The power of capitalism and wokeness are not mutually exclusive

“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.)”

Thus spoke Terry Smith, a fund manager at one of Unilever’s top 10 shareholders, FundSmith, in his annual letter to shareholders. He suggested the consumer goods behemoth is “laboring 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.”

It’s a striking illustration of the reality of the competing agendas of shareholders and other stakeholders that lies beneath initiatives such as the Business Roundtable’s redefinition of the purpose of a corporation.

Unilever CEO Alan Jope is certainly under pressure from activist investors to improve matters following a 31% drop in its share price since 2019, in stark contrast to the positive achievements over at arch rival Procter & Gamble that were highlighted in its 2021 financial results unveiled this week. Jope has abandoned his $68 billion bid for drug-maker GSK’s consumer healthcare business, at least for the time being.

Jope indicated that Unilever will double down on the healthcare and beauty sector and get rid of underperforming brands in its food portfolio, especially those that don’t meet its self-imposed “purpose standards.” Jope’s argument is that Unilever’s most purposeful brands are also the most profitable and that, contrary to the portrayal of its strategy as “politically correct woke antics,” the two concepts are not mutually exclusive but are in fact indelibly linked.

Shareholders tend to have a more binary approach to such matters, based purely on hard financials. “A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot,” added Smith, who runs a fund for which Unilever was the worst performer bar one in 2021.

The kerfuffle comes in the same week BlackRock CEO Larry Fink unveiled his annual letter to CEOs – titled The Power of Capitalism. The thoughts of the leader of the world’s largest asset manager have become a bellwether for business’ attitude to purpose.

Like Smith, Fink is intrinsically bound by hard financials as a necessary part of his function. But he rejected the notion that purposeful business is woke nonsense.

“Stakeholder capitalism is not about politics,” he said. “It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism.”

Fink is not suggesting brand owners and C-suite executives should ignore their shareholders’ desire for strong returns on their investments. Indeed, BlackRock receives big criticism for continuing to invest in oil and gas businesses.

“Make no mistake, the fair pursuit of profit is still what animates markets; and long-term profitability is the measure by which markets will ultimately determine your company’s success,” he added.

But he believes the foundation of capitalism is constant reinvention, which he says has been turbocharged during the pandemic.

“It is through effective stakeholder capitalism that capital is efficiently allocated, companies achieve durable profitability, and value is created and sustained over the long term,” he noted.

Procter & Gamble has had its own criticism in the past for purposeful initiatives such as its Gillette “toxic masculinity” activation. But it achieved organic sales growth across its brands of 6% in 2021 and was under far less scrutiny than Unilever from analysts and shareholders in its full-year financial results presentations.

It is promoting a “mindset of constructive disruption” – not dissimilar to Fink’s constant reinvention – where “a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. In this environment, that agility and constructive disruption mindset are even more important.”

It seems to me that the tension between traditional attitudes to shareholder value and a more progressive approach to purposeful business defines the fundamental conundrum for communicators looking to establish authentic narratives for their brands and corporations.

For sure, one of the principle purposes of Hellmann’s mayonnaise is “to help people enjoy good, honest food, for the simple pleasure it is, without worry or waste.” No argument there. But it also exists “to inspire people around the world to be more resourceful in their kitchens and waste less food – to say ‘yes’ to taste, and ‘no’ to waste.”

Please excuse the tortuous metaphor, but while we are still in the salad days of the reinvention of free enterprise through a purposeful lens, PR professionals are in a position to help navigate this journey and build the stakeholder capitalism movement into a full sandwich that will taste good to both Terry Smith and Larry Fink.

This article was first published on PR Week.


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