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This is a PDF version of the Unilever Annual Report and Accounts 2022 and is an exact
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and Accounts 2022 (the ESEF Format). The Annual Report and Accounts 2022 in ESEF
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Report and Accounts 2022 in ESEF Format is the official version for purposes of the
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Certain sections of the Unilever Annual Report and Accounts 2022 have been audited.
These are on pages 150 to 205, and those parts noted as audited within the Directors’
Remuneration Report on pages 109 to 131.
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Delivering sustainable
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Unilever Annual Report
and Accounts 2022
-
In this report
Strategic Report
About Unilever
Review of the Year
Our Performance
Our Principal Risks
2 Unilever at a glance
4 The Unilever Compass
Strategy for Sustainable
Growth
6 Chair’s statement
8 Chief Executive
Officer’s statement
10 Group Financial Review
12 Business Group Review
12 Beauty & Wellbeing
15 Personal Care
18 Home Care
21 Nutrition
24
Ice Cream
27 Our People & Culture
30 Planet & Society
35 Climate Transition
Action Plan: Annual
Progress Report
42 Task Force on Climate-
related Financial
Disclosures statement
67 Principal risks
67 Risk management
approach
68 Principal risks
76 Viability statement
52 Financial performance
52 Unilever Group
performance
53 Business Group
performance
54 Additional financial
disclosures
60 Non-financial
performance
60
61
Improve the health of
the planet
Improve people’s health,
confidence and
wellbeing
61 Contribute to a fairer
and more socially
inclusive world
62 Additional non-financial
disclosures
Governance Report
Financial Statements
Running a responsible and effective business
Our full financial results and notes for the year
78 Chair's Governance statement
80 Board of Directors
82 Unilever Leadership Executive (ULE)
84 Corporate Governance statement
95 Report of the Nominating and Corporate
Governance Committee
100 Report of the Audit Committee
105 Report of the Corporate Responsibility Committee
109 Directors' Remuneration Report
134 Statement of Directors' responsibilities
135 KPMG LLP's Independent Auditor's Report
150 Consolidated financial statements Unilever Group
154 Notes to the consolidated financial statements
206 Company Accounts Unilever PLC
209 Notes to the Company Accounts Unilever PLC
214 Group Companies
225 Shareholder information – Financial calendar
226 Additional Information for US Listing Purposes
Online
About this Annual Report
You can find more information about Unilever online at
www.unilever.com
For more about our sustainability activities and
performance visit
www.unilever.com/planet-and-society
The Unilever Annual Report and Accounts 2022 (and the
Additional Information for US Listing Purposes) along with
other relevant documents can be downloaded at
www.unilever.com/investors/annual-report-and-
accounts
References to information on websites in this document are
included as an aid to their location and such information
is not incorporated in, and does not form part of, this
document. Any website is included as an inactive textual
link only.
Unilever Annual Report and Accounts 2022
This document is made up of the Strategic Report, the Governance Report, the
Financial Statements and Notes, and Additional Information for US Listing
Purposes. The Unilever Group consists of Unilever PLC (PLC) together with the
companies it controls. The terms ‘Unilever’, the 'Company', the ‘Group’, ‘we’, ‘our’
and ‘us’ refer to the Unilever Group.
Our Strategic Report, pages 1 to 76, contains information about us, how we create
value and how we run our business. It includes our strategy, business model,
market outlook and key performance indicators, as well as our approach to
sustainability and risk. The Strategic Report is only part of the Annual Report and
Accounts 2022. The Strategic Report has been approved by the Board and signed
on its behalf by Maria Varsellona – Chief Legal Officer and Group Secretary.
Our Governance Report, pages 77 to 131, contains detailed corporate governance
information, our Committee reports and how we remunerate our Directors.
Our Financial Statements and Notes are on pages 133 to 213.
Pages 133 to 225 constitute the Unilever Annual Report and Accounts 2022, which
we may also refer to as ‘this Annual Report and Accounts’ throughout this
document.
The Directors’ Report of PLC on pages 2 to 4, 6 to 34, 39 to 42, 62 to 64, 70 to 71, 78
to 108, 110 to 112, 167, 172, 186-192, 195, 204, 224 to 225, 228 and 233 has been
approved by the PLC Board and signed on its behalf by Maria Varsellona – Chief
Legal Officer and Group Secretary.
Pages 226 to 235 are included as Additional Information for US Listing Purposes.
Unilever is one of the world’s largest consumer goods
companies with a portfolio of leading purposeful
brands, an unrivalled presence in future growth
markets, and a determinedly commercial focus as
a sustainable business.
We are creating value for our multiple stakeholders
through the clear investment choices we have made in
our Compass strategy which, along with our step-up in
operational excellence, are improving the consistency
and competitiveness of our performance.
2022 has been a year of significant change for Unilever.
Our new Compass Organisation is designed to make us
faster and simpler, more category-focused, and more
accountable as a team.
This Annual Report tells the story of 2022 through our
five new Business Groups. It is a story of strong growth
as we build towards our vision of demonstrating that
sustainable business delivers winning performance.
2022 financial highlights
Turnover
€60.1bn
2021: €52.4bn
Underlying sales
growth(a)
9.0%
2021:4.5%
Operating margin
17.9%
2021: 16.6%
Underlying
operating margin(a)
16.1%
2021:18.4%
Dividends paid
€4.3bn
2021: €4.5bn
Free cash flow(a)
€5.2bn
2021: €6.4bn
For more details, see our Group Financial Review on pages 10 to 11.
(a) Underlying sales growth, underlying operating margin and free cash flow are non-GAAP measures. For further information about these measures, and the
reasons why we believe they are important for an understanding of the performance of the business, please refer to our commentary on non-GAAP measures
on pages 54 to 59.
-
Unilever at a glance
We are home to 400+ brands – and proud that around
3.4 billion people use our products every day.
How we create value through our business model
Our multi-stakeholder business model recognises the importance of the relationships
and resources that we depend on across our value chain – from the ingredients
we source to the products we sell in over 190 countries.
Shareholders
Our people
Consumers
Customers
Suppliers &
business partners
Planet & society
1 Powered by
our people
Our diverse and talented people
are the heartbeat of Unilever –
when they thrive, our business
thrives. We have created a
high-performance growth
culture which is human,
purposeful and accountable.
2 Cutting-edge
insights
Consumer and customer insights
are the lifeblood of our business.
We use technology and data to
understand how people live, buy
and use our products, giving us
a competitive edge.
3
Impactful
innovations
Our team of passionate
scientists and researchers create
innovations behind the products
and experiences our consumers
love, which in turn drives growth
for our business.
127,000
Employees in around
100 countries
No1
FMCG employer of choice
for graduates and early
career talent in 16 out of
our 20 biggest markets
1.5bn+
Consumer data
touchpoints delivering
300m+ personalised
digital experiences
3m
Consumers engaged
annually through our
engagement platforms
€908m
Spend on Research and
Development
€1.7bn
Incremental turnover
from innovations
2
Unilever Annual Report and Accounts 2022 | Strategic Report – About Unilever
-
4 Resilient supply
4
chain
We source ingredients and raw
materials from over 150 countries.
Working in partnership with our
suppliers is critical to our future
growth and sustainability
performance.
52,000
Suppliers we work with
€41.3bn
Spend on raw materials
and services
5 World-class
5
manufacturing
280
Our factories are the engine
room of the business, where our
products are made – and where
we prioritise above all else safety,
quality and sustainability.
Factories operated
by Unilever(a)
-68%
Reduction in GHG
emissions from energy
and refrigerant use
in our operations
since 2015
6 Agile customer
6
operations
Our customer operations team
coordinates distribution and
logistics to ensure that products
leave our factories and
warehouses, and find their way to
the many millions of customers
who sell them – in-store and
through digital channels.
7
7
Effective and
purposeful
marketing
We invest in marketing and
advertising to make our brands
memorable and appealing.
Our research shows that brands
with purpose, coupled with
product superiority, can unlock
accelerated growth.
500
25m
Logistics warehouses
occupied by Unilever
Customer orders
processed annually
€7.8bn
Spend on Brand and
Marketing Investment
All numbers relate to 2022 reporting period.
(a) We also work with approximately 1,000
14
Unilever brands in the
top 50 most chosen
FMCG brands globally(b)
collaborative third-party manufacturing sites
to meet changing consumer demand
(including 82 dedicated to Unilever).
(b) Based on market penetration and
consumer interactions (Kantar Brand
Footprint report 2022).
Unilever Annual Report and Accounts 2022 | Strategic Report – About Unilever
3
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The Unilever Compass Strategy
for Sustainable Growth
Companies with purpose last
Brands with purpose grow
Our purpose
is to make
ustainable living
commonplace
People with purpose thrive
Our Vision is to deliver
winning performance by
being the global leader
in sustainable business.
Our Financial Framework
Consistent and competitive
growth driving top tier
Total Shareholder Return.
Where to play
Build a high growth portfolio across five Business Groups
Beauty & Wellbeing*
Personal Care
Home Care
Nutrition
Ice Cream
Win with our brands, powered by superior products, innovation and purpose
Win with
differentiated
science &
technology
Improve the health
of the planet
Improve people’s
health, confidence
and wellbeing
Contribute to a
fairer, more socially
inclusive world
Accelerate in key markets
USA, India
and China
Leverage emerging
market strength
Lead in the channels of the future
Accelerate digital
commerce
Win with top
customers
Drive category
value
* Including Prestige Beauty and Health & Wellbeing
Operational Excellence
through the 5 Growth
Fundamentals
Purposeful brands
Improved penetration
Impactful innovation
Design for channel
Fuel for growth
How to win
Global Leader in
sustainable business
Drive climate action
to reach net zero
Reduce plastic as part
of waste-free world
Regenerate nature
and agriculture
Raise living standards
in our value chain
A growth-focused
and purpose-led
organisation and culture
Drive greater category focus
and expertise
Leverage power of
Unilever-wide capabilities
Unlock speed and agility of a
digitally enabled organisation
Be a beacon for equity,
diversity and inclusion
4
Unilever Annual Report and Accounts 2022 | Strategic Report – About Unilever
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Our Compass Organisation
Unilever Corporate Centre
A lean global ‘One Unilever’ team which sets global strategy, provides functional
expertise and sets standards across all Business Groups and Business Units.
Beauty & Wellbeing
Purpose. Science. Desire.
€12.3bn
Turnover
20%
of Unilever
turnover
Personal Care
Asserting our Leadership.
€13.6bn
Turnover
23%
of Unilever
turnover
24%
of Unilever
underlying
operating
profit
28%
of Unilever
underlying
operating
profit
See pages 12-14
Key categories:
Hair Care
Health & Wellbeing
Prestige Beauty
Skin Care
See pages 15-17
Key categories:
Deodorants
Oral Care
Skin Cleansing
Home Care
See pages 18-20
Clean Home. Clean Planet. Clean Future.
Key categories:
€12.4bn
Turnover
21%
of Unilever
turnover
14%
of Unilever
underlying
operating
profit
Fabric Cleaning
Fabric Enhancers
Home & Hygiene
Water & Air
Nutrition
See pages 21-23
A World-class Force for Good in Food.
Key categories:
€13.9bn
Turnover
23%
of Unilever
turnover
25%
of Unilever
underlying
operating
profit
Ice Cream
Happy People, Happy Planet,
Winning Smiles.
€7.9bn
Turnover
13%
of Unilever
turnover
9%
of Unilever
underlying
operating
profit
Dressings
Functional Nutrition
Healthy Snacking
Plant-Based Meat
Scratch Cooking Aids
Tea
See pages 24-26
Key categories:
Ice Cream (in-home
and out-of-home)
Unilever Business Operations
The operational backbone of Unilever which combines our supply chain expertise, technology and enterprise
services to transform the way our business operates and how it is experienced by our customers and consumers.
