Recent Engagement with Unilever
Unilever, the global consumer goods giant, is held within our Thoughtful World Equity Fund. Below, Castlefield's Head of Stewardship, Ita McMahon provides an update on the outcomes from two recent engagement meetings.
We recently engaged with Unilever on two separate occasions: first, to discuss the company’s environmental and social targets; and second, in collaboration with other investors, to address concerns related to its sugar cane supply chain.
Unilever’s updated sustainability strategy
Our first meeting with Unilever was to discuss the company’s revised sustainability strategy which had received criticism from Non-Governmental Organizations for having fewer targets and a lower level of ambition1. We wanted to talk to the company to understand the rationale for the changes.
“When Unilever launched its Sustainable Living Plan in 2010, it was widely regarded as ground-breaking.”
When Unilever launched its Sustainable Living Plan in 2010, it was widely regarded as ground-breaking. The scale of ambition – to reduce its environmental impact by half and improve health and wellbeing for 1 billion people – had not been seen before in a corporate responsibility programme2. Even the idea of growing revenue while reducing emissions was fairly new. The company has revisited these targets over the years adding new targets where necessary, for example on the Living Wage.
In our meeting, Unilever’s representative stated that in the intervening years since the original Plan was launched it has become apparent that not all the targets that they’d set originally were achievable. For example, they cited a lack of plastic recycling infrastructure as a hindrance to achieving their goals around reducing plastic waste. In addition, they have faced obstacles in trying to meet their target to ensure that everyone involved directly in supplying Unilever globally would receive the living wage. This is due to a lack of consensus in some markets on what constitutes the living wage.
“They assert that the new programme with its revised targets is focused on the issues that matter most to stakeholders.”
They assert that the new programme with its revised targets is focused on the issues that matter most to stakeholders. As well as providing more achievable (but less ambitious) deadlines for some targets, they were also able to point to other goals that had been revised to be more, not less, challenging to achieve. One example is on scope 3 emissions reductions.
Outcome: As a result of the engagement, we are of the view that Unilever’s goals have been weakened and have narrowed in scope. That said, we do acknowledge that the ambitions in the company’s original strategy were truly ground-breaking, and that it was unlikely that all the goals would be achieved. To us, the new programme remains at the forefront of the consumer goods sector but lacks many of the trail-blazing qualities of the previous iteration.
Human rights abuses in Indian sugar cane industry
Our second engagement with Unilever was a group engagement facilitated by the Interfaith Center on Corporate Responsibility (ICCR), a US-based investor coalition. We have recently become members of ICCR. The engagement was prompted by a New York Times investigation into the working conditions in sugar-cane fields in Maharashtra, India. In particular, the investigations alleged that female workers are pressurised into having hysterectomies3.
“Unilever has stopped sourcing from local mills and has completed an investigation into the allegations.”
In the meeting, the company was keen to stress that only 0.2% of Unilever’s sugar sourcing comes from Maharashtra, so the company does not have a great deal of direct influence in the region. Nevertheless, Unilever has stopped sourcing from local mills and has completed an investigation into the allegations. Their intention at this stage is to take the findings to a local committee of larger sugar buyers in the region. The committee has signalled its intention to take high-level action, although no specific plans or timeline has been specified at this stage. Local Unilever representatives have asked to join the committee’s steering group so as to a) share its findings from the investigation and b) influence the speed and direction of the remedial action that is required.
“The aim is to educate workers on their employment rights and to demonstrate to employers the business benefits that accrue when workers are treated fairly.”
As part of the meeting, investors also met with a member of Unilever’s procurement team that deals with supplier due diligence and human rights. They provided an overview of a development programme that is underway with 75 suppliers. The aim is to educate workers on their employment rights and to demonstrate to employers the business benefits that accrue when workers are treated fairly.
Outcome: This engagement is likely to continue for some time, as the issues raised will take time to resolve and will require the co-operation of a wide set of stakeholders, including farm owners, sugar buyers and local doctors as well as the employees themselves. It is important that this coalition of investors continues to apply pressure on Unilever by requesting periodic updates on how they are pressing for improvements to the working conditions of female sugar cane labourers.
References:
1. Unilever to scale back environmental and social pledges | Unilever | The Guardian
2. Unilever Sustainable Living Plan 2010 to 2020
Information is accurate as at 08.08.2025. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment, capital is at risk.