If enough people think this way then they’ll stop

One of Britain’s best known investors has attacked Unilever for its “ludicrous” focus on sustainability, in a sign of growing City frustration at blue chip companies championing fashionable causes.

Terry Smith, manager of the £29bn Fundsmith Equity fund, said that the consumer goods behemoth has become “obsessed” with its public image and mocked its efforts to imbue brands such as Hellman’s mayonnaise with a higher purpose.

He said this overzealous focus on environmental and social issues has proved a distraction at a time when the £101bn maker of products from Vaseline to Marmite is struggling with a falling share price.

The argument in favour of going woke is that consumers will like it, this will make up for the costs and so boost shareholder profits. If that last doesn’t happen then consumers don’t like it enough to make up for the costs. At which point going woke should stop, right?

17 thoughts on “If enough people think this way then they’ll stop”

  1. Meh.. When the Activists voted to abandon the dual-company structure and move entirely to the UK it was clear this was going to happen, given that the dutch position was that Woke Won’t Sell. With reason. The brands they floated/adapted on that tack did not run.

    With common sense booted out… weeellll… what did they expect?

  2. Plenty of companies have committed suicide (done a Ratner) for one reason or another. Because Unilever is so big doesn’t make it immune to that. Expect the Woke to continue for a while.

  3. @TimW

    In the long run you are right. In the medium term, which might be quite long, the share price can be buoyed by the growing tide of woke (‘ESG-sensitive’) investing institutions even if profits are declining.

    Eventually the investors will work out that virtue costs money, and many of them will turn back. But we are certainly not there yet.

  4. Bloke in North Dorset

    How much of this woke stuff is about the market and how much about advertising firms and marketing/PR departments being captured by woke employees and wanting to please themselves?

    My guess is more of the latter than the former.

  5. I consider myself to be a fairly normal (if rather old) bloke. My response to these virtue-signalling “woke” companies is to think “twats!”, and look for alternatives…

    I guess that I’m not alone in this view.

  6. Don’t forget the principal – agent problem. If the people in charge are more worried about what their wives’ friends say to them at dinner parties, then the opposition from shareholders will have to get bigger than it should be before they will react.

  7. Also remember that a significant chunk of shares are held by pension funds, again the principal-agent issue. My workplace pension has decided unilaterally that it’s selling all its stock in oil, gas and mining companies. I can’t do anything about this policy, and I can’t move money out of my workplace pension without leaving the pension scheme, so they get to make my retirement poorer/further-away in order to be able to virtue signal to each other at no cost to themselves.

  8. Rather handily there are funds specifically designed on the ESG metric. When their investors lose money they will lose influence. Good.

  9. There’s a gap in the market for “ethical” fast goods – eg Ecover washing powder, owned by S.C. Johnson, or Ben & Jerry’s ice cream, owned by Unilever. But those brands all have a cutesy origin story. I suspect it’s easier to launch a new brand, than to change people’s perception of an existing brand.

  10. The argument in favour of going woke is that consumers will like it, this will make up for the costs and so boost shareholder profits.

    In reality, woke/ESG/green stuff is 99% virtue-signalling for the moneyed classes, including listed company management and the pension/insurance funds which are their main investors. As Matt points out above, pension funds are abandoning their fiduciary duties in order that their staff can fall in line with in-group pieties and feel better about themselves.

    There is, sadly, a positive performance aspect to this. If pension funds sell companies which don’t buy in to this bullshit and buy the ones which do, then this affects performance. If all the pension funds underperform, who will notice? And who gets to change their company scheme anyway?

  11. The trouble is that so many big institutions have been captured by the wokerati and their fuckwitted lobbyists. If big pension funds and the Church of England pull out or impose pressure, what company management will resist? Sadly there are not many institutions who recognise the damage. Terry Smith has called out the inconsistencies in the ESG “framework” for a long time and it is good to see him at last launch a broadside.. Here is about the only other manager with the guts to call out this nonsense

  12. “At which point going woke _should_ stop, right?”

    But that depends on whether the people reading the _sales_ numbers are in charge. In reality, because this is a game of reality vs woo, the woo peddlers are still going to win. “Their””reality” is what they see on social media. Which is woo.

    There being a lot of ruin in a coutntry, you actually going to have to run out of cash before your avoidance of actual reality will intrude. Best case, by the time the reality-based people get back in charge, the verdict of reality is going to have to be so damning that it can no longer be avoided and by that stage it will be too late. It’s really really hard to reverse the downward trajectory of big brand once it has lost its core consumer base.

  13. Equally likely, the reality based people see the writing on the wall and leave the woo peddlers to it. Same outcome.

  14. I suspect that part of the problem is polarisation – if you do these things then you get the left to buy your product, if you don’t, then you get the right. But only a very few brands can get both to do so, and those are mostly those with significant market power (as distinct from market share), like iPhone.

    This means that big corporates (like Unilever) are going to see falling sales regardless of what they do, as they will lose 50% of the market regardless.

    They can choose which 50%, but not whether.

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