Unilever shareholder's attack on sustainability messaging 'flawed', experts say

Senior marketers argue 'purpose' and 'sustainability' will become 'stick to beat away poor performance'

Jan 17, 2022 04:36:00 AM | Article | Arvind Hickman

Last week’s attack on Unilever by British fund manager Terry Smith was “flawed”, according to sustainability marketing experts, who predict "purpose" and "sustainability" will increasingly become “a stick to beat away poor performance”.

They also warned that greenwashing poses one of the biggest threats to consumer trust and that the marcomms industry is at a “tipping point”.

Earlier this week, Smith said Unilever had “lost the plot” over its focus on sustainability after a relatively poor performance over the past couple of years – including a 9% drop in share value in the past 12 months. 

His company, Fundsmith Equity Fund, owns in the region of £888m of Unilever stock, which was one of its bottom five performers, a list that also included PayPal and Brown-Forman.

Unilever is one of the world’s biggest advertisers, with a £6bn annual spend on brand and marketing investment, and Smith singled out purpose marketing activities for mayonnaise brand Hellmann’s and ice cream Ben & Jerry’s as examples of how the company had taken its eye off the ball.

But the numbers suggest otherwise. In 2018, prior to the pandemic, Unilever’s 28 Sustainable Living Brands, which include both Hellmann's and Ben & Jerry’s, grew 69% faster than the rest of its business, and accounted for 75% of the FMCG giant’s overall growth.

During the pandemic, various lockdowns have affected Unilever’s brands unevenly, leading to flat turnover and marginal declines in 2020.

“We're going to see more and more people emerge from the woodwork claiming that the reason why that fund is failing or their business is having a problem is because they focus too much on sustainability," according to John Brown, founder and chief executive of Don’t Cry Wolf, a creative communications agency that helps brands with sustainability and brand activism communications.  

"[Smith] is using sustainability as a stick with which to beat any form of underperformance away and our job is to laugh off this stupidity and ignorance in the highest sense.

“I think it's quite telling that after this rant, his position on Unilever still hasn't changed. What we're going to see happen this year, in particular, is that more people will use sustainability as a broom to sweep underperformance away.”

Brown told Campaign there is a far more positive story about Unilever’s activities over the past couple of years.

“Despite Covid and despite the fact that Unilever was almost certainly going to suffer quite significant issues for its sub brands, it still maintains its ethical and sustainable position,” he said. “I think that should be applauded rather than criticised.”

There are other reasons that large listed companies need to focus on sustainability and purpose: it is what an increasing number of consumers and investors now demand.

Sue Garrard is one of the UK’s leading sustainability strategy advisors, who for many years led Unilever's sustainable business development and communications.

Although she did not wish to comment directly on the criticism of her former employer, she said there are clear headwinds.

“The investor market is moving a million miles an hour away from stocks that look like they have not assessed their climate risks, towards ones that have,” she said.

“The former Bank of England governor Mark Carney said at COP26 that about $130tn worth of assets under management – that’s 40% of all the assets under management in the whole world – have all committed that their future investments will be only ones that will contribute to the fight against climate change.”

There is also plenty of evidence, according to Brown and Garrard, that younger consumers are far more likely to buy products and services from brands and organisations that have an ethical footprint.

So what does this mean for marketing and advertising?

Garrard said the industry has a fundamental role in helping brands communicate how consumers can behave in a more sustainable and ethical fashion, and the stakes could not be higher.

“The biggest risks that brands face is actually overplaying greenwash and undermining consumer trust," she added. "The really worrying thing is, if it happens too much, it risks undermining consumer confidence in brands and communication in general.

"While we're all trying to respond to this existential threat of carbon emissions going through the roof, greenwashing can undermine the task of trying to fix that problem and trying to direct consumers to do things that are responsible. 

“So I think we're at an incredibly delicate moment in marketing and advertising history, and brands that behave irresponsibly by not backing up claims of activity or misleading people with greenwashing will ultimately get found out and pay the price.”

For advertising, media and communications agencies, this means taking a more courageous role in pushing back against client briefs that appear to be greenwashing or other dubious forms of purpose-led activity. 

It’s a position that might find sympathy with Droga5 chief creative officer David Kolbusz, who recently told delagates at a Campaign Breakfast Briefing that purpose-led advertising was a pet peeve.

Brown said this doesn’t mean brands and their agency partners should avoid purpose and sustainability, it just means it needs to be authentic.

“The industry has to now decide are we going to – for the sake of profits – continue down a path of fairly meaningless intent-based campaigns that if you scratch beneath the surface, there's not much there, or can we sacrifice a little bit of the profit margin, but commit to a position that we will not put forward a campaign without the necessary evidence and authenticity that is required?” he said.

“It's too dangerous for us to blindly walk into the creation and dissemination of information and content to creative out there without pausing for breath for a moment, the same need to understand what the evidence is backing this up.

“Are we going to be part of the problem or are we going to be part of the solution?”

(This article first appeared on CampaignLive.co.uk)