Companies that position themselves toward being more sustainable and inclusive are more likely to attract investors, particularly from Gen Z and millennial age groups, according to former Unilever CEO Paul Polman.
Speaking on BBC Radio 4’s Today program this morning, Polman says companies that actively try to ‘mitigate negative externalities’ – such as climate change, plastics in the oceans and deforestation – in their business model have lower-risk opportunities and are better positioned for the future.
Polman, who held the role of CEO at Unilever for 10 years, says the majority of shareholders want to invest in companies that ‘not only give them a good return for the pensioners over time, but also ensure that these pensioners can retire in a world they can live in.’
During his tenure at the $107.8 bn consumer goods company, he helped pioneer a new model of sustainable growth and delivered a total shareholder return of 290 percent.
While acknowledging the attraction investors may have to large companies with high profit turnovers, Polman says there needs to be a balance between ‘short-term greed and long-term need’ when looking at shareholder investment strategies.
‘There’s undoubtedly a group of investors that will put an enormous pressure on these companies to perform short term and to return money to them and, frankly, many of the CEOs and boards are incentivized to do that, regretfully,’ Polman says.
He argues that shareholder investments are better spent on ensuring companies position themselves well for a ‘robust, greener future that undoubtedly some of them would want to play a part in but will have to play the short-term game’ first.
Polman’s position on ESG strategies and shareholder targeting follows the release of the first Net Positive Employee Barometer, which includes feedback from a survey of 4,000 adults across the UK and the US.
‘The message that came through loud and clear from thousands of employees is that in addition to thinking about their financial needs and personal well-being, many also want to work for companies that share their values and that are stepping up on the biggest issues facing humanity, not least climate change and economic inequality,’ he says in the report.
For companies that ‘pay lip service to values and are failing to deliver on their environmental and social responsibilities’, these insights are doubly troubling, Polman warns.
‘Not only are these businesses already lagging behind employees’ expectations, but they are also way out of step with the expectations and needs of millennial and Gen Z employees – the generations who will dominate the workforce for decades to come,’ he notes.
‘It’s a ticking time-bomb: as these younger generations take over the economy in greater numbers, this disconnect will increasingly hurt companies that fail to catch up.’