Unilever is the parent company of Ben & Jerry's. The WACC of
Unilever provided by Guru focus is 5.88%. My discussion will assume
that this 5.88% is assumed to be Ben & Jerry's WACC as well. 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 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 behaviour continues. This climate change issue also
effects 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
