Unilever

As active managers of our customers’ investments, we believe it is important to exercise our voice when we disagree with any aspect of a company’s strategy – even when we are long-term supporters of the business, as is the case for Unilever

About Unilever

Industry: Consumer goods
Headquarters: London, UK and Rotterdam, Netherlands

Unilever logo

The interests of a company and its long term investors should go hand in hand. There will inevitably be moments of disagreement along the way, however. Like any lasting and positive relationship, their resolution relies on honest dialogue.

At M&G, we believe we can represent our investors, and positively influence outcomes on their behalf, by engaging constructively with the companies we invest in. This is part and parcel of our role as active investment managers.

The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested. The level of any income earned by the fund will fluctuate.

Our recent engagement with Unilever demonstrates how we balance being a supportive, long-term shareholder with our commitment to putting our investors’ interests first.

A pioneer in sustainability

Unilever is a truly global consumer goods company whose products include some of the best-known brands in personal care and food. 

The company has articulated its purpose to make sustainable living commonplace, and recognises that its growth is inextricably linked to reducing its environmental footprint and delivering a positive social impact.

To this end, Unilever has spearheaded best-in-class practices in responsible production through extended control of its supply chain. Its blueprint for sustainable growth sets ambitious targets to improve the working conditions of its employees and smallholder farmers.  

Unilever in numbers

  • 2.5 billion – the number of people worldwide who the company estimates use its products each day
  • €53.7 billion – global revenues in 2017
  • 56% – of agricultural raw materials, like palm oil, paper and tea, that are sustainably sourced (by the end of 2017)
  • 601 million – people reached through programmes on handwashing, safe drinking water, sanitation, oral health and self-esteem (by the end of 2017)

A challenging proposal

Almost 90 years ago since the merger of a Dutch margarine maker and a British soap-maker, Unilever retains a dual-headed company structure. This means it has two legal entities, listed in the Netherlands and the UK respectively, but operates as a single company.

In 2018, the company’s board proposed changing this to a single structure headquartered in the Netherlands. 

By moving to a primary listing in the Netherlands, however, shares traded in London would no longer be eligible for UK stock market indices, including the benchmark FTSE 100 index*. This matters since Unilever is one of its largest constituents.

Putting our customers first

While we support the principle behind Unilever’s efforts to simplify its corporate structure, we did not believe the board’s proposals were in our customers’ best interests. 

We perceived two downsides. Firstly, with Unilever no longer being eligible for UK indices, we foresaw the risk of being forced sellers of the company’s shares at a time – and price – that might disadvantage investors in certain M&G funds. Secondly, UK-based shareholders might have faced tax implications if a Dutch withholding tax was imposed on dividend income. 

Since we felt the company had not sufficiently taken into account the number of UK shareholders who would become forced sellers and would not be able to continue enjoying the benefits of being an investor in Unilever we therefore announced our intention to vote against the proposals. Several like-minded asset managers shared our position. 

Successful outcomes for investors

The company’s board listened to the concerns of its UK shareholders, and decided to withdraw its proposals. 

As active managers of our customers’ investments, it is important to exercise our voice when we disagree with any aspect of a company’s strategy – even when we are long-term supporters of the business, as is the case for Unilever.

With this issue behind us, we believe M&G’s investors can continue to participate in Unilever’s sustainable growth. By extension, they can contribute to the positive influence that the company continues to have on society and the environment. 

 

The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested. The level of any income earned by the fund will fluctuate.

*Index: An index represents a particular market or a portion of it, serving as a performance indicator for that market.This information is not an offer or solicitation of an offer for the purchase of shares in any of M&G’s funds.Before subscribing you should read the Prospectus and the Key Investor Information Document.  

This financial promotion is issued by M&G International Investments S.A., Registered Office: 16, Boulevard Royal, L-2449, Luxembourg and M&G Securities Limited (registered in England, No. 90776), authorised and regulated by the Financial Conduct Authority in the UK. Registered office: Laurence Pountney Hill, London EC4R 0HH. The Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários, the “CMVM”) has received a passporting notification under Directive 2009/65/EC of the European Parliament and of the Council and the Commission Regulation (EU) 584/2010 enabling the fund to be distributed to the public in Portugal.

 

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