Business Operations aims to be a powerhouse of excellence in processes, execution and digital capability that enables
our Business Groups to win through cost-efficient, resilient, user-centric and sustainable operations.
Unilever Annual Report and Accounts 2022 | Strategic Report – About Unilever
5
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Chair's statement
Consumer healthcare – another accelerating category – is also
an area of keen interest. Our exchanges at the beginning of
last year with GSK and Pfizer about acquiring their consumer
healthcare arm have been well documented and commented
upon. Investors let it be known that they would not welcome a
move of that size or scale. The Board listened carefully to the
concerns and made clear that we do not intend to pursue any
large-scale acquisitions in the foreseeable future.
Instead, we have continued to follow our strategy of building
Unilever’s presence in consumer healthcare through bolt-on
acquisitions and organic growth. Good progress was made
on both fronts last year. Our Health & Wellbeing business
continued to deliver strong organic growth, but was also
complemented during the year by the acquisition of Nutrafol,
a leading hair wellness brand. Members of the Board were
pleased to meet with the founders of Nutrafol in New York last
summer and were encouraged to hear first-hand about the
exciting potential the brand has for expansion.
Like Prestige Beauty, Health & Wellbeing is now a €1 billion+
business, enjoying double-digit growth. As such, these
two relatively new businesses are making a meaningful
contribution to Unilever’s turnover. They show what can
be achieved in attractive sectors of the market through a
judicious mix of selective acquisitions and good organic
growth. This approach is serving Unilever well and will continue
to guide the Company’s portfolio strategy.
New Compass Organisation
Last year saw a complete redesign of Unilever’s organisational
model. The move away from an increasingly complex matrix
structure to a more agile and accountable model based
around five Business Groups – with responsibility for
developing strategy and delivering results – was strongly
supported by the Board.
This new Compass Organisation represents a major change
to the way the Company operates. It has the potential to
make Unilever a simpler and more transparent business, more
expert in its categories and more responsive to fast-changing
market dynamics.
The speed and professionalism with which such a large-scale
– and potentially unsettling – change was introduced is a
tribute to all those concerned. To have made the change while
keeping the business operating and performing at a time of
huge market volatility adds to the sense of achievement.
While it will take time to fully bed down – and will inevitably
continue to evolve – the Board is confident that the new
organisation provides a strong and enduring base on which
Unilever can move forward. We were pleased to see how well
the new organisation is working in practice during a visit at
the end of last year to South East Asia. Board members spent
time in Singapore, Indonesia and Vietnam, reviewing the
businesses there with the heads of the five regional Business
Units. The increased speed of decision-making – and the
energy this is releasing within the business – was very
apparent.
South East Asia is an important region for Unilever and so
the Board was reassured not only to see how well the new
organisation is working, but also how strongly the region itself
is bouncing back after the challenges of recent years. During
our time in Singapore – one of Unilever’s main strategic hubs
– we also reviewed the global Business Units helping to
support and drive Unilever’s growth. This included Unilever
International, an export-driven business which in just ten years
has become one of the Company’s fastest-growing units,
generating sales of more than one billion euros a year.
Nils Andersen
Chair
Performance
Unilever delivered a very good all-round performance in
2022, among the best in the consumer goods sector. Top-line
growth was strong, in a very challenging macroeconomic
environment, with underlying sales up by 9.0%.
The decision to introduce price increases responsibly, but
early, in the wake of record high input cost inflation proved
to be strategically correct. It enabled the Company both to
protect the overall shape of its performance and continue to
invest in the long-term drivers of growth, including – very
importantly – brand and marketing investment and R&D.
The relatively limited impact of such significant price increases
on the volume of Unilever’s sales is a measure of how well the
Company’s brands are regarded by consumers around the
world. It also reflects the operational excellence shown by the
Company’s supply chain and sales force operations.
On the bottom line, underlying operating profit improved
slightly to €9.7 billion, despite a decline in operating margin
as a result of the very large increases in material inflation,
not all of which could be offset by increased prices and
higher savings.
As part of our commitment to deliver shareholder value, we
announced in 2022 a €3 billion share buyback programme,
to be completed over the course of 2022 and 2023. The first
two tranches were delivered during 2022, worth a total of
€1.5 billion. We also continue to offer shareholders a consistent
and attractive dividend, with a total of €4.3 billion paid out in
dividends in 2022.
The world hasn’t got any easier to navigate since the
challenges of the Covid pandemic and the results for 2022 are
testament to Unilever’s resilience and to the strength and
quality of its brands.
Portfolio transformation
The strategic focus over recent years on Unilever’s core brands,
priority markets and key channels has contributed significantly
to the step-up in performance. The improvement is also a
measure of the actions taken to sharpen Unilever’s portfolio.
Over the last five years, 17% of the Company’s portfolio of
brands has been rotated out of slower growing categories
and into newer and expanding parts of the market.
The completion last year, for example, of the sale of the Tea
business to CVC Partners is helping to transform the growth
profile of Unilever’s Nutrition business, allowing for an even
stronger focus on Scratch Cooking Aids and Dressings, and on
building the Company’s presence further in the fast-growing
area of plant-based foods.
6
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
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Board composition and succession
Looking ahead
In July, we were pleased to welcome to the Board, Nelson Peltz,
whose Trian Partners investment firm is one of Unilever’s top
ten shareholders. Nelson has also joined the Compensation
Committee.
A business figure of international repute, Nelson brings a
wealth of experience to Unilever, particularly in consumer
goods, where he has served on the boards of many of the
sector’s leading companies.
In September, our CEO Alan Jope, announced his intention to
retire from Unilever in 2023 after 38 years with the business,
nearly a third of them spent on the Unilever Leadership
Executive. Alan has given wonderful service and leadership
to Unilever during an exemplary career and the Board has
thoroughly enjoyed working with him.
After an extensive global search, we were delighted to
announce that Hein Schumacher will become the new CEO
of Unilever from 1 July 2023. Hein is currently CEO of Royal
FrieslandCampina, the global dairy and nutrition business.
Since October 2022, Hein has also served as Non-Executive
Director on the Unilever Board, following a search process
that originally began in 2021.
Hein has an excellent track record of delivery in the global
consumer goods industry. He brings exceptional strategic
capabilities, proven operational effectiveness, and strong
experience in both developed and emerging markets. The
Board is looking forward to working with him as CEO as we
work to realise the full potential of Unilever to the benefit
of all our stakeholders.
It is clear that 2023 is going to be another challenging year
for the world economy, with the very real prospect of a global
recession. We don’t know exactly what impact this will have
on consumer spending, but we need to be ready. That means
continuing to price responsibly and expertly, while also being
sure to manage the necessary trade-offs between pricing,
operating margin and competitiveness.
The Company met this challenge well in 2022 and the Board
is confident that Unilever has the resilience to ride out these
inflationary storms and emerge stronger. The priority in 2023
will be to drive organic top-line growth, while continuing to
invest competitively behind the Company’s world-leading
brands. The recent sharpening of the strategy and the changes
to the organisational structure will certainly stand the business
in very good stead.
The extraordinary events of the last few years have presented
enormous challenges in running a business operating in every
corner of the globe. The Board is grateful to the management
team for the very capable way in which they have led the
business through this tumultuous period, and we are full of
admiration for the Company’s 127,000 employees, who –
despite the challenges – have delivered a strong year for
Unilever and its stakeholders.
Section 172 statement
Under Section 172 of the UK Companies Act 2006 (‘Section
172’) directors must act in the way that they consider, in
good faith, would be most likely to promote the success
of their company. In doing so, our Directors must have
regard to stakeholders and the other matters set out in
Section 172. Pages 62 to 63 and 87 comprise our Section
172 statement. Pages 62 to 63 of our Strategic Report
identifies our key stakeholders and provides examples of
how the business engaged them during 2022, with cross
references to the Review of the Year section for more
detail. Page 87 of our Governance Report details how our
Directors have taken steps to understand the needs and
priorities of these stakeholders when setting Unilever’s
strategy and taking decisions concerning the business,
including by direct engagement or via their delegated
committees and forums. The relevance of each
stakeholder group may vary depending on the matter
at hand.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
7
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Chief Executive Officer's statement
Importantly, growth was broad-based across our five Business
Groups. It was driven by a strong performance from our
biggest brands. With the addition last year of Lifebuoy and
Comfort, we now have 14 brands with a turnover of more than
one billion euros. Together these brands grew 10.9% last year
and now represent a healthy 53% of Unilever’s business.
We also benefited from our strong presence in emerging
markets, which experienced a resurgence after the challenges
of recent years. Although some markets, like Indonesia,
remained under pressure and China continued to be held
back by prolonged Covid lockdowns, in aggregate our
emerging market businesses grew 11.2%. This included strong
performances in the Unilever heartlands of South Asia, South
East Asia, and Latin America.
On profitability, despite the huge increase in our total costs
– only three-quarters of which was recovered through pricing –
we delivered an underlying operating margin of 16.1%, in line
with our guidance. Our absolute underlying profit was up
slightly, to €9.7 billion. Free cash flow was €5.2 billion – a very
robust performance in the circumstances.
Q. As you look back, what were you most
encouraged about in 2022 and what didn’t go as
well as you would have hoped?
We delivered a strong set of results in 2022, but it is the quality
– and consistency – of our performance that gives most cause
for encouragement, and in particular the extent to which it
reflects our strategic choices. Under the Unilever Compass
for Sustainable Growth (pages 4 to 5), we have set out the
categories, brands, markets and channels that are key to
Unilever’s success and which we are prioritising for investment
and growth.
In each case, we are making real headway. For one, we
have a stronger, sharper portfolio. Recent acquisitions and
disposals have helped to position Unilever more effectively
in faster-growing parts of the market, including in Prestige
Beauty and Health & Wellbeing. Our top brands are in great
shape, growing well above the Unilever average and at rates
not seen for many years. Our three biggest markets – the US,
India and China – performed well in very different market
conditions. And under our channel strategy, we are capturing
more than our share of the explosion in digital commerce,
which now represents 15% of Unilever’s business and grew last
year by 23%. In short, the Unilever Compass for Sustainable
Growth is proving to be a winning strategy, one that is backed
up, operationally, by a considerable step-up in the quality of
our execution in the marketplace.
In terms of what could have gone better, the leaking of private
exchanges with GSK and Pfizer about a potential acquisition of
their consumer healthcare business perturbed many investors,
who questioned the size and timing of a deal. Even though we
moved on quickly from the episode – ruling out large-scale
acquisitions for the foreseeable future – we recognise that
rebuilding confidence among shareholders takes time. We are
committed to doing that and have engaged extensively with
investors over the last year on how we intend to drive value
through changes to our portfolio and organisation, as well as
through an increased focus on operational execution.
Q. Last year saw the revamping of Unilever’s
organisational model. What impact do you
expect the new Compass Organisation to have
on business performance?
The scale of the change introduced last year is hard to
overstate. This was the biggest shake-up in Unilever’s way of
operating for many years. It was driven by the recognition that
Alan Jope
Chief Executive Officer
Q. 2022 was a very volatile year for the world
economy. How did this impact Unilever’s
business?
I would characterise 2022 as another volatile year, following
two extraordinary years in 2020 and 2021. Indeed, it was
instructive to see one renowned dictionary, Collins, declare
‘permacrisis’ to be word of the year in 2022, defined as ‘an
extended period of instability and insecurity’.
