UNILEVER SUSTAINABLE LIVING PLAN

PROGRESS REPORT 2012

INDIA
The Unilever Sustainable Living Plan guides all our actions. We are actively contributing to the global delivery of targets under the Plan. This publication details the progress we have made over the last year.

CONTENT

ABOUT HINDUSTAN UNILEVER LIMITED

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company. We have about 80 years of experience in understanding consumers in India. We have over 16,000 employees and 38 manufacturing locations. Eighteen of the 100 most trusted brands in India are HUL brands. Our people work to create a better future every day and make sustainable living commonplace. We help people feel good, look good and get more out of life with brands and services that are good for them and good for others.

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Highlights 2012

CEOs Message

Business Model

ABOUT THE REPORT

This report provides an overview of our work towards meeting the goals of our Unilever Sustainable Living Plan launched in 2010 with specic targets. We report the progress we have made on each of our three big goals: Health & Well-being, Environmental Impact and Enhancing Livelihoods. While we believe we are making good progress, we also know that more needs to be done. This report shares the results of our journey and details the steps we have taken so far. We believe that sustainability drives growth and is the only acceptable model of business. That is why we are putting sustainability at the heart of everything we do across our value chain.

Global Targets

Improving Health & Well-Being

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Reducing Environmental Impact

Enhancing Livelihoods

HIGHLIGHTS 2012
Over 17 million people reached through Lifebuoy Out of 38 HUL factories, 30 became zero-discharge

Handwashing programmes in 2012, taking the total to 47 million people reached since 2010.
More than 45 million people gained access to safe

sites by 2012.
HUL factories with 100% zero non-hazardous waste to landll

increased to 31.
100% of palm oil products sourced in 2012 are backed by

drinking water from Pureit globally by end of 2012.

CO2 emissions per tonne of production in India reduced

sustainability certicates.
Number of Shakti entrepreneurs scaled up to 48,000 in 15

by 22%, water use by 29% and waste by 77% compared to 2008*. (*per tonne of production in 2012 over 2008 baseline)
More than 30,000 climate-friendly freezers with

states across India; Shaktimaans scaled up to more than 30,000 across India.

Hydrocarbon technology deployed in India till date.

The Unilever Sustainable Living Plan is our strategic response to the unprecedented challenges the world faces. It is at the heart of our Compass strategy which sets out our ambitious vision and purpose.

SUSTAINABLE LIVING COMMONPLACE

We work to create a better future every day, with brands and services that help people feel good, look good and get more out of life. Our rst priority is to our consumers then customers, employees, suppliers and communities. When we full our responsibilities to them, we believe that our shareholders will be rewarded.

OUR PURPOSE TO MAKE

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CEOs MESSAGE
Dear friends, It is two years since we launched the Unilever Sustainable Living Plan and set out on a bold and new path that would double our business, reduce our environmental footprint and increase our positive social impact at the same time. We are taking multiple steps to achieve our targets. This report details the progress we have made so far. The year saw us pushing harder as we scaled up and expanded our ongoing initiatives and programmes. We made good progress on sustainable sourcing of agricultural raw materials and in improving livelihoods. We reduced the environmental footprint of our manufacturing operations by significantly reducing water usage, cutting down CO2 emissions and waste. We continue to build viable business models and forge partnerships to cover a larger number of people, in urban and rural areas, by scaling up our health and hygiene behaviour change campaigns. Our Pureit water purifiers continue to provide access to clean drinking water to more people across the country and thereby help prevent waterborne diseases. We also launched new initiatives to impact water usage by our consumers while using our products, where a large part of our footprint lies. In the last one year, we have brought to market innovations like the Magic water saver and Comfort 1 Rinse to help cut water usage. These innovations increase our positive social impact while growing our business. We continue to work on many more such solutions to drive change. Beyond numbers, the deeper story lies in how we are embedding sustainability into the heart of our business. Our teams work with the conviction that this is the path we must take if we are to lead and grow in a world where the battle for resources can only escalate. We believe companies that develop sustainable models of growth will have a real competitive advantage in the years to come. It can be a driver of long-term success and simultaneously have a positive impact on the people and the planet. Two years into this journey, we can see that the Unilever Sustainable Living Plan has energised our people and unleashed the power of innovation. Nitin Paranjpe We still face big challenges across the value chain. We must work to build sustainable solutions that cover more products. We need to work with more partners and convince many others if we have to make a difference and help bring the fruits of sustainable growth to society. And above all else, we have to enlist the support of people to influence behaviour change at the consumer-end because only then can we make an impact across the value chain. This remains a big challenge. In short, there is more work to be done. Our goal remains to deliver growth that is competitive, consistent, profitable and responsible. We believe that this is the only way to grow and remain relevant to the society at large. We seek to be the leaders in this journey and to that end we will continue our work to realise the bold goals set out in the Sustainable Living Plan.

