Shareholders praise Unilever and Nestlé for breaking ranks with trade associations
Both firms had disclaimers inserted into omnibus proposals from the European Roundtable on Industry
Dozens of companies have reviewed their lobbying practices in recent years after pressure from investors.
Several, including mining giant Rio Tinto, have even ditched trade bodies whose positions on key topics such as climate change are at odds with their own.
But there are few instances in which a company has publicly disavowed requests made by one of their business associations.
Last month, Nestlé and Unilever did just that, and some of their shareholders have welcomed it.
When the European Round Table on Industry (ERT) wrote to the European Commission last month to ask for major reductions to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D), there was a disclaimer on the letter.
It said that Nestlé and Unilever “consider the CSRD and CS3D to address legitimate societal concerns and promote ownership and cooperation along the value chain”.
“In this context, they only support measures that lead to simplification, clarification, avoidance of duplication and a reduction in the overall bureaucratic burden,” the footnote added.
Fellow ERT member L’Oreal expressed the same views, but for CS3D only.
Emma Henningsson, who’s in charge of active ownership at Sweden’s €130bn public pension fund AP7, called the move “very positive”.
AP7 is a shareholder of both firms, and has worked with BNP Paribas Asset Management and the Church of England Pension Board to develop a global standard for responsible lobbying on climate change.
Henningsson says ERT’s letter is the first time she’s seen a trade body publicly note that some of its members oppose its official position.
Unilever and Nestlé are both targets for Climate Action 100+, a massive investor network focused on encouraging key portfolio companies to align with the goals of the Paris Agreement.
British asset manager CCLA is one of the investors responsible for coordinating the group’s engagement with the pair, and its stewardship lead, Tessa Younger, thinks their decision to distance themselves from the ERT could potentially be “very powerful”.
That’s because, she continues, it’s “often assumed that trade bodies represent the views of all their members”.
Unilever and Nestlé have both undertaken lobbying reviews – at the request of shareholders – that required them to identify all the trade bodies they belong to, and evaluate whether they are lobbying in alignment with the two firms’ stated sustainability objectives.
Both Henningsson and Younger believe this process has facilitated the ERT decision.
“Once a company puts it review out in the public domain, setting out what it stands for, there is a responsibility and expectation that they will continue to monitor what those trade associations are doing,” Henningsson says.
Unilever’s most recent review, released in March, was the first to align fully with CA100+’s expectations.
Civil society is also pleased with the firm’s efforts. InfluenceMap has said it’s the only company to demonstrate it was taking action to address misalignment.
This included encouraging ERT “to continue to engage constructively on the [EU] Green Deal,” the think tank noted, when it scored Unilever’s lobbying activities recently.
InfluenceMap also awarded Nestlé a substantially higher mark in its 2024 lobbying assessment (64%) than it did in 2023 (36%) – although it noted it hadn’t identified misalignment between its trade bodies and the goals of the Paris Agreement.
Younger believes firms that regularly undertake lobbying reviews are “better prepared to act fast and provide disclaimers when needed”.
But most are not there yet.
“There is a significant proportion of companies without good oversight of what their trade associations are arguing for, and where their name is being used,” says Henningsson, adding that Unilever and Nestlé are leaders of an improving pack, but that most are still towards the tail.