Certainly, the evidence of instability was all around us.
Lockdowns arising from the Covid pandemic continued to
cast a pall over parts of the world, notably China, home to
Unilever’s third-largest business. The damage and disruption
from the effects of climate change reached new levels.
According to one report, 10 climate-related disasters each
caused more than $3 billion of damage. And the Russian
government’s brutal and senseless invasion of Ukraine not
only brought war to Europe – and untold suffering to the
people of Ukraine – but also amplified an emerging global
energy crisis.
The most obvious – and damaging – economic consequence
of these events for Unilever was soaring material costs, stoking
inflation to levels not seen since the 1980s. Unilever’s own
material cost inflation reached €4.3 billion in 2022 – more than
twenty times what we would normally expect to see. At a time
when consumers are under huge strain, increasing prices to
cover such a large spike in costs needs to be done sensitively,
and responsibly. Pricing also needs to be complemented with
higher levels of productivity savings and efficiencies, thereby
protecting the Company’s ability to invest in growth. Despite
the uncertainties of the last year, I do believe we struck the
right balance when it came to managing pricing, savings,
and investment.
Q. Given this backdrop, how do you assess the
Group’s performance in 2022?
Overall, it was a strong performance. Growth was our number
one priority and we delivered Unilever’s fastest rate of growth
for many years, with underlying sales up 9.0%. Although this
was driven by strong pricing action – with price growth of 11.3%
– the impact on volume growth was modest (down 2.1%). This
speaks to the strength of our brands, as well as to the quality
of our execution in the markets, something we have worked
hard to step-up over recent years.
Our strong underlying performance, combined with the impact
of currency movements (+6.2%), meant Unilever’s turnover was
up by 14.5%, crossing €60 billion for the first time.
8
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
-
competing in today’s fast-paced and fragmented marketplace
– where consumers have more choice and higher expectations
– demands greater levels of category expertise and
responsiveness.
Our five Business Groups are the centrepiece of the new
organisation. They are: Beauty & Wellbeing, Personal Care,
Home Care, Nutrition, and Ice Cream. These are each sizeable
businesses, catering to distinct consumer and customer needs
and operating in very different channels. The Business Groups
have the freedom to set their own strategies and allocate
resources, bringing new levels of speed and focus to the way
Unilever operates.
Crucially, the model is also founded on leveraging the power
and scale of ‘One Unilever’ through our highly skilled Unilever
Business Operations team – the systems backbone of the
Company – as well as through the expertise provided by a lean
Corporate Centre.
It is still early days. We are a few months into a transformation
that will take place over two years. However, there is a lot
of enthusiasm for the changes among our increasingly
empowered teams. There are also many examples (featured in
other parts of this report) of faster and more effective decision-
taking. We are also delighted that the business performed very
well in the quarters leading up to, and immediately after, the
launch of the new model on July 1 2022.
In short, the new Compass Organisation represents a modern,
fit-for-purpose operating model that will enable Unilever to
compete even more effectively in the years ahead. Moreover,
by structuring the business around five Business Groups – each
with the potential to grow above Unilever’s historic average –
we are confident that the new organisation can help to
accelerate Unilever’s rate of growth.
Q. How are you progressing towards your
vision of making Unilever the global leader
in sustainable business and demonstrating
how this drives winning performance?
Our commitment to sustainability comes with an unwavering
determination that it contributes to strong value-creation.
It was good to see a number of leading surveys rank Unilever
as the global leader in sustainability again last year, most
notably the GlobeScan SustainAbility Leaders Survey,
the largest of its kind. We were also pleased to top the
Responsibility 100 Index, a considered assessment of how
FTSE 100 companies are living up to their sustainability
commitments.
However, while these surveys cement Unilever’s reputation as
a leader in sustainability, the real test comes in being able to
commercialise the investments we have made and show that
sustainable business is a pathway to better performance.
The business case relies on being able to demonstrate four
things – that sustainable business drives growth, reduces cost,
lessens risk and acts as a magnet for talent. On each of these
dimensions, there is mounting evidence to support the case:
■ On growth, our own experience confirms that purpose is
a catalyst for growth when it builds on the prerequisites
of great product performance and good value. The
performance of some of our largest and most purposeful
brands, such as Hellmann’s, OMO and Rexona which all
grew double-digit in 2022, supports this.
■ On cost, while we often have to invest to drive the transition
to a sustainable business, cost efficiencies are increasingly
visible. Since 2008, we have avoided costs of around
€1.5 billion from energy and water efficiency measures
in our factories.
■ On risk, for a business whose operations are reliant on water
– and where nearly 40% of manufacturing sites are in water-
stressed areas – it makes business sense to have water
stewardship programmes in the most affected areas, like
India, where 1.9 trillion litres of water have already been
conserved.
■ And, finally, on talent, internal surveys show that our
commitment to purposeful business is a key factor in why
high-performing people stay with the Company. It also
helps to explain why we are the industry employer of choice
in 16 of our top 20 markets.
To strengthen the business case further and provide greater
focus to our sustainability efforts, we have called out four
areas that will define our corporate priorities in the period
ahead: accelerated action on climate change; reducing our
plastic footprint; regenerating nature and agriculture; and
raising living standards in our value chain, including through
the implementation of a living wage. See pages 32 to 41 for
further details of our progress.
While increasing numbers of people acknowledge the
correlation between sustainable business and improved
performance, some are yet to be convinced. The onus remains
firmly on us to go on making the case and demonstrating the
connection.
Q. Looking ahead, how do you assess the
external trading environment and what are
your key priorities for the business in 2023?
Unfortunately, we expect the lack of macroeconomic stability
to continue into 2023, and while inflationary pressures
are likely to ease later in the year, inflation will remain
at historically high levels for some time to come, with all
the attendant consequences for consumer confidence
and spending.
We are not daunted by this. As we demonstrated last year,
Unilever is a resilient business, well versed to operating in
volatile and high inflation markets. We have a clear set of
priorities and objectives to guide us.
Growth will be our number one priority, driven by investments
in the key elements of Unilever’s compounding growth model
– brand support, R&D and capital expenditure. With cost
pressures remaining at historically high levels, our focus will
be on striking the right balance of price increases and savings
delivery, commensurate with protecting our volumes and
improving Unilever’s competitiveness.
We will go on navigating these challenging conditions while
putting in place the strategic, operational and organisational
pillars necessary for long-term success and value creation.
We had a strong end to last year and are firmly fixed on
carrying that momentum into 2023. Despite the tough
environment, we are cautiously optimistic. It is an optimism
borne of the incredible efforts again last year of Unilever’s
dedicated and hard-working employees, as well as the
millions more who make up our extended value chain, who it
has been the greatest honour to lead and work alongside.
From a personal perspective, in my remaining time with the
Company, I am determined to see through the important
changes we have been making to Unilever, and which –
increasingly – we see reflected in the Company’s performance.
I will continue to work tirelessly to leave the business in good
shape for my successor, Hein Schumacher, who I am confident
will take Unilever to new heights in the years ahead.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
9
-
Group Financial Review
Strong sales growth and continued progress against strategy.
The operating environment in 2022 was challenging from
a geopolitical standpoint and saw record levels of inflation.
We continued to serve consumers in these challenging times
with our focus on operational excellence. We also rewired
the organisation into a simpler, more category-focused
operating model with sharper domain expertise and end-to
-end accountability across our newly created five Business
Groups – Beauty & Wellbeing, Personal Care, Home Care,
Nutrition and Ice Cream.
Growth and margins
Against this backdrop, the Group generated turnover of
€60.1 billion, operating profit of €10.8 billion, net profit of
€8.3 billion and free cash flow of €5.3 billion during the year.
Turnover increased 14.5% while underlying sales growth was
9.0%. There was a negative impact of 1.0% from acquisitions
and disposals and a positive currency impact of 6.2% driven
by strengthening of currencies in our key markets such as the
US, Brazil, India and China. Growth was broad-based across
each of our five Business Groups.
Input cost inflation continued to accelerate and reached
record levels in 2022. We stepped up our pricing action
decisively, delivering underlying price growth of 11.3%, the
highest in the past 10 years. This had, as expected, some
negative impact on volumes, with underlying volume growth
declining by 2.1%.
Our one billion euro plus brands, accounting for 53% of Group
turnover, delivered underlying sales growth of 10.9% (see page
11). Our digital commerce(a) sales footprint continues to grow
and now represents 15% of our overall sales. The US and India,
two of our key growth markets, grew at 8.0% and 15.6%
respectively. China declined by 1.3% as it was affected by
pandemic-related restrictions.
In emerging markets, underlying sales grew by 11.2%, with
a 13.5% contribution from price and volumes down by 2.0%.
South Asia grew strongly through both price and volume.
High inflation in Latin America led to high pricing action and
volume contraction. China declined slightly as it was affected
by pandemic-related restrictions. South East Asia achieved
double-digit price growth with flat volumes. Turkey delivered
high single-digit volume growth in a very inflationary
environment. Developed markets underlying sales grew by
5.9%, with 8.4% from price and (2.3)% from volumes. Volumes
declined in Europe and North America in the wake of the
pricing action. North America also faced service issues due
to labour shortages across factories.
2022 saw a step-up in growth
underpinned by pricing agility,
disciplined capital allocation
and a more category-focused
and accountable organisation.
Graeme Pitkethly
Chief Financial Officer
Operating profit was €10.8 billion which included €2.3 billion
of profit from the sale of our Tea business(b) and €1.2 billion
of other non-underlying items, the most significant being
restructuring costs of €0.8 billion including costs related to
the setup of the new organisation structure.
Underlying operating profit was €9.7 billion, up 0.5% versus the
prior year. Underlying operating margin decreased by 230bps.
Gross margin decreased by 210bps reflecting the significant
inflation in raw material, packaging, processing and
distribution costs globally. We continued to invest behind our
brands with a step-up in brand and marketing investment of
€0.5 billion in constant exchange rates, contributing 10bps to
underlying operating margin. Overheads increased by 30bps
largely due to investments in capabilities to drive growth and
increased scale of our Prestige Beauty and Health & Wellbeing
businesses.
Cash, capital allocation and earnings
We generated free cash flow of €5.2 billion, including
€0.3 billion of tax paid relating to the separation of the Tea
business. This represents cash conversion of 97%.
We announced a share buyback programme of €3 billion to be
completed over 2022-23. We completed the first two tranches
during the year and repurchased shares worth €1.5 billion.
Dividend payments were maintained in line with prior year
at €4.3 billion.
Diluted earnings per share were €2.99, a 29% increase versus
prior year. Excluding the impact of the gain on disposal of
our Tea business and other non-underlying items, underlying
earnings per share were €2.57, a reduction of 2.1% versus the
prior year. The reduction was driven by higher finance cost on
the back of increasing interest rates and a higher tax charge
due to country mix and other one-offs. This was partially offset
by a reduction in number of shares as a result of the share
buy-back programme.
Portfolio reshaping
We continued on our journey of pivoting the portfolio towards
higher growth businesses. On 1 July 2022, we completed the
sale of our global Tea business to CVC Capital Partners Fund
VIII for €4.5 billion on a cash-free, debt-free basis. Our recent
acquisitions, Paula’s Choice and Nutrafol, which we acquired
in 2021 and 2022 respectively, stepped up our presence in the
high growth spaces of Prestige Beauty and Health & Wellbeing.
More details on acquisitions and disposals are in note 21 on
pages 198 to 201.
Looking ahead
We have confidence that our strategic priorities and our new
simpler category-focused organisation position us well to
deliver sustainable long-term growth and shareholder value.
