Introduction
This report will investigate the role of multinational companies (MNCs) in fostering global leadership as well as corporate citizenship. First, it will deal with the general principles, outlining the necessity for purpose-driven leadership across various contexts and describing the factors that can either be supportive or disruptive.
Then, the attention will be diverted to Unilever, a member of the United Nations Global Compact, to examine its strategies in connection with the Sustainable Development Goals (SDGs). By means of this integrated analysis, the report intends to offer a complete picture of the ways in which ethical behavior and responsible leadership can build up the value for both businesses and society, presenting an integrated view of the theoretical frameworks and practical applications.
Demonstrating Purpose-led Responsible Leadership and Citizenship
MNCs occupy the place of the most intensified attention of the world community which requires them to exercise purpose-driven responsible leadership and corporate citizenship (Rotheroe, 2021). This requirement is not only from an ethical obligation but also from a strategic necessity in the globalized world. MNCs are present in diverse cultural settings, which makes them powerful actors able to shape the socio-economic conditions not only globally, regionally, but also locally.
The academic discourse stresses that responsible leadership in MNCs means a commitment to sustainable practices that respect human rights, labor, and the environment, in line with Carroll’s Pyramid of CSR, which means that companies should balance economic, legal, ethical, and philanthropic responsibilities (Carroll, 2016). On a global scale, this involves not only following the international laws but also modifying them to suit the local expectations and cultural values. It is this alignment that strengthens corporate brand, which according to Pless et al. (2021), is a key factor for achieving competitive advantage.
Additionally, the notion of ‘Corporate Citizenship’ goes further by considering that companies are citizens of the world and therefore have responsibilities towards the communities and environments that they influence (Homer, 2022). Such a global-to-local approach requires a highly sophisticated comprehension of the repercussions of business actions, therefore MNCs are required to interact actively with stakeholders at all levels to promote sustainable development and social equity.
Integrating CSR into their core business strategies is one of the things that MNCs can do to demonstrate their business leadership responsibilities. With this integration, not only companies follow ethical standards but also their business objectives are aligned with the needs of society and, ultimately, this leads to the creation of shared value (Roy et al., 2021). For instance, firms can invest in green technologies, which not only help them to shrink their ecological footprint but also enable them to develop new products, accessing new markets or consumer segments.
The other important step is the stakeholder engagement. MNCs should embrace the establishment of open and interactive communication channels that enable the participation of stakeholders, for example, workers, citizens, governments, and non-governmental organizations (Osegowitsch et al., 2022). The engagement allows MNCs to identify public opinion, adjust to the concerns of the public, and disclose their progress in a transparent manner.
Besides, it is vital to build a work environment that centers on ethics and responsible decision-making. MNC managers should lead by example and must ensure that these values are part of the corporate culture and daily business operations (Tripathi & Kumar, 2020). Training programs that focus on ethical conduct and sustainability can be useful in equipping employees with the right tools to take decisions which are in line with CSR objectives of the company.
Moreover, MNCs should have strong monitoring and reporting mechanisms to check their performance on environmental and social dimensions (Ullah et al., 2021). Such mechanisms should not only be in accordance with the international standard like the Global Reporting Initiative but also consider the local characteristics and conditions. Regular sustainability reporting could clearly show the company’s commitment to openness and accountability which will be helpful in building trust among all the stakeholders.
Enabling and Constraining Forces of Purpose-led Responsible Leadership and Citizenship
Today’s globalized economy is a complex structure that poses challenges to MNCs in terms of enabling and constraining factors. Responsible purposeful leadership and citizenship are the way forward to overcome these challenges. These forces, stemming from various economic, political, social, and technological fields, often assist and impede the efforts of MNCs to transform into the tool of sustainable and ethical development.
Enabling Forces
Globalization of Markets: Globalization provides MNCs with an infinite number of the opportunities to access the international markets and to disseminate responsible practices throughout multiple regions of the world (Lartey et al., 2021). This exposure not only extends the reach of their CSR initiatives but offers sincere chances that may help them to develop better global strategies.
Technological Advancements: Digital revolution gives MNCs an opportunity to strengthen the transparency and stakeholder engagement via technology. Technologies such as blockchain for supply chain transparency and social media for stakeholder communication will allow companies to improve their reputation management and to engage in real time feedback loops with all global stakeholders (Srinivasan & Eden, 2021).
Regulatory Frameworks: International treaties and local laws, like the Paris Agreement and the EU’s GDPR, establish the rules of conduct for MNCs to follow in order to be more responsible (Coche et al., 2024). The compliance with such rules not only eliminates the legal risks but also brings in alignment with the international norms of sustainability and ethics.
