Another ESG Champion Disappoints – WSJ

The website of

Unilever

PLC proclaims:

We’re a company of brands and people with a big purpose: to make sustainable living commonplace… We urgently need to bridge the divide to a fairer, more socially inclusive world. A world where we all live with, rather than at the expense of, nature and the environment.

We still have time to act. But we don’t have time to waste.

Did the company waste too much time working on such initiatives, and spend too little on creating new ways to efficiently serve the consumer? The Journal’s Peter Stiff reports from London:

Unilever PLC said Chief Executive Officer

Alan Jope

plans to retire at the end of next year, signaling an end to what has been a challenging tenure at the helm of the maker of Dove soap and Ben & Jerry’s ice cream…

The CEO change comes as Unilever seeks to reinvigorate growth across its sprawling portfolio while grappling with rising input costs, changing consumer trends and broad economic uncertainty…

News of Mr. Jope’s retirement was a surprise but one that will likely be viewed positively by investors…. Shares in Unilever closed 1.8% higher in London.

But how can shareholders be happy to see Mr. Jope depart, when he earned so many positive reviews? For example, in 2021 S&P Global Ratings wrote in an ESG evaluation:

We view Unilever’s long-term preparedness as best-in-class based on its vantage point on consumer behavior, the inclusion of a broad set of environmental, social, and other factors into its long-term strategy, and its ability to continuously innovate and adapt.

Unilever’s decision-making is aligned with its long-term strategy, underpinned by a remuneration package tied to long-term targets. Unilever has effectively used scenario analyses to assess the potential impact of ESG factors, including climate change, on its business model and financials for several years. The company has flexibility in its organizational structure to capitalize on strategic opportunities.

Companies can get into a lot of trouble when they focus on things other than profitably serving their customers. The Journal’s Saabira Chaudhuri reported in May:

What is the point of mayonnaise? At one of the world’s largest consumer-products companies, it’s no longer just about sandwiches and potato salad.

Ads for Hellmann’s once focused on taste, spreadability and ingredients. Now the brand is on a mission to curb food waste—part of Unilever PLC’s push to give each of its 400 brands a social or environmental purpose…

The brands-with-purpose strategy has become a centerpiece for Unilever since Alan Jope took over as chief executive in 2019. The Scottish marketeer defines purpose as having a point of view on issues important to the planet or society… And so Knorr, a 150-year-old brand best known for its bouillon cubes, now wants people to diversify their diets with more plant-based foods, such as white icicle radish and an Ethiopian grain called teff, for better nutrition and less environmental impact.

Do consumers enjoy lectures from producers? Many investors clearly did not. Ms. Chaudhuri reported:

Unilever’s share price and sales growth have lagged behind those of rivals

Nestle SA,

L’Oréal SA

and

Procter & Gamble Co.

in recent years…

“A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot,”

Terry Smith,

chief executive of Fundsmith, one of Unilever’s largest shareholders, wrote in his annual letter to investors in January. Unilever, he added, “is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business.”

Fortunately for consumers and investors, Hellmann’s seems to have maintained its taste and spreadability despite the distractions of this era. Let’s hope the next manager will appreciate what a virtuous thing it is to focus on serving delicious food at a healthy profit.

Speaking of ESG mania, one also has to ask why shareholders should subsidize it when they are already forced to offer so much support in their role as taxpayers. Their generous aid has resulted in a sort of feeding delirium at the alternative-energy trough.

The Journal’s Phred Dvorak reports:

Businesses and financiers are scrambling to tap billions of dollars in U.S. clean-energy incentives, spurring what executives and government officials say is a frenzy of deal making in the renewable-power and emissions-reduction sectors.

At one of the first big clean-energy conferences since the U.S. passed legislation full of incentives for renewable power and other climate measures, corporate executives crammed into standing-room-only meetings on green steel and hydrogen fuel…

The

Global Clean Energy

Action Forum, hosted by the U.S. Department of Energy in Pittsburgh last week, included funders, manufacturers and entrepreneurs all hoping to tap a rich trove of tax credits and other incentives from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. The infrastructure bill alone grants the Energy Department more than $62 billion for clean-energy related projects; the IRA contains nearly $370 billion in climate- and energy-related support measures.

***

Time for Hollywood To Get Creative
Speaking of losing a plot, this column has enjoyed films about planet-threatening asteroids as much as the next movie consumer. But this beloved plot device may be losing its emotional punch as a solution is developed for the theoretical cause of global catastrophe.

Rhiannon Williams of MIT Technology Review reports:

NASA is celebrating the success of humanity’s first test of a planetary defense system: crashing a spacecraft into an asteroid in order to change its orbit. NASA’s Double Asteroid Redirection Test spacecraft, or DART, was intentionally smashed into the asteroid Dimorphos at 7:14 p.m. US Eastern time last night, spelling the end to a successful 10-month mission.

A small camera mounted on DART livestreamed the spacecraft’s steady progress toward the 160-meter-wide asteroid, located about 6.8 million miles from Earth, back to controllers based at the Johns Hopkins University Applied Physics Laboratory. The team cheered as Dimorphos grew closer and closer, before the livestream cut out on impact with the asteroid.

The strike was “basically a bull’s-eye,” mission systems engineer Elena Adams said. You can watch the livestream for yourself to see the exact moment DART struck Dimorphos. And for a sense of scale, last year the collision was described by Tom Statler, DART’s program scientist, as a golf cart traveling at 15,000 miles an hour smashing into the side of a football stadium… The next step is to study the asteroid using telescopes on Earth to confirm that DART’s impact altered the… orbit around a larger asteroid called Didymos.

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Parting Gift to the Empire State
Chris Churchill writes in the Albany Times Union:

This year’s governor’s race is the first since 1946 in which New Yorkers will have just two names on the ballot. Those names, of course, are

Kathy Hochul

and

Lee Zeldin.

A Democrat and a Republican. Coke and Pepsi. Same old, and more same old.

For this meager selection, we can largely blame former Gov. Andrew Cuomo, who pushed changes that made it much harder for third-party and independent candidates to get on the ballot. His message to New Yorkers: Take your protest vote and shove it.

Perhaps it’s poetic justice that the disgraced Democrat is watching the contest from the sidelines, unable to benefit from his own machinations. But that might be scant consolation to the hundreds of thousands of New Yorkers who decide in a typical year vote for minor-party candidates. That choice has disappeared.

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Mr. Freeman will host “WSJ at Large” Friday at 7:30 p.m. EDT on the Fox Business Network. The program repeats at 9:30 a.m. and 11:00 a.m. EDT on Saturday and Sunday.

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James Freeman is the co-author of “The Cost: Trump, China and American Revival.”

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Follow James Freeman on Twitter.

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(Teresa Vozzo helps compile Best of the Web. Thanks to Anne Lauenstein.)