(a) Digital commerce sales are defined as online sales made by Unilever to our
consumers or customers either directly or through platforms as well as an
estimate of our brands' sales through our customers' own websites.
(b) Excluding our Tea business in India, Nepal and Indonesia and our interests in
the Pepsi Lipton ready-to-drink Tea joint ventures and associated distribution
businesses.
10
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
-
Unilever Group performance highlights
Turnover
Underlying sales growth
€60.1bn
€50.7bn
€52.4bn
% Underlying sales growth
■ Underlying price growth
■ Underlying volume growth
9.0%
€0
2020
2021
2022
0% -
-
4.5%
0.3%
1.9% •
--
1.6% •
2020
2022
-2.1%
2021
1.6%
Contribution of our €1bn+ brands
Dove
-
✓ 1\CJMO
Rexona
@I
~ ©)
WALL'S
RXE
-
.
~-
Operating
margin
Underlying
operating margin
Free cash flow
Diluted earnings
per share
10.9%
Underlying sales
growth
53%
of Unilever
turnover
Underlying
earnings per
share
17.9%
16.1%
€5.2bn
€2.99
€2.57
2021: 16.6%
2021: 18.6%
2021: €6.4bn
2021: €2.32
2021: €2.62
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
11
Business Group Review: Beauty & Wellbeing
Beauty & Wellbeing
We are a global player in the fast-growing beauty, health and
wellbeing market. Our Business Group is home to global brands
like Dove and Vaseline, as well as our Prestige Beauty and Health
& Wellbeing brands which include Paula's Choice and Liquid I.V.
Highlights
Our Hair Care and Skin Care
categories delivered price-led
growth with modest decline
in volumes.
Health & Wellbeing and Prestige
Beauty grew double-digit.
Continued focus on scaling
superior science and technology
through our brands.
Acquired a majority stake
in Nutrafol, building on our
expertise in beauty and hair.
Beauty & Wellbeing performance
Turnover growth
Turnover
Operating margin
€12.3bn
2022
20.8%
2021
-
2020 -
2022
2021
2020
17.6%
21.1%
19.2%
Underlying sales growth
Underlying operating margin
2022 -
2021 -
2020 •
2022
2021
2020
18.7%
22.1%
20.4%
12
Unilever Annual Report and Accounts 2022 | Strategic Report Review of the Year
–
Business Group Review: Beauty & Wellbeing
Purpose. Science. Desire.
Beauty & Wellbeing represents 20% of Unilever’s total
turnover and 24% of its underlying operating profit. We
are focused on delivering high growth across four key
categories and investing in portfolio transformation. We
have a strong Hair Care portfolio which is contesting for
global leadership and our Skin Care portfolio is particularly
strong in Asia. Our newest categories are Prestige Beauty
and Health & Wellbeing, both of which have a strong
presence in the US with potential for global expansion.
Our Business Group strategy is inspired by a simple but
powerful mantra: ‘Purpose. Science. Desire.’ This means
creating purposeful and meaningful brands that positively
impact people and planet, using cutting-edge science
and technology for superior products, and increasing the
desirability of our brands to make them relevant and timeless.
We believe that the combination of all three will help us
unlock consistent growth and competitiveness.
Several industry trends are informing our strategy including
the demand for authenticity and inclusive beauty, consumers
continued search for science-backed hero products that
deliver transformational results, and the blurring of 'beauty'
and 'wellbeing'. All of these trends drive premiumisation and
make the economics of digital commerce and specialist
channels attractive.
Growing our global brands
Our core global Hair Care and Skin Care brands, which
include Dove, Vaseline, Sunsilk, CLEAR, TRESemmé, Pond's
and Glow & Lovely, make up half of our turnover and are key
to accelerating value creation. We are focused on growing
these brands by channelling investment to our most important
markets.
This year we launched several new premium lines, supported
by superior science and technology, and we are now scaling
these leading technologies through our brands. Dove Hair
Therapy, for example, is now available in multiple markets
globally and includes patented Fibre Shield Advance Repair
technology that delivers superior conditioning, surface repair
and protection. And our Vaseline brand's Gluta-Hya range,
which includes day and night protect and repair variants, has
been successful in a number of South East Asian markets.
We are working closely with our retail partners to strengthen
our strategic category partnerships. For example, in the US we
have been selected as a Walmart ‘Category Captain’ across
several Hair Care subcategories in order to help accelerate
their overall category growth.
The new Compass Organisation has empowered our Business
Group to make strategic choices which improve growth and
profitability of our brands. For example, we have been able
to remove cost from the business by reducing more than
200 fragrances used across our shampoos.
-
In 2022, we invested in our
fastest-growing brands and
markets, setting a strong
foundation for us to deliver
consistent growth ahead of
the market in four categories,
while shifting our portfolio
into premium products and
fast-growing channels.
ke Faber
Fernando Fernandez
President, Beauty & Wellbeing
Scaling Prestige Beauty and Health & Wellbeing
Another key part of our transformation is scaling our Prestige
Beauty and Health & Wellbeing categories which include many
of our recently acquired businesses – the result of a disciplined
and selective approach to capital allocation. Our Prestige
Beauty brands contributed €1.2 billion in turnover in 2022. The
Unilever Prestige Beauty skincare and colour cosmetics
portfolio in the US has been growing at twice the market rate.
Digital commerce has been growing strongly, accounting for
about half of all Prestige Beauty portfolio sales. Our Prestige
Beauty business in China grew strongly and is now our third-
biggest Prestige Beauty market, with brands such as Hourglass
performing well thanks to its launch in specialised beauty
retailer, Sephora.
Paula’s Choice continued its growth in direct-to-consumer
channels, building on its successful launch into Sephora last
year. Meanwhile, our Japanese rituals skin care brand Tatcha
continued its expansion into new markets including the UK.
Health & Wellbeing is a key growth space of the future,
as consumers increasingly turn to vitamins, minerals and
supplements (VMS). Our lifestyle-led, science-driven Health
& Wellbeing brands contributed €1.3 billion in turnover. Liquid
I.V. is our biggest Health & Wellbeing brand and the number
one powdered hydration brand in the US. It continues to grow
and has quadrupled in size since acquisition, thanks to strong
retail partnerships and a step-up in marketing.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
13
- Business Group Review: Beauty & Wellbeing
OLLY also expanded its range in 2022 with new gut-friendly
products, such as Fiber Gummy Rings and Keep it Movin'. In
2022, we acquired a majority stake in Nutrafol, a premium
brand which offers a range of clinically tested, physician-
formulated products designed to address thinning hair and
compromised hair health for women and men. We are well
placed to add value to this business, building on our expertise
in beauty and hair.
Leading on purpose
Our consumers want brands that not only deliver great results,
but that also promote inclusive beauty, healthy lifestyles and
speak to their personal identities. Our biggest brand Dove has
been driving a pioneering purpose agenda for a number of
years – read more about Dove on page 17. Vaseline also has a
long-term commitment to providing access to skin health care.
This year, Vaseline created the award-winning 'See My Skin'
database, in partnership with Hued and dermatologists of
colour who understand melanin-rich skin care needs.
Our other brands are continuing to place purpose and
sustainability at the core of their propositions, often guided
by their original founder’s social mission. Dermalogica, for
example, is providing skills-based training, education and
scholarships to maximise the growth potential of the
professional skin therapists who work with the brand. And
Shea Moisture – a vocal advocate for advancing economic
equity through supporting Black entrepreneurship – continues
to invest in securing a sustainable supply of organic shea
butter, working with cooperatives in West Africa which
empower women and their families. Read more about the
work of Shea Moisture in its 'Wash, Wealth, Repeat' 2022
Impact Report.
Performance in 2022
Turnover increased by 20.8%. Underlying sales growth was
7.8%. There was a net positive impact of 3.7% from acquisitions
and disposals driven by Paula's Choice and Nutrafol, and a
favourable currency impact of 8.1% driven by the strengthening
of currencies in key markets such as India, China and the US.
Our Hair Care and Skin Care categories delivered price-led
growth with modest decline in volumes. Growth was
competitive supported by a continued step-up in brand and
marketing investments. Both Health & Wellbeing and Prestige
Beauty grew double-digit. Health & Wellbeing’s growth was
propelled by Liquid I.V., on the back of increased distribution
and awareness. Prestige Beauty delivered another year of
consistent and competitive growth despite a shift from digital
commerce to bricks and mortar in 2022.
Emerging markets led growth through pricing with a slight
volume decline. Latin America and South Asia grew double-
digit. North Asia declined marginally driven by the Covid
lockdowns in China, which ended in December 2022.
Developed markets grew single-digit with North America
leading the growth driven by premium portfolio and digital
commerce. Europe grew modestly through price, while
volumes declined as the competition increased in Hair Care.
Operating profit was €2.2 billion, which was flat compared
to the prior year despite record high inflation and a step-up in
brand and marketing investment. This was driven by a focus on
savings and positive mix as the contribution of gross margin-
accretive Prestige Beauty portfolio increased. Non-underlying
items were €138 million, mostly driven by restructuring spends.
Underlying operating profit increased slightly to €2.3 billion.
€1.2bn
Turnover from Prestige Beauty brands.
14
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Business Group Review: Personal Care
Personal Care
We are one of the world's leading Personal Care businesses by
turnover, with a portfolio of strong global brands such as Dove,
Rexona, Lux and Pepsodent that deliver personal hygiene, self-care
and confidence to consumers all over the world.
Highlights
Skin Cleansing grew high single-
digit with strong pricing offset by
volume decline.
Deodorants held volumes despite
robust pricing, delivering double-
digit growth.
Oral care grew high single-digit
driven by pricing.
Stepped up innovation execution,
focusing on our biggest global
brands.
Personal Care performance
Turnover
Turnover growth
Operating margin
€13.6bn
15.9%
2022
2021
2020
-2.3% I
-0.3% I
2022
2021
2020
16.6%
19.9%
21 .3%
Underlying sales growth
Underlying operating margin
2021
2022 -
2020 •
I 0.3%
2022
2021
2020
19.6%
21 .3%
22.7%
Unilever Annual Report and Accounts 2022 | Strategic Report Review of the Year
–
15
- Business Group Review: Personal Care
Asserting our Leadership.
Growing with our customers
The biggest channels for our Personal Care business are
hypermarkets and supermarkets in developed markets, and
smaller proximity stores in emerging markets which serve local
neighbourhoods. We partner with our key customers to create
category growth opportunities through these channels. Dove,
for instance, has been working with retailers to commercialise
its purpose agenda, bringing its pioneering work on self-
esteem and inclusion into stores and online.
Sales through digital commerce grew 21.7% and accounted
for 12.6% of Personal Care turnover. China is our biggest
digital commerce business with 52% of sales through digital
commerce platforms and video-sharing apps – driven by
a focus on our premium Skin Cleansing brands, Dove and Lux.
Personal Care is a large and
attractive market, in which we
hold strong leading positions
with some of the most powerful
brands in the industry.
Fabian Garcia
President, Personal Care
Personal Care represents 23% of Unilever’s total turnover
and 28% of underlying operating profit. We are organised
to deliver growth through three key categories and seven
core brands, which represent the majority of Personal
Care's turnover. We have global market-leading positions
in Skin Cleansing and Deodorants, and in Oral Care we are
number four globally.
Consumers are now looking for better defences against
lifestyle and environment challenges as well as products
which offer additional functional benefits – such as enhanced
protection against odour and wetness, body hygiene and
care, and protection against tooth decay. Our Personal Care
strategy harnesses our world-class innovation capabilities
to meet these needs, aiming to deliver superior products
and experiences, which are accessible to the mass
consumer market.
