From the Financial Times:
In January, the FT reported that activist investor Nelson Peltz had built a stake in Unilever. Despite positioning itself as a leader on corporate sustainability — especially under former chief executive Paul Polman — the company’s shares have underperformed, making it a juicy target for activists.
Despite?
Despite?
I wrote something about Unilever back in January. I included a report from the Daily Telegraph in which Fundsmith’s Terry Smith, a well-known British portfolio manager, had something to say about Unilever’s corporate, uh, focus.
It’s too good not to reprint part of it:
One of Britain’s best known investors has attacked Unilever for its “ludicrous” focus on sustainability, in a sign of growing City frustration at blue chip companies championing fashionable causes.
Terry Smith, manager of the £29bn Fundsmith Equity fund, said that the consumer goods behemoth has become “obsessed” with its public image and mocked its efforts to imbue brands such as Hellman’s mayonnaise with a higher purpose.
He said this overzealous focus on environmental and social issues has proved a distraction at a time when the £101bn maker of products from Vaseline to Marmite is struggling with a falling share price.
In a letter to investors in his fund, Mr Smith said: “A company which feels it has to define the purpose of Hellmann’s mayonnaise has, in our view, clearly lost the plot.
“The Hellmann’s brand has existed since 1913 so we would guess that by now consumers have figured out its purpose (spoiler alert – salads and sandwiches).”
. . . Unilever in particular has long seen itself as a leader in the [ESG] field.
Which is rather like taking pride in being one of the first lemmings to leap off the cliff.
Meanwhile, the FT also reported on another disappointing development for the ESG/sustainability industry:
Climate-related financial risks are getting growing attention — but a new survey from BCG casts doubt on how seriously institutional investors are taking them. Just one in 20 investors polled by the consulting firm said that climate and ESG-related issues were among the three risks they took most seriously. And only 11 per cent of the 150 investors polled indicated that ESG is a primary consideration in day-to-day investment decisions.
Oh.
And yet we always seem to be hearing just how enthused investors are about ESG (a form of “socially responsible” investment which scores actual or potential portfolio companies against various environmental, social, and governance benchmarks).
I’d expect a new poll shortly from someone somewhere, showing more suitable results.