infections claim the lives of millions of children.

Studies show that most people know they should brush twice a day, or wash their hands with soap after using the lavatory. Yet they have not translated this knowledge into a habit. The government and health agencies are grappling with this issue. We have been working in partnership to help develop effective interventions and share our expertise to bring about a change in consumer behaviour.

WHAT WE DO

Our approach is to: - Make effective products that improve health and well-being - Change habits through behaviour change programmes - Work with partners to develop joint campaigns and achieve a broader reach 12

HUL Sustainable Development Report, 2009 Lifebuoy's Swasthya Chetna is the single largest private rural health and hygiene educational programme undertaken in India. The objective of the programme is to educate people about basic hygiene habits. With a focus on rural communities, the programme targets school children, women, and community elders. To ensure that the message of hygiene awareness is received well, the programme involves a range of engaging activities, including quizzes, games, songs, and the popular 'glo-germ' demonstration kit, with which one can see the germs on the hands, even after they've been rinsed with only water.

This proves that using soap is essential for staying healthy. Since 2002, the project has touched more than 120 million Indians. In recognition of this massive effort, the Indian Postal Department released a special Lifebuoy Swasthya Chetna Postal Cover in 2006. Lifebuoy also supports the Global Handwashing day. It is an annual event backed by the PublicPrivate Partnership for Handwashing with soap, of which Unilever is a founding partner. Lifebuoy, in partnership with a coalition of public, and NGO partners launched the inaugural Global Handwash Day in India on October 15, 2008.

As part of this initiative, in 2009, Lifebuoy partnered with the Government of Tamil Nadu and organised a massive event to educate people about the importance of washing hands. Thousands of school children took part in awareness-raising activities and were encouraged to take handwashing pledges. To assess whether using soap at the right time actually reduces the incidence of sickness in families, in 2007-08 Lifebuoy conducted a clinical trial involving 2,000 families. Half the families were supplied with soap along with regular hand-washing education.

The other half continued with their normal hygiene practice, acting as a control group. The trial revealed that among those who had received hygiene education; the use of soap increased by as much as ten times and led to a 25% reduction in the number of incidences of diarrhoea among children aged five. conducts oral hygiene programmes in schools. In 2009, Pepsodent went to 180 schools across the country to educate more than 1,50,000 kids about the 'right brushing, night brushing' practice.

Pepsodent is endorsed by FDI, the largest dental association globally, and is also among the most trusted brands in India (Brand Equity, Economic Times). Its mission is to improve oral health by encouraging children and their families to brush twice daily.

IMPROVING ORAL HEALTH

Tooth decay and gum disease are one of the most common ailments today. The World Health Organization has identified oral health as a neglected area of general health. In developing countries, like India, there is low awareness of the importance of oral hygiene. Encouraging people to brush regularly remains one of our main objectives.

The benefits are proven – scientific research has shown that brushing teeth twice a day, with fluoride toothpaste, can reduce tooth decay by up to 50% in children, compared to only brushing once. This is a clear opportunity for business growth as well as improving oral hygiene in society. Here, too, changing everyday habits is critical. As one of the leading toothpaste companies in India, we have the opportunity to make a difference. Pepsodent, our oral care brand

NUTRITION

As lifestyles change, there is great concern about the effect of diet on general health and wellbeing.

Governments and policy-makers expect food companies to improve the nutritional quality of their products and to be more transparent and responsible in their marketing & communications. each cup of tea, to help every family live a healthier life and help address problems caused by micro-nutrient deficiencies. One can get 50% RDA of important B vitamins (B2, B6, B9 and B12) by consuming three cups of Sehatmand tea. products which on one hand enhance nutritional values and are accessible by the masses. At the same time, compliance is also easy since it fits into the daily lifestyles of communities in rural India. Consumers are now interested in the nutritional value of their food and where it comes from. Companies that ignore these trends could face falling sales and market share, increased legislation and risk to their reputation. This is achieved by using a combination of technology and healthy ingredients to create a nourishing brand of tea that is available at an affordable price. The coating technology allows us to use tea as a carrier for micro-nutrients and vitamins that help strengthen the immune system and protect families from weakness and common illnesses.

