Investors urge Unilever to put health on the menu

● A group of investors in Unilever said this week they had filed a fresh resolution urging the company to fix a “crucial blind spot” in its strategy and set ambitious targets to sell healthier foods.

The resolution by an 11-strong investor group with $215bn (about R3.2-trillion) in assets, including Candriam, Actiam and Greater Manchester Pension Fund, calls on Unilever to disclose the current proportion of sales linked to healthier products.

It also urges the company to set a target to “significantly increase” that share by 2030, and publish an annual review of its progress.

While Unilever, owner of Ben & Jerry’s ice cream and Hellmann’s mayonnaise, is seen as a leader in sustainable business by many funds, the investors said increasing regulations around health meant a failure to act could hit its finances.

Governments in many of the company’s main markets have introduced taxes on products high in sugar or calories as obesity levels rise.

“Unilever has long been a sustainability leader. Some even criticise it for being too focused on ESG [environmental, social and governance issues]. Yet the health profile of the food and drink products it sells remains a blind spot,” said Ignacio Vazquez, a senior manager at responsible investment NGO ShareAction, which co-ordinated the resolution.

British fund manager Terry Smith, whose Fundsmith vehicle is a top-10 Unilever investor, lambasted Unilever last week for being “obsessed” with promoting its sustainability credentials at the expense of performance.

Vazquez said: “By voicing their support for this resolution, Unilever’s investors can help to drive change at the heart of one of the biggest food and drink manufacturers in the world while also shielding themselves from regulatory and reputational risks.”

In response, Unilever said it shared ShareAction’s belief in the importance of having a long-term strategy for nutrition and health, and publishing targets, and had made a commitment to reduce sugar, salt and calories in its products.

The company said it plans to update its model for assessing nutrition in 2022, “ensuring it better reflects our current portfolio and the role our products play in the diets of our consumers”.

The resolution follows similar calls for action at last year’s annual general meeting, which ShareAction said had not resulted in much progress.

While Unilever said that in 2020, 61% of its food and drink sales were of products with “high nutritional standards”, the investors said they questioned its metrics.

“It is key that a company with such a scale of leverage and capacity demonstrates efforts to set its targets and disclosures on the basis of government-endorsed nutrient profiling models where it operates,” said Sophie Deleuze, lead ESG analyst of engagement & voting at Candriam.

Deleuze urged Unilever to conduct and outline its risk profile in countries where it operates, factoring in aspects including existing and upcoming regulatory pressures, the health profile of customers and their product preferences as a basis for reformulation.

The move comes at a turbulent time for the company, which late on Wednesday effectively abandoned a £50bn (R1-trillion) proposal to buy the consumer health unit of GlaxoSmithKline.

Promoting healthy food and drink has become a hot-button issue for investors in general. Late last year, investors managing $12.4-trillion in assets urged policymakers to use fiscal and regulatory measures to help fix what they described as a “global nutrition crisis”. Reuters

The health profile of the food and drink products it sells remains a blind spot

Ignacio Vazquez

ShareAction