Last week’s attack on Unilever by UK fund manager Terry Smith was ‘flawed’, say sustainability marketing experts, who predict ‘purpose’ and ‘sustainability’ will increasingly become ‘a stick for fend off poor performance”.
They also warned that greenwashing posed one of the biggest threats to consumer confidence and that the marcomms industry was at a “tipping point”.
Earlier this week, Smith said Unilever had “lost the plot” by focusing on sustainability after a relatively poor performance over the past two years – including a 9% drop in share value. over the past 12 months.
His company, Fundsmith Equity Fund, owns around £888million worth of shares in Unilever, which was one of his last five performers, a list that also included PayPal and Brown-Forman.
Unilever is one of the largest advertisers in the world, spending £6 billion annually on brand and marketing investments. Ball.
But the numbers suggest otherwise. In 2018, before the pandemic, Unilever’s 28 sustainable brands, which include both Hellmann’s and Ben & Jerry’s, grew 69% faster than the rest of its business and accounted for 75% of overall growth in the FMCG giant.
During the pandemic, various lockdowns have affected Unilever’s brands unevenly, resulting in flat revenue and marginal declines in 2020.
“We’re going to see more and more people come out of the backbone saying the reason this fund is failing or their business is having a problem is because they’re too focused on sustainability,” according to John Brown , Founder and Managing Director. from Don’t Cry Wolf, a creative communications agency that helps brands communicate about sustainability and brand activism.
“[Smith] uses sustainability as a stick with which to fight any form of underperformance and our job is to laugh at this stupidity and ignorance in the highest sense of the word.
“I think it’s quite telling that after that rant, his stance on Unilever still hasn’t changed. What we’re going to see happen this year, in particular, is that more people will use sustainability as a a broom to sweep up underperformance.
brown said Countryside there is a much more positive story about Unilever’s business over the past two years.
“Despite Covid and despite the fact that Unilever was almost certainly going to suffer some pretty significant issues for its sub-brands, it still maintains its ethical and sustainable stance,” he said. “I think that should be applauded rather than criticized.”
There are other reasons why large listed companies need to focus on sustainability and purpose: it is what a growing number of consumers and investors are now demanding.
Sue Garrard is one of the UK’s leading sustainability strategy advisers, having led Unilever’s business development and sustainability communications for many years.
While she didn’t want to comment directly on criticism from her former employer, she said there were clearly headwinds.
“The investor market is moving a million miles an hour away from stocks that appear not to have assessed their climate risks, to those that have,” she said.
“Former Bank of England Governor Mark Carney told COP26 that around $130 billion in assets under management – or 40% of all assets under management worldwide – have gone all committed to ensuring that their future investments are the only ones to contribute to the fight against climate change.
There’s also plenty of evidence, according to Brown and Garrard, that younger consumers are much more likely to purchase products and services from brands and organizations that have an ethical footprint.
What does this mean for marketing and advertising?
Garrard said the industry has a fundamental role to play in helping brands communicate how consumers can behave more sustainably and ethically, and the stakes couldn’t be higher.
“The biggest risks brands face are actually overplaying greenwash and undermining consumer trust,” she added. “What’s really worrying is that if it happens too much, it risks undermining consumer trust in brands and communication in general.
“While we are all trying to address this existential threat of skyrocketing carbon emissions, greenwashing can undermine the task of trying to fix this problem and get consumers to do responsible things.
“So I think we’re at an incredibly delicate time in the history of marketing and advertising, and brands that behave irresponsibly by not supporting activity claims or misleading people with greenwashing will end up by being discovered and will pay the price.”
For advertising, media and communications agencies, this means taking a more courageous role in pushing back against client briefs that appear to be greenwashing or other dubious forms of targeted activity.
It’s a stance that could find sympathy from Droga5’s chief creative officer, David Kolbusz, who recently told delegates during a Countryside Breakfast Briefing that targeted advertising was a pet peeve.
Brown said that doesn’t mean brands and their agency partners should avoid purpose and sustainability, it just means they should be authentic.
“The industry must now decide whether we are going – for the sake of profit – to continue down the path of fairly meaningless intent-based campaigns which, if you scratch below the surface, there isn’t much there, or can we sacrifice a bit of profit margin, but commit to a position that we will not run a campaign without the necessary evidence and authenticity that is required? ” he said.
“It is too dangerous for us to go blindly into the creation and dissemination of information and creative content without pausing for a moment to breathe, the same need to understand what the evidence supports.
“Are we going to be part of the problem or are we going to be part of the solution?