An intensive on-ground campaign called 'Sehatmand Parivaar – Sehatmand Bharat' led by major NGOs and civil society groups was launched in a few states. The mission of this programme is to educate people about combating micro-nutrient deficiency related problems with proper health and nutrition. This initiative seeks to bring together gram panchayats and various governmental and non-governmental bodies as well, so that the education campaign can reach across villages. Ambarish Singh, CEO of Pahal, a nodal NGO in Uttar Pradesh said, ‘Malnutrition has serious long-term consequences because it impedes physical and mental development. 0% of our population cannot meet its daily requirement of micro-nutrients. What is alarming is that many communities in urban, as well as rural areas, are not even aware of the causes and health manifestations of micro-nutrient and vitamin deficiencies. We support these innovative

NUTRITIOUS DELIGHTS

To cater to the needs of the growing number of health conscious people who will not compromise on great taste, Kwality Wall's launched a select range of fruit flavours. Each standard scoop (80 ml) has less than 99 Kcal.

WHAT WE DO

We believe we can make a difference to people's health even as we boost business growth. Through our products and partnerships we aim to make a difference to the quality of people's diets, helping to tackle both over- and undernutrition. Our approach is founded on:

  • Improving the nutritional quality of all our products
  • Developing new products and expanding consumer choice
  • Providing clear information

HEALTHY CHOICE

Our vitality initiatives include a Nutrition Enhancement Programme – a cross-category benchmark developed by Unilever Food & Health Research Institute, based on international dietary guidelines.

HUL introduced this programme across key food brands in India to reduce the levels of unhealthy ingredients such as trans-fat, saturated fat, salt, and sugar. Most of our food and beverage brands carry the 'Healthy Choice' stamp (as per 2005 benchmark). The 'Healthy Choice' label is granted to food products that comply with the qualifying criteria based on international dietary guidelines.

AFFORDABLE INNOVATIONS

Pureit, the home water purifier, provides affordable and safe drinking water for middleincome families in India as it is cheaper than boiling water, or buying bottled water. Brooke Bond Sehatmand addresses the health needs of the low-income group of consumers through their daily intake of tea. It is a unique innovation that allows us to use tea as a carrier for micro-nutrients. low-cost manufacturing process, wide distribution network, and a different approach to pricing. Today, Wheel is the largest selling detergent brand in the country, reaching more than 120 million households1.

Our Shakti initiative is a micro-enterprise programme that creates opportunities for the rural population to sell our products door-to-door in their areas. Through this initiative, we expect to make our products more accessible to lowincome consumers and reduce the menace of locally sold spurious products.

INNOVATIVE BUSINESS MODELS

In the laundry category, we created a new business model for Wheel detergent powder that delivers superior value to low-income consumers by driving efficiencies at every stage of the value chain. We developed a new product formulation, In most product categories, we have low unit packs priced between 50 paise to INR 5, including brands like Lifebuoy, Clinic plus, Annapurna iodised salt and oral care brands.

Our responsibility goes beyond manufacturing good quality products and distributing them. We need to ensure that our products are safe for the consumers and the environment. We must also communicate clearly with consumers so that they can make an informed choice. Risks for consumers, workers, and the environment, with regard to the safety of products and supply chain technology - Environmental impacts, with regard to the sustainability of Unilever's brands, products and supply chain Our view on animal testing and chemicals in products: Most of our products are developed on a global scale by following the policies and procedures laid down by Unilever. Mentioned below is the approach and work done by Unilever in this area.

RESPONSIBLE MARKETING AND COMMUNICATION

We are committed to responsible marketing and have clearly defined principles which guide our communications.

Advertising is a way for us to engage with consumers on issues that matter to them. At the same time, we recognise the influence of marketing and advertising on consumers and take our responsibilities seriously. This means ensuring that all the claims we make have a sound scientific basis and that all such communication passes the baseline test of being 'legal, decent and honest'.

