Shareholder group calls for Unilever health push after difficult week

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A group of major asset managers and shareholders has called on consumer giant Unilever to focus further on health after a week of fierce criticism for the Marmite manufacturer.

The coalition of investors, backed by Share Action said it is urging the company to adopt ambitious targets to increase the share of healthy foods in its sales amid fears it could be struck hard by regulatory changes.

It comes after a difficult week for Unilever, which saw its shares slide after confirming a roughly £50 billion approach for GlaxoSmithKline’s consumer arm was rebuffed.

Last week, Unilever, which also owns brands including Dove soap and Ben & Jerry’s ice cream, was heavily criticised by leading fund manager Terry Smith.

Mr Smith, the founder of top 10 shareholders Fundsmith, said the company has “lost the plot” and was prizing sustainability credentials at the expense of running the company.

“Unilever seems to be labouring under the weight of a management which is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business,” the stockpicker said.

The shareholder group distanced itself from Mr Smith’s stance on sustainability but cautioned that it believes health is still a “blind spot” for the business.

On Thursday, the group, which includes 11 eleven institutional investors representing 215 billion dollars (£158 million) in assets, filed a resolution calling it to set more ambitious health targets.

Ignacio Vazquez, senior manager at Share Action, said: “Unilever has long been a sustainability leader.

“Some even criticise it for being too focused on ESG.

“Yet the health profile of the food and drink products it sells remains a blind spot.

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

Unilever’s foods and refreshments division, which produces brands such as Hellman’s mayonnaise and Ben & Jerry’s, generates 19.1 billion dollars annually, approximately 40% of the group’s total sales.

The Access To Nutrition Initiative, a benchmarking organisation for food companies and investors, last year found that 17% of Unilever’s food and drink sales were derived from “healthier” products.

Unilever reported in 2020 that, using the company’s own definitions, 61% of its food and drink sales were derived from products with “High Nutritional Standards”, but investors  questioned its metrics.

Amy Browne, stewardship lead at London investment house CCLA, said: “The growing epidemic of obesity and diet related ill-health is concerning from both a moral and a fiduciary perspective.

“Furthermore, until Unilever reports against government-endorsed models, the risk to the business from changing health-related legislation remains a complete unknown.

“As a recognised sustainability leader, we are hopeful that the company will recognise the merits of our asks.”

The resolution has specifically urged the firm to disclose the current proportion of sales linked to healthier products, set targets to “significantly increase” this share by 2030 and called for an annual review of its progress.

It comes as global governments continue to introduce more health-oriented regulations and follows an independent review in the UK last year, run by Leon founder Henry Dimbleby which suggested taxing sugar and salt.

A Unilever spokesman said: “We welcome the constructive dialogue we’ve had with Share Action and share their belief in the importance of having a long-term strategy for nutrition and health, and publishing targets.

“This approach lies at the heart of our Future Foods strategy, which sets out our commitment to reduce sugar, salt and calories.

“In 2022, we will update our WHO-aligned Highest Nutrition Standards model, making it more stretching and ensuring it better reflects our current portfolio and the role our products play in the diets of our consumers.

“We’re proud of our global approach and the progress we have made so far in the area of nutrition.”