Firms that take a lead on world’s biggest problems will be most successful, says Paul Polman

A former boss of Unilever has said capitalism is a “damaged ideology” that must reinvent itself to survive by doing more to combat inequality and the climate emergency.

Paul Polman said companies that took a lead on the world’s biggest problems would be the most successful of the 21st century. Companies that put short-term profit ahead of long-term sustainability would not survive, he said.

“Capitalism, which has been responsible for the growth and prosperity that has done so much to enhance our lives, is a damaged ideology and needs to be reinvented for the 21st century,” Polman said in a speech. “Business needs to reinvent capitalism. We need to build a new model of inclusive and sustainable capitalism.”

Polman led Unilever, the maker of Dove soap, Marmite and Persil, for 10 years before stepping down at the end of 2018. As chief executive of one of the world’s biggest consumer goods companies, he argued for businesses to take a long-term view on urgent matters such as global heating instead of prioritising profit.

Since leaving Unilever, Polman has invested in Imagine, a foundation to promote the UN’s sustainable development goals. He has also backed the young activists behind Extinction Rebellion and is a fan of Greta Thunberg.

Polman said there was a compelling business case for investing in the UN’s development goals with the opportunity to create at least $12 trillion (£9.3tn) a year in economic growth and generate 380m jobs.

“Companies with a strong sense of purpose are better able to grow not only revenue and profits but also create additional value, such as customer loyalty, attracting top talent and developing new products and services,” he told a dinner of business leaders held by the executive recruiter Odgers Berndtson. Companies must aim for “a next decade of delivery” to be a force for good, he said.

Despite Polman’s campaigning for more responsible capitalism while he was at Unilever, the company has only recently pledged to halve its use of plastics from 700,000 tonnes a year by 2025. His replacement, Alan Jope, has also said he will sell off brands that do not contribute to society or the planet.

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Business leaders faced with unrest over the looming environmental disaster, social inequality and companies’ treatment of workers are trying to head off political interference by accepting that capitalism needs to change. In August, Apple, Amazon and the Wall Street bank JP Morgan were among 200 big US companies that redefined their purpose as “improving our society” and not only making money for shareholders.

Some of the world’s richest and most powerful businesspeople have warned that capitalism is failing. The hedge fund billionaire Ray Dalio has said the gap between rich and poor is an “existential threat” to US capitalism because it could lead to conflict, populism and “revolution of one sort or another”. Starbucks’ former chief executive Howard Schultz has said capitalism faces a crisis and has advocated higher taxes on the wealthy.

In Britain, the Labour party has committed itself to a target for the UK of net zero emissions by 2030 in its version of a Green New Deal. Labour has also pledged to extend workers’ rights, cap bosses’ pay at companies that provide services to the government and increase the minimum wage to £10 for all workers.