PRODUCT SAFETY

Rigorous assessments are undertaken to establish that the product is safe for consumers as well as the environment. This is ensured through the SEAC (Safety and Environmental Assurance Centre) certification process for product safety and SIMAS (Safety in Manufacturing and Supply) clearance for process safety. Adherence to all applicable regulations including Bureau of Indian Standards (BIS), Drugs and Cosmetics Act is non negotiable. All risk assessments are undertaken by SEAC. SEAC's role is to provide independent scientific evidence and guidance so that we can identify and manage:

Animal testing: The vast majority of our products reach the consumer without being tested on animals. Unilever has been developing and using alternatives to animal testing, including new approaches to risk assessment, biological, and computer-based modelling for data generation. Unilever has a policy on animal testing which explains, in detail, our view on this issue. Use of chemicals: Unilever determines the safety of chemicals in our products by assessing the risk, taking into account the inherent properties of the chemicals (hazard) and the way they are used (exposure to the hazard).

We carefully choose chemicals to ensure they are safe for people and the environment. Safety and environmental decisions are made independent of commercial considerations through the SEAC. 16 HUL Sustainable Development Report, 2009 Self-regulatory codes We support the development of self-regulatory codes for all our marketing and advertising activities, and apply these codes across our business. Working through industry trade bodies, such as Advertising Standards Council of India (ASCI), we have supported the development of general principles in this area and their integration into advertising and marketing self-regulatory codes and systems.

In 2009, six complaints were filed with ASCI against advertisements by HUL brands and one complaint was upheld. The communication was suitably modified. Food & beverage marketing principles In addition to national laws and self-regulatory codes in India, we apply Unilever's principles to the marketing and advertising of all our food and beverage products. Our food and beverage marketing principles contain additional clauses for marketing food and beverage products directed at children. They require that our marketing practices: - do not convey misleading messages - do not undermine parental influence.

Our advertisements always show parents as gatekeepers to the product being consumed - do not encourage pester power - do not suggest time or price pressure - do not encourage unhealthy dietary habits - do not blur the boundary between promotion and content HUL has decided that it will not advertise food and beverage products to children under 12 years, except for products which fulfill specific nutrition criteria that are based on accepted scientific evidence and/or applicable under national and international dietary guidelines.

For the purpose of this initiative, ‘advertising to children under 12 years’ means advertising to media audiences with a minimum of 50% of children who are under 12 years. Further, we have decided that there will be no communication related to food and beverage products in primary schools, except for products which fulfill specific nutrition criteria that are based on accepted scientific evidence and/or applicable under national and international dietary guidelines, where specifically requested by, or agreed with, the school administration for educational purposes.

On pack labelling regulations For on pack information, our home care, personal care and food brands adhere to applicable regulations such as the Drugs and Cosmetics Act, Weights and Measures Act, Bureau of Indian Standards Specifications, and the Trademark Act Copyright Act. Food and beverage brands also adhere to the Prevention of Foods Adulteration Act, Fruit Product Order, Tea Control Order, Tea Act, Tea Board Regulations, etc.

COMMUNICATION WITH CONSUMERS

Providing a good consumer dispute redressal system Consumer feedback is very critical for HUL, and we actively seek it.

HUL has appointed an ombudsman for consumer disputes redressal. This is a unique initiative and the first time a consumer goods company in India has appointed an independent and expert mediation procedure for the benefit of consumers. We also have a consumer care helpline service called Levercare. Helpline contact details are part of our standard on-pack information. To place complaint resolution on top priority, all complaints with high or medium risk are targeted for resolution within 14 days.

Awards & Recognitions (2009) Project Shakti won the Silver Trophy at the EMPI-Indian Express Indian Innovation Awards Kwality Wall's Swirl's awarded 'The Franchisor of the year' for the Ice-cream parlour category by Franchise India Focused and reliable, the bee diligently collects pollen to bring back to the hive, and while doing this, it pollinates several flowers, benefiting each one of them. HUL is dedicated to creating a sustainable future for its stakeholders. Our activities create equitable benefits for all our business partners. We help them grow, as we grow.

BUSINESS PARTNERS

Enhancing livelihoods through partnerships From sourcing to distribution – we engage with a diverse set of business partners. Our business creates economic benefits for all our partners, including our suppliers and distributors. We are committed to creating a positive and lasting impact on society by developing successful business partnerships built on mutual trust and respect. Ultimately, we hope, we will realise our strategic objectives of growing responsibly while enhancing the livelihoods of our partners.

