A Unilever shareholder resolution is urging the company to sell more healthy food. Unilever is behind Ben & Jerry’s icecream, Marmite and Hellmann’s mayonnaise, among other products.
The coalition in favour of the move says Unilever is seen as a leader in sustainable business but the nutrition of its products is a blind spot.
Speaking from one coalition signatory, Ignacio Vazquez, Senior Manager of Healthy Markets at ShareAction, said, “The rapid growth of regulation means that health is a critical ESG issue presenting a real financial threat to its business.
“By voicing their support for this resolution, Unilever’s investors can help to drive change at the heart of one of the biggest foods and drink manufacturers in the world while also shielding themselves from regulatory and reputational risks.”
The resolution is co-filed by eleven institutional investors representing $215 billion in assets.
They include pan-European asset manager Candriam, Dutch asset manager ACTIAM, US healthcare provider Trinity Health, the UK’s Guy’s & St Thomas’ Foundation, CCLA, and Greater Manchester Pension Fund.
“When Unilever steps forward it sends ripples through the industry”
The co-filing group also includes over 100 individuals co-ordinated by ShareAction, including Unilever customers, parents, medical professionals and health campaigners.
Sophie Deleuze, Lead ESG Analyst, Stewardship, Candriam, said, “We commend Unilever’s strategic commitments and close collaboration on tackling nutrition and health issues.
“Despite the company’s efforts, questions remain as to whether its policies are delivering sufficient progress to improve the healthiness of its sales portfolio in the eyes of regulators. We encourage them to take further action and lead the industry.
“When a company the size of Unilever takes significant steps forward, it will send ripples through the whole food manufacturing industry, and we believe will deliver meaningful, positive change. It will also ensure the company is better placed to navigate any potential regulatory intervention.”
With many countries clamping down on unhealthy eating, it was incumbent on Unilever to proactively reduce sugar, salt and fat in its products.
Unilever’s Foods and Refreshments’ Division generates €19.1 billion annually – approximately 40 per cent of the group’s total sales.
“Only 17 per cent of Unilever’s sales were derived from healthier products”
Health is emerging as the next frontier in shareholder activism, says the coalition, adding, obesity rates have tripled since 1975, costing the global economy US$2 trillion or 2.8 per cent of gross domestic product each year, similar to the economic impact of smoking.
The Access to Nutrition Initiative, a benchmarking organisation, last year found only 17 per cent of Unilever’s food and beverage sales were derived from healthier products. This was a smaller proportion than many of its competitors, including Danone (61 per cent), Nestlé (43 per cent), Kraft Heinz (36 per cent), General Mills (29 per cent) and Kellogg (26 per cent).
Unilever reported in 2020 that, using the company’s own definitions, 61 per cent of its food and drink sales were derived from products with “High Nutritional Standards”, but investors question its metrics.
The shareholder resolution urges Unilever to:
- Disclose the current proportion of sales linked to healthier products – as defined by government-endorsed nutrient profiling models
- Set targets to “significantly increase” that share by 2030
- Publish an annual review of progress.
In other sustainability initiatives, Unilever aims to achieve net zero emissions in its supply chain by 2039 and to ensure all workers supplying the company receive a living wage by 2030.
Chief Executive Alan Jope recently stated that his goal is “to prove incontrovertibly that sustainable business does drive superior financial performance.”
He has added his voice to calls for a UN treaty harmonising regulations against plastic pollution.
Last year, Knorr, Unilever’s largest food brand, said it would grow 80 per cent of its key vegetables, herbs, spices and grains following regenerative agriculture principles by 2026.
“Ben & Jerry’s has a long history of advocating for human rights”
It said it would find new ways to grow and diversify food towards a positive impact on nature, “while sharing learnings with others to grow for good”.
The Ben & Jerry’s brand in particular has leaned into social activism, with explainers on reparations for slavery in the United States and how systemic racism infiltrates the US education system.
It won’t renew its licence agreement in Israel this year, by way of protesting the illegal occupation of Palestine, saying, “We’re a values-led company with a long history of advocating for human rights, and economic and social justice. We believe it is inconsistent with our values for our product to be present within an internationally recognised illegal occupation.”
It has called out the UK’s asylum plans for lacking a legal basis or humanity.
And this year announced further plans to reduce its carbon footprint through converting cow manure into energy and changing the diet of the cows it sources from.
The shareholder resolution regarding nutrition has been broadly well received. However, earlier in January investor Terry Smith had written to fellow investors in his Fundsmith Equity Fund that Unilever management was “obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business.
“1,500 roles globally to be lost in management restructure”
“The most obvious manifestation of this is the public spat it has become embroiled in over the refusal to supply Ben & Jerry’s ice cream in the West Bank.
“However, we think there are far more ludicrous examples which illustrate the problem. A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot.”
He added, “Although Unilever had by far the worst performance of our consumer staples stocks during the pandemic we continue to hold the shares because we think that its strong brands and distribution will triumph in the end.”
Since then Unilever has announced a restructure, saying “The proposed new organisation model will result in a reduction in senior management roles of around 15 per cent and more junior management roles by 5 per cent, equivalent to around 1,500 roles globally.
“Changes will be subject to consultation. We do not expect factory teams to be impacted by these changes.”
A date has not yet been set for Unilever’s AGM where the resolution will be presented but traditionally it falls in May.