Our new structure enables us to take decisive actions to unlock
funds which are reinvested into the business for profitable
growth. For example, we have significantly streamlined how
we work with collaborative third-party manufacturers.
Making our portfolio more premium
Innovation is key to growing our category leadership position
and underpins our approach to premiumisation. This year,
we stepped up our innovation execution, focusing on our
biggest global brands. Rexona is an example of our innovation
and epitomises this approach. Following a successful launch
last year, its patented 72-hour non-stop sweat and odour
protection deodorant – the first of its kind – is now available
in 46 markets thanks to a concerted marketing campaign
emphasising product superiority. This helped the brand grow
double-digit in 2022.
We see a big growth opportunity in the area of beauty
enhancing products with the wide availability of cutting-edge
beauty ingredients and crossover of skincare regimes into
daily personal care routines. We are well placed to lead in
this trend with our brands and through products such as Dove
Even Tone antiperspirant deodorant which offers 48-hour
sweat and odour protection, as well as helping to restore
underarm skin to its natural tone.
We believe Skin Cleansing has growth potential in both
developed and emerging markets – powered by our largest
brands such as Dove, which relaunched Dove Body Wash with
microbiome nutrient serum. In India, our focus this year has
been on strengthening our premium Lux range – such as soap
bars for glowing skin, enriched with vitamin E and jasmine
extract. We are also premiumising our Skin Cleansing portfolio
in China through liquid formats such as the relaunched
Lux Botanicals Body Wash, offering 24-hour long-lasting
fragrance, as well as self-foaming body cleansers and
bath products.
16
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Business Group Review: Personal Care
-
Making a positive impact
Performance in 2022
Our biggest brands combine product superiority and strong
purpose agendas with high consumer appeal. Lifebuoy
is one of several brands which has a long track record of
improving health and wellbeing through large-scale targeted
interventions. In 2022, it reached 647 million people through
powerful TV commercials that are proven to help improve
hand hygiene behaviour. These complement Lifebuoy’s long-
standing behaviour-change programmes that are reaching
children and mothers at scale in around 30 countries. Lifebuoy
now also gives consumers in Asia access to free consultations
with doctors and health advice via digital telehealth apps
on their smartphones.
Pepsodent has a long-term commitment to promoting
toothbrushing. This expanded in 2022 with the launch of its
teledentistry initiative in Indonesia and Vietnam, offering
access to free dental advice and dentist consultations via
mobile. Meanwhile, our Rexona brand's Breaking Limits
programme is taking an inclusive approach to sport and
physical activity to build young people’s confidence to
move more. It is now live in five of our key markets.
For nearly two decades, Dove has been providing pioneering
body confidence programmes for young people around the
world that have been proven to have a positive impact on
self-esteem. Dove is now using digital channels to expand its
reach and this year launched the Real Virtual Beauty Coalition
to encourage developers to create a healthier, more diverse
representation of women and girls in video games.
We are also addressing a number of important issues as part
of Unilever's wider environmental agenda – including plastic
packaging (pages 32 to 33), climate change (page 37),
sustainable palm oil (page 32), and protecting and
regenerating nature (page 32).
Turnover increased by 15.9%. Underlying sales growth was
7.9%. There was a favourable currency impact of 7.4% driven
by the strengthening of currencies in key markets such as the
US, Brazil, India and China.
Skin Cleansing grew high single-digit with strong pricing offset
by volume decline. Growth was broad-based across markets
and brands, further strengthening market leadership.
Deodorants held volumes despite robust pricing, delivering
double-digit growth, with continued premiumisation and
higher brand and marketing investment. Oral care grew high
single-digit driven by pricing. Elida Beauty declined volumes
in the face of pricing action and supply constraints. Dollar
Shave Club, whilst marginally profitable, continued to decline
in a competitive market.
Emerging markets grew double-digit on the back of decisive
pricing action, with competitors now catching up. In developed
markets, North America grew mid-single-digit with declining
volumes, despite service challenges as multiple resilience
actions such as alternative sourcing and factory efficiency
enhancements were rolled out at speed. Europe grew by
mid-single-digit driven by pricing, with volumes declining
as consumers were hit hard by very high inflation levels.
Operating profit was €2.3 billion, a decrease of 3.1% compared
to the prior year. Non-underlying items were €415 million,
primarily driven by restructuring costs and a €192 million
impairment related to Dollar Shave Club. Underlying operating
profit was €2.7 billion, an increase of 6.9% despite extreme
inflation, through savings and mix benefit as the margin-
accretive Deodorants business increased its contribution.
647m
People reached by Lifebuoy in 2022 through
TV commercials proven to help improve hand
hygiene behaviour.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
17
Business Group Review: Home Care
Home Care
We are a global business with leading household cleaning and
laundry brands such as OMO*, Sunlight, Comfort and Domestos.
Our aim is to offer products that are superior, sustainable and
great value.
Highlights
Fabric Cleaning saw double-digit
competitive growth, driven by
pricing which was slightly offset
by volume decline.
Fabric Enhancers grew high single-
digit led by price with some volume
decline.
Home & Hygiene grew by low
single-digit with high pricing offset
by volume decline.
Our innovation programme Clean
Future continued to inspire winning
innovations to the mass market.
Home Care performance
Turnover
Turnover growth
Operating margin
€12.4bn
2022
17.3%
2021
, 1.1%
2020 -3.4% .
2022 -
2021
-
2020 -
Underlying sales growth
Underlying operating margin
2022 -2021 •
2020 •
2022 -2021 -2020 -
* Also known as Dirt Is Good, Persil and Skip.
18
Unilever Annual Report and Accounts 2022 | Strategic Report Review of the Year
–
Business Group Review: Home Care
Clean Home. Clean Planet.
Clean Future.
Home Care represents 21% of Unilever’s total turnover and
14% of underlying operating profit. We are organised to
deliver growth and margin across four key categories: Fabric
Cleaning, Fabric Enhancers, Home & Hygiene and Water &
Air. We have a portfolio of strong global brands, a global
geographical footprint and two years of consecutive market
share growth. Our strength is in emerging markets where we
lead the industry through market development.
We see potential for our portfolio in our key emerging markets
such as India, Brazil and China, where urbanisation is driving
demand for household products. In Europe, we continue to
innovate premium formats such as laundry and dishwasher
capsules to meet evolving consumer needs. Clean Future is
a critical part of our growth strategy – guiding our approach
to innovation, product superiority and sustainability.
Creating value from our premium portfolio and
new channels
Premiumisation is at the core of our strategy. We have seen in
India the value this has created over the last decade, with our
focus on market development to shift consumers from laundry
bars and laundry powders to premium powders and laundry
liquids. As a result, Home Care turnover in India has more than
doubled and profitability has increased from 14% to 19%.
In China, we are positioning our Fabric Cleaning portfolio
to capitalise on the premiumisation opportunity – such as
investing in the high-margin laundry capsules market and
cleaning sprays. Laundry fragrance beads are another
premium product with growth and margin potential, offering
a high concentration of fragrance and convenience to
consumers. We launched Comfort Fragrance Beads in China in
2020 and despite being a newcomer in this space with multiple
competitors, we have delivered the fastest growth of market
share over the past two years. Digital commerce, which now
accounts for 17% of Home Care sales, is a key channel for
our premium products – like fragrance boosters and laundry
capsules – especially in countries such as China, the US and
UK where digital penetration is high.
We have also continued to expand our presence in the
professional cleaning market through Unilever Professional
(UPro), which offers a portfolio of premium products tailored
to the needs of small and medium-sized operators in the
laundrette, hospitality and food services sectors. Leveraging
the power of our Home Care brands and expertise to tap into
an industry white space, UPro is now present in 45 markets
and grew by 32% in 2022, doubling its turnover in three years.
Powered by science and technology
Home Care has increased investment in R&D for the last two
years, principally through Clean Future which is our innovation
programme – and above all a growth strategy. Clean Future
uses technology to drive next level product superiority and
sustainability, while keeping costs competitive through
reformulations. We codify this approach through all our Home
Care brands, driving innovations in fragrance, biotechnology,
packaging and eco-design.
-
Clean Future continues to inspire winning innovations to the
mass market. In France, we introduced Skip 3-in-1 laundry
capsules in cardboard packaging, with fast dissolving speeds
and more biodegradable active ingredients which work in
short cycles and cold water – saving consumers up to 60%
energy per use. Sunlight dishwash was launched with a new
formula in 2022 in Thailand and now includes plant-based
cleaning agents which not only deliver on performance by
foaming and cleaning, but also make the formulation 99%
biodegradable and 79% renewable.
A key part of our Clean Future agenda is our progress towards
net zero. This requires replacing fossil-fuel-derived cleansing
ingredients that are integral to the formulations of our
products and diversifying the sources of plant-based carbon.
This year, we invested in a €115 million ($120 million) joint
venture with Genomatica, a US-based leader in biotech and
sustainability, to research, develop and scale cost-effective
plant-based ingredients. These alternative ingredients will
help us to future-proof our portfolio by diversifying our supply
chains for vital ingredients while offering more sustainable
choices to the consumer.
Convenient formats such as refills, dilutable bottles and
concentrates represent another growth opportunity and
we continue to roll out these formats. For example, after
a successful launch in Brazil, we launched dilute-at-home
products through our Ala (OMO) brand in Argentina – offering
convenience, value and at the same time reducing our use
of plastic.
Most consumers choose
Home Care products for their
performance. Clean Future
is our strategy to deliver
unmissable product superiority
at an affordable price whilst
stepping up the sustainability
of our business. This strategy
has served us well in 2022.
anneke
Peter ter Kulve
President, Home Care
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
19
- Business Group Review: Home Care
Performance in 2022
Turnover increased by 17.3%. Underlying sales growth was
11.8%. There was a favourable currency impact of 4.9% driven
by strengthening of currencies in key markets such as India,
Brazil and China.
Fabric Cleaning saw double-digit competitive growth, driven
by pricing which was slightly offset by volume decline. Fabric
Enhancers grew high single-digit led by price with some
volume decline, despite the impact of Covid lockdowns in our
biggest market, China. Home & Hygiene grew by low single-
digit with high pricing offset by volume decline. Water & Air
sales declined, as the US air market slowed down following
rapid expansion in the last few years and increasing
competition in digital commerce channels.
Emerging markets growth was led by a strong delivery in
South Asia and Latin America. India grew volumes despite
high pricing, driven by product superiority and market
development actions. Developed markets witnessed a decline
as consumers tightened their spending and competitive
pressures stepped up.
Operating profit for the year was €1.1 billion, a decline of
17.8% compared to the prior year. Non-underlying items were
€280 million, mostly driven by restructuring spends. Underlying
operating profit was €1.3 billion, a decline of 5.2% compared to
the prior year. This was driven by high input cost inflation which
was partly offset by pricing and savings.
€4bn
Dirt is Good contribution to Unilever turnover in 2022.
Brands with purpose
Our Home Care brands recognise the role that purpose
combined with product superiority plays in competitiveness.
Dirt Is Good, which contributed €4 billion in turnover during
2022, continues to inspire young people to take action on
environmental and social causes.
Domestos has been campaigning for cleaner, safer toilets for
a number of years and continues to proudly communicate this
on-pack and through its marketing. Its Cleaner Toilets Brighter
Future programme is helping schools to maintain their
facilities, so they are safe and accessible, while also providing
materials that teach children correct toilet behaviour for better
hygiene. Its partnership with UNICEF in India tackles access to
safe toilets across 15 states.
