Unilever (UN): Sustainability is the Strategy

Unilever (UN): Sustainability is the Strategy

Share this post

Unilever logoEarlier this year, Unilever’s (NYSE: UN) CEO Paul Polman announced the company was considering pursuing B Corporation status, which obligates companies to provide a “general public benefit” alongside their commercial activities (see related article in the Spring 2015 edition of The Clean Yield). This is not a new concept to the company. Going back to its roots as Lever Brothers in the late 1800s, the company has tried to balance profit with responsible corporate behavior.

Corporate responsibility researchers regularly rank Unilever at or near the top of global companies on both sustainability policy and performance. The CEO is widely admired for his commitment to deliver tangible results, rather than just seeking a favorable public image. The company’s reputation seems to be helping attract young talent. It is the #1 consumer goods employer of choice among students surveyed in 26 countries. The company has been reporting on its sustainability since 1996.

In 2010 the company launched the Unilever Sustainable Living Plan as a blueprint for sustainable growth. The plan sets out to decouple growth from environmental impact, while increasing positive social impacts. UN tries to embed sustainability into every stage of the lifecycle of its products. As of 2013, 48% of the agricultural raw materials the company used were sourced sustainably. Its goal is that by 2020, 100% will be sourced sustainably, along with halving the environmental footprint of its products. Unilever has also committed to halving the GHG impact of our products across the lifecycle by 2020. In November 2014, UN’s European food business reached 100% traceable and certified sustainable palm oil, representing 58% of the company’s global volume. UN also intends to help more than one billion people improve their health and well-being, through e.g., Lifebuoy’s drive to promote hygiene through hand-washing with soap.

UN: Stock Price and Trailing EPS, 2005-Present. Source: BigCharts.com.

UN: Stock Price and Trailing EPS, 2005-Present. Source: BigCharts.com.

Under Paul Polman, Unilever stopped delivering quarterly guidance reports to investors. “It has allowed us to focus instead on a mature discussion with the market about our long-term strategy,” he told the Harvard Business Review in 2012.

Forty-two (42) percent of Unilever’s managers are women. The company has been recognized for its efforts in making gender equality a business priority by committing to transform its workplace culture. These efforts extend to how the company markets its products to women. For example in 2004, Dove launched its Campaign for Real Beauty to challenge beauty stereotypes, provoke discussion, and encourage debate.

Unilever’s shift toward emerging markets was ahead of many of its competitors, and it has placed the company in a strong competitive position. In developed markets, the company’s sales are basically stagnant, so Unilever is working to reduce costs and improve its profit margins company-wide. As part of its ongoing strategic review, the company has been shifting away from food and toward personal care and home care products. A key part of the company’s strategy is to grow faster than its markets and to improve its profitability.

UN appears quite attractive relative to key peers, with high returns on invested capital and the lowest valuation, particularly on a price/sales basis. Unilever is well managed, and the stock offers an above-average dividend yield of almost 4% and moderate long-term growth prospects. We like this company for its steady dividend, strong sustainability record, and the fact that it is actively exploring certified B Corp status.

 

Unilever N.V

Revenues: $69 billion

Market Capitalization: $119.4 billion

Earnings Per Share (EPS):
2014 est. $1.99
2015 est. $2.20

Projected 3–5 Year Annual Earnings Growth: 9%
Dividend Yield: 3.31%
Stock 52-week Low–High: $36.78–44.41

Risk: Below Average

Website: http://www.unilever.co.uk/

 

 

Tags: ,