Unilever R&D chief: ‘Cut bureaucracy in EU research programmes’

Hans Dröge Unilever.JPG

The Dutch multinational Unilever wants to increase its participation in EU research programmes to develop the breakthrough environmental technologies. But for that to happen, the level of bureaucracy needs to be drastically reduced, says Dr. Hans Dröge, senior vice president for R&D operations at Unilever.

Dr. Hans Dröge is senior vice president for R&D operations at Unilever. Dr. Rob J. Hamer, is responsible for food and nutrition at Unilever's R&D centre in Vlaardingen, Netherlands. They spoke to EURACTIV's editor, Frédéric Simon.

Unilever has shown interest in participating in the EU's Horizon 2020 research programme for 2014-2020. Broadly speaking, how is this programme relevant for Unilever?

Hans Dröge: It’s mainly because of our strategy. Three years ago we launched our Compass strategy at Unilever, which is to double turnover while reducing the environmental impact.

That has resulted in the Sustainable Living Plan, with 3 big challenges: To help one billion people improve their health and well-being; to halve the environmental footprint of our product portfolio, and; to source 100% of our agricultural raw materials in a sustainable way.

And in order to do that you need R&D because you can’t grow a company – a goods company – without innovation. And innovation needs to come from R&D.

But also because of the environmental challenge – halving the environmental footprint –you need technology breakthroughs, for instance in the area of cold washing so that the detergents still work at 15 degrees instead of 40 degrees. And that calls for a technology breakthrough that needs to come from R&D. So we really want to put R&D back at the heart of the company.

And because of that Compass strategy, we also had to look and think about our R&D strategy. And one of the big conclusions we came to was that we need to do more externally. We need to be more in connection with technology institutes, knowledge institutes outside Unilever. So we want to move from internal to external, we want to connect to our suppliers, to our partners in the value chain. We want to connect to technology hotspot areas worldwide where the best scientists are sitting and can help us to resolve some of those challenges.

Then, reflecting on that, we came to the conclusion that nationally we are doing quite well. In the Netherlands we’ve got an innovation ecosystem that we are using and exploiting to a certain extent. Same think in the UK.

But if you look at European connections then we don’t get our fair share, let's say. And we are not as connected European-wide as we should be with the research community in having a collaboration with the knowledge institutes around Europe.

So you very quickly come to Horizon 2020. And we looked at what we did in FP7 and in those kinds of frameworks and again we came to the conclusion that we didn’t submit a lot of project proposals. And that is something that we now want to change. And that’s one of the reasons why we are here in Brussels.

Rob J. Hamer: To put it even stronger, I think Unilever contributed strongly to establishing the European technology platform Food for Life. So basically, an agenda-setting activity.

But at the same time while we helped set the agenda we didn’t participate for many reasons. I think those reasons are now changing. On the one hand, we want to bring down the complexity of dealing with Brussels. And on the other hand, with Unilever’s Sustainable Living Plan, we have a long-term strategy in place with very clear commitments.

And the one conclusion is that you need technological innovations in order to meet those commitments. In the complex world of today, with the challenges that we face today, it’s very difficult for a single company to do that. So we need to connect with scientific networks, framework programmes, and really not only share with them our vision of where to go to but also inspire them to develop the technologies that are needed.

Was bureaucracy a big obstacle in participating to FP7?

Hamer: Prior to joining Unilever, I was involved already in the second framework programme (1987-1991). And if you see how that has evolved from a bureaucracy point of view, it went up like this.

Many big multinational companies – not only Unilever – are not participating at the level that they should. The reason for that has to do with some of the legalities of joining consortiums – that you are as a partner responsible for the activities of the other parties as well. And how can you be?

It also has to do with intellectual property. And then on top of that you had all the process control that Brussels was instating. And we would figure that a more output-based control system would be far more effective and give far more freedom for people to do the right thing.

Do you believe that these concerns have been addressed in Horizon 2020?

Hamer: I can’t say whether they’ve been addressed yet because I think the real criteria and the real text of the calls still have to be published.

So despite all of these barriers to entry, you still want to increase your participation in European research projects?

Hamer: Content-wise, absolutely. But at the same time, we hope that all the small hurdles preventing us form joining in the past will become less and less.

Dröge: There are clear signals that there is a will to cut bureaucracy and so from that point of view it’s going into the right direction. What we are probably a bit concerned about is whether it goes far enough. Because you can do cosmetic things or you can do structural things. And we’ve seen some cosmetic stuff but we would really like to see a real structural cut in bureaucracy.

Unilever invests €900 million per year in R&D, which is a considerable amount. Do you actually need extra money from Europe or is it about something else?

