Sustainability governance
Good governance is essential in helping us to run our business responsibly and to meet the ambitious goals in the Unilever Compass.
Sustainability is at the heart of our business
Our commitment to sustainability is embedded through our purpose, vision, business model and strategy – the Unilever Compass (PDF 500.49 KB) – which outlines our five strategic choices for growth and the important role that our sustainability agenda plays in this.
The Compass sets out a range of sustainability commitments against three strategic choices: improve the health of the planet, improve people’s health, confidence and wellbeing, and contribute to a fairer, more socially inclusive world. We believe strong governance is vital if we are to deliver our commitments. We’ve built robust governance mechanisms at all levels of the business to ensure we hold ourselves accountable to them.
This page summarises how we govern sustainability and highlights where more detailed information can be found.
The Board of Unilever
Our Board comprises independent, Non-Executive Directors plus two Executive Directors who are members of the Unilever Leadership Executive – our CEO and our Chief Finance Officer.
Our Board is a diverse one in terms of gender, ethnicity (PDF 15.43 MB) and nationality. Members have expertise (PDF 15.43 MB) that includes wide-ranging board and leadership experience as well as specific skills such as understanding of geopolitics, purposeful business, sustainability, finance, the consumer goods industry, science and technology and digital.
The Board has ultimate responsibility for reviewing, monitoring and guiding the strategy of Unilever, as well as its conduct. Our Board members provide constructive challenge, strategic guidance and specialist advice, bringing their diverse experience to our discussions and decision-making. The Chair leads the Board and is responsible for its effectiveness in directing Unilever, and for ensuring the Directors are equipped with the training needed for their roles.
The Board has overall accountability for the management and guidance of risks and opportunities, including those associated with aspects of our Compass strategy, such as climate change, plastic packaging and ethical behaviour. Our CEO and Executive Board member, Alan Jope, is ultimately responsible for oversight of our sustainability agenda and for delivery of the Unilever Compass sustainability goals, supported by individual Unilever Leadership Executive members and guided by the Board.
Board meetings
The Board attend six scheduled meetings per year. Our Chief Legal Officer & Group Secretary (who is also a ULE member) attends each meeting to support the Board.
Across 2021, the Board discussed progress on the Unilever Compass as well as our Positive Beauty, Clean Future and Future Foods strategies. It also discussed our sustainability plans, our people strategy, plans for workforce engagement and corporate governance.
The Board, supported by the Audit Committee, studied a number of multi-risk scenarios as part of its consideration of risks to the Unilever Group. In 2021 the scenarios modelled looked at the potential impact of reputational damage from not progressing against our plastic packaging commitments and water shortages in key developing markets.
Another important focus in 2021 was climate. Our Climate Transition Action Plan (PDF 10.15 MB) was reviewed by the Board’s Corporate Responsibility Committee at the end of 2020, prior to endorsement by the Board in March 2021. In May 2021, the CTAP was put to shareholders for an advisory vote at our AGM, with over 99% of shareholders voting in favour and so providing a clear mandate to progress our ambitious climate agenda. We published our first report of progress on the CTAP in our 2021 Annual Report, alongside our fourth Task Force on Climate-related Financial Disclosures statement.
Board engagement with stakeholders
Under Section 172 of the UK Companies Act 2006, our Board of Directors must act in the way that they consider, in good faith, would be most likely to promote the success of Unilever. In doing so, they must have regard to stakeholders.
Engagement with employees is one of the ways we ensure our Board is in touch with our business. The Board has agreed that all Non-Executive Directors should take part in this engagement, thereby creating a collective responsibility for bringing employee views into Board discussions.
Board training
The Board Chair is responsible for ensuring members are equipped with the training needed to carry out their duties and all Directors receive a detailed induction on joining the Board. In addition to Board meetings, throughout each year site visits, presentations and knowledge sessions are held on topics such as corporate governance, regulatory developments, investor relations and environmental and social issues.
Find out more
More detail on the role of the Board is included in the Governance of Unilever. The Board’s role in risk management is covered in our Annual Report. The corporate governance section of our Annual Report and website also provide additional detail on our governance, including biographies of Board members.
Board Committees
The Board is supported by four Board Committees which play a critical role in the governance and oversight of our sustainability commitments.
Each of the Committees is chaired by one of our Non-Executive Directors and has a clear remit, as set out in The Governance of Unilever. We publish details of the Committees’ discussions during the year in our Annual Report. After each meeting, Committee Chairs provide feedback on their discussions to the full Board, thereby keeping all Directors informed of progress. Find out more about the role of each Committee in relation to sustainability below.
