Unilever (ULVR)

[Dod101]

What JofB8 is probably missing is that there are many 'soft' factors affecting the bottom line besides thermodynamics. I have read from several different sources that companies which practise sustainability and behave generally as a 'good citizen' have on the whole better financial outcomes than those which do not. He sounds a bit like those scientists who one week tell us bacon causes cancer and the next that it is fine to eat it.

Besides I rather fancy that a spokesman for Unilever probably knows rather more about the Unilever business than does JofB8. I am not a great believer in climate change as being caused by man, but is part of a very long cycle. OTOH I do know that plastic is causing untold damage to our environment and a huge amount of it could be cut out without any noticeable difference to our lifestyles.

Dod

[TheMotorcycleBoy]

"We profoundly believe that sustainability leads to a better financial top and bottom line."

His assertion is demonstrably false. His words display complete and cretinous lack of understanding of sustainability, and basic economics.

You've missed the point. AJ is referring to ULVR top and bottom. Earlier he alludes that making low/zero plastics products will make them more popular with the next generation. That part is true; from my experiences with my teenagers they are deliberately buying what they see as low/zero plastics. Hence their (ULVR) top line improves. Furthermore they *may* get a tax credit for "doing their bit", hence the bottom line.

Not all of the consumer will understand thermodynamics, but will arguably be seduced into "buying what they see as lower environmental impact products". Whether those products are or not "greener" is not the whole point. I imagine AJ understands this.

Anyway why don't you create a new topic to discuss thermodynamics and manufacturing processes should you feel the need to discuss the scientific minutiae some more?

Matt

[JoyofBricks8]

I have a fairly significant proportion of my portfolio invested in Unilever, and they have done well.

Is Unilever remotely a sustainable enterprise?

No.

So we should not pretend that it is. It is a glorious manifestation of industrial might, converting untold billions of creatures and plants via factory processes powered mostly by fossil energy into foodstuffs.

Foodstuffs then packaged in vast facilities, wrapped aseptically in preservative plastic shrouds, epoxy-coated tins, and bleached paper protection from the global suppliers of such future litter.

Foodstuffs scientifically formulated to be cheaper, tastier, better selling, more profitable.

Foodstuffs that are then shipped and trucked and stacked and refrigerated using diesel powered transport and refrigeration machines. Food that is bought and sold and tracked and checked by electronic devices and computer technology.

We should not pretend that any of it remotely sustainable.

Mr Jope is talking through his hat. Unilever can never be a sustainable enterprise, and as shareholders we shouldn’t aspire to sustainability.

Truly sustainable is food grown in your back garden and wrapped in a leaf. How much profit is in that?

We want profits and addictive industrial foods that hook consumers by the billion. Sustainability? Thats just fantasy, and their chump customers will probably buy into it, but I won’t.

[scrumpyjack]

But you are happy to get the dividends from this dreadful planet wrecking company?

[JoyofBricks8]

Sure, why not?

I am not squeamish about it at all. I think it is an incredible triumph that it is possible to produce such vast quantities of yummy delights with such success.

I am just unwilling to call the process sustainable. It’s clearly not. And the assertion that making it sustainable would improve profits is quite difficult to justify. A truly sustainable Unilever would be denied access to the technology, materials, energy and transport that have allowed it to succeed globally.

[Arborbridge]

Sure, why not?

I am not squeamish about it at all. I think it is an incredible triumph that it is possible to produce such vast quantities of yummy delights with such success.

I am just unwilling to call the process sustainable. It’s clearly not. And the assertion that making it sustainable would improve profits is quite difficult to justify. A truly sustainable Unilever would be denied access to the technology, materials, energy and transport that have allowed it to succeed globally.

We've crossed swords occasionally over the B word, but I have to say it's nice to be able to agree with your talking sense over this issue.
We delude ourselves if we think any of the changes we are trying to make - slowly - is anything but a minor alteration of our disastrous course.
Enjoy the run while we can and before Gaia shakes off human kind before it wrecks everything irretrievably.

Arb.