20
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Business Group Review: Nutrition
Nutrition
We are one of the world’s largest foods businesses, and home to
Knorr and Hellmann’s which account for 50% of our turnover. Our
portfolio also includes Horlicks, The Vegetarian Butcher, and local
brands such as Bango, Unox, Kissan and Marmite. Unilever Food
Solutions serves food operators across the globe.
Highlights
Scratch Cooking Aids delivered
mid-single-digit growth.
Dressings and Plant-Based Meat
both grew high double-digit.
Tea and Functional Nutrition
delivered broadly stable sales.
Continued focus on core products
that win consumer preference on
taste as well as health and
sustainability.
Operating margin
2022
2021
16.1%
2020
16.3%
32.4%
Nutrition performance
Turnover
€13.9bn
2022
2021
2020
Turnover growth
..
II
I 0 .7%
Underlying sales growth
Underlying operating margin
2022 -
2021 -
2020
.1 .8 %
2022
2021
2020
17.6%
19.3%
18.9%
Unilever Annual Report and Accounts 2022 | Strategic Report Review of the Year
–
21
- Business Group Review: Nutrition
A World-class Force for
Good in Food.
Nutrition represents 23% of Unilever’s total turnover and
25% of underlying operating profit. We are organised
to deliver growth across six key categories: Dressings,
Functional Nutrition, Healthy Snacking, Plant-based
Meat, Scratch Cooking Aids and Tea. Unilever Food
Solutions serves food operators and accounts for
approximately one fifth of Nutrition's turnover. We have
a global geographical footprint with 55% of Nutrition's
turnover generated in emerging markets.
Our ambition is to be a ‘World-class Force for Good in Food’,
delivering competitive growth with sequential margin
improvement. A number of consumer trends are driving
our business: the post-Covid scratch cooking renaissance,
a growing interest in healthy, more conscious living and
eating, and rising expectations around convenience. Our
strategy sets out clear choices in response to these trends.
Focusing on our core brands
We are well positioned for growth following a major portfolio
transformation over the past four years, most recently through
the sale of our Tea business to CVC Capital Partners Fund VIII.
We are now focused on delivering ‘holistic product superiority’
– creating products that win consumer preference on taste
as well as health and sustainability. Tests against competitor
products performed during the year showed that 89% of the
evaluated portfolio (representing about half of Nutrition’s
previous year turnover) was holistically superior.
Hellmann’s enjoyed another year of high double-digit growth
in 2022 by focusing on its core mayonnaise range and newer
variants such as Hellmann’s Vegan, while also continuing to
drive its food waste reduction agenda through high-impact
advertising. A good example of this was its 2022 Super Bowl
campaign in the US, with 6.6 billion earned media impressions.
The US was Nutrition's largest market in 2022 and grew
double-digit.
Knorr also delivered robust growth in 2022, thanks to a focus
on its core segments of bouillons and seasonings. New plant-
based products such as Rinde Más, an alternative protein
range launched in Latin America last year and in several
European markets this year, are offering consumers more
choice. Knorr continued its work on regenerative agriculture
in 2022 – see page 36 for more.
The new Compass Organisation is already unlocking cost
savings, growth and profitability in Nutrition. For instance, we
were able to significantly increase marketing investment in the
fourth quarter of 2022 in line with our Business Group priorities,
which helped us to step up competitiveness during the high
consumption winter season. We have also been able to take
more decisive and longer-term action on our portfolio by
delisting or discontinuing products which are no longer
performing, even if this means a short-term market share loss.
Nutrition is a transformed
business. We have step
changed our growth through
portfolio transformation
and the strong growth of our
brands, most notably our two
global power brands Knorr
and Hellmann's.
Hanneke Faber
President, Nutrition
Growing our tea business
We are now focusing on our remaining tea portfolio in India,
with an offering that ranges from affordable loose tea to
premium and speciality teas. Our largest tea brand is Brooke
Bond which includes a number of tea varieties to meet the
needs of different consumers. For example, Taaza continued
its market development drive to upgrade consumers from
loose to packaged tea, while specialist products such as
Brooke Bond Natural Care offer clinically proven functional
benefits.
Expanding our plant-based portfolio
We are committed to offering more plant-based meat
substitutes and dairy alternatives, which was reflected in our
€1 billion plant-based sales goal announced in November
2020. To better reflect our plant-based strategy and
sustainability agenda, we have broadened the scope of the
original goal to include plant-based products in categories
which have traditionally used animal-derived ingredients,
such as bouillons. Hence, to reflect this change we have now
revised our goal to achieve sales of plant-based products to
€1.5 billion per annum by 2025. In 2022, Unilever Nutrition and
Ice Cream achieved €1.2 billion in sales from the plant-based
products in scope.
22
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Business Group Review: Nutrition
For the second year running, we were named by Investor
Network FAIRR as the leader in its 2022 benchmark of
companies using protein diversification to drive growth and
build climate-aligned portfolios. The Vegetarian Butcher
grew high double-digit, capitalising on partnerships with
quick service restaurants such as Starbucks, Subway,
Dominos, and Burger King – where we were named Global
Direct Supplier of the Year.
Working with customers
We are working closely with our retail customers, and
continued a number of successful partnerships with retailers –
such as with Dutch retailer Albert Heijn to encourage plant-
based eating.
Digital commerce is a growing channel and now accounts
for 10% of Nutrition's sales, with business-to-business digital
commerce a key growth driver in 2022, notably in Unilever
Food Solutions. Unilever Food Solutions' growth was helped by
the continued digitisation of our customer experience, which is
allowing us to connect with more food service operators more
frequently, as well as through affordable and convenient
products designed for professional kitchens – such as Knorr
potato flakes which make rich and creamy mashed potato in
just three minutes.
We have stepped up our focus on content to drive conversion,
such as linking to recipe inspiration – a key motivator for
consumers to try a new product. We now have 35,000 recipes
for our products which we host in online recipe platforms
across multiple key markets, in partnership with our customers.
Boldly healthier, more sustainable
As a global player in the food industry, we have a responsibility
to increase the nutritional value of our products through
reformulation. See page 33 for more on our positive nutrition
agenda.
Horlicks further strengthened its leadership market share
position in India in the health food drinks space. After the
contraction of the market over the last few years due to
lockdowns and increasing milk prices, we are working to
rebuild consumption levels through market development,
such as the launch of a convenient and affordable ‘Ready Mix’
range and through door-to-door sampling. In 2022, Horlicks
distributed over 30 million product samples in India.
As well as our commitment to regenerative agriculture (page
32) and plant-based foods (page 36), we are contributing to
Unilever's waste-free world agenda through our actions on
plastic packaging (pages 32 to 33) and food waste (page 36).
-
Performance in 2022
Turnover increased by 6.1%. Underlying sales growth was 8.6%.
There was a negative impact of 6.9% from acquisitions and
disposals, following the sale of the Tea business. There was a
favourable currency impact of 4.9% driven by the strengthening
of currencies in key markets such as the US, India and China.
Scratch Cooking Aids delivered mid-single-digit growth, driven
by high pricing which was partly offset by volume decline.
Dressings saw high double-digit growth led by price with
modest volume decline. Tea and Functional Nutrition sales
were broadly flat with increased price and declining volume.
Plant-Based Meat grew high double-digit, further gaining
scale, driven by the foodservice channel.
Unilever Food Solutions posted double-digit growth despite
the impact of Covid lockdowns in China. Europe grew by high
single-digit, led by pricing with resultant volume decline
amidst competitive pressures. North America delivered
double-digit growth led by pricing with modest volume
decline. South Asia posted mid-single-digit growth through
price and volumes. Latin America grew double-digit led by
price with some volume decline.
Operating profit was €4.5 billion, an increase of 113.7%
compared to the prior year. A net gain in non-underlying items
of €2.0 billion included €2.3 billion related to the gain on the
sale of our Tea business. Underlying operating profit was
€2.4 billion, a decrease of 3.0% compared to the prior year.
This was driven by very high inflation in material and energy
costs, partly mitigated through pricing and savings.
€1.2bn
Unilever Nutrition and Ice Cream sales from
plant-based products in 2022.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
23
Business Group Review: Ice Cream
Ice Cream
We are a global leader in the ice cream market, delighting
consumers in over 60 countries through our iconic brands
such as Magnum, Ben & Jerry’s and Wall’s.(a)
Highlights
Out-of-home saw competitive
double-digit growth.
Our fast ice cream delivery service
ICNOW grew 30% and is now in over
40 countries.
Expanded our product range
through innovative new twists on
premium offerings.
Launched pilots to ‘warm up’ our
ice cream freezers and reduce
emissions.
(
/
r r
/
'
) l
J
< r f I
,,
_,~~
i.
Ice Cream performance
Turnover
Turnover growth
Operating margin
€7.9bn
Underlying sales growth
.3.2%
2020 -3.4%.
2022 -2021
2022 -2021 -2020
I 0.2%
(a) Wall's is also known as Algida, Holanda and Langnese.
2022 -
2021
-
2020 -
Underlying operating margin
2022 -2021 -2020 -
24
Unilever Annual Report and Accounts 2022 | Strategic Report Review of the Year
–
Business Group Review: Ice Cream
Happy People, Happy Planet,
Winning Smiles.
Ice Cream represents 13% of Unilever’s total turnover and
9% of underlying operating profit, and is organised to deliver
growth and return on assets through in-home and out-of-
home channels. We currently account for approximately one
fifth of the global ice cream industry. Ice Cream is an attractive
market with competitive intensity increasing as a number of
confectionery and dairy producers extend their presence in
the category. Around two-thirds of our sales are in developed
markets, and we have plans to expand further our footprint in
emerging markets where low per-capita consumption of ice
cream offers significant opportunities for growth.
Our vision ‘Happy People, Happy Planet, Winning Smiles’
encapsulates our belief that ice cream should be an
indulgent treat that brings happiness. We have identified
three strategic drivers to deliver our vision and grow our
business: premiumisation, digitalisation and simplification.
Working closely with our value chain partners is a critical
part of our strategy, as we tackle important sustainability
challenges like climate change.
Brands with global growth potential
We have brands with strong growth potential which are well
positioned to respond to consumer preference for treats
and indulgent products. Our innovation capabilities put
us in a strong position to meet these needs, through new
experiences, shapes, flavours and formats. Proposing new
twists on premium offerings through exciting innovation and
outstanding marketing is a powerful and profitable way to
expand our ice creams to a wider audience. This approach
means that Magnum, Ben & Jerry’s, Cornetto and our kids'
portfolio of brands which includes Twister, are well positioned
to expand into new markets.
Magnum has a long track record of working with celebrity
influencers, cementing its status as not just a superior ice
cream but also as a trendsetting brand. It grew double-digit
in 2022 on the back of Magnum Remix, our largest ice cream
launch of the year with ‘super-charged’ versions of our much-
loved flavours of Classic, White Chocolate and Almond across
35 countries, supported by a glamorous campaign fronted
by Kylie Minogue and DJ Peggy Gou. Cornetto's relaunch in
China is reinforcing its appeal to Gen Z consumers which has
helped it grow in 2022. This builds further on the success of
the Cornetto Rose range which was expanded to ten more
markets and the Cornetto Soft range, which is available in
over 15 European countries.
Ice cream all year round
Our ice cream sales are split across two key channels – in-
home and out-of-home. Out-of-home makes up around 40%
of our sales and is continuing to recover after Covid. We see
a big opportunity in the digitalisation of our out-of-home
operations. For example, we are embedding digital devices
into our ice cream cabinets to monitor stock levels and
automatically trigger replenishment. Early pilots in markets
suggest that these significantly increase sales and
reduce the chance of running out of stock.
