Unilever will no longer seek to “force-fit” all of its brands with a social purpose, its new chief executive said, following a backlash over the company’s “virtue-signalling”.
Hein Schumacher, who took over from Alan Jope in July, said for some of its brands, giving them a social or environmental purpose “simply won’t be relevant or it will be an unwelcome distraction”.
He added: “I believe that a social and environmental purpose is not something that we should force-fit on every brand.”
It marks a change in position from Mr Jope, who placed social purpose at the centre of his strategy for Unilever. In 2019, he pledged to sell off brands that “are not able to stand for something more important than just making your hair shiny, your skin soft, your clothes whiter or your food tastier”.
The stance prompted a backlash from the City, amid growing frustration at blue chip companies for prioritising fashionable causes over profits.
Terry Smith, one of Britain’s best-known investors, has criticised Unilever for becoming “obsessed” with its public image and accused the company of “virtue signalling” rather than focusing on financial performance.
He said in January last year: “A company which feels it has to define the purpose of Hellmann’s mayonnaise has, in our view, clearly lost the plot.”
Speaking on Thursday, Mr Schumacher said Unilever was not “giving up on purpose-led brands” altogether. He said for some brands such as Dove, giving them a social or environmental purpose was “logical”, as it made them more attractive for shoppers. Dove uses the idea of “real beauty” in its marketing campaigns, featuring women with different body types.
The Unilever chief said Ben & Jerry’s was another of its brands which has a “clear purpose”.
The ice cream brand is known for adopting stances on political issues, championing causes including protecting the environment and defending LGTBQ+ and refugee rights.
However, Unilever has clashed with Ben & Jerry’s over its activism in the past. Mr Jope told the ice cream company in July last year it should steer clear of “straying into geopolitics” after the brand attempted to boycott the Palestinian occupied territories. Unilever later sold Ben & Jerry’s Israeli operations.
Ben & Jerry’s has not spoken publicly about the Israel-Hamas conflict since the war broke out.
Mr Schumacher said on Thursday: “They’ve been vocal indeed before because of the social mission that Ben and Jerry’s definitely has. On the conflict, I just have no comment at the moment. It’s not a topic of discussion.”
It came as Mr Schumacher unveiled a wider shake-up of the company on Thursday intended to address underperformance. It included an overhaul of the company’s leadership team, moving the president of its beauty and wellbeing business Fernando Fernandez to become its new chief financial officer. He is replacing Graeme Pitkethly who is retiring. Unilever is also replacing the head of its nutrition and ice cream businesses.
Mr Schumacher said: “The quality of our growth, productivity and returns have all under-delivered.
“Unilever is a company of many strengths, including, its category positions, the strength of its brands, its unmatched geographic reach and talented and passionate people. However, there has been a disconnect between these intrinsic strengths and the quality of our performance.”
Unilever posted a 5.2pc rise in underlying sales for the three months to October compared with a year earlier as it was boosted by higher prices.
However, sales volumes fell by 10pc in Europe, driven by a fall in demand which it blamed on bad weather over the summer.
As part of the strategy shake-up, Mr Schumacher said the company was planning “no major or transformational acquisitions”. It follows a disastrous failed £50bn bid to buy GlaxoSmithKline’s consumer healthcare division last year.
Investors were left unconvinced that Mr Schumacher’s plans were radical enough, with Unilever’s shares falling as much as 3.5pc on the announcement.
Analysts at Jefferies said there was “not much to excite” in the latest update, adding that it was “light on numbers and change”.
Mr Schumacher has also come under pressure to address Unilever’s decision to keep selling its products in Russia since taking over as chief executive.
The Telegraph revealed earlier this year that Ukrainian veterans had written directly to Mr Schumacher, urging him to quit Russia in response to its invasion of Ukraine. They warned Unilever staff risked being conscripted into the war.
On Thursday, Mr Schumacher said Unilever would continue to look at its options, adding: “It is clear that the containment actions that we have taken minimise Unilever’s economic contribution to the Russian state.”
https://news.google.com/rss/articles/CBMiXGh0dHBzOi8vd3d3LnRlbGVncmFwaC5jby51ay9idXNpbmVzcy8yMDIzLzEwLzI2L3VuaWxldmVyLWJvc3MtdW5kZWxpdmVyZWQtdHVybmFyb3VuZC1lZmZvcnQv0gEA?oc=5
2023-10-26 17:26:00Z
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