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BUSINESS MODEL
Our business model is designed to deliver sustainable growth. For us, sustainability is integral to how we do business. In a world where temperatures are rising, water is scarce, energy is expensive, sanitation is poor and food supplies are uncertain and expensive, we have both a duty and an opportunity to address these issues in the manner in which we do business. Our business model has three key inputs: brands, operations and people. A key differentiator is the Unilever Sustainable Living Plan and the goal of sustainable living. The outputs of the model are threefold: sustained growth, lower environmental impact and positive social impact. These align directly with our vision, which is to double the size of the business while reducing our environmental footprint and increasing our positive social impact. We will lead for responsible growth, inspiring people to take small everyday actions that will add up to a big difference. We will grow by winning shares and building markets everywhere. The diagram below represents our virtuous circle of growth. It summarises how we derive profit from the application of our business model.

OUR BRANDS Strong brands and innovation are central to our ambition to double in size. We are investing in brand equity, finding and strengthening the connections between consumers and the products they buy. Where equity is strong, we are leveraging it creating efficiencies by focusing on fewer, bigger projects that enhance margins. And we are seeking superior products which consumers will prefer, driving profitable growth.

OUR OPERATIONS On any given day two billion consumers use our products globally and we want to reach many more by developing innovative products that address different consumer needs at different price points. To do this we use our global scale to help deliver sustainable, profitable growth by seeking to add value at every step in the value chain by enhancing product quality and customer service and rolling out innovations faster across all markets.

OUR PEOPLE Sustainable, profitable growth can only be achieved with the right people working in an organisation that is fit to win, with a culture in which performance is aligned with values. We are increasingly an agile and diverse business with people motivated by doing good while doing well. We are building capability and leadership among our people and attracting some of the best talent in the market place.

SUSTAINABLE LIVING For us, sustainable, equitable growth is the only acceptable business model. Business needs to be a regenerative force in the system that gives it life. For example, by reducing waste, we create efficiencies and reduce costs, helping to improve margins while reducing risk. Meanwhile, looking at more sustainable ways of developing products, sourcing and manufacturing opens up opportunities for innovation while improving the livelihoods of our suppliers.

PROFITABLE VOLUME GROWTH Profitable volume growth is the basis of the virtuous circle of growth. Stronger brands and innovation are the key drivers behind it. Consistently strong volume growth builds brand equity as we reach more consumers, more often. COST LEVERAGE + EFFICIENCY Profitable volume growth allows us to optimise the utilisation of our infrastructure and spread fixed costs over a larger number of units produced, reducing the average cost per unit. It improves our profitability and allows us to invest in the business.

INNOVATION + MARKETING INVESTMENT Lower costs and improved efficiency enable us to strengthen our business further. New and improved products are the result of investment in R&D and, together with effective marketing, strengthen our brand equity. This results in profitable volume growth, self-perpetuating the virtuous circle of growth.

PROFITABLE VOLUME GROWTH

B OU R RAN DS

COST LEVERAGE + EFFICIENCY

SUSTAINABLE LIVING

INNOVATION + MARKETING INVESTMENT

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GLOBAL TARGETS

IMPROVING HEALTH AND WELL-BEING

By 2020, we will help more than a billion people take action to improve their health and well-being.

HEALTH AND HYGIENE

By 2020, we will help more than a billion people to improve their hygiene habits and we will bring safe drinking water to 500 million people. This will help reduce the incidence of life-threatening diseases like diarrhoea.

NUTRITION
We will continually work to improve the taste and nutritional quality of all our products. By 2020, we will double the proportion of our portfolio that meets the highest nutritional standards, based on globally recognised dietary guidelines. This will help hundreds of millions of people to achieve a healthier diet.

GREENHOUSE GASES
Halve the greenhouse gas impact of our products across the lifecycle by 2020.*

* Throughout this report our environmental targets are expressed on a per consumer use basis. This means a single use, portion or serving of a product. We have taken a lifecycle approach with a baseline of 2008. + In seven water-scarce countries representing around half the worlds population. Note: In our 2011 Progress Report, we presented our people and workplace targets as a standalone set of targets. In 2012, we have incorporated these targets into the main body of the Plan.

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REDUCING ENVIRONMENTAL IMPACT

By 2020, our goal is to halve the environmental footprint of the making and use of our products as we grow our business.

ENHANCING LIVELIHOODS
By 2020, we will enhance the livelihoods of hundreds of thousands of people as we grow our business.

WATER
Halve the water associated with the consumer use of our + products by 2020.*

WASTE
Halve the waste associated with the disposal of our products by 2020.*

SUSTAINABLE SOURCING
By 2020, we will source 100% of our agricultural raw materials sustainably.

BETTER LIVELIHOODS
By 2020, we will engage with at least 500,000 smallholder farmers and 75,000 small-scale distributors in our supply network.

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IMPROVING HEALTH & WELL-BEING

GLOBAL GOAL
By 2020, we will help more than a billion people take action to improve their health and well-being.

