What does Unilever’s ESG backtrack mean for other brands?

Unilever has for some time been the poster boy of ESG (Environmental, Social and Governance).

But the consumer goods giant has recently announced it is scaling back some of its commitments, including on plastics and diversity.

The company, which includes household brands like Hellmann’s mayonnaise, Ben & Jerry’s ice cream and Dove beauty products, had previously committed to halving its use of virgin plastics by 2025.

That has now been replaced by a new target to cut it by a third by 2026.

It has abandoned a pledge to pay direct suppliers a living wage by 2030, replacing it with a fair pay promise.

It is also dropping a promise to spend €2bn (£1.7bn) a year with diverse businesses by 2025 and a commitment that five per cent of its workforce will be made up of people with disabilities by the same year.

Hein Schumacher, Unilever’s CEO, says the company can still “make a difference”.

And he described focus on the environment and societal issues as being “cyclical”.

He said: “When you have a huge drought for a number of months but everything else is going fine, the attention is on climate. These days it’s about wars and rightly so, that’s at the forefront.”

Unsurprisingly, though the move has led to some damning headlines:

Unilever to scale back environmental and social pledges The Guardian

ESG Poster Child Unilever Waters Down Green Pledges Bloomberg

Unilever’s ESG rollback causes dismay Global Food Industry News

Additionally, Greenpeace UK said Unilever bosses “should hang their heads in shame”.

So, what does this move mean for other organisations and their communications and PR teams wrestling with sustainability targets and trying to show they are making a difference to the environment and society?

Will other companies follow this example from a sustainability pioneer? Is this a sign of ESG fatigue?

And will sustainability storytelling become a less crucial part of comms strategies?

Tom Idle is a sustainability communications expert, part of our brilliant training team, and the host of The Scope 3 Podcast.

He believes the Unilever announcement is part of a wider move to more pragmatic and conservative sustainability goals amid increased interest and scrutiny of targets.

“If it wasn’t Unilever, I don’t think this would be a story,” he said.

“And, as far as I can see, there are loads of companies out there that are rowing back on targets they have set.

“I think it is mainly the result of investors, shareholders and customers being much more aware of and interested in ESG. When targets were not met, it wouldn’t have been a big deal five years ago, but now there is much more scrutiny.

“And, as a result, companies are inclined to be much more cautious about the targets they set.

“Five years ago, companies would set targets and have no idea how they would meet them. It was considered as a way of stirring internal innovation.

“But I had Unilever on my podcast this week, and they said that they will no longer set targets unless they know how they will meet them. And I think that is the big change in sustainability over the past few years.”

Tom believes the Unilever changes are not as big as has been suggested.

He said: “I feel sorry for Unilever in this instance because when you look at the nuts and bolts of what they are rowing back on, it is not that bad.

“You have the plastics target going from a half to a third and the living wage going to fair pay.

“There is not a massive change in either of those two things.

“I think the reaction shows the risk of putting your head above the parapet and being a leader.”

 

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No comms team wants to be in the position of having to row back on well-publicised and promoted targets.

So, it is vital strategies and plans are developed in advance to reduce the risk of such a move triggering a crisis media management incident.

Tom believes part of that strategy for any organisation looking to alter ESG targets is to communicate why the changes are necessary and the challenges faced.

“From a comms point of view, you have to explain why the targets are being revised and show that they are still ambitious,” he said.

“You can say that you have to be realistic, and there is no point in setting targets that are not achievable.

“Do some extra storytelling about the challenges. The plastics challenge is massively problematic and demands a whole group of companies to come with them.

“The infrastructure is currently not there. For a global company like Unilever, it is really hard to use non-virgin plastic in parts of the world where recycled content is not available.

 “What we have seen is that companies that go quite far ahead on sustainability end up falling over because they need everyone to come with them.

“They need a pool of companies to go with them that share the same suppliers and can use the same infrastructure. This needs explaining.

“On the pay front, the difference between a living wage and fair pay for all suppliers needs explaining.”

Tom also believes that more conservative targets should not prevent companies from talking about the successes they have achieved and how they are still leading the way.

He said: “The big challenge for companies now is the Scope 3 one on emissions in the supply chain. And Unilever is doing more than most on that in terms of engaging suppliers.

“And from a communications point of view, it can say that ‘Yes, we have moved some targets, but we are doing so much more in these areas’.”

You can hear more from Tom later in the year when he leads a sustainability masterclass for Media Team Academy members. And if you move fast, you can join the learning and development programme for free*.

 

Media First are media and communications training specialists with over 35 years of experience. We have a team of trainers, each with decades of experience working as journalists, presenters, communications coaches and media trainers.

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