Why Attracting the Right Investors Could Save Your Company in the Long Run

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Investors are a particularly tough set of customers. It’s easy to try and chase their needs and find you’re dancing to many different tunes, not all in sync. Some investors want quick returns; some demand share buybacks or special dividends; some want you to buy, build, and grow brands, while others ask you to sell businesses to play a numbers game; and index funds want you to perform better than the market. None of those goals are focused on the employees, communities, customers, or any other group that has a stake in the company’s fortunes.

That’s why in 2009, days after becoming CEO of Unilever, I told a meeting of major banks and institutional investors that anyone who wanted the company to stay focused on short-term profits would be better off putting their money elsewhere. Unilever would no longer provide quarterly earnings guidance, but would instead become a net positive company–one that profits and thrives by improving the lives of everyone it impacts–acting in the long-term interests of people and the planet, serving consumers, employees, and communities.

What does that look like in practice? In local communities, Unilever has worked to improve livelihoods and eliminate human rights abuses. The company has built factories in rural areas of China and Africa to create jobs and build long-term relationships with communities in those markets. The company has also run massively successful programs to improve public health, such as its Lifebuoy soap hand washing programs that have reached a billion people, teaching them how to avoid deadly diseases.

For employees, Unilever made its mission clear through consistent communication and offered programs in finding personal purpose (which more than 60,000 employees have now gone through). Younger workers in particular want to work in a place that shares their values. About three-quarters of new employees today come to Unilever specifically because of its sustainability strategy. The company is one of the most in-demand employers in the world.

Unilever also looked at how its own investment portfolio (its pension fund) was being managed and changed the strategy and incentives to promote long-term investing. Unilever issued the first green bond in the industry to support investments in making operations more sustainable. To increase buy-in and knowledge within the financial ranks, I had the CFO represent Unilever on global sustainability partnerships and organizations developing protocols for climate-related financial disclosure.

The path to being net positive is about being consistent across all actions and messaging. It wasn’t enough to just tell investors that Unilever cared about the long-term. We had to show we were serious by the sum of many actions. The first step–stopping quarterly guidance–had an immediate impact by pushing away short-term speculators. But it was consistency across the business that attracted longer-term shareholders. 

Fast forward eight years, and those loyal investors helped fend off a $143 billion hostile takeover from Warren Buffett and 3G, a firm known for its obsession with quick profits. The lesson I learned: Find investors who share your values. One day you’ll need them. Find the full story in my book,Net Positive: How Courageous Com­panies Thrive by Giving More Than They Take.

From the October 2021 issue of Inc. Magazine