PS perhaps the biggest problem behind all this is population growth and we do not seem to be able to get our heads round that since reproduction is such an imperative for our species. Nothing less than massive population control measures will help the future of humankind and the planet. If we don't do it, something will come along to help us.

[Gengulphus]

... it misleads the listener that sustainability is desirable and possible in the context of a capitalistic industrial society. It is not. This is readily demonstrated by basic physics: if we model the economy as a dissipative structure, a heat engine, converting energy into goods and services that people need, increased output is only possible via increased energy flow. That is basic thermodynamics.

How then do we increase energy flow, except via increasing consumption of fossil fuels?

If you answer is 100% renewables, you miss what the renewables are constructed from. If we want an arbitrary increase in energy, that necessitates an arbitrary fossil use to produce that low quality power.

Sorry, but that argument is nonsense, other than possibly in a very pedantic sense, for at least two reasons:

* The Earth receives massive energy flow from the Sun - energy flow that is completely sustainable, other than in the very pedantic sense that in a few billion years, the Sun will reach the end of its life and no longer be sustainable. Most renewable energy sources ultimately come from it (an exception is geothermal energy), and indeed so do fossil fuels (they're just stored-up energy flow from millions of years ago...). The problems with renewables are that they're all very inefficient users of that energy flow, intermittently available or both. And indeed, fossil fuels suffer from the inefficiency problem as well - only a tiny fraction of the energy flows from the Sun millions of years ago has been stored in fossil fuels. It's just that it doesn't cost us anything to deal with that problem for fossil fuels, because nature has dealt with it for us... Anyway, if we could deal with those problems cost-effectively for renewables, the energy flows available from the Sun would dwarf fossil fuels as a source of energy flow - that's a very big "if", of course, but it's enough to say that your argument is based on the current practicalities of renewables, not solely on thermodynamics.

* The value of goods and services produced is not only a function of the energy flow, but also of how efficiently that energy is used. As a simple example, take the service that all listed companies provide to their shareholders, of supplying them with annual updates of the company's performance in the form of annual reports. When I started investing in shares in the 1980s (*), that was basically only done by printing copies of the annual report and posting them to shareholders. Now, it can be done in a completely paperless way, e.g. by emailing shareholders a notification of where they can download a pdf copy of the annual report - which clearly uses a lot less in the way of energy and other resources, and at least as far as I am concerned, is also a far better service: in particular, I can search for mentions of a particular subject far more easily in a pdf than in a printed paper report, and I can carry a library of annual reports around with me on a memory stick in my pocket that in paper form would weigh many times what I do, or with no weight at all as long as I'm willing to rely on having internet access and on companies not expiring them from their websites.

I do appreciate that there are limits to how much the energy costs of goods and services can be reduced, that those limits vary quite a lot depending on which goods and services they are, and that I've picked an example for which the cost could be (and has been) reduced a lot. I'm not trying to imply that everything can be reduced that much - just that there are reductions available that will significantly improve the efficiency with which our existing energy flow is used to provide value in the form of goods and services.

I'm also not trying to imply that your idea that what Unilever are doing here is 'greenwash' is wrong - on the contrary, I think it's probably largely correct, in that there's a probably some grains of truth in it about sustainability improvements, but they're almost certainly 'spinning' the extent to which they're moving towards total sustainability and the effects of doing so on the company finances. It probably is true that some particular movements towards sustainability will improve the company's top and bottom lines, but as your example of hunter-gatherers indicates, getting all the way there doesn't do the same - so "We profoundly believe that sustainability leads to a better financial top and bottom line." is probably only true in a much more limited sense than the lack of 'weasel words", qualifications, etc, in it suggests. And of course, any statement by any significant organisation - not just Unilever or even just listed companies, but also governments, charities, regulators, etc - about itself can be expected to be 'spun' to present itself in a positive light. So I'm afraid that a significant amount of 'greenwash' is only to be expected in what an organisation says about itself, especially with environmental issues a major focus of public attention as they are at present.

But what's needed to expose such 'greenwash' is a careful critique of the details of what it claims, with careful attention to not including unjustified hidden assumptions such as that because producing goods and services requires energy flow (true AFAIAA), producing better goods and services requires more energy flow (false, as my example of annual reports demonstrates).

