Unilever to scale back environmental and social pledges
Rob Davies
Rob Davies
THE GUARDIAN
Fri, 19 April 2024
London-based Unilever previously promised to halve its use of virgin plastics by 2025.Photograph: Tim Ireland/PA
Unilever is to scale back its environmental and social aims, provoking critics to say its board should “hang their heads in shame”.
The consumer goods company behind brands ranging from Dove beauty products to Ben & Jerry’s ice-cream was seen as perhaps the foremost proponent of corporate ethics – particularly under the tenure of its Dutch former boss Paul Polman.
On Friday, the London-based firm’s current chief executive appeared to signal a strategic U-turn for the company, which is valued at £94bn on the London Stock Exchange. In an interview with Bloomberg, Hein Schumacher confirmed plans to water down the company’s ethical pledges on a range of issues including plastic usage and pay.
The shift comes amid a wider trend of pressure from shareholders in corporations ranging from banks to oil companies to cut costs and focus more on stock market performance than green projects.
Unilever, one of the largest users of plastic packaging in the world, had previously promised to halve its use of virgin plastics by 2025. Instead, it will now aim for a reduction of a third by 2026, Bloomberg reported. The less ambitious target equates to about 100,000 tonnes more fresh plastic every year.
The company is also abandoning a pledge to pay direct suppliers a living wage by 2030, instead proposing fair pay for suppliers accounting for half its annual spend on goods and services by 2026. It is also dropping a promise to spend €2bn (£1.7bn) a year with diverse businesses by 2025 and a commitment that 5% of its workforce will be made up of people with disabilities by the same year.
Schumacher said people’s focus on environmental and social issues was “cyclical”.
“When you have a huge drought for a number of months but everything else is going fine, the attention is on climate. These days it’s about wars and rightly so, that’s at the forefront.
“I’m not going to shout that we’re saving the world, but I want to make sure that in everything that we do, that it is indeed better,” he added.
He insisted that the company could still “make a difference” in the four key areas of climate, plastics, nature and people’s livelihoods.
Nina Schrank, the head of plastics at Greenpeace UK, said Unilever bosses “should hang their heads in shame”.
“Hein Schumacher and his board are well aware of the ruinous impact of their plastic pollution,” she said. “The tsunami of plastic they produce each year meant their existing targets were already not fit for purpose. We needed much more. And so rather than doubling down, they’re quietly dressing up their backpedalling and low ambition as worthy pragmatism.”
Unilever’s dilution of its ethical stance follows a period of worsening performance in which the company’s shares have fallen by 8% since Schumacher took over in July 2023.
Under Polman – and his successor Alan Jope – Unilever became increasingly involved in ethical initiatives. It promised to invest €1bn over 10 years in green projects and provided funding from its cleaning brand Domestos for a Unicef project to improve access to toilets in India.
The firm last month released plans to cut 7,500 jobs globally and spin off its ice-cream division as part of an overhaul aimed at saving about €800m over the next three years.
Fri, 19 April 2024
London-based Unilever previously promised to halve its use of virgin plastics by 2025.Photograph: Tim Ireland/PA
Unilever is to scale back its environmental and social aims, provoking critics to say its board should “hang their heads in shame”.
The consumer goods company behind brands ranging from Dove beauty products to Ben & Jerry’s ice-cream was seen as perhaps the foremost proponent of corporate ethics – particularly under the tenure of its Dutch former boss Paul Polman.
On Friday, the London-based firm’s current chief executive appeared to signal a strategic U-turn for the company, which is valued at £94bn on the London Stock Exchange. In an interview with Bloomberg, Hein Schumacher confirmed plans to water down the company’s ethical pledges on a range of issues including plastic usage and pay.
The shift comes amid a wider trend of pressure from shareholders in corporations ranging from banks to oil companies to cut costs and focus more on stock market performance than green projects.
Unilever, one of the largest users of plastic packaging in the world, had previously promised to halve its use of virgin plastics by 2025. Instead, it will now aim for a reduction of a third by 2026, Bloomberg reported. The less ambitious target equates to about 100,000 tonnes more fresh plastic every year.
The company is also abandoning a pledge to pay direct suppliers a living wage by 2030, instead proposing fair pay for suppliers accounting for half its annual spend on goods and services by 2026. It is also dropping a promise to spend €2bn (£1.7bn) a year with diverse businesses by 2025 and a commitment that 5% of its workforce will be made up of people with disabilities by the same year.
Schumacher said people’s focus on environmental and social issues was “cyclical”.
“When you have a huge drought for a number of months but everything else is going fine, the attention is on climate. These days it’s about wars and rightly so, that’s at the forefront.
“I’m not going to shout that we’re saving the world, but I want to make sure that in everything that we do, that it is indeed better,” he added.
He insisted that the company could still “make a difference” in the four key areas of climate, plastics, nature and people’s livelihoods.
Nina Schrank, the head of plastics at Greenpeace UK, said Unilever bosses “should hang their heads in shame”.
