CFO LEADERSHIP NETWORK - ENHANCING INVESTOR ENGAGEMENT Practical example: Unilever - Accounting for ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
CFO LEADERSHIP NETWORK ENHANCING INVESTOR ENGAGEMENT Practical example: Unilever
INTRODUCTION
The A4S Essential Guide to Enhancing • How to convince investors that UNILEVER
Investor Engagement was first published in sustainability is being integrated into your
2014. Since the initial publication, the nature, business. At Unilever, we are driven by our purpose:
quality and extent of investor interest in the to make sustainable living commonplace.
topic of sustainability has grown dramatically, • How to communicate with your investors. Established over 100 years ago, we are
with members of the A4S CFO Leadership one of the world’s largest consumer goods
• How to integrate into your investor companies. We are known for our great
Network noting a shift from ‘we never get
relations activities. brands, a global footprint and our belief in
asked about our sustainability initiatives’ to
‘it (sustainability) comes up in every investor doing business the right way.
This set of case studies explores aspects
engagement’. This growing investor focus of how Unilever’s sustainability activities
on the link between environmental and social align with increased investor interest in
issues and long-term value creation means environmental, social and governance (ESG)
companies must think about the relevance topics. Specifically, it looks at how Unilever:
of sustainability for their business and the
opportunities it presents for effective investor • Integrates sustainability into its strategy
engagement.
• Adopts a commercial tone in
As part of the 2021 refresh of the guide, communicating with investors
we have generated a series of practical
examples from companies in our CFO • Makes everyone sustainability literate
Leadership Network, including Unilever,
to illustrate ways in which they are linking • Gives investors a say on climate
environmental and social trends, business
performance and investor engagement. In
addition to explaining why it is important to
engage with investors, the guide provides
recommendations around three broad
themes:
Enhancing investor engagement practical example: Unilever 2
CONVINCING INVESTORS THAT SUSTAINABILITY MATTERS:
INTEGRATE INTO STRATEGY
Investors are interested in understanding The Unilever Compass is made up of
how we think about value creation, how we five strategic priorities, one of which is to
identify opportunities, and how we manage ‘position our brands as a force for good,
our risks. For us, sustainability is integral to powered by purpose and innovation’. This
our business growth and performance over is underpinned by a series of multiyear
the short, medium and long term and thus to metrics and targets that allow investors and
our value creation story. other stakeholders to understand what this
priority means and how we plan to measure
In 2020 we announced the Unilever progress.
Compass, our new integrated strategy. It
builds on the lessons learnt from Unilever’s This approach clearly articulates the
Sustainable Living Plan (then 10 years centrality of sustainability to our strategy.
old and coming to an end) and extensive We will demonstrate how our purpose-led,
engagement with employees and external future-fit business model drives superior
stakeholders. The strategy retains Unilever’s performance, consistently delivering financial
purpose, which is to make sustainable results in the top third of our industry.
living commonplace, but sets a new vision,
namely, to be the global leader in sustainable
business.
Enhancing investor engagement practical example: Unilever 3
The Unilever Compass
Multi-stakeholder Model
Our Vision is to be the global leader in Our People Consumers
sustainable business. We will demonstrate
how our purpose-led, future-fit business
model drives superior performance,
consistently delivering financial results in Customers Suppliers & Business
Partners
the top third of our industry.