(*) In case anyone thinks this inconsistent with the implication in various past posts of mine that I've had about 20 years of experience as an individual investor in the stockmarket, the explanation is that I was very much a "subscribe to a few privatisations and IPOs, stick the certificates in a bottom drawer and forget about them" investor for many years - my first shares were acquired in 1983 or 1984, but my first market trade was in 1999!

Gengulphus

[JoyofBricks8]

A careful critique is not really necessary to reveal the severe difficulties Unilever faces in this search for profits via sustainability: A casual glance at the product range is all it takes.

I challenge Unilever to supply me with sustainable, no plastic, zero carbon Magnum or Vienetta, using a refrigeration machine without steel smelted with coal, or refrigerant from the oil industry. Deliver it to me from the farm gate to consumer without using a fossil vehicle or steel and with only renewable power.

We seem to agree there is an upper boundary to the possible efficiency of the Unilever heat engine. I rather doubt there is much more that can be done to significantly improve it, though Mr Jope is free to prove me wrong.

You seem to think that there is less embedded energy in documents on the web rather than on paper. I dont believe that to be the case:The only study I have found does not support that view. As an aside, good luck trying to convince anyone that a bunch of e-waste is easier to compost than paper at the end of the life cycle of the document.

[ReformedCharacter]

PS perhaps the biggest problem behind all this is population growth and we do not seem to be able to get our heads round that since reproduction is such an imperative for our species. Nothing less than massive population control measures will help the future of humankind and the planet. If we don't do it, something will come along to help us.

Arb, I don't think population growth is the biggest problem. It's been slowing dramatically since the 60's, see the chart here:

https://en.wikipedia.org/wiki/Population_growth

specifically 'World population growth rates between 1950–2050'

The key to reducing the population growth rate seems to be education and having a decent quality of life:

Norton compared fertility rates of over 100 countries with their index rankings for economic freedom and another index for the rule of law. ‘Fertility rate is highest for those countries that have little economic freedom and little respect for the rule of law,’ wrote Norton. ‘The relationship is a powerful one. Fertility rates are more than twice as high in countries with low levels of economic freedom and the rule of law compared to countries with high levels of those measures.’”

And, “Economic freedom and the rule of law produce prosperity which dramatically lowers child mortality which, in turn, reduces the incentive to bear more children. In addition, along with increased prosperity comes more education for women, opening up more productive opportunities for them in the cash economy. This increases the opportunity costs for staying at home to rear children. Educating children to meet the productive challenges of growing economies also becomes more expensive and time consuming.”

https://www.cato.org/blog/prosperity-wo ... ion-growth

RC

[JoyofBricks8]

The point I am trying to make is that the sustainability game is an impossible one to win. The green agenda as presented is a sunlit upland of windmils and solar and the ability to recycle all things.

However the bottom line is that Unilever will always fail to be green because it is not possible to eliminate all possible pollution, modern materials and technology from a global industrial enterprise without simultaneously destroying both profits and the enterprise itself. Certainly thus far no-one has ever succeeded in achieving the Unilever vision of a highly profitable non-polluting zero-carbon global megacorp.

As a shareholder I am opposed to Unilever's greenwashing because it is just pandering to an impossible vision.

I submit that many of this parish have argued strongly and passionately that it is probably a bad idea to pander to visions of sunlit uplands that are not in accordance with base reality (heavy, heavy irony intended).

A question for fellow shareholders: Should we worry that Unilever's management appear believe in such impossible things? What does that say about their judgement?

[Dod101]

The point I am trying to make is that the sustainability game is an impossible one to win. The green agenda as presented is a sunlit upland of windmils and solar and the ability to recycle all things.

However the bottom line is that Unilever will always fail to be green because it is not possible to eliminate all possible pollution, modern materials and technology from a global industrial enterprise without simultaneously destroying both profits and the enterprise itself. Certainly thus far no-one has ever succeeded in achieving the Unilever vision of a highly profitable non-polluting zero carbon global global megacorp.