GLOBAL PERSPECTIVE
We bring to market affordable and effective products that promote health, hygiene and well-being and help us ght preventable diseases like diarrhoea that claim millions of lives. Alongside, we use our market reach and consumer insight to deliver campaigns that promote healthy habits like handwashing with soap to create a lasting impact on everyday behaviour. In nutrition, we use the highest nutritional standards to benchmark our products and create great-tasting products that people will want to eat. This year marks ten years of our Nutrition Enhancement Programme, a pioneering initiative to reduce levels of salt, saturated fats, trans fats and sugar across our entire product portfolio.

OUR APPROACH
We work to sensitise communities to the linkages between health and hygiene, through our brands like Lifebuoy soap and Pureit in-home water purier. This helps improve lives and drive business growth; linking the Sustainable Living Plan to business performance. As more people are covered, the demand for health and hygiene products rises. Increased demand builds business performance that enables us to reach out to more and more people. This takes us closer to our goal of helping more than a billion people take action to improve their health and well-being. On nutrition, we are working to improve the taste and nutritional quality of our products to offer healthier diets.

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HEALTH & HYGIENE

REDUCE DIARRHOEAL AND RESPIRATORY DISEASE THROUGH HANDWASHING
Global Target: By 2015, our Lifebuoy brand aims to change the hygiene behaviour of 1 billion consumers across Asia, Africa and Latin America by promoting the benets of handwashing with soap at key times. Every year, diarrhoea and pneumonia claim the lives of over two million children under the age of ve. Studies have shown that the simple behaviour of washing hands with soap is one of the most effective and low-cost ways to prevent these diseases. Through our Lifebuoy handwashing programme, we seek to take messages on the importance of handwashing to vulnerable sections of the society. A large part of this group comprises children. In 2012, we reached over 17 million people through the Lifebuoy handwashing programmes in India. Since 2010, we have reached out to 47 million people. However, much more needs to be done in the coming years. While most households do have access to soap, the number of people who regularly wash their hands at the right timessuch as before eating and after using the toiletis worryingly low. Our rural outreach programme Khushiyon Ki Doli (Caravan of happiness) takes the message of handwashing to remote areas of our country. In urban India, Lifebuoy has been running a direct school contact programmme for the last two years. We teach children in urban schools the benet of using handwash on ve critical occasions every day. We have partnered with UNICEF and the Government of Madhya Pradesh to run a rural school contact programme in Madhya Pradesh. By the end of the rst quarter of 2013, we reached out to three million people.

In partnership with NGOs, Lifebuoy launched the Global Handwashing Day in India on 15th October, 2008. As part of this programme, in 2012 over 2,000 HUL employees including our CEO reached out to 91,000 children in 38 cities and towns across India to educate children on the importance of handwashing. The Roti Reminder activation at the Kumbh mela in Allahabad in Uttar Pradesh was an innovative initiative taken up by Lifebuoy to promote handwashing habits. Nearly 2.5 million rotis were stamped and served during the Kumbh mela. Over the past 10 years, Lifebuoy has taken its handwashing behaviour change programmes to millions of people across the world. The programme now aims to change the handwashing behaviour of Thesgora, a village in Central India with one of the highest incidence of diarrhoea.

PROVIDING SAFE DRINKING WATER

Global Target: We aim to make safe drinking water available and affordable to 500 million people through our Pureit in-home water purier by 2020. The lack of safe drinking water is a major public health issue, particularly in developing countries where around 80% of diseases are waterborne. Our Pureit in-home water purier provides water 'as safe as boiled water', without the need for electricity or running water. Pureit provides approximately four litres of safe drinking water for just one rupee. The National Institute of Epidemiology (NIE) has scientically established that homes using Pureit have had a 50%* lower incidence of diarrhoea. More than 45 million people gained access to safe drinking water from Pureit globally by end of 2012. We are working with a range of micronance and NGO partners in India to improve the affordability of the purier for sections where price remains a barrier to purchase. We are piloting with an initiative called Waterworks, a not-forprot programme that provides safe and clean drinking water to communitiesin need.
*Randomised trial by the NIE, based on 430 children in Chennai, India, 2005-06

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IMPROVING HEALTH & WELL-BEING

REDUCE WORKPLACE INJURIES AND ACCIDENTS
Global Target: We aim for zero workplace injuries. By 2020, we will reduce the Total Recordable Frequency Rate (TRFR) for accidents in our factories and ofces by 50% versus 2008. As part of our Sustainable Living Plan, we have set targets for reducing workplace injuries and accidents. We design facilities and procedures to ensure safety of everyone employees, contractors and visitors on our premises. Safety performance is monitored through a set of key performance indicators and reviewed regularly by the Companys management committee. We achieved 62.5% reduction in the TRFR. HUL actively promotes a culture of safety beyond work. All employees and their families are involved in home safety and road safety initiatives. By the end of 2012, 66% of our Foods portfolio (by volume) was compliant with the 5 g per day salt target. Our Kissan ketchup range has seen a sodium reduction of10% since 2011 and currently all our ketchups meet the interim target of 6 g salt per day. In 2012, we conducted a joint workshop with the International Union of Nutritional Science on salt and health to generate ideas for new approaches to reduce the salt intake in India. We developed a simple, free online Salt Tool (http://salttest.hul.co.in) which tells consumers their current salt intake and how they can reduce their intake gradually.