Strategic Choices and Actions
Society Planet
1. Develop our portfolio into high growth spaces
Plant-based
Hygiene Skin care Prestige beauty Functional nutrition
foods
2. Win with our brands as a force for good, powered by purpose and innovation
Shareholders
Improve the health Improve people’s health, Contribute to a fairer, more Win with differentiated science
of the planet confidence and wellbeing socially inclusive world and technology
3. Accelerate in USA, India, China and key growth markets
Build further scale in USA, Leverage emerging
India and China market strength
4. Lead in the channels of the future
Multi-year Financial Framework
Accelerate pure-play and Develop eB2B Drive category leadership
omnichannel eCommerce business platforms through shopper insight
5. Build a purpose-led, future-fit organisation and growth culture
Unlock capacity through agility Be a beacon for diversity, inclusion Build capability through Competitive Profit
and digital transformation and values-based leadership lifelong learning growth growth
Operational Excellence through the 5 Growth Fundamentals
Purposeful Improved Impactful Design For Fuel For
1 Brands 2 Penetration 3 Innovation 4 Channel 5 Growth Cash generation Top 1/3 TSR
Source: Extract from Unilever’s Compass Strategy, May 2020
Enhancing investor engagement practical example: Unilever 4
Win with our brands as a force for good, powered by purpose and innovation
Improve the Improve people’s health, Contribute to a fairer,
health of the planet confidence and wellbeing more socially inclusive world
Climate Protect and Waste-free Positive Health and Equity, diversity Raise living Future
action regenerate nature world nutrition wellbeing and inclusion standards of work
Net zero emissions from all Deforestation-free supply 50% virgin plastic reduction €1 billion annual sales from Take action through our Achieve an equitable Ensure that everyone who Help equip 10 million young
our products from sourcing chain in palm oil, paper and by 2025, including an plant-based meat and dairy brands to improve health and inclusive culture by directly provides goods and people with essential skills
to point of sale by 2039 board, tea, soy and cocoa absolute reduction of alternatives by 2025-2027 and wellbeing and advance eliminating any bias and services to Unilever will earn by 2030
by 2023 100,000 tonnes equity and inclusion, discrimination in our at least a living wage or
Halve greenhouse gas reaching 1 billion people practices and policies income by 2030
Double the number of per year by 2030. Pioneer new models to
impact of our products Help protect and regenerate 25% recycled plastic by 2025 products sold that deliver
Help 5 million small and provide our employees with
across the lifecycle by 2030 1.5 million hectares of land, positive nutrition by 2025 Accelerate diverse
We will focus on: medium-sized enterprises flexible employment options
forests and oceans by 2030 representation at all
Collect and process more • Gender equity grow their business by 2025 by 2030
Zero emissions in our plastic than we sell by 2025 70% of our portfolio to meet levels of leadership
• Race and ethnicity equity
operations by 2030 100% sustainable sourcing of WHO-aligned nutritional • Body confidence and
our key agricultural crops standards by 2022 5% of our workforce to be Reskill or upskill our
100% reusable, recyclable or self-esteem employees with future-fit
made up of people with
compostable plastic • Mental wellbeing skills by 2025
Replace fossil-fuel derived disabilities by 2025
carbon with renewable or Empower farmers and packaging by 2025 95% of packaged ice cream • Hand hygiene
recycled carbon in all our smallholders to protect to contain no more than 22g • Sanitation Spend €2 billion annually
cleaning and laundry and regenerate farm total sugar per serving • Oral health with diverse businesses
Halve food waste in our
product formulations environments by 2025 • Skin health and healing worldwide by 2025
operations by 2025
by 2030
Implement water 95% of packaged ice cream Increase representation
stewardship programmes Maintain zero waste to contain no more than 250
Share the carbon footprint of diverse groups in our
in 100 locations in water- to landfill in our kcal per serving by 2025
of every product we sell factories advertising
stressed areas by 2030
85% of our Foods portfolio to
100% of our ingredients will help consumers reduce their
be biodegradable by 2030 salt intake to no more than
5g per day by 2022
Supported by: €1 billion Climate & Nature Fund
Respect human rights
Respect and promote human rights and
the effective implementation of the UN Guiding Principles,
and ensure compliance with our Responsible Sourcing Policy
Our responsible business fundamentals
Business Safety Employee Product safety Responsible Responsible advertising Safeguarding Engaging with Responsible Committed to
integrity at work wellbeing and quality innovation and marketing data stakeholders taxpayer transparency
See our Planet & Society Hub on unilever.com for more
Source: Extract from Unilever’s Compass Strategy, May 2020
Enhancing investor engagement practical example: Unilever 5
HOW TO COMMUNICATE WITH YOUR INVESTORS:
ADOPT A COMMERCIAL TONE
Because sustainability is integrated into • Building trust: our positioning as • Risk reduction: for example, working
our strategy, we can explain how our focus a sustainable business helps us to with smallholder farmers in our supply
on sustainability contributes to superior build trust with employees, partners chain to improve their climate resilience
performance over time, through: and customers, eg it helps us to be has an overall benefit for both Unilever (by
an employer of choice in many of the securing supply) and our suppliers.
• Positive contribution to growth: markets we operate in.
having brands that stand for something
that consumers care about (both in Our differentiating strengths: The global leader in sustainable business
words and actions) is strongly correlated
with brand power and ultimately brand
growth. GenZ and Millennials, who
make up an increasing proportion
of the population, particularly care
about the brand choices they make. More Lower Less Stronger
Thus, purposeful brands backed by a growth cost risk talent
purposeful business will drive growth.