Hamer: It’s about something else for sure. It’s about obtaining access to lots and lots of scientific networks. That’s the key thing, the absolute key.

But to do what? To become an agenda-setter or to leverage knowledge which you don’t have?

Dröge: It's both. Our CEO, Paul Polman, has taken the initiative with Jan Peter Balkenende, the ex-prime minister in the Netherlands, to start a Dutch sustainable growth coalition, which is bringing together seven or eight big companies in the Netherlands – DSM, Unilever, Shell, Phillips, Akzo Nobel.

Together with those companies they summarised their goals with the three S’s: They want to share, they want to stimulate, and they want to shape.

It’s all about sustainability, which needs to be Unilever’s business model and Akzo's business model, etc. And then it’s about bilateral collaborations, it’s about showing good examples, showing best practice to the rest of the world and making the connection. So that is the combination of the 3 S’s. And that is just one example which clearly shows that we want to be at the forefront, we want to set the agenda.

But then of course, we can’t do that on our own – whether from a business point of view or from a technology point of view.

So it’s about leveraging over people’s research efforts…

Hamer: Yes, but it’s not a one-way street, we can also contribute. Not just money but also the fact that we have our publicly stated commitments to deliver on our challenges.

So to give you an example, if you talk about an agricultural production chain, we all know that still a lot of material is lost, about 40%. So on sustainable agriculture, we are more than just looking at sustainable farming but also down the supply chain. For example, can we also have some learning about how to prevent waste and perhaps some of these learnings reflect the type of material you grow in the first place.

If some of the losses are related to the  material you use, part are related to the process you use, we would also like to have input on the process in an entirely different way and then reflect on the type of material that we want.

So the fact that we cover the whole food production process – until and after the consumer – is something where we believe we can contribute in terms of sustainable agriculture. Because at the same time we also say the business case has to be positive as well…

You said research projects are a two-way street. At the same time you say you have concerns about intellectual property protection. So does that involve sharing part of your own expertise in R&D with the researchers that are external? Or do you think limits should be drawn?

Hamer: What you typically do in a consortium is that you agree on the topics, on the challenges that you need to solve. And typically you do that in a way that is not hurting the interests of each of the companies involved. So we find a kind of common ground. This is the way you operate.

If you then have a requirement from the European Union but that you also have to open up all of your background knowledge then that is a risk. So it is not so much the protection of IP that is generated within the agreed activities – it's more the additional requirement to open up.

Are you worried that such requirements will be imposed on you as part of Horizon 2020?

Hamer:  That requirement has been in place, and I'm not sure whether it’s still in place. If it was up to me, I would throw it out…

That will probably have to be negotiated because there is always an aspect of knowledge sharing that the Commission wants to see.

Hamer:  I can understand the logic, but you can regulate it in a different way.

Dröge: But if you do pre-competitive research projects, then this should not be an issue.

Earlier on you mentioned this concept of open innovation. How does that all fit in? On the one hand, protecting your IP but at the same time being open. How does that all work? What’s your vision of what open innovation is?

Hamer:  I can be very brief. Open innovation is only working if you have partners who have complementary roles and interests and if you’re open and clear about it. When we work with our suppliers, one of the things we have learned in order to get a successful partnership with these companies is that each of us puts on the table basically what the benefit is.

So defining the scope of the cooperation first?

Hamer: And accepting that you have a benefit and I have a benefit. We do this with big companies where your benefit might be bigger here and smaller there, but if we work in a balanced portfolio then there’s no problem.

Dröge: With our suppliers it’s relatively simple because if you talk about generated IP and you come up with a new ingredient together, then the IP related to the ingredient applications in our categories is for us whilst the applications in other categories is for them. Then in that way you balance it off.

When you talk about public-private partnerships you need to be careful about who those other private partners are. So you would not go with your biggest competitor in applied R&D.  You could do if it’s completely pre-competitive.

Hamer: And obviously we do that as well, if the challenge is generic. We meet our colleagues for sure in areas with respect to regulation, with respect to food safety, new legislation, in relation to novel foods or GMOs.

You said one of Unilever's objectives was to halve the company's environmental footprint. Do you have a target date to achieve this?

Hamer: Yes and no. We aim at doubling our turnover by 2020 and we want to do this while halving our environmental footprint. So the moment to come to a conclusion on whether we succeeded or failed will be 2020.

But at the same time, we are working everyday on disconnecting our growth from our environmental footprint, most often through small actions which, we hope, when added up will make a big difference by 2020. So in reality we have to meet this deadline on a daily basis and in everything we do.

What areas are you looking into to halve Unilever's environmental footprint?

