Jamie Mitchell, Volunteer Advisor and All Together co-founder
For many ‘better’ business leaders, the best investors are long-term and patient, and want the same as you – a balance between profit, planet and society. But what do you do when your investors turn – as some appear to have at Unilever – and start to challenge your purpose and impact in favour of short-term profit?
The last few weeks has seen a lot of press coverage about the investor pressure being dumped on Alan Jope, CEO at Unilever, accusing him of focusing too much on purpose and not enough on profit (e.g., see “Unilever has lost the plot”). The press coverage on Unilever might lead you to conclude that the City’s love affair with purpose and profit is over, and that it is reverting to Friedman type.
Thankfully, that’s mostly journalistic license at play. “All investors agree that Unilever’s focus on ESG is one of the great assets of the company,” says Bruno Monteyne, Managing Director and Senior Analyst at AB Bernstein. “[But] the company’s growth has been low, around 3%. Strip out inflation, you are left with no growth at all. There is not much money in declining brands.”
And it’s not just the risk of stagnation or decline that troubles investors. According to Bruno, Unilever lacks innovation and has a litany of failed or under-performing acquisitions. “Jope’s problems are indeed of his own making”, he says.
Regardless, how should a CEO intent on impact prepare for any future shareholder revolt or challenge?
Here are my Three Things to help you manage investor pressure:
Set, agree and then deliver your targets
As CEO, your job is to set the targets (financial and impact), align these with all stakeholders and then guide your business to deliver on them. As long as you don’t consistently under-deliver on any single stakeholders’ expectations, you should be free to pursue your better business strategy.
Talk and engage with shareholders constantly.
When people are left in the dark, they see shadows. Shine a bright light with regular and transparent communications.
Last resort, change shareholders.
Consider whether you have the right investors. It may be difficult to swap the engine on your plane mid-flight, but if you want your business to balance the interests of shareholders, planet and society, you may need different investors – and a different board (if you haven’t already done that).
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