REPORT (1800 words): Corporate Social Responsibility (CSR)

Unilever And The Failure Of Corporate Social Responsibility

Wayne Winegarden  Contributor

EconoSTATS Contributor Group 

Opinion

GUEST POST WRITTEN BY

Tom Borelli

This article is more than 2 years old.

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Paul Polman, Chief Executive Officer, Unilever speaks on a panel during the annual Clinton Global Initiative on September 21, 2016 in New York City. (Photo by Stephanie Keith/Getty Images)

The stunning election of Donald Trump as president and the surprising Brexit decision demonstrates citizens can disrupt the elite political establishment when it fails to represent the needs of the people.

On a larger scale, it means politicians and governments can be held accountable for putting their self-serving goals before those that put them in power.

Shareholders also need to take note and rally to toss CEOs when they put their personal agenda before the interests of investors.

Starbucks CEO Howard Schultz put personal political views before shareholders when he aggressively challenged a number of policies promoted by President Trump in a letter to employees. The backlash from Trump supporters was swift and #boycottStarbucks became a top trending hashtag on Twitter.

The damage Schultz is causing by putting himself before shareholders pales in comparison to Unilever CEO Paul Polman.

Polman is a poster child of a CEO gone rogue.

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Since leading the company in 2009, Unilever has suffered financial and public relations damage from Polman’s disastrous leadership.

At the core of Polman’s problem is his eagerness to put superficial feel good policies ahead of sound business decisions and he is not shy about touting his twisted priorities.

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In Polman’s world, “as CEO of Unilever, my personal mission is to galvanize our company to be an effective force for good.”

While Polman seeks approval from global elites and basks in the glory of being called a “sustainability evangelist’” and a world saver for his roles in combating climate change and efforts to address social issues, Unilever has gone off the rails.

Despite Polman’s efforts to make Unilever a good corporate citizen, Unilever was mired in environmental and sexual harassment controversies.

Last year, Unilever settled with almost 600 workers in India over mercury exposure from a now closed thermometer plant following a 2006 lawsuit over exposure to the toxic element. The issue reached global attention from an  Indian rapper’s song  “Kodaikanal Won’t” that modified Nicki Minaj tune “Amaconda,” with lyrics addressing the mercury contamination problem.

A 2011 Irish Times story exposed sexual harassment claims from African workers that said they had to bribe supervisors to stop them from unwanted advances.

Polman’s efforts to address the sexual harassment claims were not universally accepted by NGOs. A 2014 report by the Netherlands-based Centre for Research on Multinational Corporations “claimed the existing system of checks and balances has failed to stop abuses of workers on Unilever’s Kenyan estate, including sexual harassment and poor housing conditions.”

And just this month, Unilever’s South African business was  accused  of collusion with a competitor by the country’s Competition Commission: fines of up to 10 percent of annual turnover could be levied as a result. Rot starts at the top.

Polman’s focus on social matters distracted him from addressing core business challenges.  In a  Fortune magazine  interview last month, Polman expressed more interest in supporting the United Nations Sustainable Development Goals than Unilever’s 2016 financial results.

Unsurprisingly, Unilever’s business is suffering. The company’s 2016 fourth-quarter sales reported in January 2017 grew 2.2 percent which was lower than analysts’ expectations of 2.8 percent. Sales for the entire 2016 year were 3.7 percent  below Wall Street’s  estimates  of 3.9 percent.

Bloomberg’s  Andrea Felsted  highlighted growth problems in Unilever’s personal care unit, “which has been one of its top divisions, expanded at its slowest rate for two years.”

Polman’s biggest blunder by far was the recent rejection of a $143 billion  takeover effort  from Kraft Heinz. Unilever’s stock jumped about 15 percent after the bid became public but  fell 8 percent  following the company’s rejection of the takeover offer.

Unilever’s decision perplexed Wall Street since the offer of $50 per share represented an 18 percent boost from its share price before the takeover bid and it would have resulted in valuing the company at  24 times  2016 earnings.

Perhaps Polman rejected the takeover offer because it could prevent him from using Unilever to advance his personal political agenda.

It’s time for Unilever shareholders to mimic the anti-establishment trend and oust Polman as CEO and let him play politics on his own dime.

Tom Borelli Ph.D. is a former shareholder activist and business executive, and a contributor to Conservative Review.