Constraining Forces
Cultural Diversity: The task of cultural landscapes management of various countries is a daunting one. Customs that are good in one region, may not be as acceptable in another. Therefore, MNCs need to show a high level of cultural competence and adaptability. If this diversity is not properly managed, ethical mistakes and public relations scandals can appear, which will cause reputational damage (Jensen, 2020).
Economic Pressures: Although sustainable methods have long-term benefits, the upfront costs may be difficult for some. In the competitive market, the pressure for quick financial returns may persuade companies to reallocate their CSR investment, an investment that yields return in a long time (Roy et al., 2021).
Political Instabilities: MNCs have to deal with the problem of political instability in some parts of the world (Sallai et al., 2024). Change in a government, civil unrest, and unstable regulations can be a source of a business failure and do not allow to keep the CSR norms the same all over the markets.
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To successfully deal with these forces, MNCs can apply different strategic approaches:
Strategic Flexibility: MNCs should have the ability to be flexible to change their strategies in different cultural, political and economic conditions (Naradda Gamage et al., 2020). Such adaptability can be achieved through the use of decentralized management that allows local branches to tune CSR activities to be more in line with the culture and values of the area.
Stakeholder Engagement: Involving various stakeholders is beneficial as it does not only bring in different perspectives but also it builds trust and commitment towards the CSR initiatives (Osegowitsch et al., 2022). The right engagement strategies could therefore protect a company from cultural misunderstandings and thus enable the company to preserve its social license to operate.
Proactive Advocacy: By taking part in the creation of the international and local legislative frameworks, multinationals can make the policies more in tune with the sustainable practices (Borgert et al., 2020). Proactive advocacy assists to the synergy of enterprises strategies with global standards, thus reducing the compliance friction.
Ethical Leadership: Setting the leaders who are committed to high ethical standards and who can inculcate the sense of mission throughout the organization is important (van Knippenberg, 2020). Ethical leadership coaching and training programs can improve decision making and create an atmosphere of accountability.
United Nations’ Sustainable Development Goals and Shared Value at Unilever
A multi-pronged approach to sustainability is what Unilever, a global consumer goods company, has committed to by incorporating the UN’s SDGs into its business strategy (Baragiola & Mauri, 2021). By adopting an SDG lens to all aspects of the strategy, Unilever takes the right leaders to innovate sustainable solutions, inspire sustainable choices, and collaborate with partners globally to transform the system. Through its Unilever Sustainable Living Plan (USLP), the company endeavours to address three primary goals: improving the health of more than a billion people, reducing its environmental footprint by half, and boosting the quality of life of millions of people in its supply chain.
Unilever has realized the interconnectedness of SDGs and knows that none of them is more important than the others (Montiel et al., 2021). The company is involved with different SDGs through its USLP that covers different aspects ranging from the farm to the fork. Unilever’s strategy focuses on solving the most critical external issues such as climate change, food security, deforestation, and sanitation, and therefore sustainability is integral to its operations, supply chain, innovation, and brands.
The business case for Unilever to be in line with the SDGs is clear. The achievement of the SDGs creates immense market opportunities worth $12 trillion annually and could also result in the creation of 380 million jobs by 2030, especially in sectors such as food and agriculture, cities, energy, and health and well-being (United Nations, 2020). On the other hand, Unilever’s sustainable living brands, which are focused on addressing the issues outlined in the SDGs, have shown tremendous growth, outperforming the rest of the business by over 50% (Unilever PLC, 2019).
Nevertheless, Unilever understands the hurdles that come with the implementation of SDGs, which include the short-term focus of financial markets, the need to assign true value to social and environmental capital, and political systems that are more inclined to short-term gains over long-term sustainability (Baragiola & Mauri, 2021). Overcoming these obstacles, however, calls for concerted efforts from businesses, governments, academia, NGOs, and consumers. Unilever highlights the role of collaboration as a tool for implementing the SDGs-kind of capitalism, which requires leaders to consider the interests of others and to work together for the benefit of all.
Unilever and Its Employee and Community Stakeholders
Unilever’s dedication to improving the lives of its employees and communities is deeply embedded in its wide-ranging initiatives and strategies, which are both comprehensive and data-driven. This is expressed through specific and quantifiable actions and partnerships that bridge global and local notions of sustainability, inclusivity, and wellbeing.
Unilever offers a multi-dimensional approach to employee well-being, combining mental and emotional health, physical health, and a sense of purpose in their corporate strategy. This will involve the establishment of a well-being framework whereby all employees have access to support through various channels like the Mental Health at Work Commitment, which they signed up to in 2022 (Unilever, n.d.). The framework’s usefulness is ensured by the training of mental health line managers and a health and well-being hub that offers continuous resources and support.
