Wednesday, September 4, 2019
In an article entitled "He Ran an Empire of Soap, and Mayonnaise. Now He Wants to Reinvent Capitalism", today's New York Times profiles Paul Polman, the current CEO of Unilever. Under Mr. Polman's tenure, Unilever has stopped issuing quarterly guidance, which is an interesting turn for those of you who follow corporate finance and securities law. The interesting part for this blog, however, is that Polman stopped focusing on short term results and started looking at long term changes, including "a very bold objective to decouple [Unilever's] growth from our environmental impact." In the article, he says "we need to decarbonize this global economy if we want to keep it livable. We need to find an economic system that is more inclusive." To that end, part of the reason Unilever turned down a bid from Kraft Heinz was the significant difference between the two companies on these types of issues of corporate social responsibility and double bottom line thinking.
A few issues came to mind for me as I read this. First, with regard to benefit corporation status, I said to myself, "Interesting that Unilever was able to go there without being a benefit corporation and under, presumably, standard fiduciary duty rules of engagement." The answer to that is that Unilever is apparently two different organizations: Unilever NV is organized in the Netherlands and Unilever PLC is organized under the laws of England and Wales, according to their website , so they may in fact be working under different rules - I'd be curious if anyone knows what fiduciary duty standards apply in these jurisdictions.
Of course, not all benefit corporations are B Corps, and vice versa, so just for fun, I then hit the Google with "Unilever B Corp." My first hit was "Unilever, Multinationals, and the B Corp Movement," featuring a video from none other than .. Paul Polman. Apparently, Unilever will be working with B Lab to look at barriers to B Corp status for mulinationals as part of a new Multinationals and Public Markets Advisory Council. Unilever owns a number of B Corp certified subsidiaries, including Ben & Jerry's and Sir Kensington's, an "upstart condiments maker" according to one industry blog (I'm not really sure what an upstart condiment is ... anyone had Sir Kensington's? Looks pretty good though....)
The other connection I made harkens back to my post from yesterday, and specifically the book Winner Take All that I mentioned yesterday. One of the themes of Winner Take All was that business elites like to talk about CSR, impact investing, double bottom lines, and all of the jargon that accompanies philanthro-capitalism because it is safe and familiar. Everyone around them comes from a similar business background, so a lack of diversity of thought and training is reinforced. This leads to the singular thinking that business methods can solve social problems, and there are no countervailing voices to say, "Hey, wait a minute..." In the best case scenario, this is myopia. In the worst case scenario, business solutions to social issues are "win-win" - at least to the business - and forestall efforts to reallocate resources away from the business sector to governments in order to address these issues. My problem with Winner Take All is that it was extraordinarily dismissive of those who were involved in philantho-capitalism as being entitled, self-indulgent, or greedy. I think the picture is far more nuanced then that, and it was interesting to read the profile of Mr. Polman through that lens.