Harnessing the Power of Business to Fight AIDS: Unilever & M·A · C Cosmetics Peace Through Commerce Conference Mark Holloway

Harnessing the Power of Business to Fight AIDS:

Unilever & M·A·C Cosmetics

Peace Through Commerce Conference

Mark Holloway

What do these have to do with AIDS?

http://www.maccosmetics.com/templates/products/sp.tmpl?CATEGORY_ID=CATEGORY17522&PRODUCT_ID=PROD7869

Presentation Overview

1) Overview of the pandemic

2) The case for business action and GBC

3) Companies in Action: Unilever and MAC Cosmetics

The Global AIDS Crisis

AIDS is the worst health crisis in all of human history

25 million people have died


Women make up over 50% of infections

25 million AIDS Orphans by 2010

Source: UNAIDS, AIDS Epidemic Update 2004

Total: 40 million Adults and Children living with HIV/AIDS at the end of 2005

Western Europe610 000610 000

North Africa & Middle East440 000440 000

Sub-Saharan Africa24.5 million24.5 million

Eastern Europe & Central Asia1.5 million1.5 million

South & South-East Asia

7.1 million7.1 millionAustralia

& New Zealand

35 00035 000

North America1 million1 million

Caribbean330 000330 000

Latin America1.6 million1.6 million

East Asia & Pacific1.1 million1.1 million



Over 13,000 people are infected every day


Over 13,000 people are infected every day

Over 90% of people do not know they have the virus

Emerging Epidemic in Emerging Markets

Russia, India, China are increasingly at risk

GDP Growth of the Largest Economies

0

2

4

6

8

10

12

1999 2000 2001 2002 2003 2004 2005

GD

P G

row

th (

Pe

rce

nt)

China

Russia

India

United StatesUnited Kingdom

JapanGermany

Growing Epidemic CHINA

HIV Prevalence Curves: 3 scenariosChina, 2000-2025

Source: Nicholas Eberstadt, Senior Advisor to National Bureau of Asian Studies, Copyright © 2002

45.87 Million Infected


Growing EpidemicINDIA

HIV Prevalence Curves: 3 scenariosIndia, 2000-2025




Growing EpidemicRUSSIA

HIV Prevalence Curves: 3 scenariosRussia, 2000-2025




Why should business take action against HIV/AIDS?

1. Economic Impact


1. Economic Impact“potential threats to the creation of value”


1. Economic Impact“potential threats to the creation of value”

• Devastating to economies• Threat to security• Diminishes workforce• Cuts productivity and profit

AIDS Decimates Economies

-1.6

-1.4

-1.2

-1

-0.8

-0.6

-0.4

-0.2

0

0 5 10 15 20 25 30 35

HIV Prevalence Rate (%)

Red

uct

ion

in

gro

wth

rat

e G

DP

p

er c

apit

a (%

, p

er y

ear)

Source: R. Bonnel (2000) Economic Analysis ofHIV/AIDS, ADF2000 Background paper, World Bank. Slide adapted from UNAIDS: “Socio-Economic Impact of HIV/AIDS in Africa,” presented by Anita Alban and Lorna Guiness, ADF 2000.

Growth Impact of HIV (1990-97) for 80 developing countries

The Impact in Africa is Devastating

A – This is the GDP growth rate assumed for South Africa without AIDS.

B - Shows that the decline in the growth rate tapers off as the HIV prevalence rate increases from 5 to 30 percent.

Source: HIV/AIDS: DOES IT INCREASE OR DECREASE GROWTH IN AFRICA?, René Bonnel, ACTAfrica, World Bank, November 6, 2000

7.6

11.8

15.9

0

2

4

6

8

10

12

14

16

18

Early Late High

Estimated Loss to China’s GDP as a Result of HIV/AIDS, In 2010

• Experts project losses to China’s GDP due to HIV/AIDS could be as high as $2 billion in 2010 and will exponentially increase after that

• The death of one worker due to HIV/AIDS costs China’s economy 25 years of lost labor productivity

• Over 90 percent of peasants have no access to health care

RM

B B

illio

ns

Impact on China’s Economic Development

• Health consumes more of government budget

• Declines in family savings and disposable income

AIDS Threatens Security & Economic Development

MACROECONOMIC IMPACTS

• Reduced investment

• Foreign investment and tourism decline

• Tax revenues fall

• Brain drain

AIDS Diminishes Workforce


No HIV Severe Epidemic

Deaths

CHINA 1.46 billion 1.37 billion 90 million

INDIA 1.38 billion 1.26 billion 120 million

RUSSIA 140 million 120 million 20 million

TOTAL 230 million

Population in 2025

Officials and businessmen are 10 to 22 times more likely to buy sex than physical laborers

■

Truckers in India: more than 40% HIV+

Threats Looming Below the Radar

The Impact on Business: Declining Productivity and Profits

• Increased cost for health care, burials, training and recruitment of replacement employees

• Decreased revenues as a result of absenteeism due to illness or attendance at funerals

• Employees in their most productive years are affected


1. Economic Impact

2. Changing Consumer Attitudes• Expectations of private sector• Shifting balance of trust• Cause-related product marketing

2005 Survey: U.S. consumer attitudes towards business and AIDS

AIDS is a serious issue.