We actively seek to resolve sustainability issues across our entire value chain. This involves working closely with our suppliers and customers. Working with farmers who are part of our supply chain and developing micro-enterprise models, like Shakti, in our distribution chain has led to twin benefits. It boosts the income and prospects of the farmers and small-scale businesses we work with. It also provides us with security of supply of raw materials and new distribution routes to improve the penetration of our products. Our products require a large amount of agriculture and forestry inputs.

These supplies are sourced from contract growers, third-party suppliers, and small holders. Businesses are expected to play a role in addressing supply chain issues such as working conditions, and fair incomes for growers. In these areas, our company is well placed to contribute. Farm workers: We are working with Rainforest Alliance, an international environmental organisation, to ensure that the tea estates we source from are certified. Rainforest Alliance certification follows a comprehensive approach towards sustainable farm management, covering social, economic, and environmental aspects.

As part of the certification it is ensured that workers are paid wages and perks higher than the minimum wage and they are adequately trained on occupational health and safety. Small-farm holders: We also work with small-farm holders to implement sustainable agricultural methods and improve both – their crop yields and business profits. In India, Unilever is working with the government to promote increased yields of gherkins used by Unilever's Amora and Maille brands. We are jointly funding eight drip-irrigation trials with gherkin suppliers to help reduce water use and increase yields and profits.

So far, two trials have been a success, resulting in a yield increase of 84%, increased profits of 245%, and a 70% reduction in water use. However, two other trials failed due to the incorrect implementation of the drip-irrigation technique. We are researching how we can help farmers avoid similar errors. More crop trials are planned in 2010.

SECURING SUPPLIES & ENHANCING LIVELIHOODS

Sustainable sourcing is a strategic imperative from a business perspective. It not only helps us manage a key business risk, it also presents an opportunity for growth for us and for our partners.

HUL Sustainable Development Report, 2009 19 Business partner code Our expectations from our suppliers are set out in our 'Business Partner Code', which details our requirements in key areas of health and safety at work, business ethics, labour standards, consumer safety, and the environment. Unilever has formalised a Supplier Quality Assurance Policy to accompany the Business Partner Code. The responsibility of implementing the policy lies within the procurement function. The policy ensures that we have a consistent approach to supplier assessments.

It also defines how the assessments will be done, by whom, and where the responsibility lies to ensure compliance. Shakti: Micro-businesses, massive impacts Shakti is our initiative that combines social responsibility, sustainability, and business strategy. India has more than 6,30,000 villages, most of these are 'hard to reach' and offer relatively lower business potential. Hence, reaching them through the conventional distribution system is a challenge. In 2000, we collaborated with Self-Help Groups (SHG) to extend our rural reach.

We partnered with the SHGs by offering them opportunities for business. By promoting micro-enterprises, our initiative not only makes great business sense, but also has a deep social impact. The business objective is to extend our direct reach into untapped markets and to build brands through local influencers. The social objective is to provide sustainable livelihood opportunities for underprivileged rural women. On an average, a Shakti entrepreneur earns INR 700 - 1000 a month, and since most of them live below the poverty line, this earning is significant, often doubling the household income.

Shakti started with 17 women in two states. Today, it provides livelihood enhancing opportunities to about 45,000 women in 15 Indian states and provides access to quality products across 100,000+ villages and over 3 million households every month. Project Shakti contributes to 10% of rural turnover nationally. In most Shakti markets, we are dominant and enjoy a market share which is qualitatively better as compared to non-Shakti markets. Shakti is not only a channel for increasing our reach, the Shakti entrepreneurs are also brand ambassadors for all HUL brands in rural India.

Their relationship with consumers is forged by their home-to-home contacts, and go a long way in building brand loyalty.

WINNING WITH CUSTOMERS

Our products reach consumers through a network of customers – from large retailers to a more diverse group of distributors, wholesalers, and small, independent outlets and kiosks. It is our constant endeavour that consumers have ready access to our products across every corner of urban and rural India. We work with over 2000 distributors and cover more than 6. 3 million outlets.