FUTURE CHALLENGES
Reaching a large number of people living in villages spread across vast stretches of India is always a challenge. We will need innovative ways to spread our messages. Though we have made good progress over the last two years, we will need to further strengthen our engagement with people.

NUTRITION
Millions of people in the country enjoy the foods and beverages we make. It is our endeavour to help people achieve the right nutritional balance needed for good health. This drives us to improve our products and run awareness campaigns for consumers. Since we began the Nutrition Enhancement Programme in 2003 globally, we have made good progress on lowering the levels of salt, saturated fat, trans fat and sugar in our portfolio.

REDUCE SATURATED FAT

Global Target: We are committed to improving the fat composition of our products by reducing saturated fat as much as possible and increasing levels of essential fats. By 2012, our leading spreads will contain less than 33% saturated fat as a proportion of total fat. A daily portion will provide at least 15% of the essential fatty acids recommended by international dietary guidelines. Our Kissan creamy spread provides more than 15% of the essential omega-6 fats and has less than 33% saturated fat, which is about eight times less saturated fat than other leading table spreads.

REDUCE SALT LEVELS

Global Target: Prior to 2010, we had already signicantly reduced salt levels in our products. Our goal is to reduce the level further to help consumers meet the recommended level of 5 g of salt per day based on globally recognised dietary guidelines. Our rst milestone was to reduce salt levels to an interim target of 6 g per day by the end of 2010. This required reductions of up to 25%. Our ambition is to reduce by a further 15-20% on average to meet the target of 5 g of salt per day between 2015 and 2020.

REMOVE TRANS FAT

Global Target: By 2012, we will have removed from all our products any trans fat originating from partially hydrogenated vegetable oil.

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Our portfolio in India is virtually free from trans fats originating from partially hydrogenated vegetable oil. For example, our ice cream portfolio is fully compliant and does not use any raw materials containing partially hydrogenated oil. Our Knorr range of soups and Kissan creamy spreads are virtually trans fat free (<1gm/100gm).

IMPROVE EMPLOYEE HEALTH AND NUTRITION

Global Target: Our Lamplighter employee programme aims to improve the nutrition, tness and mental resilience of employees. By 2010, it had already been implemented in 30 countries, reaching 35,000 people. In 2011, we aimed to extend the reach of Lamplighter to a further eight countries. We will implement Lamplighter in an additional 30 countries between 2012 and 2015. Our longer-term goal is to extend it to all the countries where we operate. For the last eight years, we have been regularly performing basic preventive health checks for all employees. Our medical and occupational health strategy addresses the top three health risks we have identied mental health, lifestyle factors and ergonomic factors. In the lifestyle management programme, employees are assigned colour codes (green, amber, and red) based on their state of health as part of the Lamplighter programme. Employees identied in the amber and red categories are provided support and treatment as necessary. This employee health and well-being programme has shown a steady decline of Reds over the last eight years. Currently, only about 4% of our employees belong to the red category.Approximately 15,000 employees have been covered by the programme in India.

REDUCE CALORIES
Global Target: By 2014, 100% of our childrens ice creams will contain 110 kilocalories or fewer per portion. 60% will meet this level by 2012. More than 60% of our childrens ice cream portfolio in India contains 110 kilocalories or fewer per portion, meeting our interim 2012 target. For eg, our Fruttare and Paddlepop range are fully compliant.

FUTURE CHALLENGES
The number of people with diabetes, hypertension and obesity is on the rise. At the same time, a large number of children suffer from malnutrition in India. Building awareness and adapting to consumers tastes and preferences while providing nutritious food remains one of the biggest challenges. As we improve the nutritional quality of our products, we need to ensure that they remain affordable. This requires a business model that offers healthy products across multiple price points and different product sizes accessible to every socio-economic category.

PROVIDE HEALTHY EATING INFORMATION

Global Target: Our aim is to provide clear, simple labeling on our products to help consumers make choices for a nutritionally balanced diet. By 2015, all our products will include energy per portion information on the front of the pack, plus list the eight key nutrients and percentage Guideline Daily Amounts (GDA) for ve nutrients on the back of pack*. All our labels carry information on energy, protein, sugars, fat and also on saturated fat, bre and sodium, where relevant.
* Where applicable and legally allowed in accordance with local or regional industry agreements.

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REDUCING ENVIRONMENTAL IMPACT

GLOBAL GOAL
By 2020, our goal is to halve the environmental footprint of the making and use of our products as we grow our business.

GLOBAL PERSPECTIVE
We have made good progress in reducing our environmental footprint across our value chain. Our biggest challenge remains encouraging people to change their behaviours when using our products. This is because the largest part of our environmental footprint lies at the consumer end. We therefore have an important role in inuencing how people use our products. We will be able to achieve this by innovating to develop new products and adapting existing ones.

