Former Unilever CEO Checks Tesla, Says Firms Should Focus on Long Term

The former CEO of British consumer goods giant Unilever shared his views on how the business should operate in the coming years, mentioning Elon Musk’s Tesla, Danish energy company Orsted and Beyond Meat.

In comments made during a discussion moderated by CNBC’s Karen Tso at Mobile World Congress in Barcelona, ​​Paul Polman suggested that a company’s performance could be enhanced through environmental, social and governance (ESG) factors.

“You have to make sure that whatever you do when you run a company, you also get results,” Polman said at a panel on Tuesday.

“But increasingly, I think we have evidence that operating within a more inclusive, multi-stakeholder, and long-term model gives you a better chance of generating shareholder value over time.”

Polman said that while short-term shareholders, whom he described as speculators, will always be around, a significant shift is currently underway.

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Polman added that “hard data” shows that “companies that are gender-diverse perform better, companies that address and reduce climate change perform better.” This also applies to firms dealing with “human rights issues” in their value chain.

“Higher Market Value”

Expanding on his point, the chief executive, who co-founded and co-chaired the Imagine social enterprise, said that from airlines to food and mobility to delivery, “companies that are more actively trying to mitigate these negative externalities actually have higher market value.” “.

“While accounting standards systems have not yet caught up, the financial market is already able to appreciate these, as some call, “intangible” issues,” he said. “They are tangible and incredibly important to the future of the company.”

He cited energy firms Vattenfall and Orsted as examples of companies moving in this direction.

“Either you have a Tesla, or you have Beyond Meats, which are moving to an alternative to food. They are significantly taller than actors who find it harder to change.”

Tesla specializes in electric vehicles, a technology many see as crucial when it comes to reducing urban air pollution.

While Tesla is focused on what can play a key role in the planet’s transition to greener modes of transport, it is not immune to criticism.

In February, The California Civil Rights Agency sued the company, alleging racist harassment and discrimination against black workers who had been kept for years at the company’s auto assembly plant and other facilities in the state. Tesla called the lawsuit “erroneous.”

Sustainability Debate

With growing concerns about sustainability, the environment and climate change, discussions and debates around ESG are getting louder. Polman’s comments reflect a growing ESG trend that has its fair share of supporters and detractors.

Last summer the CEO Credit Suisse told CNBC that the coronavirus pandemic has “materially accelerated the trend towards ESG and sustainability.”

“The demand we’re seeing — both from our private clients and institutional clients — for ESG-compliant products is constantly growing,” said Thomas Gottstein, who spoke with CNBC’s Jeff Cutmore. “It’s also clearly seen as an opportunity to boost profits.”

“There is no contradiction between sustainable investment and sustainable returns, in fact quite the opposite,” Gottstein added. “In many cases, sustainable investments are actually more profitable than unsustainable investments.”

Indeed, many corporations around the world are trying to polish their reputation for sustainability by announcing goals and plans to reduce the impact of their activities on the environment.

In some quarters, however, there is a significant degree of skepticism about many of the company’s sustainability claims, given that specific details are often difficult to come by and timelines for achieving these goals are sometimes decades away.

This often leads to accusations of greenwashing, a term that environmental campaign group Greenpeace UK has called a “PR tactic” used “to make a company or product look green without significantly reducing its environmental impact”.

— Laura Kolodny of CNBC contributed to this report.

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