-
Consumers also have increasing expectations around
convenience when they are at home. This is especially true
of ice cream as an impulse purchase. In this context, our Ice
Cream Now (known as ICNOW) fast delivery service is helping
to deseasonalise the market. Consumers can access our ice
cream brands throughout the year in three ways: with a meal,
with a grocery delivery, or via delivery apps with dedicated
virtual ice cream stores. Now in more than 40 countries,
ICNOW grew around 30% in 2022, helped by partnerships with
delivery firms such as Grab in South East Asia, Food Panda in
Singapore and Robomart in the US. We plan to further develop
this digital capability in key markets, including in India, where
our ice cream business has seen strong growth over the past
two years.
Faster and more effective
The new Compass Organisation is providing opportunities
to simplify our business and we are taking bolder portfolio
decisions and rolling them out at scale. For example, we have
been able to simplify and standardise our Viennetta range
across Europe, which has generated savings and freed up
production capacity.
The Business Group set-up helps us to navigate the seasonality
of our Ice Cream business by investing in our brands and
marketing more consistently throughout the year. We have
also benefited from being able to make global investment
choices which are helping to increase the productivity of our
ice cream cabinet fleet.
Ice Cream is a global leader
in an attractive market and is
well positioned to capture the
latest consumer trends. We are
evolving to win in high growth
channels and markets.
Matt Close
President, Ice Cream
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
25
- Business Group Review: Ice Cream
Happy people, happy planet
Our sustainability programme focuses on the areas of our Ice
Cream value chain where we can have the biggest impact:
cabinets, cows and cocoa sourcing. Ice cream freezers in retail
stores make up 10% of our GHG emissions and play a key role
in our net zero decarbonisation plan. In 2022, we launched a
pilot scheme in Germany and a second will follow in Indonesia
in 2023, to trial warmer temperatures in our freezer cabinets,
from -18°C to -12°C, in order to reduce energy consumption per
freezer while ensuring the same ice cream quality.
Our non-dairy, plant-based ice cream business represents
8% of Ice Cream's turnover and includes our newly launched
Magnum Vegan Mini Classics. See pages 22 and 36 for more
on our plant-based sales goal. We are also researching ways
to reduce the methane emissions from cows used in milk
production – see page 36 for more details.
Cocoa is a key ingredient in many of our ice creams. For many
years we have been sourcing our cocoa sustainably. This year
our brands went one step further. Ben & Jerry’s joined forces
with Tony’s Chocolonely on Tony’s Open Chain – an initiative
that helps other companies take steps to end modern slavery
and child labour in the chocolate industry. Magnum also
launched a new social programme called AWA, which aims
to empower 5,000 women in cocoa farming communities
by 2025 through income diversification opportunities and
entrepreneurial training.
As a global ice cream company, we recognise the role we
play in improving nutritional standards and encouraging
healthy behaviours. See page 33 for more on our positive
nutrition agenda.
Performance in 2022
Turnover increased by 14.8%. Underlying sales growth was
9.0%. There was a favourable currency impact of 5.4% driven
by the strengthening of currencies in key markets such as the
US and China.
Out-of-home saw competitive double-digit growth with a good
balance of price and volumes. In-home grew by mid-single-
digit led by pricing and declining volumes due to the impact
of higher price elasticity and higher competitive pressures in
Europe in-home and supply issues in the US.
Emerging markets grew by double-digit, and competitively,
through both price and volumes. China grew by double-digit
despite Covid lockdowns and Turkey grew volumes despite
the hyperinflation environment. Developed markets grew by
single-digit led by price and volume decline. This was due to
in-home higher price elasticity and US supply issues.
Operating profit was €776 million, a decrease of 6.8%
compared to the prior year. Non-underlying items were
€143 million primarily driven by restructuring spends.
Underlying operating profit was €919 million, a decrease
of 3.5% compared to the prior year driven by extreme levels
of inflation in commodities and energy costs, partly offset
through pricing and savings.
+30%
Growth from our fast ice cream delivery service
ICNOW in 2022, which is now in more than
40 countries.
26
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
-
Our People & Culture
This year was transformative for Unilever as we created
our new Compass Organisation and continued to embed
a high-performance culture.
We have long believed in the power of our people and our
culture to drive performance. Our people agenda this year
has focused on creating and embedding a new organisational
model so that we can maximise the talent and diversity of our
workforce to unlock superior performance.
and the day-to-day priorities of our teams. OKRs are formally
reviewed by leadership teams, including the ULE, at Quarterly
Business Review meetings. To deliver our OKRs, we have set up
multidisciplinary teams, supported by our Agile coaches. See
the Business Group reviews on pages 12 to 26 for examples of
prioritisation in action.
The Compass Organisation
High-performance culture
In January 2022, we announced plans to create our new
Compass Organisation with three core objectives, to make
Unilever: 1) simpler, faster, and more agile; 2) with greater
category focus and domain expertise; and 3) more empowered
and accountable in how we work.
We have evolved the previous matrix organisation structure
and with it, a conscious shift of power and accountability into
the hands of the five Business Groups while still maintaining
global scale through a ‘One Unilever’ model. This is helping
leverage our unique category and geographic footprint to
unlock trapped speed and capacity to drive faster, more
competitive growth. See the Compass Organisation explained
in the box below.
We are now in a critical phase as we begin to work under the
new operating model – testing, learning and refining as we
go. It is testament to our people that we managed to not
only deliver strong business performance during a period
of significant change, but also sustained high engagement
levels in our annual UniVoice survey, which was carried out in
October 2022, with around 96,000 office and factory-based
employees responding. Our Engagement Index(a) was 81% in
offices and 84% in factories, placing us in the top quartile
for employee engagement compared to industry benchmarks
(2021: 82% in offices and 83% in factories).
(a) This is a composite score of four other metrics focused on pride in working for
Unilever, job satisfaction, willingness to recommend Unilever for employment
and intention to remain employed by Unilever.
New ways of working
One of the key objectives of the Compass Organisation is to
become more agile. This means upgrading the ‘software’ of
the organisation so that we can take faster decisions with
more impact and respond more dynamically to consumer
needs and market conditions – in turn enabling growth.
One of the ways we are doing this is by introducing ‘Agile’ ways
of working. Our Agile programme is rooted in experimentation,
consumer connectivity, simplification, trust and empowerment.
In 2021 we set up our Agile Centre of Excellence. This year
we have been building capability within targeted parts of
the business to operationalise Agile. For example, we have
invested in appointing an Enterprise Agile Coach for each of
our Business Groups to upskill leadership teams in embedding
Agile behaviours, skills and delivery processes.
We are also embracing disciplined prioritisation by making big
bet choices and by setting Objectives & Key Results (OKRs) –
from Unilever Leadership Executive (ULE) to Business Group
and Business Unit leadership teams – supported by a
governance process to link company strategy with targets
The new Compass Organisation is powered by our refreshed
human, purposeful and accountable culture with a focus on
high performance at its heart. A key part of this is making sure
our people work with a 'winning mindset', which means taking
ownership for the choices we make and the outcomes these
lead to. We have taken the opportunity to revise our bonus
framework to drive a significantly stronger direct line of sight
between individual performance and business performance.
Our peoples’ bonuses are now linked to the part of the
business they contribute to most in their role and the
performance of that part of the business.
Another important part of creating a high-performance culture
is ensuring our people have the right skills and behaviours.
For example, our senior leaders are participating in a rigorous
behavioural and data-driven development programme to
help them become more effective leaders in our Compass
Organisation. In addition, work is underway to refresh existing
leadership programmes across all work levels. These will be
rolled out in 2023.
The Compass Organisation explained
The Compass Organisation has been operational since
1 July 2022. We are now organised into five Business
Groups which have end-to-end responsibility for strategy,
performance and their own P&L. The Business Groups now
incorporate geographical Business Units responsible for
building and executing the Business Group strategy and
managing the choices necessary to deliver their in-year
and multi-year plans. We have structured certain countries
or regions as 'One Unilever' entities, which have full
accountability for their P&L across all categories, in order
to benefit from local synergies and reduce complexity.
We also now have two overarching ‘One Unilever’ teams
supporting our five Business Groups. Firstly, a lean Unilever
Corporate Centre, including the ULE, which is responsible
for the strategic choices we make. And secondly, a
technology-driven Unilever Business Operations team
which provides the systems and processes to help us run
effectively, efficiently, and consistently across all the
Business Groups.
Our functions, including Marketing, Customer
Development, HR, Finance, R&D, Communications, Legal
and Sustainability, have been reorganised to support the
priorities of our Business Groups and Business Units. As a
result, most of our functional teams now work and report
to a Business Group or Business Unit.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
27
- Our People & Culture
Equity, diversity and inclusion
Future of work
Our goal is to achieve an equitable and inclusive culture in the
workplace, to unlock the potential of diverse teams to deliver
high performance. We assess employee sentiment around
equity, diversity and inclusion through our annual UniVoice
survey. In 2022, 84% of employees said that our leadership
stands for equity, diversity and inclusion (2021: 84%).
Whilst not an explicit aim of the Compass Organisation,
the changes we have made will help us to future-proof our
business and our people against changes in the world of
work – including automation and new technologies which
are reshaping many roles in our business. Our future of work
strategy addresses this through three pillars.
We have identified four equity, diversity and inclusion priorities
to address under-representation: gender, race and ethnicity,
people with disabilities and LGBTQI+ communities. Our newly
developed Equity & Inclusion Advancement Framework is
helping us to review and improve our policies and practices
to identify where interventions can help to tackle bias or
discrimination. In 2022, we piloted the Framework to evaluate
our global policies and practices, covering more than 20 areas
of HR, such as recruitment, talent management and learning.
This will inform future pilots of the Framework at country level.
We continue to maintain gender balance in management
and are now focused on diverse representation at more senior
levels. Senior female representation continues to increase and
is now at 31%, due to gender-balanced succession planning
and balanced slates in hiring. We support our senior-level
women with bespoke development plans, mentoring and
career coaching. Where legally possible, we consider racial
and ethnic diversity in our recruitment and succession
planning. See page 63 for gender balance in our workforce.
We have committed that 5% of our workforce will be made
up of people with disabilities by 2025. At the end of 2022,
36 markets were collecting employee self-reported data on
disability. At the same time, we are continuing to improve the
accessibility of our technology and sites, drawing on feedback
from our global employee resource network for disability,
Enable. In partnership with the Business Disability Forum, we
have reviewed the accessibility of around 80 workplace sites,
with more planned in 2023.
ProUd, our LGBTQI+ network, plays an active role in community
building and sharing resources, for example by educating our
marketeers to portray the community in unstereotypical ways
and by working with senior leaders to be role models for
LGBTQI+ inclusion.
The first pillar is reskilling and upskilling our workforce, with
a focus on our employees below senior management. In 2022
we reskilled or upskilled 15% of our employees with future-fit
skills. Digital skills are a priority, so we have launched our first
company-wide Digital Upskilling Programme which includes
a range of courses and external certifications on digital skills
for our office-based employees. We have also developed a
series of learning pathways tailored for people who work in our
factories, warehouses, and distribution centres to help them
master the future technologies of manufacturing, including
robotics and AI. In addition, we continued the roll-out of a tool
which digitises production processes, helping our factory
employees to learn digital skills on the job. The tool is now
available at around 110 factories with more planned for
next year.
The second pillar is providing flexible employment options.
People’s expectations of how they work are changing. In 2022,
we proactively engaged with our workforce to understand
their needs and expectations on flexibility and hybrid working.
We are using this to inform how we achieve our goal to
extend flexible working practices and pioneer new models
of employment, so that we achieve a more agile and effective
organisation.