The professional development of the company also involves upskilling all employees by 2025 (Unilever, n.d.). Through an integrated learning platform which provides over 100,000 pieces of content, available in 20 languages, this is achieved (Unilever, n.d.). Furthermore, the company has created a flexible career development system, and employees can alter their career paths based on the skills they have instead of traditional career goals. This program is conducted through on-the-job learning and access to external certifications as part of a comprehensive mentorship and leadership development strategy.
In the community aspect, Unilever aims to ensure that everyone in its supply chain makes at least a living wage by 2030 (Singh, 2021). This specific purpose is a part of the bigger picture and is meant to allocate 2 billion euros to the suppliers who are owned and managed by people from the under-represented communities by the year 2025, consequently showing the strategy of Unilever to grow economic inclusion and to support the community businesses.
The environmental and social initiatives of Unilever are an integral part of the Unilever Compass strategy, which is a guiding compass for its sustainability endeavours. The plan involves the following objectives: zero carbon footprint by 2039, no plastic use, and agricultural regeneration (Lawrence et al., 2018). These goals are not only to curb environmental degradation but also to improve the social fabric of the communities where Unilever operates. In 2022, the company’s sustainability initiatives resulted in large-scale outcomes that helped the community such as partnerships that focused on bettering the local economies and the people’s livelihood.
Unilever does not work solely; it focuses on partnerships that can make its initiatives more scalable and consequential. The company works with NGOs, governments, and other businesses to tackle global issues such as climate change, food security, and social inequality (Baragiola & Mauri, 2021). Through these collaborations, the reach and effectiveness of the community and employee-focused programs are amplified, and the organization ensures that the corporate actions contribute positively to sustainable development and shared value creation among the stakeholders.
Ethical Values and Practices at Unilever
The core of Unilever’s responsible leadership and citizenship is its ethical values and practices, which are part and parcel of its corporate culture and operational framework. The ethical orientation of the company is reflected in the 2022 Code of Business Principles, a detailed document that covers the standards of behavior required for all its operations worldwide. This code is accompanied by particular policies, guidelines, and control mechanisms that are robust and designed to enforce ethical standards throughout the company.
Unilever’s Business Integrity programme, being the basis of the ethical framework, is designed to prevent, detect and respond to inappropriate behavior within the company (Unilever PLC, 2024). The program encompasses comprehensive training and educational tools to create a culture of honesty and compliance among staff members. Besides, Unilever’s commitment to sustainability is also demonstrated by its ethical practices in its Compass strategy. The Compass strategy which focuses on climate change, reducing environmental impact, and health and social equity is an example of its ethical practices.
Regarding supply chain management, Unilever shows great concern for transparency and sustainable sourcing (de Arruda Pollice & Scarcelli, 2024). The company collaborates with its suppliers in order to implement corporate responsibility standards all along the supply chain, ensuring that the ethical values and environmental sustainability are maintained. This devotion is clearly seen in Unilever’s partnership with its suppliers to reach its goal of every person in its supply chain earning a living wage by 2030.
Unilever’s environmental, social and governance (ESG) performance is another evidence of its ethical values. The company obtained a very high score of 89 in an ESG assessment by S&P Global, which confirms its capacity to succeed while upholding the principles of environmental sustainability, social well-being, and governance excellence (S&P Global, 2022).
Ethical perspective of Unilever is also reflected in its marketing approach, which involves working with influencers to advertise products in a genuine and transparent manner (Mazikana, 2023). Through collaboration with the beauty and personal care industry’s top influencers, Unilever leverages its popularity and creates an authentic connection with consumers. This technique not only increases brand loyalty but also builds consumer confidence by means of clear and responsible marketing.
However, Unilever utilizes digital platforms to enhance brand loyalty and engagement among the community (Hermanses et al., 2024). Through all these activities such as user-generated content, contests and challenges Unilever develops online communities and grows its consumer relationships. This strategy gives Unilever a chance to learn what the consumer wants and thinks, so that it can be able to make its products and marketing strategies according to the needs of the consumer.
Conclusion
This report has been focused on the difficulties of MNCs as the key drivers of responsible leadership and corporate citizenship. The analysis of different literatures and cases have shown that MNCs play powerful roles in the global, regional, and local levels. The ethical values and practices can not only help MNCs to increase their reputation and performance but also do good for the society.
The Unilever case study illustrates how a multinational corporation can make sustainability goals a part of the main strategy and engage with different stakeholders in order to bring about a substantial change.
In addition, the role of these companies should be to contribute actively to the implementation of the United Nations’ Sustainable Development Goals through purpose-driven leadership.
Besides global efforts and new ways of thinking, MNCs can lead the world economy to a more sustainable and just world for the future generations.
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