Unilever today (15 November) urged its shareholders to back the company’s plans to halve the environmental footprint of its products.
Speaking at the launch of the ‘Sustainable Living Plan’, which will see the consumer goods giant source 100% of its agricultural materials sustainably, CEO Paul Polman said that the financial crisis has meant the company needed to take “a slightly different approach to long-term share value creation”.
“There is such a broad investor base that has different objectives that we need to do a good job of attracting the right investors,” Polman told attendees. “The consumer wants [action on sustainability], the retailer wants it, and it often results in innovation and in lower costs.
“Unilever has been around for a hundred-plus years and we want to be around for several hundred more years, so if you buy into this long-term value creation model that is equitable and which sustainable, then come and invest with us. If you don’t buy into this, I respect you as a human being, but don’t put your money in our company.”
Asked how Unilever will sell the sustainability plan to key “relatively sceptical” stakeholders, Polman said that the firm doesn’t want to attract the type of investor base that wants “higher and higher and quicker results” against the targets it puts out.
“That is why we do not give guidance any more,” Polman said. “I think the financial crisis once more has pointed out that it is time for us to take a slightly different approach to long-term share value creation than what was happening before, and as a result, hopefully we will attract the right long-term investors. We have to deliver. I am not interested in if this [plan] will become a competitive advantage for us or not. It is the target of the business to become sustainable, consumers will force it upon us so we might as well think as much about it as we can.”
In terms of future acquisitions, Polman dismissed the suggestion that it might be a “challenge” to bring any new company in line with its sustainability plans.
“I don’t see them [acquisitions] as being any more challenging than what we are trying to do for the corporation here as a whole,” Polman said. “We expect that all of our businesses, the ones that we look at in the future to acquire and the businesses that we have, we expect them to operate under a model of growing sustainability.
“Companies that join our family, we expect to do the same thing. It might take a little bit more time, the main essence is that you build them in from the start in your product development programmes …so when you get new companies in they might be a little bit behind in some cases, but I hope we get some companies that are sometimes a little bit ahead,” he added.
Polman said that when it looks at possible acquisitions, the criteria will not just be about the “short-term financial or the quick payback of the investment” it will make for Unilever, but also about the long-term sustainability of its model.
“What we are really after here is a different business model that also the financial business community needs to feel comfortable with, not a 30-day model of announcements, it’s not a 60-day model of results, it’s not a 90-day model of winners, it’s a long term model of sustainable equitable growth for this world in which we are a part of – it is quite different,” Polman said.
Asked whether the firm will consider phasing out any products that are not or cannot be made sustainable, Gavin Neath, SVP for sustainability told attendees, “almost certainly no”.
“We can’t possibly claim that all of our products are sustainable today or that they will be completely sustainable in ten years time, but in aggregate as a business we will be dramatically better in a decades time that we are today, and that will only happen by working brand by brand and that is what we are doing, that’s where this agenda lies in this business, it lies with the brand,” Neath said.
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