OUR APPROACH
We are working to reduce our environmental impact on four priority areas across the value chain greenhouse gases, water, waste and sourcing. We are reducing greenhouse gases across our value chain through the use of climate-friendly manufacturing technologies and processes in our factories, by reducing greenhouse gases from our transport network and by deploying climate-friendly freezer cabinets for our ice cream business. We are working to reduce water usage in our manufacturing operations by optimising process operations, recycling of treated effluent water and rainwater harvesting. We will continue to focus on reducing, reusing and recycling our waste material. We are evaluating different technology options to process waste generated from sachets. We are working with our suppliers, local government and farmers to sustainably source our agricultural raw materials which includes tea, fruits, vegetables and spices.

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GREENHOUSE GASES
REDUCE GREENHOUSE GAS EMISSIONS FROM OUR MANUFACTURING
Global Target: By 2020, CO2 emissions from energy from our factories will be at or below 2008 levels despite significantly higher volumes. This represents a reduction of around 40% per tonne of production. Versus a 1995 baseline, this represents a 63% reduction per tonne of production and a 43% absolute reduction. We will more than double our use of renewable energy to 40% of our total energy requirement by 2020. We recognise that this is only a first step towards a longterm goal of 100% renewable energy. All newly built factories will aim to have less than half the impact of those in our 2008 baseline. We had made a commitment to reduce CO2 emissions per tonne of production by 25% by 2012 (against the 2004 baseline). We exceeded this target. Till 2012, we reduced CO2 emissions per tonne of production in India by 41.8% against the 2004 baseline and 22% compared to our 2008 baseline. This was achieved through various initiatives such as biomass boilers, thermic fluid heaters and hot air generators at factory sites. Biomass boilers were commissioned at two more sites in 2012, increasing the total number of sites to 11. These projects helped increase the share of renewable energy to 19% by 2012. We took up several environment-friendly initiatives in our manufacturing operations such as setting up a cogeneration power unit, use of sky light pipes which allow natural sunlight for illumination on the shop-floor and the use of LED lights and energy efficient motors.

REDUCE GREENHOUSE GAS EMISSIONS FROM TRANSPORT

Global Target: By 2020, CO2 emissions from our global logistics network will be at or below 2010 levels despite significantly higher volumes. This will represent a 40% improvement in CO2 efficiency. We will achieve this by reducing truck mileage, using lower emission vehicles, employing alternative transport such as rail or ship and improving the energy efficiency of our warehouses. In 2012, CO2 emissions from our logistics network reduced by 5% (from 83.2 kg CO2 per tonne to 79.1kg CO2 per tonne).We continued to focus on travel distance and load capacity. In 2012, we maximised direct despatches in a way that the distance travelled reduced whereas the load carrying capacity increased significantly. During 2012, we used the railways to transport our products, leading to 3% increase in loading ability. For transporting by road, we used new trucks that have greater height and can carry more volume. This helped us increase the overall loading ability from 89% to 93%. We also introduced new lighting systems with CFL bulbs to reduce power consumption by 50%. After being successfully piloted in one of the Bangalore depots, this project is now being rolled out across several distribution centres.

REDUCE GREENHOUSE GAS EMISSIONS FROM REFRIGERATION

Global Target: As the worlds largest producer of ice cream, we will accelerate our roll-out of freezer cabinets that use climate-friendly (Hydrocarbon) refrigerants. When we launched our Plan in November 2010, we had already purchased 450,000 units with the new refrigerant. We will purchase a further 850,000 units by 2015.

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REDUCING ENVIRONMENTAL IMPACT

In 2007, we stopped purchasing Hydrofluorocarbons refrigerant cabinets and replaced them with new cabinets that use climate-friendly Hydrocarbon (HC) refrigerants.These freezers have brought about a significant reduction in our carbon footprint. More than 30,000 such green freezers with HC technology have been deployed in India.

WATER
REDUCE WATER USE IN THE LAUNDRY PROCESS
Global Target: We will reduce the water required in the laundry process by: Making easier rinsing products more widely available. Providing 50 million households in water-scarce countries with laundry products that deliver excellent results but use less water by 2020. Studies show that rinsing clothes accounts for the bulk of water consumption in the laundry process. On an average, three to four buckets of water are used for rinsing per wash. Rinsing alone accounts for 80% of water consumption in laundry for many households that rely on washing clothes by hand. We are trying to find solutions which can help consumers use less water for rinsing, while giving them the same effective cleaning performance.

REDUCE EMPLOYEE TRAVEL

Global Target: We are investing in advanced video conferencing facilities to make communication easier while reducing travel for our employees. By 2011, this network will cover more than 30 countries. In 2012, over 2,000meetings were held utilising the telepresence facility, dramatically cutting business trips to and from India. We also have30 video conferencing facilities in our key locations across India. This new way of conducting meetings reinforces our belief in agile working a flexible approach that enables employees to work anytime, from anywhere, as long as business needs are met.