“Hein Schumacher and his board are well aware of the ruinous impact of their plastic pollution,” she said. “The tsunami of plastic they produce each year meant their existing targets were already not fit for purpose. We needed much more. And so rather than doubling down, they’re quietly dressing up their backpedalling and low ambition as worthy pragmatism.”
Unilever’s dilution of its ethical stance follows a period of worsening performance in which the company’s shares have fallen by 8% since Schumacher took over in July 2023.
Under Polman – and his successor Alan Jope – Unilever became increasingly involved in ethical initiatives. It promised to invest €1bn over 10 years in green projects and provided funding from its cleaning brand Domestos for a Unicef project to improve access to toilets in India.
The firm last month released plans to cut 7,500 jobs globally and spin off its ice-cream division as part of an overhaul aimed at saving about €800m over the next three years.
Unilever gives up on ‘saving the world’ after ‘virtue-signalling’ backlash
Daniel Woolfson
Unilever forced to retain a multibillion-pound slice of its ice cream empireDaniel Woolfson
THE TELEGRAPH
Fri, 19 April 2024
Chief executive Hein Schumacher says the company will focus on 'fewer things and with greater impact' - Vivian Wan/Bloomberg
Unilever has abandoned efforts to “save the world” after a backlash from investors over “virtue-signalling” that included giving Hellmann’s mayonnaise a social purpose.
The consumer goods giant, which owns Marmite, Dove, Magnum and Ben & Jerry’s, has watered down green targets and scrapped some diversity pledges after investors told it to focus more on profits and less on social and environmental issues.
Chief executive Hein Schumacher, who took charge last July, told Bloomberg: “I’m not going to shout that ‘we’re saving the world’, but I want to make sure that in everything that we do, that it is indeed better.”
Unilever has softened targets to reduce its use of plastic, improve the health of the land in its supply chain and ensure all the people in its supply chain are paid the living wage.
A promise to increase the number of disabled employees to 5pc of its workforce by 2025 has been scrapped altogether, as have plans to spend almost £2bn with “diverse businesses” across the world by 2025, and to halve food waste in its operations by 2025, Bloomberg reported.
Mr Schumacher said Unilever would focus on doing “fewer things and with greater impact”, adding that the company’s new Climate Action Plan was “very stretching, but they are also intentionally and, unashamedly, realistic”.
Under Mr Schumacher’s predecessors, Alan Jope and Paul Polman, Unilever became focused on improving the planet as well as delivering for investors. In 2019, it pledged to develop a “purpose” for every brand, with everything from Domestos bleach to Vaseline “addressing an environmental or social issue,” Mr Jope said at the time.
However, the focus led to accusations that the company was putting activism ahead of business fundamentals.
Terry Smith, a Unilever investor and the managing director of Fundsmith, repeatedly accused the company of “virtue-signalling” and trying to “define the purpose of Hellmann’s mayonnaise” instead of focusing on performance.
Unilever’s share price has fallen by more than 17pc over the last five years.
Mr Schumacher’s weakening of pledges is the latest move to address investors’ concerns. Last year he abandoned the strategy of ensuring every product had a purpose.
Mr Schumacher said in a statement: “We want to set sustainability ambitions which are credible, which we believe we can deliver against, and which have real positive impact.”
Some of the changes include reducing its targeted use of virgin plastics by one third by 2026, rather than a previous target of 50pc. Its goal for sustainable sourcing of key crops by 2026 has been slightly reduced from 100pc to 95pc.
Other targets have been pushed back: a commitment to using 100pc reusable, recyclable or compostable plastic packaging by 2025 has been delayed until 2030 for rigid plastics and 2035 for flexible plastics.
Roseanna Ivory, a fund manager at Abrdn, which is a top 20 investor in Unilever, said the announcement was “disappointing” but added there was not a significant shift in Unilever’s “commitment to sustainability”.
She said: “It is notable that Unilever’s decarbonisation targets have been left unchanged, and that other commitments, such as to make all plastic reusable, recyclable or compostable, have been retained but pushed further back in time.”
Ms Ivory added that “the challenges of a higher inflationary world make it harder for the company to execute on targets released within a different economic and political context.”
Fri, 19 April 2024
Chief executive Hein Schumacher says the company will focus on 'fewer things and with greater impact' - Vivian Wan/Bloomberg
Unilever has abandoned efforts to “save the world” after a backlash from investors over “virtue-signalling” that included giving Hellmann’s mayonnaise a social purpose.
The consumer goods giant, which owns Marmite, Dove, Magnum and Ben & Jerry’s, has watered down green targets and scrapped some diversity pledges after investors told it to focus more on profits and less on social and environmental issues.
Chief executive Hein Schumacher, who took charge last July, told Bloomberg: “I’m not going to shout that ‘we’re saving the world’, but I want to make sure that in everything that we do, that it is indeed better.”
Unilever has softened targets to reduce its use of plastic, improve the health of the land in its supply chain and ensure all the people in its supply chain are paid the living wage.