Greenwashing is really just pandering to the impossible.

I submit that many of this parish have argued strongly and passionately that it is probably a bad idea to pander to visions of sunlit uplands that are not in accordance with base reality (heavy, heavy irony intended).

I rather assumed that that was the point you were trying to make. We all need to live. I do not anyway believe climate change is anything like as bad as is being claimed. We have had periods in the past of global warming long before man was more than a hunter/gatherer. Fossil fuels will run out some day however and it is not a bad idea to try to make them last a bit longer. And cutting down on waste of any sort has got to be a good thing.

Back to Unilever. I do not think they ever claimed that they will become zero carbon, nor that they are a global global megacap, for that matter (whatever that may be).

Trying to be a good citizen though does help promote good business practice and that does feed through to the bottom line.

Dod

[SalvorHardin]

I submit that many of this parish have argued strongly and passionately that it is probably a bad idea to pander to visions of sunlit uplands that are not in accordance with base reality (heavy, heavy irony intended).

A question for fellow shareholders: Should we worry that Unilever's management appear believe in such impossible things? What does that say about their judgement?

It doesn't bother me in this case. Lots of customers and potential customers like this sort of thing; it's a good way of getting favourable publicity and to show that you "care". Unilever have a track record in this field; its Ben & Jerry's ice cream brand is a walking talking example of it.

Issues We Care About
https://www.benjerry.co.uk/values/issues-we-care-about

Environmental concerns for many people are important, though for most of them if it starts to cost too much then their concern for their wallets outweighs the environment. Showing that you care can often be much more important than actually delivering on the caring.

Just as long as they don't deliberately go out of their way to aggrevate a big part of their consumer base. Gillette did this recently, a shaving company really shouldn't put out adverts that are deliberately designed to show that you have contempt for much of your customer base. Procter & Gamble ended up writing off $8 billion in respect of Gillette in its next results; it wasn't all due to increased competition and the rising popularity of beards

"That idiotic Gillette ad may have turned the tide on ‘toxic masculinity’"
https://nypost.com/2019/01/20/that-idio ... sculinity/

[JoyofBricks8]

If Unilever executives want to save the world and salve their consciences, they are free do it with their own damn money. Trying to placate the environmental lobby is a dumb move.

The problem isnt so much with this individual concession to public pressure to eliminate plastic straws or what have you.

It is the philosophy behind the demand.

Eventually the greens will be encouraged by our repeated concessions. They may demand that Unilever phase out the use of something critical that renders the business non-viable or non-profitable. I hope management stop caving in before it gets to that stage. My own money will be on the line then.

As for wokester Gillette, I hope Unilever's Dollar Shave Club is eating their lunch with gusto, leaving virtue-signalling Gillette worthless and us rich.

The question is: Do I trust the Unilever management not to virtue-signal and destroy their own shaving brand too? Well, this whole thread was kicked off by virtue signalling woke eco-rubbish so I am not hopeful.

[SalvorHardin]

As for wokester Gillette, I hope Unilever's Dollar Shave Club is eating their lunch with gusto, leaving virtue-signalling Gillette worthless and us rich.

Oh yes! In response to Gillette's "toxic masculinity" advert, Dollar Shave Club rapidly responded with a very short twitter post "Welcome to the Club"

"The timing and wording of the tweet suggests that, while the Dollar Shave Club didn’t outright write “ditch Gillette and come to us instead,” that’s what it implied. So how did the company respond when a consumer asked, “What are the rules to your club?” “Take care of yourself. Respect others. Buy our stuff,” Dollar Shave Club replied."
https://www.bizpacreview.com/2019/01/15 ... gle-714066

Millenials love virtue signalling and companies want to attract people as consumers when their purchasing habits haven't fully formed. Unilever is fairly well practiced at it, but I don't expect to see them going full woke like Gillette and trashing their brands (if only because they've been doing it for much longer e.g. Palm Oil controversies, Ben & Jerry's). This Forbes article about Gillette's campaign, from a Professor of Marketing, indicates that the lesson has been learned by some of the advertising industry:

"The use of the term “toxic masculinity” in the ad was a flat out mistake. While only mentioned quickly and briefly, the use of this term, which many men associate with a one-sided critique and stereotype of an entire gender."

https://www.forbes.com/sites/charlesrta ... -is-toxic/

For anyone who hasn't seen it (and wants to), here's the original Gillette "toxic masculinity" advert

https://www.youtube.com/watch?v=koPmuEyP3a0

And here's a Dollar Shave Club advert. I really like the top rated comment, "I though this ad was pure genius at selling your product but Gillette came up with even better way to promote your stuff."

https://www.youtube.com/watch?v=ZUG9qYTJMsI

[Dod101]

Sadly, people power is alive and real, just look at the demos in London at the moment. Attend the AGM of any major company (including Unilever) and an innocuous looking hand goes up (usually attached to a nice young lady with a script drawn up for her by some leftie organisation) She is given the opportunity to put her question and the next several minutes or longer is taken up by the Chairman trying to justify the payment to a rice farmer in Indonesia, or the trading of palm oil. At HSBC, the question (from the same organisation) will be asking about the financing of shipments of fossil fuels (usually coal) to some poor African country or the like.

What is the Chairman supposed to do in these circumstances? Many of us would like him to ignore the questioners but the fact is that is life nowadays. It is not Unilever that is driving that sort of thing it is what we must call society. It has grown so rich that we can afford to protest. I too would prefer that the proprietors of these companies got filthy rich and pandered to the peasants (or salve their conscience if they have one) by funding charitable hospitals or social housing. But times have changed whether we like it or not. Unilever like other responsible companies is simply trying to avoid too many brickbats. As a shareholder I think they have no option.

Dod

[JoyofBricks8]

I too would prefer that the proprietors of these companies got filthy rich and pandered to the peasants (or salve their conscience if they have one) by funding charitable hospitals or social housing. But times have changed whether we like it or not. Unilever like other responsible companies is simply trying to avoid too many brickbats. As a shareholder I think they have no option.

Dod

To be fair Unilever has a long history of such enlightened capitalist benevolence: https://en.wikipedia.org/wiki/Port_Sunlight.

[Dod101]

I too would prefer that the proprietors of these companies got filthy rich and pandered to the peasants (or salve their conscience if they have one) by funding charitable hospitals or social housing. But times have changed whether we like it or not. Unilever like other responsible companies is simply trying to avoid too many brickbats. As a shareholder I think they have no option.

Dod

To be fair Unilever has a long history of such enlightened capitalist benevolence: https://en.wikipedia.org/wiki/Port_Sunlight.

Indeed and I have one or two model villages near me funded by Whisky Barons in the late 19th century.

Dod

[Gengulphus]

A careful critique is not really necessary to reveal the severe difficulties Unilever faces in this search for profits via sustainability: A casual glance at the product range is all it takes.

I challenge Unilever to supply me with sustainable, no plastic, zero carbon Magnum or Vienetta, using a refrigeration machine without steel smelted with coal, or refrigerant from the oil industry. Deliver it to me from the farm gate to consumer without using a fossil vehicle or steel and with only renewable power.

What that shows is that a careful critique is not really necessary to reveal the severe difficulties Unilever faces if they search for profits via total sustainability. But it's completely clear that that's not what Mr Jope meant - he was obviously talking about greater sustainability, and showing that that is largely 'greenwash' is what is likely to require a careful critique. Criticising a clear exaggeration or other distortion of what someone actually meant is a waste of everyone's time, including your own, and also a well-known fallacy - sufficiently well-known that it has been named: it's a "straw man". (As an example, if I were to ridicule your statement on the grounds that there's no such thing as a "fossil vehicle", since vehicles haven't been around for long enough for any of them to have become properly fossilised, that would be a straw man, because you pretty obviously actually mean "fossil-fuel-powered vehicle"...)

You seem to think that there is less embedded energy in documents on the web rather than on paper. I dont believe that to be the case:The only study I have found does not support that view. ...

Sorry, I'm not going to even try to engage with any study you have found without being told where to find that study.