Dröge: It’s focusing on CO2, waste and water. On all three we’ve completed what we call a total value chain analysis and looked first at CO2, so where is most of our CO2 consumed. The same for water and the same for waste.

I think this is a very interesting finding, that for all three, the biggest contribution sits where the consumer sits, in consumer use. Then you come to the conclusion that you can only change that if you change the consumer’s behaviour.

How does that translate into practice? At the end of the day, people still consume and they are actually consuming more and more, with the growing middle-class, especially in the emerging world. So you still get an increase in the absolute amount of energy consumed or waste generated for example…

Hamer: Not necessarily. We analysed our portfolio and try to tackle every touch-point we have so we can grow sustainability. We look at transport of the material into the factories. We look at wastes occurring in the factories. We look at the energy and water use in the factories.

But that’s not the consumer…

Hamer: No but it means that you are sort of integrating the whole. And then when you arrive at the consumer there are many things that you can still do. One of the worst things the consumer can do for example is throw away food. Because there’s lots of investment so there is a very high environmental pressure if you do that.

So let’s look at practical examples. Throwing away less food, that’s one thing that the consumer can do. But what else can they do apart from actually consuming less?

Dröge: Maybe on waste it’s different, but when you talk about CO2 they can definitely spend less time in the shower, they can wash at lower temperatures. When you talk about water, it’s rinsing once instead of rinsing three times. Of course then you need to be helped by a technology that we need to develop so the consumer only needs to rinse the soap once.

So for instance you would develop soaps that would rinse better?

Dröge: Correct. There’s a product called Easy-Rinse, which is already on the market at the moment and it’s really contributing quite significantly to altering the entire value chain.

Hamer: Or we introduced a dry shampoo that allows you to wash your hair every third day instead of every second day and still feel clean and attractive.

On food, we can develop products to make sure that the consumer can use it all. So for example we’ve developed packaging that empties 100%, rather than 90%, developed in such a way that its shelf life is better.

We have a jelly bouillon product – if you would now make a gravy or a soup using that bouillon, you would be far more energy-efficient because you only have to heat it up basically, instead of leaving it on the stove for hours and hours.

Is it also about additives that increase the shelf life of food?

Dröge: No, not at all. On the contrary because we’re trying to take all the food additives out. Also part of Unilever’s Sustainable Living plan is what we call 'clean-label'. Our mayonnaise, over time, we want it to be without E-numbers.

And you can do that while keeping a better shelf-life? That seems like a very tall order…

Dröge: We don’t know how we’re going to get there. But you need to set big hairy goals in order to make a difference. JFK said he wanted an American to be the first man on the moon. He didn’t know how to achieve it. So I think it’s similar to Unilever’s Sustainable Living Plan. We don’t know how to do it but we got commitments to change year-on-year to bring us in that direction, step by step.

Hamer: I strongly believe that if you give people real challenges they really feel engaged and motivated. Of course you have to celebrate every step on the way. Going for full clean labels and still maintaining the level of preservation and hygiene that is required is a big challenge. But we need to start thinking about what we need to do in order to achieve that.

And we have an interest to collaborate with all the bright minds in Europe. They may need a different filler, a septic filler. It may need a different mode of looking at bacteria and how to remove fungi and yeast and do it in a different way than we used to, maybe a different process.

So the idea of setting big challenges is also instrumental in showing to the science community that just by optimising you won’t get to where you need to be. We need breakthroughs.

You were talking about simple labelling for consumers to understand clearly what they’re buying. There are a few ideas floating around, like carbon labelling. Do you believe this is a kind of information that the consumer should get? Or do you believe that it could be misleading?

Dröge: I think as a company you need to be transparent. And that has implications for the labelling of your products. But this has to be done in a harmonised approach if you want to be able to compare products across different brands.

And we are slowly moving towards that situation but we are not there yet. And it is important that whilst you’re implementing, you keep a level playing field or else you will put yourself at a disadvantage. So what it the best labelling system? One that can be easily understood without being misleading.

A traffic light system for food was discussed at the European level – for salt, fat and sugar for instance – but it was not approved in the end because of resistance from the food industry…

Hamer: I know, because from a nutritional point of view it’s very difficult.

One of the things that Unilever has helped to introduce is the 'healthy choice' label in the Netherlands. Every product which is best of class in its product category – and every year the criteria are sharpened – gets the 'healthy choice' label.

If you are a health conscious person, how on earth is it possible to have a mayonnaise which contains a lot of oil to have a healthy choice label? We say yes of course because it’s the best in its class. It’s the healthiest choice.

