10 september 2005
Unilever's impact on poverty measured
With a workforce of about 5,000 people, and some 1,8 million small store holders and street vendors distributing and selling its products, Unilever Indonesia (UI) is a company that could really make a difference for poor people. Unilever and Oxfam ventured into a challenging study to find out what UI's 'poverty footprint' is.
The report 'Exploring the Links Between International Business and Poverty Reduction: A Case Study of Unilever in Indonesia', looks at the impact of UI's entire value chain, from its interactions with small-scale producers in the supply chain to those with low-income consumers. One of the conclusions is that the closer and more formally workers in the value chain are linked with UI's operations, the more they benefit from the company. In itself this outcome is not amazing, but the underlying data are quite interesting. Indirectly, the full-time equivalent of about 300,000 people make their livelihoods in UI's value chain. More than half of this employment is found in the distribution and retail chain. Two thirds of the value generated along the chain is distributed to participants other than UI (producers, suppliers, distributors and retailers). And taxes paid by UI to the Indonesian government account for 26% of the value generated in the chain.
Unilever spokeswoman Alexandra Middendorp, asked what the impact of the study will be for her company: "This is the first time such a study has been conducted, and we were glad to participate. Not only to get insights into how we can increase our contribution to poverty reduction, but also because of the cooperation with an organization like Oxfam. Both partners have different views on issues, and we have learned a lot from each other. We will have to study the data more closely, before we can say what the impact will be on our activities in Indonesia."
According to Oxfam Netherlands' director Jan Bouke Wijbrandi, the real value of the research is "that it is a first step in developing a method to measure the impact of a company on poverty reduction. This is a highly relevant issue. The World Bank, for instance, is also trying to develop a methodology to measure whether extractive industries contribute to or harm poverty reduction. We will certainly carry on to make the fruits of this research available for other international players."
P+ Webtip: Unilever Indonesia