FUTURE CHALLENGES
We have a vast distribution network that takes our products to the remotest corners of India. We spend a significant amount every year on transportation and warehousing from suppliers factories to our own factories, from our factories to our distribution centres and from there to our customers. We are working to reduce the CO2emissions from energy used during these operations. Raising awareness among people and encouraging behaviour change continue to be important factors in reducing emissions. Simple practices such as switching off lights and equipment when not needed and swift reporting of steam and compressed air leaks can deliver big energy savings. We will have to work to embed these practices at our own premises and also extend them to the operations of our partner.

Magic water saver was launched in May 2012 as a pilot in Andhra Pradesh. It significantly helps reduce water consumption in laundry. Just a capful of Magic in the very first bucket of rinse helps remove all the lather and soap and thereby helps save up to three buckets of water per wash. Another product which helps reduce water required in rinsing is the Comfort 1 Rinse fabric conditioner. With a significant presence in Tamil Nadu, Comfort 1 Rinse fabric conditioner helps consumers save two buckets of water per wash.

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HINDUSTAN UNILEVER FOUNDATION This Foundation, a wholly-owned subsidiary of HUL, is engaged in community projects to conserve water for public good. The Foundation has undertaken water conservation and storage projects in several villages in Madhya Pradesh, Gujarat, Tamil Nadu, Karnataka and Maharashtra. The projects are in partnership with NGOs, government agencies such as NABARD, state governments and members of the local community. The Foundation's partnerships have resulted in water storage and conservation potential to the extent of25 billion litres as of March 2013. Over the years, we expect one million people to benefit from our efforts and a 15% rise in crop production in villages across India.

FUTURE CHALLENGES
Changing consumer behaviour is a challenging task and we have only made limited headway. We have made a start by offering products that can significantly cut water usage by consumers. We do not yet have all the answers and we will continue to seek innovations which will help people reduce their impact on the environment.

REDUCING WATER USE IN OUR MANUFACTURING PROCESS

Global Target: By 2020, water abstraction by our global factory network will be at or below 2008 levels, despite significantly higher volumes. This represents a reduction of around 40% per tonne of production. Versus a 1995 baseline, this represents a 78% reduction per tonne of production and a 65% absolute reduction. We will focus in particular on factories in water-scarce locations. All newly built factories will aim to abstract less than half the water of those in our 2008 baseline. We have reduced water usage in our manufacturing operations by 29% compared to our 2008 baseline. Rainwater harvesting has been implemented in 22 sites out of a total of 38 sites. Some of our manufacturing sites have the potential of returning more water to the ground than is being consumed by them. This has been achieved by a series of initiatives such as collecting and recycling rainwater, recycling of treated effluent water through Reverse Osmosis technology, optimising process operations and other initiatives. We have 30 of our 38 manufacturing sites as zero-discharge sites. Our factories implemented some simple innovations to contain the usage of water. Our Goa factory became the first factory in the entire South Asia cluster to implement roof rainwater harvesting. As part of this process, rainwater on the terrace area of the factory is collected and recycled for use in various processes in the factory. Through this initiative, the factory reduced water consumption by 11% in Phase-1 of implementation in 2012. Our sites for Home Care products at Goa, Mangalore, Puducherry, Dapada, Sumerpur, Tatapuram and Chiplun saved up to 13,500 kilolitres of water per annum cumulatively by implementing roof rainwater harvesting.

WASTE
REDUCE PACKAGING
Global Target: By 2020, we will reduce the weight of packaging that we use by a third through: Lightweighting materials Optimising structural and material design Developing concentrated versions of our products Eliminating unnecessary packaging We delivered a significant reduction in overall plastic and paperboard consumption in India. In 2012, a number of projects were implemented across categories, resulting in a potential annualised reduction of more than 1,500 tonnes of plastic and over 700 tonnes of paper.

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REDUCING ENVIRONMENTAL IMPACT

RECYCLE PACKAGING
Global Target: Working in partnership with industry, governments and NGOs, we aim to increase recycling and recovery rates on average by 5% by 2015 and by 15% by 2020 in our top 14 countries. For some, this means doubling or even tripling existing recycling rates. We will make it easier for consumers to recycle our packaging by using materials that best fit the end-of-life treatment facilities available in their countries. By 2020, we will increase the recycled material content in our packaging to maximum possible levels. This will act as a catalyst to increase recycling rates. In order to create awareness and promote segregation of post-consumer use of packaging waste, HUL and Bharti Retail implemented a joint programme named 'Go-Recycle'. As part of the programme, consumers were encouraged to bring empty plastic bottles and pouches of any brand from select FMCG categories. In return, the consumers were given discount coupons for future purchases. In 2012, HUL and Bharti Retail Go-Recycle programme engaged over 100,000 shoppers over a six-month period. flexible plastic as well as municipal authorities and NGOs. The technology options being worked on include pyrolysis, cement co-processing and mechanical recycling. Pyrolysis offers a closed loop system which involves catalytic depolymerisation of plastics into fuel. The fuel can be used in our factories as furnace oil or can be used for similar industrial applications.Wehaveevaluated'technical proof of principle' of turning sachets, pouches, and other flexible plastic waste into fuel oil at a viable cost. Our factory in Puducherry has successfully used the fuel to power its boilerto check feasibility of this approach.We are studying long-term techno-commercial feasibility of different technology options to take this forward.