This generates significant indirect employment opportunities as our distributors employ a large number of salespersons and handling staff. We have also developed innovative distribution channels based on micro-enterprise models. These not only improve the reach of our products but also generate livelihood opportunities. 20 HUL Sustainable Development Report, 2009 Our Shakti initiative can be described in many ways – as a sales and distribution initiative that delivers growth; a communication initiative hat builds brands; a micro-enterprise initiative that creates livelihoods; and a social initiative that improves the standard of life in rural India by providing quality products. What makes Shakti scalable and sustainable is the fact that it contributes not only to our business, but also to the community it is a part of. make INR 3000-4500 a month. This channel generates over INR 16 crores in commissions for our vendors. Some of our vendors have now become distributors themselves, managing INR 2 to 10 crores in the ice-cream business and earning upwards of INR 1,00,000 per month.

Arvind Jain's story is one of the many success stories we are privileged to be part of. Kwality Wall’s: Mobile cart vendors Thousands of men belonging to economically weaker sections travel to bigger Indian towns seeking employment. They are employed in a variety of labour intensive activities, usually earning less than what is prescribed by the Minimum Wage Act. Through our marketing and distribution channels, we are working towards providing sustainable and dignified entrepreneurship opportunities to over 5,500 such migrant labourers by engaging them in our ice-cream distribution operations.

We provide uniforms, first aid kits, behavioural and basic sales training and financial support through our channel partners. Initial stock on credit and a vending cart with freezers are provided by our channel partner to start them off. We have been able to make a substantial improvement in the quality of life of these vendors with this opportunity that gives them a regular income, growth potential, entrepreneurial training, and better living conditions. In most cases, each vendor can Ten years ago, Mr. Arvind Jain chose to be an entrepreneur, and became a vendor of Kwality Wall's in Delhi.

He had the responsibility of taking care of his wife, two children and four younger brothers. He began earning a modest sum of INR 1000 per month. But soon, with his persistence, excellent selling skills and friendly nature, he was able to significantly enhance his earnings. His story even inspired his brothers to become vendors of Kwality Wall's. Over the next few years, he decided to take the next step, and with the help of company officials, he invested his savings and became a distributor of Kwality Wall's. He now manages a few hundred vendors himself, running a vibrant and sizeable business.

Today, he is an extremely successful business partner of Kwality Wall's, earning a good living for himself and his family. He has his own house in Delhi, his brothers are now well settled. He dreams of an even better future for his children, who are studying in a reputed school in Delhi. Mr. Jain is a self-made man, who has created an inspiring success story through his partnership with Kwality Wall's. Unilever in India: Hindustan Lever's Project ShaktiMarketing FMCG to the Rural Consumer, V Kasturi Rangan/ Rohithari Rajan, HBS case study, March 2006

HUL Sustainable Development Report, 2009 21 Awards & Recognitions (2009) HUL ranked fourth in the ‘Top Companies for Leaders, 2009' (Asia Pacific region) and 10th place in the global rankings in a survey carried out by Hewitt Associates HUL's Goa factory won a Gold Trophy at the Greentech Awards in the manufacturing sector category for their outstanding work in Safety Management Bees are exemplary social insects, committed to prioritising the colony's needs and working together. Such team work and a passionate commitment to achieve a shared goal is what helps HUL create milestones.

EMPLOYEES

Building responsible leaders Our employees are our biggest assets. Every step taken by our team boosts our growth exponentially. We endeavour to constantly strengthen our team's capabilities and develop innovative business solutions for a competitive, profitable, and sustainable future. We have clear action plans aimed at building responsible leaders, ensuring employee health and safety, and promoting sound human resource practices and policies. Over the years, our approach towards nurturing leaders has been very successful.

More than 400 CEOs who are steering the Indian industry have been part of HUL. It is vital that we have people with the right talent and supporting systems to meet our growth ambition. We are developing people and building structures to help us advance towards our new vision. It is essential for us to: - Build the capabilities of our people - Instill values - Ensure health and safety - Develop responsible Human Resource (HR) practices and policies business leaders. It provides exposure to the various functions in a large organisation.

Each year, we choose the best business schools and engineering colleges in the country and select promising talent to join us for the programme. During this 15-18 month structured programme, each trainee goes through cross-functional stints, a rural stint and an international stint (in another Unilever business). To facilitate learning, a senior manager is appointed as a mentor, a young manager is designated for informal connect and support, and a tutor is assigned to every trainee. Leadership development Leadership development is a strength HUL has built over decades and it is jointly owned by line managers, HR and employees themselves.

