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In Defense of Unilever’s ESG-Led Strategy

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Unilever is not a client of Daggerwing Group and all facts cited are based on published reports. The ideas below, including using Unilever as an example, are presented to support greater discussion about how businesses are transforming to address ESG priorities. 

It was predicted that the movement to value organizations beyond the delivery of shareholder value would face backlash from some within a system that has, up until recently, been entrenched in protecting the status quo. Unilever is the latest example.

Recently, Unilever was in The Financial Times when an investor argued that their public commitment to sustainability and social values comes at a cost to business fundamentals and performance – swinging the pendulum too far at the expense of shareholder value. This individual even went as far as to say that Unilever is spending too much time defining the purpose of Hellman’s Mayonnaise.

As background, sustainability is in Unilever’s DNA. It was reportedly one of the first global companies to stop providing quarterly guidance so the organization could focus on building longer-term sustainable value – rather than making decisions to deliver short-term returns. This approach illuminated the differences between shareholder vs. stakeholder capitalism and how Unilever would aggressively pursue the latter.

While reports do indicate that Unilever’s share performance has dipped in contrast to its industry peers, we believe correlation does not equal causation. And there are contrasting reports from other investors who say that blaming this dip on sustainability and purpose is unfair; rather that it stems from other corporate decisions that are not related.

As change experts who are working with companies on their ESG strategies, we know leaders are facing a multitude of challenges in meeting the needs of the two stakeholders who matter most: employees and customers. They want to drive their company to do the right thing, focus on DE&I, win over consumers, retain and recruit employees, and improve business performance – all in the face of the external pressures to go back to the “old way of doing things.”

There’s a lot at stake and a lot of work to be done. But one thing is clear: focusing on ESG and purpose will not hinder long-term progress.

This was illustrated in 2019 when nearly 200 CEOs from companies including Apple, Pepsi, and Walmart, issued a statement arguing that companies should no longer only advance the interest of shareholders, but also invest in their employees, protect the environment, and deal fairly and ethically with their suppliers.

We’re seeing a lot of proof that this was the right call. Especially when considering that Millennials and GenZ will grow to make up 75% of the workforce by 2025 and represent a huge consumer market for many companies. ESG is clearly a critical factor for these generations when they choose where to work, and what products to buy:

  • People are leaving their white-collar jobs and seeking opportunities that give them a chance to make a difference in the world – they are looking to join organizations that have a greater purpose beyond profitability.
  • People around the world are also changing their purchasing habits and are up to six times more likely to purchase, protect, and champion purpose-driven brands.

With that in mind, organizations that focus on their ESG efforts have the potential to reap the predicted benefits of this new business movement, which includes: recruiting and retaining top talent, transforming their culture, strengthening their brand in the marketplace, creating social equity, minimizing environmental impacts, gaining new consumers, and improving financial outcomes.

ESG is a complex, challenging transformation that requires courage and staying power from executives and leaders to frontline employees and future employees. And while critics will try and turn back the clock, we believe the winners at the end will be the companies, like Unilever, who are seeking to leave people and the planet in a better state. And yes, we want our mayonnaise as a delicious spread for sandwiches, but we’re more likely to buy it if the ingredients are sustainably and ethically sourced – the vegan option doesn’t hurt either.

Michelle is the Managing Partner of Daggerwing Group, as well as a member of Daggerwing’s Executive Leadership Team. In her role, Michelle leads all global client relationships and delivery of Daggerwing’s consulting services to ensure change is done right the first time, and sticks. She also ensures that Daggerwing’s consulting leaders are effectively driving career growth for our consultants, continuously building capability and experience. Michelle’s breadth of expertise in the people side of change includes facilitating Executive Alignment on every type of organizational transformation, orchestrating enterprise-level culture shifts to deliver on a CEO’s strategy, and helping clients custom-create and bring to life their Future of Work strategies. Michelle is passionate about creating leaders and employees who are energized, rather than exhausted, by the opportunities change creates – ultimately helping clients succeed by fostering a culture that delivers the desired experience for customers and enables employees to thrive. In her private time, Michelle enjoys singing 70s pop songs badly while playing her ukulele, buying musty old records, and spending tons of time in the woods and on snowy mountains.
Andy is a Senior Principal and a member of the global leadership team at Daggerwing Group. In his role, Andy serves as a source of strategic counsel to Executives of many of the world’s largest companies facing major business transformation challenges – from mergers, acquisitions, and spin-offs, to enterprise-level changes to culture, ways of working, and operating models. A specialist in the people side of change, Andy brings almost 20 years of experience helping drive Executive Alignment, leadership change readiness, and effective employee engagement to ensure change happens and sticks. Andy is an active speaker, thought leadership writer, and catalyst for service innovation within Daggerwing. In his spare time, he is on a quest to try every cheese the UK produces.
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