REDUCE WASTE FROM OUR MANUFACTURING

Global Target: By 2020, total waste sent for disposal will be at or below 2008 levels despite significantly higher volumes. This represents a reduction of around 40% per tonne of production. Versus a 1995 baseline, this represents an 80% reduction per tonne of production and a 70% absolute reduction. By 2015, all manufacturing sites will achieve zero nonhazardous waste to landfill. All newly built factories will aim to generate less than half the waste of those in our 2008 baseline. Reduction in total waste per tonne from our manufacturing sites is 77% against the 2008 baseline.A total of 31 HUL factories are now 100% zero non-hazardous waste to landfill. Emphasis on recycling has led to more than 98% of our total waste being recycled in environmentally-friendly ways. Some of the other initiatives include sludge-digesters installed in the Nasik and Amli (Silvassa) factories. In Nasik, the gas generated would be used in the canteen for cooking. The Effluent Treatment Plant sludge of the Hosur factory is co-processed through the plants of ACC Limited, a cement major which uses the sludge as fuel in its cement kiln. This is another example of the energy from waste model at work.

REUSE PACKAGING
Global Target: We will provide consumers with refills in our home and personal care portfolio to make it possible to reuse the primary pack. We introduced refills in several products such as Lifebuoy, Vim Liquid & Kissan Ketchup.

TACKLE SACHET WASTE

Global Target: Our goal is to develop and implement a sustainable business model for handling our sachet waste streams by 2015. Sachets and pouches create less waste by weight per millilitre of product sold and are therefore considered more efficient for packaging than bottles. However, it has been challenging to find an economically viable way of collecting andrecoveringsachet waste due to its low weight. This requires us to work in partnership with other users of

REDUCE OFFICE WASTE

Global Target: In our top 21 countries, at least 90% of our office waste will be reused, recycled or recovered by 2015 and we will send zero waste to landfill by 2017. By 2015, we will reduce paper consumption by 30% per head in our top 21 countries. We will eliminate paper in our invoicing, goods receipt, purchase order processes, financial reporting and employee expense processing by 2015, where legally allowable and technically possible. We have taken various initiatives to reduce waste from our office sites. Our campus at Mumbai has Effluent Treatment Plants which treat 100% of sewage and chemical waste. The

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recycled water is used for the cooling tower for airconditioning, landscaping and flushing. The site, therefore, is a zero discharge site. Dry and wet garbage is separated at the campus. A vermiculture organic digester on the campus processes this waste. This is being used as fertilizer. The hazardous waste is disposed at the authorised site.

SUSTAINABLE FRUIT AND VEGETABLES

Global Target: We will purchase 100% of our fruit from sustainable sources by 2015. We will purchase 50% of our top 13 vegetables and herbs from sustainable sources by 2012 and 100% by 2015. This accounts for over 80% of our global vegetable and herb volume. We have launched an initiative to source tomatoes sustainably in India. In September 2012, we entered into a public-private partnership with the Maharashtra Government for sustainable sourcing of tomatoes locally. In 2012, over 60% of tomatoes used in Kissan Ketchup in India were from sustainable sources. HUL aims to source 100% of its tomatoes from sustainable sources by 2015. For this project, the Government of Maharashtra registered 618 farmers who grow tomatoes on over 1,208 acres. Banana puree used in making Kissans popular mixed fruit jam variant is sourced from sustainable sources. We have also initiated work on sustainable practices for vegetables like onion, cabbage, carrot, sweet corn and garlic and spices like chilli, coriander, cumin and turmeric. Unilever is working with farmers in India to source gherkins sustainably for its brands, Amora and Maille.

FUTURE CHALLENGES
We are making good progress in identifying and developing technologies that help us reduce waste be it at the production level in factories or at the consumer level by innovating optimised packaging solutions. But we are aware that we need to do more. The Go-Recycle initiative has successfully highlighted the importance of recovery of materials which we place in the market. However, carrying this initiative forward and bringing about a change in the consumer mindset continues to be a medium and long-term challenge. Also, finding an economically viable solution to collecting and recovering sachet waste has been challenging. We are therefore trying to create a scalable model that will significantly increase the recovery rates of this waste. Although this is a challenge, it is also an opportunity to inspire end-to-end solutions through collaboration.

FUTURE CHALLENGES

SUSTAINABLE SOURCING
SUSTAINABLE PALM OIL
Global Target: We will purchase all palm oil from certified sustainable sources by 2015. We will purchase all palm oil sustainably from certified, traceable sources by 2020. (New target 2012.) We have committed to source 100% of our palm oil from sustainable sources backed by Green Palm certificates by 2015. By end-2012, all of our palm oil was from sustainable sources and 100% of palm oil volumes of India were covered by Green Palm certificates.

A majority of farms in India are characterised by conventional farming methods and smaller landholdings. Farms sell to several manufacturers, making it difficult to certify them as sustainable sources because the certificate is held by the manufacturing units. Equally, manufacturers are hesitant to change in a market where demand outstrips supply and there is little incentive to do things differently.

