Unilever is the parent company of Ben & Jerry's. The WACC of
Unilever provided by Gurufocus is 5.88%. My discussion will assume
that this 5.88% is assumed to be Ben & Jerry's WACC as well.
Generally speaking, this is a great WACC that allows for investors to
feel safe to invest their money into the company.
The WACC can increase, driving investors away by the downturn of
economic and political risk. Economically speaking, interest rates are
rising constantly, and items are becoming more expensive. Ben &
Jerry's has always been on the pricier side of things, as they have high
quality ice cream. As the cost of living continues to rise, other items
will begin to as well, and one of those can be Ben & Jerrys. Despite its
project differentiation and social changes by the company, sometimes
its values just is not enough to sustain business, therefore, the
continued high cost of living can cause Ben & Jerrys to have a
downturn. This downturn can be started at its WACC.
Climate change is another issue that will effect Ben & Jerrys and its
WACC. ""It [climate change]" can also “affect the ability of
households and businesses to meet their repayments because of the
impact it can have on their incomes,”". Climate change is a factor that
is causing items to become scarce, therefore, prices are rising in
shortages. The WACC will definitely continue to climb if Ben & Jerrys
struggle with repayments. "The nonprofit, which looked at 134
financial statements from last year in sectors spanning fossil fuels,
mining, manufacturing, automotive and technology, found that
almost all failed to consider the financial impact of climate change."
This environment is failing to consider what will happen to the ice
cream industry if this behavior continues. This climate change issue
also effect the raw materials of producing ice cream. These raw
materials may lose quality in the middle of it all, and Ben and Jerrys is
huge on quality. If quality goes down, business will go down, while
will mean less cash flows in order to repay investors back.
The company can only hope that society sees that the company is
different and wants different for the world. Ben and Jerrys is not a
corporation that does not care about climate change because they do
actually care. The measures that Ben and Jerrys take to reduce
carbon footprint is a move that all other companies should follow.
Pandey, S. (2022, August 23). Rba's Kearns warns climate change set to
impact financial system. Bloomberg.com. Retrieved December 8,
2022, from https://www.bloomberg.com/news/articles/2022-08-
23/rba-s-kearns-warns-climate-change-set-to-impact-financial-
system?leadSource=uverify+wall
Schwartzkopff, F. (2022, October 5). Firms aren't reporting financial
risks of carbon emissions, study finds. Bloomberg.com. Retrieved
December 8, 2022, from
https://www.bloomberg.com/news/articles/2022-10-05/firms-aren-
t-reporting-financial-risks-of-emissions-study-
finds?leadSource=uverify+wall
Unilever (NYSE:UL) WACC %. UL (Unilever) WACC %. (n.d.). Retrieved
December 8, 2022, from
https://www.gurufocus.com/term/wacc/UL/WACC-Percentage/UL
