Our thinking

What the hell-mann

28 January, 2022

The knives were out at Hellmann’s mayonnaise earlier this month, and not to spread it around. 

Unilever, the consumer goods giant, came under fire from fund manager Terry Smith, who hit out that “a company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot.” 

This isn’t, of course, just about mayonnaise. Smith’s broader point is that Unilever’s focus on sustainability comes at the expense of business success. He claims it’s the cause of Unilever’s weak performance, and the reason why it is underperforming relative to peers. 

And that makes us think it might be him that’s lost the plot, not Unilever. 

He makes no attempt to show why he puts the blame for poor performance at sustainability’s door. And seemingly ignores the notable examples of dubious leadership and business management which are the more likely culprits – the recent failed takeover of GSK’s consumer healthcare division being the most obvious case in point. 

The same thing happened with Danone. Sustainability was used as the scapegoat for poor business performance, despite the fact that other core, structural factors were also at play. 

It’s a bit odd, given that it comes at the time when investment heavyweights notably including BlackRock have emphatically closed the case on the importance of prioritising ESG. 

And it’s all so linear, and one-dimensional, when business is anything but.  

Of course sustainability won’t solve every business problem. But it’s definitely not the cause of all of them either. 

By Alice Railton