Corporate Responsibility Committee
Corporate Responsibility CommitteeRemit
A Committee of Non-Executive Directors which oversees Unilever’s conduct as a responsible business, sustainability and our corporate reputation. It provides input on the management of current and emerging sustainability matters and provides independent oversight and guidance on the environmental and social impact of how Unilever conducts its business, including the company’s influence and impact on stakeholders.
Core to the Committee’s remit is governance of progress on Unilever’s sustainability agenda, as set out in the Unilever Compass, including monitoring progress against the Compass sustainability goals. Its remit also includes reviewing our Climate Transition Action Plan with a view to submitting an updated plan for shareholder approval at the AGM every three years, noting any material changes we have made or propose to make.
The Committee reviews our Code of Business Principles and compliance with it to ensure the Code remains fit for purpose as well as tracking compliance with our Responsible Partner Policy (PDF 4.45 MB). It also reviews health and safety strategies and performance through a quarterly scorecard.
In conjunction with the Compensation Committee, the Committee evaluates performance against the sustainability component – the Sustainability Progress Index – of our Performance Share Plan, our long-term incentive plan.
Meetings
The Committee holds four scheduled meetings per year. Our Chief R&D Officer, Chief Sustainability Officer and Chief Business Integrity Officer attend each meeting.
In 2021, the Committee discussed our Unilever Compass sustainability commitments, our Code of Business Principles and third-party compliance (including the EU’s Whistleblower Protection Directive), safety and security, plastic packaging and equity, diversity and inclusion.
It also considered human rights, namely legislation in the UK, EU and US in relation to supply chain transparency and mandatory due diligence, including the deforestation-related proposals in all three jurisdictions. It studied German and broader EU proposals on mandatory human rights and environmental due diligence, governance risks and corporate sustainability reporting.
With the Compensation Committee, in 2021 the Committee scrutinised progress on the KPIs within our Sustainability Progress Index in order to agree its vesting for 2021. The Committee also assessed and agreed new KPIs based on the Unilever Compass for the Sustainability Progress Index from 2022 onwards.
Find out more
Further detail on the Committee’s discussions are published in the Committee’s report for 2021. Our Directors’ Remuneration Report details how our long-term incentive plan operates, including its KPIs, while the rationale behind the KPIs is described in a video.
Compensation Committee
Remit
A committee of Non-Executive Directors which deals with the Remuneration Policy for Directors and the Unilever Leadership Executive, employee incentive plans and workforce pay policies and practices.
The Committee agrees our Remuneration Policy, including our long-term incentive scheme, the Performance Share Plan. In conjunction with the Corporate Responsibility Committee, it agrees performance against the Sustainability Progress Index which is the sustainability performance measure of our Performance Share Plan.
It also approves the Directors’ Remuneration Report in our Annual Report which explains how Unilever’s business performance links to remuneration outcomes.
Meetings
It holds five scheduled meetings per year. The CEO, the Chief People & Transformation Officer, the Global Head of Reward and the General Counsel Executive Remuneration & Employment attend each meeting. The Chief Legal Officer & Group Secretary attends as required.
The Committee consulted shareholders and advisory bodies on Unilever’s new Remuneration Policy prior to its approval by shareholders at the AGM in May 2021. The Policy includes our new long-term incentive plan, the Performance Share Plan and its new metric on competitiveness which measures what percentage of revenue is being generated in areas where we’re gaining market share. Stakeholders requested more detail on the competitiveness measure, as well as on how Sustainability Progress Index targets are calculated, so we published further detail on our website.
In autumn 2021, the Committee chair engaged investors and advisory bodies on how the Remuneration Policy had landed in Unilever and the wider investor community.
With the Corporate Responsibility Committee, the Committee scrutinised progress on the KPIs within the Sustainability Progress Index in order to agree its vesting for 2021. The Committee also assessed and agreed new KPIs based on the Unilever Compass for the Sustainability Progress Index from 2022 onwards.
Find out more
More details of the Committee’s discussions are published in the 2021 Directors' Remuneration Report, including the eight KPIs that comprise the Sustainability Progress Index.
Our Sustainability Progress Index
We’ve built sustainability into our long-term share incentive plan - our Performance Share Plan (PSP). Our global management population is eligible for the PSP: this group spans people from the first rung of management (which we call Work Level 2) up to our most senior work levels, including our CEO. The PSP is a key part of our Remuneration Policy as it aligns our employees’ interests with those of shareholders by focusing on the sustained delivery of high-performance results over the long-term.
PSP performance measures are strategically aligned with our business: 75% of the PSP focuses on financial performance measures while 25% is assessed on our progress on sustainability via the Sustainability Progress Index. We’ve integrated sustainability KPIs into our long-term incentive plan since 2017.
The Sustainability Progress Index is reviewed by two of our Board Committees each year.
