Exclusive – Unilever exec: investor Peltz supportive of sustainability drive
2022.08.17 18:34
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FILE PHOTO: A Hindustan Unilever Limited (HUL) employee removes a bottle from a ‘Smart Fill’ refilling machine inside a supermarket in Mumbai, India, June 11, 2022. Picture taken June 11, 2022. REUTERS/Francis Mascarenhas/File Photo
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By Richa Naidu
LONDON (Reuters) – Activist investor Nelson Peltz is “supportive” of a plan by consumer goods maker Unilever (NYSE:UL) to de-carbonize all five of its newly established business units, in an endorsement of its sustainability strategy, a Unilever executive told Reuters.
The maker of Knorr stock cubes and Magnum ice creams earlier this year fielded criticism from some shareholders about the importance it places on having social purpose behind brands. It has set a target of net zero emissions by 2039.
Having the support of Peltz, who joined Unilever’s board in July, will make it easier to press ahead with the strategy, analysts say. The investor, whose hedge fund Trian has built a roughly 1.5% stake, has a track record of building stakes in consumer-focused companies and influencing strategy.
“He (Peltz) and the rest of the board are very supportive of the work that we’re doing,” Rebecca Marmot, Unilever’s chief sustainability officer, told Reuters.
Trian declined to comment.
In May, Trian said it would work with Unilever’s management and board “to help drive Unilever’s strategy, operations, sustainability, and shareholder value for the benefit of all stakeholders.”
The hedge fund supports sustainable investment and believes “the consideration of ESG (environment, social and governance) factors enhances our overall investment process” and “may encourage portfolio companies to implement ESG-related initiatives,” according to its website.
Unilever says on its website its 400 brands “are on a global mission to do good.” Many back social or environmental causes, like recycling plastics in the case of Hellmann’s mayonnaise.
Not all investors have been supportive.
Terry Smith, who owns about 0.85% of the company’s shares via his Fundsmith vehicle, in January accused Unilever of being “obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business.”
Smith declined to comment for this story.
BIG INVESTORS
Marmot, who has been in her role for more than three years, has been speaking to more investors than before. Where previously she spoke mainly to “specialist” investors about sustainability, she now goes into “lots of the conversations with BlackRock (NYSE:BLK) and all of the big investors.”
Unilever’s shares have underperformed rivals including Procter & Gamble (NYSE:PG) and Nestle over the past year, reflecting what one investor called “low sales growth as a result of their portfolio mix.” Unilever has taken some criticism for holding on to some brands that have grown slowly in recent years, particularly in its food business.
Asked what she thought about investors who want Unilever to focus less on sustainability, Marmot said: “well, everyone’s entitled to their own opinion … it’s a strange approach to say that we’re doing too much.
“We’re now going through the process – and this is a live project I’m working on at the moment – of setting a de-carbonisation plan for each of our five business groups,” she added.
The five business groups are Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream.
Marmot said the process – which the board is “100 percent” supportive of – would have a bearing on how Unilever runs its factories, develops products in R&D, and works with suppliers.
Meanwhile shareholders are paying attention to increased scrutiny from financial watchdogs in the United States and Europe on how companies report their impact on the environment and on societies around the world.
“Firms that act ethically tend to drive shareholder returns over the long term and that’s primarily what I’m concerned with,” said Jack Martin, a fund manager at investor Oberon Investments, said.
“They make a lot of goods so if they can reduce their carbon footprint and be more sustainable, I think the shares will trade at a premium.”
