Unilever criticised for focus on sustainability and brand purpose

By our News Team | 2022

Prominent fund manager believes the focus is excessive and a factor in Unilever’s poor business performance last year.

‘Sustainability’ and ‘brand purpose’ have become buzzwords among top marketers, senior executives and big-company boards. But when is it overkill?

This is a question being asked in the UK marketing and business community after a prominent fund manager, Fundsmith Equity Fund, criticised FMCG giant Unilever by calling its focus on sustainability and brand purpose “ludicrous”.

Terry Smith, the founder of Fundsmith, said in a recent letter to investors that Unilever’s poor business performance last year was down to an over-emphasis on these factors. 

Unilever – which has iconic global brands such as Knorr, Dove, Axe, Lipton, Joko and Vaseline in its stable – was the fund’s second worst performer over the period.

“Unilever seems to be labouring under the weight of a management which is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business,” Smith wrote.

Brand Purpose

Photo by Akil Mazumder from Pexels

‘Ludicrous’ examples illustrate the problem

“The most obvious manifestation of this is the public spat it has become embroiled in over the refusal to supply Ben & Jerry’s ice cream in the [Israeli-controlled] West Bank. However, we think there are far more ludicrous examples which illustrate the problem.

“A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot. The Hellmann’s brand has existed since 1913, so we would guess that by now consumers have figured out its purpose (spoiler alert — salads and sandwiches).”

According to the industry publication Marketing Week, Unilever has been on a mission to put purpose at the heart of all its brands since 2018, after finding that its purpose-driven brands were growing at a faster rate. The company’s 28 ‘Sustainable Living’ brands grew 69% faster than the rest of the business, up from 46% in 2017, and delivered 75% of Unilever’s overall growth that year.

As a result, CEO Alan Jope committed to furthering Unilever’s purpose credentials, saying at the time: “We believe the evidence is clear and compelling that brands with purpose grow. In fact, we believe this so strongly that we are prepared to commit that in the future, every Unilever brand will be a brand with purpose.”