Assessing the Sustainability Progress Index
Below is a summary of how we assess our Sustainability Progress Index each year. See our Annual Report for an explanation of the Performance Share Plan.
Eight sustainability KPIs
From 2022, the Sustainability Progress Index comprises eight key performance indicators (KPIs), representing the sustainability pillars of the Unilever Compass.
Each of the KPIs is equally weighted. They have specific annual KPIs that are fixed for three years. These enable the meaningful evaluation of progress against the overarching mid- to long-term Unilever Compass KPI.
Assessed by our Board committees
To determine the Sustainability Progress Index, the Corporate Responsibility Committee and the Compensation Committee annually review a detailed quantitative and qualitative update on performance against each KPI.
They also consider our overall sustainability performance across the strategic actions of the Unilever Compass.
Shares awarded based on performance
This information is then used to recommend an annual performance outcome in the range of 0–200%.
Annual Sustainability Progress Index outcomes are averaged over a three-year period, with the award – in the form of conditional shares – vesting at the end of the three-year cycle. Executive Directors are required to hold these shares for an additional period of two years after vesting.
Audit Committee
Remit
A Committee of Non-Executive Directors which oversees Unilever's approach to risk management, including corporate risks and related mitigation/response plans as well as the integrity of our financial statements and compliance with legal and regulatory requirements.
The Committee reviews our Annual Report and Accounts to ensure it is fair, balanced and understandable. It also reviews significant breaches of the Code of Business Principles as part of its remit to review risk management.
The Committee oversees the qualifications and performance of our external auditors and the independent assurance programme for selected sustainability metrics in the Unilever Compass and goals in our Climate Transition Action Plan. The Committee also regularly reviews upcoming sustainability reporting regulation.
Meetings
The Committee holds seven scheduled meetings per year. Our Chief Auditor attends each meeting. Our Chief Financial Officer, Chief Legal Officer & Group Secretary and our Executive Vice Presidents for Financial Control & Risk Management and Sustainable Business Performance & Reporting attend as required.
The Audit Committee supports the Board in managing risk. In 2021, it reviewed Unilever’s overall approach to risk management and control alongside our risk identification and assessment process. Our principal risks highlight the risks identified as most relevant for our business, which include climate change, plastic packaging and ethical risks.
A key part of the Committee’s monitoring of risk was to review internal audit’s plan for the year - which is focused on Unilever’s corporate risks - and ensure the necessary resources were in place to perform effectively.
The Committee also reviewed quarterly risk and control status reports which included Code of Business Principles cases relating to fraud and financial crimes.
In addition, the Committee continued to review the sustainability assurance provided by PwC and the plan for the assurance of the non-financial metrics in the Unilever Compass and the goals in our Climate Transition Action Plan.
Find out more
The Audit Committee’s report for 2021 details its discussions. In our Annual Report, we explain the Board’s role in managing risk and how it is supported by the Audit Committee. Independent assurance explains our approach and the metrics we assure.
Nominating and Corporate Governance Committee
Remit
A committee of Non-Executive Directors which recommends candidates for Directors, oversees succession planning and ensures Board skills, diversity and independence are maintained.
The Committee oversees corporate governance, including assessing the composition of the Board and succession planning, and evaluation to ensure the Board continues to work effectively. It reviews our Board Diversity Policy each year, and oversees reporting on the Policy and objectives on diversity, including gender and social and ethnic background as well as reviewing Unilever’s practices and procedures on workforce engagement.
Meetings
The Committee holds four scheduled meetings per year. The Chief Legal Officer & Group Secretary attends each meeting; the CEO and Chief People & Transformation Officer attend as required.
The Committee reviewed and considered recommendations on Board diversity during 2021 as well as reviewing the EU proposals for a Corporate Sustainability Reporting Directive and a UK white paper on audit and corporate governance reform.
Find out more
The Committee’s report for 2021 sets out further detail. We’ve summarised the skills required of our Directors in a table in our Annual Report and published the profile we seek for them, including strong experience in corporate social responsibility issues.
Executive management
We have defined clear roles and responsibilities for the executive management team of Unilever – called the Unilever Leadership Executive (ULE) – as set out in The Governance of Unilever.
The Unilever Leadership Executive is responsible for driving our Unilever Compass strategy, working in tandem with our Board to promote the success of the business.
The role of the Unilever Leadership Executive
The Board delegate responsibility for the day-to-day operational leadership of the business including strategy, monitoring of performance and policy to our CEO, while financial strategy is delegated to the CEO and Chief Financial Officer (CFO).
Accountability for delivery
The CEO leads the ULE which monitors implementation and delivery of our Unilever Compass strategy, including its sustainability goals.