... As an aside, good luck trying to convince anyone that a bunch of e-waste is easier to compost than paper at the end of the life cycle of the document.

Good luck trying to convince people that that's a remotely sensible statement. The sensible way to deal with an electronic document at the end of its life cycle is to delete it, not to regard the equipment it's on as e-waste, and when such equipment does become e-waste, the sensible way to recycle it is not composting. Furthermore, an annual report pdf only uses a miniscule proportion of a modern hard disc's capacity (the ones I've got on my desktop average very roughly a millionth each of its hard disc's 3TB capacity), so they're only responsible for a similarly small proportion of its recycling cost when it eventually becomes e-waste.

Gengulphus

[JoyofBricks8]

But it's completely clear that that's not what Mr Jope meant - he was obviously talking about greater sustainability, and showing that that is largely 'greenwash' is what is likely to require a careful critique.

Well, I note that many environmentalists have been agitating for net zero carbon emissions by 2050, and this is now (insanely) a tenet of UK law. So it is clear that zero pollution is, in fact, a key objective of the environmental movement. The Extinction Rebellion organizers will not be satisfied with a mere reduction for long. Elimination of pollution is the objective.

As i explained,I am simply stating that I do not believe it is possible to successfully and profitably produce Magnum ice-cream or Cif cleaner or Pot Noodles globally with net zero C02 emissions and no pollution. I suspect it simply cannot be done. It has not been done so far, that is for sure.

Unilever have foolishly accepted the premise of the environmentalists. They have the opportunity to prove me wrong. As a shareholder I regret that they accept the activists values and framing when Unilever would be rendered moribund overnight were the activist's agenda fully realised.

[Gengulphus]

The point I am trying to make is that the sustainability game is an impossible one to win. The green agenda as presented is a sunlit upland of windmils and solar and the ability to recycle all things.

Agreed - but the fact that political movements (all of them, apart possibly from some very early stage ones that haven't really got around to presenting anything...) present "sunlit uplands" is a fact of life that both investors and companies have to cope with. One can try coping with it by engaging in politics (which I won't go into here - it's definitely Polite Discussions' territory, not this board's), or by making your views known to the political movement (but this site is far too small and off-the-beaten-track to be an effective way of doing that!), but otherwise one just has to apply the appropriate pinches/shovelfuls of salt, recognising the pressures that companies are subject to.

However the bottom line is that Unilever will always fail to be green because it is not possible to eliminate all possible pollution, modern materials and technology from a global industrial enterprise without simultaneously destroying both profits and the enterprise itself. Certainly thus far no-one has ever succeeded in achieving the Unilever vision of a highly profitable non-polluting zero-carbon global megacorp.

As a shareholder I am opposed to Unilever's greenwashing because it is just pandering to an impossible vision.

I submit that many of this parish have argued strongly and passionately that it is probably a bad idea to pander to visions of sunlit uplands that are not in accordance with base reality (heavy, heavy irony intended).

A question for fellow shareholders: Should we worry that Unilever's management appear believe in such impossible things? What does that say about their judgement?

Of course Unilever's management don't believe in such impossible things. Nor have they said that they intend to "eliminate all possible pollution, modern materials and technology".

As to what it says to me about their judgement, it says that they understand public relations. Plastic use is a sensitive subject politically at present - can you imagine what the outcome would be if they had said "Reducing our use of plastics is in our view a futile and costly pipedream, so we're not going to even try." I can - there would be widespread calls to boycott all their products, and there are enough people around who are concerned enough about environmental issues that that would almost certainly hurt their top line quite badly (and consequently their bottom line as well). And it would increase calls for laws to be enacted forcing them to take the environmental measures anyway - and if such calls become widespread enough and strong enough and stay around for long enough, politicians will either accede to them or find themselves voted out of office in favour of opponents who will do so... Even a statement along "We don't really believe in this, but to humour the public we're taking the following environmental measures" lines (though doubtless expressed more diplomatically than that!) would risk similar consequences.

In short, they're bending with the prevailing political gales, rather than risking being broken by them.

Gengulphus