Think companies should be “actively involved” in fighting AIDS.

Would pay more for a brand “if they knew that the extra money was going specifically to a program to fight AIDS.”

96%71%

67%

Consumer Attitudes

To mobilize international

business in the fight against

AIDS, tuberculosis and

malaria.

Mission of GBC

History:• Launched in June 2001• Response to Kofi Annan’s call to action• Private Sector ‘Focal Point to Global Fund to Fight AIDS, TB &

Malaria

Leadership: • Ambassador Richard Holbrooke – CEO and President• Sir Mark Moody-Stuart, Chairman, Anglo American• Bertrand Collomb, Chairman, Lafarge• Cyril Ramaphosa, Chairman, Shanduka

Offices:• New York, Paris, Geneva, Nairobi, Johannesburg, Kiev,

Moscow, Beijing, Delhi (2007)

Overview of GBC

Member Companies

1. In the Workplace

2. In the Community

3. With its Core Competency

4. Through Advocacy and Leadership

Business Action: Four Components

Impact Mitigation:

Unilever Tea Kenya• Kericho district• 20,000 employees• Live on company estates with families – 80,000 people

Impact Mitigation:

Kenya • 1999: HIV/AIDS a national disaster• More than 1.2 million adults living with

HIV/AIDS (2003)

• 650,000 AIDS orphans (2003)

Unilever Tea Kenya• Annual medical budget: $1.4 million• 22 dispensaries• 4 health centers• 85-bed hospital• Estimated 9% infection rate

Impact Mitigation:

May 2002: HIV/AIDS Policy• Education and

Communications• Awareness• Prevention

• Medical care• Company best practice

strategies• Non-discrimination policy• No routine HIV screening

without informed consent

Impact Mitigation:

Lessons Learned• Clear policy and leadership support

• Involved people living with HIV/AIDS

• Strategic: targeted groups

• Capacity building

• Partnerships• Kenya HIV Aids Business Council• Kenya Tea Growers Association• Walter Reed - PEPFAR• National Org. of Peer Educators• GTZ• Local schools

• Created by Bono & Bobby Shriver, 2006• NOT a charity• Aims to deliver sustainable flow of contributions

from the private sector to the Global Fund• (Gap)RED, after 2½ weeks raised enough money to:

• educate 1 million people in HIV training• provide 35,000 children orphaned by AIDS with a year's worth of

school materials and daily hot meals

MarketOpportunity:

http://www.joinred.com/red.asp

• VIVA GLAM lipstick • Response to devastation of AIDS

in fashion, cosmetics industry• Company underwrites all product

expenses• Collaborates with retail partners • Contributes 100% of retail selling

price to M·A·C AIDS Fund• ONLY advertised M·A·C product

MarketOpportunity:

• Five new launches since 1994• Extensive use of celebrity

endorsements- Elton John- Missy Elliott- Pamela Anderson- Lisa Marie Presley

• One of fashion world's most successful fundraising initiatives

• Contributed $75 million to M·A·C AIDS Fund

• Market Success:- Pamela Anderson: 200% increase in sales;

$3 million in six weeks- Lifted sales across all product lines

• Spawned additional efforts:- Kids Helping Kids- Get Tested - Good Spirits

• Become “heart and soul” of M·A·C Cosmetics

The Next Wave

1. Co-Investment/Public-Private Partnerships

1. Co-Investment / Private-Public Partnerships

- Brings together various sectors with unique and complementary resources

- Four pilot projects: - Nigeria (2)- Kenya- South Africa

- $1.4 million investment by PEPFAR- “Making Co-Investment a Reality”

produced with GTZ

Co-Investment

Development Goals

Private Sector Goals

PPP

The Next Wave

1. Public-Private Partnerships2. Emerging Economies3. Testing4. AIDS in Black America

People Living with AIDS in

United States (CDC, 2004)

Documents

Harnessing the Power of Business to Fight AIDS: Unilever & M·A · C Cosmetics Peace Through Commerce Conference Mark Holloway