SUSTAINABLE TEA
Global Target: By 2015, we aim to have the tea in all Lipton tea bags sourced from Rainforest Alliance Certified estates. By 2020, 100% of Unilevers tea, including loose tea, will be sustainably sourced. A total of 77 tea estates in Assam, West Bengal and Tamil Nadu have been certified 'Sustainable Estates' by the Rainforest Alliance by the end of 2012. In 2012, more than 15% of the tea sourced from India for Unilever's brands was from sustainable sources.

Unilever Sustainable Living Plan: India Progress Report 2012 |

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ENHANCING LIVELIHOODS
GLOBAL GOAL
By 2020, we will enhance the livelihoods of hundreds of thousands of people as we grow our business.

GLOBAL PERSPECTIVE
We have a vast supplier and distributor network that touches small-scale farmers, distributors and retailers across the globe, many of them in developing and emerging markets. We will source more agricultural materials grown by smallholders. As they prosper, they will be able to invest more and we will have better certainty of supply and better quality raw materials for our food products.

OUR APPROACH
We work to build opportunities for people while growing our business. Spanning the range of opportunities from sourcing to distribution, we run several pilots focused on improving the livelihoods of small-scale businesses. A majority of those who benefit are smallholder farmers or small-scale distributors who sell our products. Under the Shakti programme, micro entrepreneurs take our best practices and products across India, often where larger distributor chains cannot reach. While they expand our reach, we help them build better livelihoods.

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BETTER LIVELIHOODS
HELPING SMALLHOLDER FARMERS
Global Target: Our goal is to engage with at least 500,000 smallholder farmers in our supply network. We will help them improve their agricultural practices and thus enable them to become more competitive. By doing so we will improve the quality of their livelihoods. We continue to work with smallholder farmers across India to implement sustainable agricultural methods and improve their crop yields. We support and encourage farmers to adopt advanced technologies for better yields by imparting training and through regular field-monitoring. We also help the farmers with good agricultural practices like drip irrigation, nutrient management, pest and disease management.

In 2012, we improved our Shakti rural-selling operation by part-funding mobile phones for a number of Shakti ammas, equipping them with a simple application to drive sales. The cost-effective mobile technology helps them sell the right products, saving time during sales calls while increasing sales and earnings. HUL also entered into a partnership on telecom distribution with a leading telecom company. This initiative helped Shakti entrepreneurs increase their income by selling telecom products and services to retailers as well as directly to consumers. The project was rolled out nationally in 2012 after a successful pilot in 2011. KWALITY WALLS VENDING OPERATIONS Our Kwality Walls mobile vending operations provide entrepreneurship opportunities to over 6,500 migrants across India. Uniforms, first-aid kits, behavioural and basic sales training and financial support are provided through our channel partners along with initial stocks on credit and a vending cart with freezers. In most cases, a vendor can make ` 3,000-4,500 a month. A few of our vendors have now become distributors themselves, managing ` 2-10 crore in the ice cream business and earning upwards of ` 100,000 per month.

SUPPORTING SMALL-SCALE DISTRIBUTORS

Global Target: Shakti, our door-to-door selling operation in India, provides work for large numbers of people in poor rural communities. We will increase the number of Shakti entrepreneurs that we recruit, train and employ from 45,000 in 2010 to 75,000 in 2015. We operate similar schemes in Bangladesh, Sri Lanka and Vietnam which we are also committed to expanding. PROJECT SHAKTI Project Shakti is a rural distribution initiative that targets small villages. This project benefits HUL by enhancing its direct rural reach and also creates opportunities for people in rural India. Project Shakti has 48,000 Shakti entrepreneurs (Shakti ammas) in 15 states. The Shakti ammas cover over 135,000 villages and serve 3.3 million households. During 2012, our work with Shakti ammas helped them further grow and develop their businesses. This has helped to consolidate and strengthen our network. Shakti ammas have proved successful in increasing our presence in rural areas and building strong local relationships with consumers, which encourages brand loyalty. The model we use improves the lives of Shakti ammas and usually leads to the doubling of income of a Shakti household. The programme was extended in 2010 to include Shaktimaans who are typically the husbands or brothers of the Shakti ammas. Shaktimaans complement our Shakti ammas. They sell our products on bicycles to surrounding villages, covering a larger area than Shakti ammas can do on foot. There are over 30,000 Shaktimaans across India.

FUTURE CHALLENGES
Project Shakti is a well known example of the synergy between enhancing livelihoods and growing our business. Our challenge is to continue to increase the business for our Shakti entrepreneurs and also increase the viability for extending the Shakti network to smaller and remote villages. Training Shakti entrepreneurs continues to remain a resource intensive process.

Unilever Sustainable Living Plan: India Progress Report 2012 |

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HINDUSTAN UNILEVER LIMITED Unilever House B. D. Sawant Marg Chakala, Andheri (E) Mumbai 400 099 T +91 (22) 3983 0000 For further information on our social, economic and environmental performance, please visit our website:

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