The entire process is holistic and well integrated, right from attracting the best talent, providing diverse experiences through challenging roles and job rotations every 2-3 years, a high performance culture, strong capability building plans, rigorous and well-executed HR planning processes.

Our Business Leadership Training programme grooms young managers and makes them of our talent processes are considered industry best practices, for example, the Functional Resource Committees, Leadership Differentiation Toolkit (a matrix that maps high performing and high potential individuals based on an objective evaluation process every year on the 'what' and 'how' of performance). These observations are then used to devise strong career and development plans for managers, which includes career planning and international opportunities within Unilever.

HUL is a key source of talent for Unilever and currently 195 HUL managers are on international assignments with Unilever. Engaging future leaders In 2009, HUL and CNBC TV 18 started 'Lessons in Marketing Excellence'. It was a series of Inter Business School marketing challenges. Through this initiative, marketing students got an opportunity to go through real life business cases and display their thought process and devise solutions with the advice of those in the industry. HUL Sustainable Development Report, 2009 23

India immersion In order to connect our employees to the rural population and bring them closer to the social and economic challenges India is facing, we have a rural programme for managers as well as the HUL-Sankalp volunteering initiative. Hul Sankalp: This is our formal employee volunteering initiative. In 2008, our 75th year in India, our employees committed to volunteering one hour for each day HUL has been in India, which collectively meant 27,375 hours of community service. In 2008, our employees volunteered more than 48,000 hours against a target of 27,375 hours.

In 2009, we clocked more than 1,15,000 hours of volunteer work. Rural Programmes for Managers: Business Leadership Trainees are required to go through a rural stint and spend time working on projects that address the concerns of the rural population. In 2009, 37 trainees were sent for such projects. They interacted with the rural consumer and understood their profile, psyche, and lifestyle. They also gained an understanding of the Shakti micro-enterprise model. framework that guides us in our day-to-day operations and establishes an unshakeable value system.

This code is founded on three basic principles: - Formation of trust and respect - Building mutually beneficial relationships - Engaging in responsible management practices To deepen the understanding of this code awareness/re-iteration workshops and reinforcement programmes are also carried out regularly in a structured manner by the members of the management committee and leadership teams. Such training also includes anti-corruption awareness. Violations of the CoBP are reported in the quarterly communication bulletin to enhance sensitivity of the employees to CoBP compliance.

These reports are also translated into the local language. All new employees receive the entire code as part of their initiation kit. A copy of the code and a detailed report about reported cases is accessible to all employees via the company intranet. Responsible leaders Sustainability is now even more closely tied to our business strategy. Ensuring its implementation requires a workforce that is aware of the wider impacts the business has on society and the environment. Our R&D function has developed a three-day sustainability foundation course. The course is open to all managers across the business.

A complementary sustainability awareness e-learning module was developed in 2009. These courses aim to show how one can deftly weave sustainability into our business strategy as a means of achieving a competitive advantage.

ENSURE EMPLOYEE HEALTH AND SAFETY

Personal well-being We engage in a spectrum of activities to communicate the importance of personal well-being to employees. We address physical, emotional, and psychological health issues through company-wide periodical activities such as one-to-one discussions, well-being workshops and awareness campaigns. Periodic medical check-ups for employees are the norm.

During these checks, physical health is evaluated and practical advice is dispensed on any health concerns that might be identified. Follow-up meetings are adhered to strictly. Counselling facilities are available on request. Recreational facilities to enhance physical fitness are set up in many locations. Ergonomic design of work-stations has also helped in minimising work related muscular or skeletal disorders. We have introduced an initiative called the Vitality Index which covers all our employees and colour codes (green, amber and red) them based on their state of health.

Employees identified in the 'Red' state are provided specialist support and treatment as necessary. We conduct regular education, training, and counselling programmes on various diseases, including HIV/AIDS, diabetes, hypertension, malaria, water-borne diseases, blindness, anaemia, and cancer. We offer a nondiscriminatory working environment for those afflicted with HIV, consistent with our policy on HIV/AIDS.