To ensure we maintain accountability for delivery of our strategy at the highest level, our ULE members lead the sustainability pillars of the Unilever Compass:
- Chief Business Operations Officer: Climate action; Protect and regenerate nature; Raise living standards; Respect human rights
- Chief R&D Officer: Waste-free world
- Global Nutrition President; Ice Cream President: Positive nutrition
- Beauty & Wellbeing President; Personal Care President: Health and wellbeing
- Chief People & Transformation Officer: Equity, diversity and inclusion; Future of work.
Meetings
Unilever Leadership Executive meetings are held fortnightly, with other leaders from across the business attending as required. Progress on the Unilever Compass overall is tracked in quarterly meetings, with specific Compass topics discussed throughout the year, particularly when new strategies need to be agreed or resources allocated
In 2021, the ULE reviewed Unilever’s approach to risk management prior to discussing it with the Board, concluding that biodiversity has the characteristics of an emerging risk.
During the year, the ULE addressed many urgent issues in the face of Covid-19, such as the health and safety of employees, hybrid working and supply chain resilience. The ULE discussed topics related to our Compass sustainability goals, such as climate change and our Climate Transition Action Plan, our Climate & Nature Fund, plastic packaging and plant-based foods. It scrutinised business integrity (which covers our Code of Business Principles and third-party compliance) and assessed progress on our global health strategy; equity, diversity and inclusion (including supplier diversity); and our roadmap for implementing living wages in our supply chain.
Embedding sustainability into every part of our business
We rely on experts across our business to help us drive better sustainability practices across our operations and value chain. In many cases we have specialist teams within functions whose role it is to promote good practice. For instance, we have dedicated sustainability teams in Finance, R&D, Customer Development, Supply Chain and Business Operations. Many more people have sustainability as a key part of their job.
Our Global Sustainability Team, led by our Chief Sustainability Officer, supports our Unilever-wide sustainability agenda to deliver our Unilever Compass goals. They also drive systemic change across markets through advocacy and partnerships and define innovative social business models for sustainable growth. The team is responsible for co-ordinating quarterly progress reporting on the sustainability commitments in the Unilever Compass to the ULE.
We also have a number of specialist groups who work in tandem with our Global Sustainability Team and provide input on the sustainability elements of the Unilever Compass to support the ULE, our Business Groups and the markets who put our strategy into action.
For example, our Global Diversity Board drives our agenda on equity, diversity and inclusion. Our Procurement Business Integrity Committee provides guidance and direction on difficult and complex situations where remediation, escalation and sanctions are required with respect to sourcing in line with our Responsible Partner Policy. And our Metrics Team defines the scope of our Unilever Compass metrics and the ensures that the methodologies that underpin our metrics are robust.
Using external stakeholder insights
We operate a multi-stakeholder business model, so building relationships with our stakeholders is crucial to our success. We draw on insights from external stakeholders as an integral part of running our business - from our interactions with industry groups, policymakers or NGOs to understand how the world is changing to our People Data Centres which combine social listening and traditional consumer research to track changing consumer sentiment, including on sustainability issues.
We’ve also put in place formal mechanisms to provide independent insights and counsel on sustainability matters.
Unilever Sustainability Advisory Council | |
|---|---|
Role | Our Unilever Sustainability Advisory Council comprises independent external specialists in social and environmental sustainability who guide and critique our strategy. |
Members | The Council is chaired by our Chief R&D Officer and attended by our Chief Procurement Officer and Chief Sustainability Officer. They feed insights from the Council into the business and relevant ULE and Board discussions. Its members are: Dr Githinji Gitahi, Kate Hampton, Katja Iversen, Ricken Patel, Jonathon Porritt, Kavita Prakash-Mani and Dr Danny Sriskandarajah. |
Meetings | At least two meetings a year. In 2021, the Council discussions included Unilever’s approach to COP 15 (biodiversity) and COP 26 (climate), our Climate & Nature Fund, renewable and recycled carbon advocacy, non-financial reporting metrics and our human rights strategy and approach to due diligence. |
Unilever Next Gen Sustainability Council | |
Role | Our Unilever Next Gen Sustainability Council is a collective of young advocates, who are independently connected to broader youth bodies. The Council aims to capture the voice and expectations of young people across key sustainability issues that are critical to the people and planet ambitions of the Unilever Compass. |
Members | Chaired by our Chief Sustainability Officer, who shares perspectives from the Council with the business. Its members are: Swetha Stotra Bhashyam, Grace Gatera, Jichen Liu, Saffran Mihnar and Inés Yábar. |
Meetings | Meetings are held as required. Topics discussed in 2021 included understanding what ‘next generation’ stakeholders want to hear about climate and nature and how we can optimise our advocacy efforts, our plastics packaging communications and events, gender equity and the role of brands in talking about positive mental health. |