Unilever acquires Seventh Generation, polishes its green image

Unilever, the world’s third largest producer of consumer goods, is burnishing its green image.

The British-Dutch company announced Monday that it bought Seventh Generation, an eco-friendly cleaning, paper, and personal care product company, for $700 million. The acquisition show the increasing importance of ethics to the consumer market and represents a shift in values toward sustainability for Unilever.

“Seventh Generation has long been a disruptor in the US marketplace, leading the industry in sustainable innovation while attracting new generations of conscious consumers,” Nitin Paranjpe, president of Unilever’s home care division, said in a statement. “This addition to Unilever’s product portfolio will help us meet rising demand for high-quality products with a purpose.”

The sale could give Unilever, valued at $136.2 billion, an advantage in a US market largely held by its rival company Procter & Gamble. Seventh Generation, which made $200 million in sales last year, could now have access to a larger pool of consumers for its increasingly in-demand products.

“We look at this as having a multiplier effect for our business,” Seventh Generation Chief Executive John Replogle, who will stay on to run the company, told The Wall Street Journal. “We always aspired to be a billion-dollar brand. We see this as a springboard as opposed to throwing in the towel.”

Some are worried about the partnership, as startups don’t always retain their original mission once bought by publicly traded companies. But Unilever has historically taken a hands-off approach when it has acquired new companies – like it was seen to do after it bought Ben & Jerry’s in 2000.

Additionally, Unilever acquired the environmentally friendly Dollar Shave Club in July for $1 billion, and is reported to be in talks to buy Jessica Alba’s Honest Company, which sells nontoxic household products.

The acquisition of companies aimed at environmentally conscious buyers symbolizes a dramatic turnaround for Unilever, which in 2008 was accused of contributing to the destruction of the Borneo Rainforest in Indonesia by buying palm oil, a key ingredient in many processed food and personal care products, from companies that engaged in illegal deforestation. At the time, Unilever was the largest purchaser of palm oil in the world. 

The advocacy group Greenpeace led a campaign against Unilever's participation in the rainforest destruction, which was seen as causing harm to native people and wildlife.

Unilever responded by dropping contracts with the palm oil producers in question and lobbying its competitors Kraft, Nestlé, Cadbury, Cargill, and Proctor & Gamble to do the same.

"Unilever's decision could represent a defining moment for the palm oil industry.” John Sauven, Greenpeace executive director, said in a statement in 2009.  "What we're seeing here is the world's largest buyer of palm oil using its financial muscle to sanction suppliers who are destroying rainforests and clearing peatlands. This has set a new standard for others to follow."

In the years since, Unilever has been involved in efforts to promote sustainable palm oil production and it was Unilever's commitment to reducing its environmental impact that made the Seventh Generation CEO to say that the two companies would make good partners.

“Today marks the next chapter and we’re proud to join Unilever and its shared vision for purpose-led business on a global scale,” Replogle said in a statement. “Working together we are confident we can have a positive impact on the health of billions of people around the world, truly fulfilling our mission of nurturing the next seven generations while transforming global commerce.”