• Cost reduction: while there may be
Purposeful
upfront costs associated with some of
our sustainability initiatives, eg moving brands €1.2bn 100% 54 of 75
since 2008 renewable Employer of choice in
from virgin to recycled plastics, the growing 2x electricity across
our operations
markets measured
expectation (borne out by evidence) is
that costs will decrease over time. In
addition, certain sustainable practices, eg
water and energy efficiency initiatives or
35
reduction of waste/packaging, result in
cost efficiencies. Source: Extract from Unilever’s Q4 and Full Year 2020 Results presentation
Enhancing investor engagement practical example: Unilever 6
LINK TO STRATEGY:
MAKE EVERYONE SUSTAINABILITY LITERATE
Because sustainability is embedded into
the business at Unilever and is integral Activating brand purpose to drive consistent, competitive growth
to value creation, it is not treated as
a discrete topic area from an investor Ben and Jerry’s a consistent Dove leads the fight to Seventh Gen raising awareness
relations (IR) perspective. The IR team will voice for social justice end Hair Discrimination about climate change
field sustainability-focused questions from
investors and pull in additional support
from relevant teams/individuals within the
organization, as required. Everyone who
speaks about our business is equipped
to talk about sustainability in their line of
business.
12% 8% 22%
3 Year USG
25
Source: Extract from Unilever US Deep Dive webcast, 22nd March 2021 – presentation by
Fabian Garcia, President, Unilever North America
Enhancing investor engagement practical example: Unilever 7
Clean Future - our differentiated Home Care strategy
High carbon Wastage
Petro-chemicals Single use plastic Distrust in chemicals
chemistry of water
Low carbon products
100% renewable Water efficiency & Recyclability, PCR Products designed for
that work in quick and
or circular biodegradability Refill & re-use consumer trust
cold wash
feedstocks
22
Source: Extract from Bernstein European Strategic Decisions Conference, 23rd September 2020 –
presentation by Richard Slater, Chief R&D Officer
Enhancing investor engagement practical example: Unilever 8
WHY ENGAGE WITH YOUR INVESTORS ON SUSTAINABILITY:
GIVING INVESTORS A SAY ON CLIMATE
Over the last few years, we have started to be held accountable for delivery against We hope that our approach and the result
to see more active engagement on the plan. The 2021 AGM was a first step will encourage other companies to follow
environmental and social topics from in an ongoing process of engagement and suit. We believe investors will increasingly
investors and much greater emphasis on we were very pleased that it received over expect to have a ‘say on climate’. By
corporate action. 99% shareholder support. We intend to engaging in this way, we improve outcomes
report annually on our progress in the areas for all.
In addition to weaving ESG into all our outlined under the plan and seek an advisory Our plan
investor relations activities, we have done shareholder vote every three years.
some deep dive activities. In December Our plan
2020, we announced that we would be This ‘say on climate’ vote is not the first
Our Climate Transition Action Plan sets out a range of
giving shareholders a non-binding advisory time that we have engaged investors on our
targets and actions designed to deliver an emissions
vote on our ‘Climate Transition Action Plan’. climate reduction
targets. In June
pathway 2020,
consistent we
with the 1.5° added
ambition of
This would be the first time that a major to our existing science-based targets2020s
the Paris Agreement. Our primary focus in the byand
2030s will be on emissions reduction, not offsetting.
global company had voluntarily committed announcing our intention to achieve net
to putting its climate transition plans before zero across all our products, across our
shareholders for a vote. We have several value chain, excluding indirect use-phase
reasons for doing this. emissions by 2039. In September, we hosted
a ‘Climate Action’ webinar for investors and
We recognize that reaching net zero across analysts. During the webinar, we explained
the whole economy requires engagement why companies and investors alike needed
between companies and investors. Putting to be concerned with climate change. In
the action plan to a vote at the annual addition to highlighting the existential nature
general meeting (AGM) strengthens the of climate change, our Global Climate and
nature and the quality of the engagement. Environment Director set out why we saw Source: Extract from Unilever’s ‘Climate
It also demonstrates our commitment to policy movement on climate change as a Transition Action Plan’, March 2021
following through on the plan, given that it source of business opportunity.
includes multiyear targets, and a willingness
Enhancing investor engagement practical example: Unilever 9
CONCLUSION Investors are demanding more from companies around their sustainability performance and disclosure and assessing the credibility of company commitments. This overview has set out some examples of how one company is communicating effectively with investors about their integrated strategy and how it cascades down into the business, as well as giving investors a say on its climate transition action plan. For more information and practical examples, see the A4S Essential Guide to Enhancing Investor Engagement. Enhancing investor engagement practical example: Unilever 10
GET IN TOUCH OR FIND OUT MORE
@PrincesA4S
The Prince’s Accounting for Sustainability Project (A4S)
ThePrincesA4S
info@a4s.org
www.accountingforsustainability.org
More from the A4S Essential Guide Series:
www.accountingforsustainability.org/guidesYou can also read