INSTILLING VALUES

Code of Business Principles People, integrity, and values have always been central to HUL and will continue to be so.

Our policies and programmes are based on the values as set out in our Code of Business Principles (CoBP). This describes the way we treat our people and also the high standards of behaviour and integrity we expect of them. It is the moral 24 HUL Sustainable Development Report, 2009 Occupational safety We stand committed to being an injury-free organisation. Our safety principles have the same standing as our Code of Business Principles (CoBP) and are deeply integrated into our business processes, people, systems, technology, and facilities. Safety is driven top-down and supported by demonstrated leadership.

Prevention is at the core of our safety policy and working safely is a condition of employment. This policy has been implemented across manufacturing units and offices and has been included as a key responsibility in line management and business performance. Safety data is collected from all our own manufacturing sites. It covers 42 manufacturing sites (including one site in Nepal), six offices, and two research labs. Our safety performance is governed through the Central Safety Health and Environment Committee (CSHEC) which is responsible for strategic direction on occupational safety and health issues.

It is supported by sub-committees which are responsible for recommending standards. Implementation and monitoring is carried out by safety health and environment committees at division and unit level (DSHEC and USHEC). The Corporate Safety & Environment team is responsible for providing expertise; coordinate CSHEC and Sub-committee activities; check conformance to standards and help build safety capability in line organisation. All manufacturing units conform to Unilever's internal safety, health and environment Framework Standards (FWS) modelled on ISO-14001 and OHSAS 18001.

In addition to this, some of our manufacturing units conform to the OHSAS 18001. Behavioural-based safety: In order to boost our safety journey we have imbibed behaviour-based safety systems since 2004. We have partnered with Dupont to achieve leadership and excellence in our safety performance. We have trained more than 3300 managers and executives through workshops for Developing Safety Commitment (DSC) aimed at helping leaders effectively carry out safety engagements and identify personal action plans to demonstrate his/her safety commitment.

We have established systems for 'safety engagement with employees' to proactively identify unsafe acts and unsafe conditions. All managers and executives in the factory have leading indicator targets for behavioural audits, Safety Action Meetings (SAM), hazard identification, and system checks. The target for leading indicator is more than one safety engagement per employee, per month. We strongly believe that visible and felt leadership and employee involvement are the key to the success of our safety programme.

It is this visible leadership commitment that builds trust and faith across the board, and encourages personal responsibility throughout the organisation. In 2009, DuPont published a case study on HUL, which showcased our efforts in leading corporate culture transformation through 'Behaviour Safety'. Leading indicators represent proactive measures to bring about behaviour change which includes Hazard Identification, Near Miss Incidents etc. Our continued focus and monitoring of leading indicators has helped in improving our performance in lagging indicators.

Our consistent efforts have resulted in a 30 percent decrease in the Total Recordable Frequency Rate over 2004 base Total Recordable Frequency Rate (TRFR) is tracked for employees on duty. It covers workplace accidents, excluding those cases that require simple first aid treatment. It is expressed as a rate per one million hours worked. HUL Sustainable Development Report, 2009 25 Fatality at Work in 2009. The total rate of employee turnover (total exits due to resignation, retirement, demise, early retirement) in 2009 was 10% for managers and 14% for officers. The rate of turnover for workmen in our operations was negligible.

  • Child labour: Our recruitment policy doesn't permit engagement of child labour directly or indirectly. Regular audits ensure compliance at our own sites and at third party locations/sites.
  • Forced or compulsory labour: The Employee Relations Policy and business principles adopted by the company prohibit such practices and this is upheld in letter and spirit.
  • Rights of indigenous people: We haven't witnessed any violations of the rights of indigenous people and none of our sites are at risk of violating such rights.
  • Diversity: We are committed to maintaining diversity in our working environment. We aggressively pursue the target of increasing the proportion of women in management cadres. We have a number of gender-friendly policies such as Maternity Benefit, Career Break, Flexi-working, Agile Working from remote location, Sabbaticals, Part-time work and Career Breaks. In 2009, 19% of our managers and 9% of our officers were women. Our eight-member management committee has a woman member. Our formal employment and fitment policy absolutely prohibits gender-base

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