But if you are concerned about calories intake, well we still recommend mayo because it’s also healthy – it contains the essential fats. But you can imagine that from a communication point of view, that’s a difficult one.

Is that kind of labelling something that you would like to see expanded at European level?

Hamer: Whatever system that works and helps communicate to the consumer and makes it easier to do the healthy choices then we’re all in favour.

Obviously, such a labelling system is always going to create winners and losers, because some will rank better than others. Unilever products might end up ranking quite favourably but some of your competitors might think differently…

Hamer: We work to comply with all the nutritional guidelines, wherever they are. And we work very hard to even go beyond that if there are any concerns, if there are any new insights, because the nutritional world is also developing. They’ve also had their waves of concern also related to human behaviour.

So what percentage of your food carries this healthy choice label?

Hamer: About 40%.

Dröge: I think with the Sustainable Living Plan, Unilever really needs to take its responsibility because we are in the public domain. We are seen as a sustainability champion in the food world. It’s very important that we keep our reputation as high as possible so that you take the high ground when you talk about salt content.

One emerging issue in the European Parliament is what MEPs call 'vulnerable consumers' – older people, children, etc. Would you support specific labelling for those categories of consumers?

Hamer: In some cases we are already doing that by means of communication.

For example with ice-cream, we have a system in which we very simply communicate to the parents where you can sort of rank the different types of ice-cream we sell compared to other snacks they may offer their children, allowing them to also go for the healthy choice, rather than the less healthy choice.

In today’s world, we see that food is often considered a problem and related to common diseases. We want to make food part of the solution. And that’s more than a kind of commercial statement. We want to show our food products are part of the solution and help you get the nutrients you need.

And we want to focus more on providing nutrients to people than on providing calories. If you talk about vulnerable age categories, like young adulthood, babies, small children – one of the things that we provide is nutrients that they require for normal development. And we are not only doing that in the Western world but also in the D&E world.

The thing we do need – and I'm turning back to the EU framework programme – is that you have the appropriate insights, that you really understand the consumer's need. And that’s not as simple as people think. There are things that are basically clear in the area of fortification for example and we are looking at that and try to supplement our food products with appropriate fortificants.

But there are other things as well which are a bit puzzling. For example, why is the rise in diabetes so high in Asia and Africa? What is the underlying thing? How can we intervene and how can we make our products part of the solution? And that requires solid insights into what went wrong – do we understand the physiology and the genomics of those people in detail to understand why they’re more vulnerable.

Going back to the traffic lights system, were you disappointed that it didn’t go through at a European level?

Hamer: One of the things that we are still fighting for at the European level is the establishment of nutrient profiles. We think that this is very important because they set standards for what is considered to be good and optimal. And as soon as you have those standards you can start comparing products.

Are you hoping a further round of legislation would help you get those kinds of labelling schemes in place?

Hamer: Not us in particular but we think it’s for the good of all that there are very clear standards that you can measure foods against.

Dröge: It’s about the quality of the standards and it’s to give you the entry ticket to go to standards.

Hamer: In Australia for instance, they have a specific 'heart health' label, a glycaemic index label, whatever label. And then you can imagine that the consumer gets confused again.

About GMOs, a rather controversial issue in Europe as you know, would you be in favour of clearer labelling for consumers, like maybe a GMO-free label?

Dröge: We would rather focus on other new technologies that are still in the debate, for instance nanotechnology.

Hamer: Something you always have to remember – what is the advantage for the consumer? For the consumer, if you look in the medical area, GMOs are all over the place. You can’t get insulin that is not produced using that technology. But it has a clear benefit. And that’s also clearly communicated I think.

If you look at the food industry, as soon as there is a very clear benefit, my personal opinion is, be open about it, show the benefit and put it on the label, make it clear to the consumer and give them a fair choice. Don’t hide it as it has been done in the past, so the consumer only finds out about it afterwards. That I absolutely do not recommend.

You mentioned 'sustainably-sourced agriculture' as one of the key objectives of Unilever's Sustainable Living Plan. Does that include potentially GMO-based agriculture?

Hamer: If there are other options we will definitely use those options. Whether in the future, GMO-type options are necessary, we’ll see.

Dröge: It definitely doesn’t exclude GMOs.

Hamer: We had a panel discussion recently with some environmental experts. And they were heavily debating GMOs amongst themselves. One thought it was an inescapable part of the solution, the other said we can do without. So who are we to judge?

The one key thing that we are very conscious of is that we want to have the consumer's trust, at all times.

If that means GMO-specific labelling, would you be ready to do that?

Dröge: Yes, why not? In the end, it's all down to the consumer, and our work needs to start with the consumer.

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