A promise to increase the number of disabled employees to 5pc of its workforce by 2025 has been scrapped altogether, as have plans to spend almost £2bn with “diverse businesses” across the world by 2025, and to halve food waste in its operations by 2025, Bloomberg reported.
Mr Schumacher said Unilever would focus on doing “fewer things and with greater impact”, adding that the company’s new Climate Action Plan was “very stretching, but they are also intentionally and, unashamedly, realistic”.
Under Mr Schumacher’s predecessors, Alan Jope and Paul Polman, Unilever became focused on improving the planet as well as delivering for investors. In 2019, it pledged to develop a “purpose” for every brand, with everything from Domestos bleach to Vaseline “addressing an environmental or social issue,” Mr Jope said at the time.
However, the focus led to accusations that the company was putting activism ahead of business fundamentals.
Terry Smith, a Unilever investor and the managing director of Fundsmith, repeatedly accused the company of “virtue-signalling” and trying to “define the purpose of Hellmann’s mayonnaise” instead of focusing on performance.
Unilever’s share price has fallen by more than 17pc over the last five years.
Mr Schumacher’s weakening of pledges is the latest move to address investors’ concerns. Last year he abandoned the strategy of ensuring every product had a purpose.
Mr Schumacher said in a statement: “We want to set sustainability ambitions which are credible, which we believe we can deliver against, and which have real positive impact.”
Some of the changes include reducing its targeted use of virgin plastics by one third by 2026, rather than a previous target of 50pc. Its goal for sustainable sourcing of key crops by 2026 has been slightly reduced from 100pc to 95pc.
Other targets have been pushed back: a commitment to using 100pc reusable, recyclable or compostable plastic packaging by 2025 has been delayed until 2030 for rigid plastics and 2035 for flexible plastics.
Roseanna Ivory, a fund manager at Abrdn, which is a top 20 investor in Unilever, said the announcement was “disappointing” but added there was not a significant shift in Unilever’s “commitment to sustainability”.
She said: “It is notable that Unilever’s decarbonisation targets have been left unchanged, and that other commitments, such as to make all plastic reusable, recyclable or compostable, have been retained but pushed further back in time.”
Ms Ivory added that “the challenges of a higher inflationary world make it harder for the company to execute on targets released within a different economic and political context.”
Unilever raised the for sale sign in March, alongside
7,500 possible job losses.
Ben Marlow
Sat, 20 April 2024
ben and jerry's
Unilever could be forced to hold onto a multi-billion pound slice of its ice cream empire, according to senior City sources, as the sheer size of the operations make it difficult to find a buyer.
The consumer goods giant is attempting to offload brands including Magnum, Wall’s and Ben & Jerry’s as part of an elaborate corporate clean-up exercise.
Valued at as much as £15bn, bankers say the ice cream operations are so large that a full takeover would be beyond even the deep-pocketed private equity firms and Middle Eastern state-backed funds that are circling the business.
The only way to make a deal affordable is if Unilever brings down the price tag by retaining a significant minority stake, it is believed. Even then, it is expected that buyers will have to team up in bidding consortiums in order to assemble the required firepower.
Retaining a minority stake would reduce the risk of Unilever being accused of selling the division on the cheap – a charge it has faced in the past when the company has sold parts of its sprawling portfolio of household labels.
“Think of it as an anti-embarrassment clause,” one City source said.
Unilever sold its spreads division, which included the Flora and Stork margarine brands, to buyout firm KKR in 2017 in the wake of a hostile takeover approach from Kraft Heinz and Warren Buffett. KKR paid £6bn but some analysts think Unilever could have got more.
Four years later, CVC paid nearly £4bn for its PG Tips tea division.
It is understood some of the world’s biggest private equity funds, including CVC, KKR, and Blackstone, are running the rule over Unilever’s ice cream division. Sovereign wealth funds from the Middle East are also understood to be interested.
Unilever raised the for sale sign in March, alongside 7,500 possible job losses.
The FTSE 100 consumer goods giant is also exploring a spin-off that would see the ice cream business floated as a separate entity on the stock market.
City figures hope that the board would choose a London listing in this scenario. A share sale in the capital of such a large business would be a huge boost as the stock market battles to stem an exodus of public companies – largely to America.
Shell stunned the Square Mile earlier this month when it raised the prospect that it could become the latest UK company to up sticks and move to New York. Chief executive Wael Sawan said that the £180bn oil explorer was looking at “all options” for its listing.
Referencing the London market, he said: “I have a location that clearly seems to be undervalued.”
There are doubts, however, about whether Unilever would choose London over Amsterdam, given the controversy over its attempts to leave the UK and consolidate its dual Anglo-Dutch corporate structure in the Netherlands during the Brexit vote.
Following a fierce backlash from British shareholders, Unilever was forced into an embarrassing about turn that ended with the company unifying in the UK instead.
At the time, the Dutch government asked for reassurance that Unilever would incorporate and list its foods and refreshment division in The Netherlands should it ever choose to list the businesses as an independent company. Unilever said it was “comfortable to make these commitments.”
In 2022, the division was split into two parts, nutrition and ice cream.
Unilever declined to comment.
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