The third pillar is about our future workforce. In 2022, we
expanded our partnership with UNICEF’s Generation Unlimited
to help us work towards our goal of equipping 10 million
young people with essential work skills by 2030 – through
education, training, volunteering and employment
opportunities. We are engaging with our partners to put in
place a reporting mechanism so that we can report progress
against this goal in 2023.
Employee health and wellbeing
Protecting employee health and wellbeing is an important
priority – especially during periods of change. Based on
our latest annual UniVoice survey, employee sentiment on
wellbeing overall remained relatively high at 82%, albeit with
room to improve especially on supporting prioritisation.
Based on data and evidence, we have identified psychological
safety as a key enabler of high-performing teams in the
new Compass Organisation and a fundamental driver of
wellbeing. We have developed training for line managers to
build awareness around psychological safety and will roll this
out in 2023. We continue to grow our 4,000-strong network
of trained Mental Health Champion volunteers worldwide,
and offer support resources on mental health such as our
confidential Employee Assistance Programmes.
To support our employees' physical health, we have launched
a new whole person health programme called ‘Healthier U’
which prioritises employees in the highest-risk groups for
certain health conditions. It is now active in over 30 countries.
28
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Our People & Culture
-
Culture of integrity
Our focus is on high-performance and growth in line with our
culture and values, but not at any cost. Our Code of Business
Principles set clear expectations in terms of the standards of
conduct we expect from our employees. We review our Code
of Business Principles and Code Policies every year to ensure
they reflect the current operating context and the latest
legal requirements. Our zero-tolerance approach to bribery
continues to be supported through mandatory training and
initiatives delivered to our employees. We train our people
every year to prevent compliance breaches, and they are able
to report in confidence any concerns around business integrity
through our 24/7 Speak Up platform.
In 2022, we continued to simplify and improve the
whistleblowing process for users through expansion of local
hotlines and interpreting services. On our website, we report
the number of Code cases and subsequent actions for each
of our five Code themes including countering corruption –
covering, amongst other things, anti-bribery and avoiding
conflicts of interest.
This year, across all areas of our Code of Business Principles,
we received 1,279 Code reports, closed 1,088 reports (including
some from prior years) and confirmed 554 reports as breaches,
which led to 314 people leaving the business. Our data on
Code breaches provides insights into issues and where they
happen so we can prevent the behaviours that lead to them.
Safety at work
We remain strongly committed to the safety of our people
and contractors who work with us at our sites. Our safety
programmes are underpinned by a safety-first culture and
focus on identifying and managing key safety risks such as
road safety and working at heights.
A critical part of our safety culture is ensuring our people
feel able to call out safety issues without fear of negative
consequences. In 2022, we ran our second annual safety day
involving our global workforce. The focus this year was on
encouraging employees to call out unsafe behaviour and
promote best practices.
During the year, we carried out a detailed analysis of safety
incidents to better understand the key factors that influence
safety risks. Our findings led to increased on-site safety
communications, training enhancements and safety
equipment trials for working at heights, such as smart
harnesses and drones. We have a strong focus on road safety
as it is a primary cause of injury in our logistics network. On top
of targeted global campaigns, we are addressing road safety
issues on a country-specific basis. For example, our India
business partnered with the Federation of Indian Chambers
of Commerce and Industry (FICCI) to jointly develop a cross-
industry Code of Conduct that outlines safe vehicle and driver
requirements.
In November 2021, we very sadly lost an employee who was
fatally electrocuted in Kenya.(a) We want all our employees
to feel fully confident about the standards of safety in their
working environments, and we continue to review procedures
and introduce appropriate measures in order to minimise risks
and prevent accidents. Our Total Recordable Frequency Rate
(TRFR) returned to pre-Covid levels as more normal operations
have resumed. Our employee TRFR was 0.67 accidents per
million hours worked versus 0.55 in 2021.(a)
(a) Fatality and TRFR reporting for the period 1 October 2021 to
30 September 2022.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
29
-
Planet & Society
The Unilever Compass sets out a clear vision to deliver winning
performance by being the global leader in sustainable business.
The Compass explicitly recognises that sustainability is a commercial driver. This Annual Report and Accounts outlines the
progress we are making against our Compass sustainability targets and how our brands are creating growth opportunities
and building resilience from sustainability and purpose. Our targets are summarised in the table below and commentary
on performance can be found by referring to the pages indicated. Pages 117 to 118 details our Sustainability Progress Index
which links the annual bonus for management employees – up to and including the Unilever Leadership Executive – to in-year
progress against selected Compass sustainability targets.
Win with our brands, powered by superior products, innovation and purpose
Improve the health of the planet
Climate action
Protect and regenerate nature Waste-free world
■ Net zero emissions across our value
■ Deforestation-free supply chain in
■ 50% virgin plastic reduction by 2025
chain by 2039
■ Halve greenhouse gas impact of our
products across the lifecycle by 2030
■ Zero emissions in our operations
by 2030
■ Replace fossil-fuel-derived carbon
with renewable or recycled carbon in
all our cleaning and laundry product
formulations by 2030
■ Communicate a carbon footprint for
every product we sell
palm oil, paper and board, tea, soy
and cocoa by 2023
■ Help protect and regenerate
1.5 million hectares of land, forests
and oceans by 2030
■ 100% sustainable sourcing of our key
agricultural crops
■ Empower farmers and smallholders
to protect and regenerate farm
environments
■ Implement water stewardship
programmes in 100 locations in
water-stressed areas by 2030
■ 100% of our ingredients will be
biodegradable by 2030
■ 25% recycled plastic by 2025
■ Collect and process more plastic
than we sell by 2025
■ 100% reusable, recyclable or
compostable plastic packaging
by 2025
■ Halve food waste in our operations
by 2025
■ Maintain zero non-hazardous waste
to landfill in our factories
Pages 32 to 41 and 60
Pages 32, 36 and 60
Pages 32 to 33 and 60
Supported by our €1 billion Climate & Nature Fund
Improve people's health, confidence and wellbeing
Positive nutrition
Health and wellbeing
■ €1.5 billion of sales per annum from plant-based products
in categories whose products are traditionally using
animal-derived ingredients by 2025
■ Take action through our brands to improve health and
wellbeing and advance equity and inclusion, reaching
1 billion people per year by 2030. We will focus on:
■ Double the number of products sold that deliver positive
■ Gender equity
nutrition by 2025
■ 70% of our portfolio to meet WHO-aligned nutritional
standards by 2022(a)
■ 95% of packaged ice cream to contain no more than
22g total sugar per serving by 2025
■ 95% of packaged ice cream to contain no more than
250 kcal per serving by 2025
■ 85% of our Foods portfolio to help consumers reduce their
salt intake to no more than 5g per day by 2022(a)
■ Race and ethnicity equity
■ Body confidence and self-esteem
■ Mental wellbeing
■ Hand hygiene
■ Sanitation
■ Oral health
■ Skin health and healing
Pages 33 and 61
Pages 34 and 61
(a) From 2023, these commitments will be replaced with a new target to ensure that 85% of our servings meet new Unilever Science-based Nutrition Criteria (USNC) by 2028.
30
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Planet & Society
-
Win with our brands as a force for good, powered by purpose and innovation
Contribute to a fairer and more socially inclusive world
Equity, diversity and inclusion
Raise living standards
Future of work
■ Achieve an equitable and inclusive
culture by eliminating any bias and
discrimination in our practices
and policies
■ Ensure that everyone who directly
provides goods and services to
Unilever will earn at least a living
wage or income by 2030
■ Accelerate diverse representation at
■ Help 5 million small and medium-
sized enterprises grow their business
by 2025
all levels of leadership
■ 5% of our workforce to be made up
of people with disabilities by 2025
■ Spend €2 billion annually with diverse
businesses worldwide by 2025
■ Increase representation of diverse
groups in our advertising
■ Help equip 10 million young people
with essential skills by 2030
■ Pioneer new employment models and
provide access to flexible working
practices to our employees by 2030
■ Reskill or upskill our employees with
future-fit skills by 2025
Pages 28, 34 and 61
Pages 34 and 61
Pages 28 and 61
Respect human rights
Respect and promote human rights and the effective implementation of the UN Guiding Principles,
and ensure compliance with our Responsible Sourcing Policy
Page 34
Our responsible business fundamentals
ti
Business
integrity
Page 29
Safety
at work
Page 29
Employee
wellbeing
Page 28
Product safety
and quality
Pages 72 and 76
Responsible
innovation
Pages 32-33 and 35-36
G
Responsible
advertising and
marketing
Safeguarding
data
Engaging with
stakeholders
Responsible
taxpayer
Committed to
transparency
Page 33
Page 72
Pages 62-63
Pages 170-172
Pages 30-51
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
31
- Planet & Society
Climate action
Our Climate Transition Action Plan (CTAP) outlines the actions
we are taking to decarbonise our business and deliver our
net zero target. This Annual Report contains our second CTAP
Progress Report – see pages 35 to 41.
Protect and regenerate nature
Our business is dependent on nature. That is why we have a
plan to protect and regenerate the land, forests and water
systems that we depend on and are critical to tackling
climate change.
Our work to protect and regenerate nature is guided by three
things: delivering a deforestation-free supply chain by the
end of 2023 in five of our key commodities: palm oil, paper
and board, tea, soy and cocoa; accelerating our transition
towards regenerative agriculture; and the protection of water
resources. We also recognise the need to have a positive
impact beyond our value chain and have committed to protect
and regenerate 1.5 million hectares of land, forests and
oceans by 2030.
Our aim is to operationalise deforestation-free supply chains
so that they become a standard way of working for our five key
commodities. We are on track to complete the implementation
of systems, processes and infrastructure to deliver a
deforestation-free supply chain for these key commodities
by the end of 2023. Our complex supply chain will require a
significant transformation in our sourcing of raw materials –
given the limited availability of deforestation-free commodity
volumes and the highly volatile markets we face. At present,
we are measuring and reporting volumes from areas of low-
risk as this provides us with an interim measurement of our
progress, while we continue to roll out a verification
programme for deforestation-free volumes.
One way we are working to achieve a deforestation-free
supply chain is by investing in the transformation of our
manufacturing infrastructure in North Sumatra. We believe
this will bring us closer to our suppliers and simplify our supply
chain, increasing our ability to source deforestation-free
commodity volumes. In 2022, we began the upgrade of our
Unilever Oleochemicals facility, with a spend of €59 million
($63 million). €70 million ($75 million) is forecasted for further
upgrades in 2023. This will help us to source deforestation-free
palm kernel oil directly, with an aim to reach around 40,000
smallholder farmers by 2025.
We are also focused on building resilience within our portfolio.
Where possible, we are diversifying the ingredients that we use
by reducing our reliance on commodities that have a high risk
of deforestation, such as palm oil, with lower-risk alternatives
such as coconut oil. To enable such changes, we are currently
adjusting the formulations of our products.
Another part of our strategy is accelerating our transition to
regenerative practices. In 2022, we continued to implement our
Regenerative Agriculture Principles, guiding our suppliers and
farmers on how to nourish soil and water, capture carbon and
restore land. We are building our regenerative agriculture
programme on the solid foundations and experience of our
sustainable sourcing programme, which we have run for more
than a decade. In 2022, 81% of our key agricultural crops were
sustainably sourced. Additionally, we are progressing towards
our goal to empower farmers and smallholders to protect and
regenerate farmland. Knorr has continued its programme in
Arkansas, in partnership with a supplier, to reduce the
environmental impact of rice production – increasing yield
whilst reducing methane emissions and water use. This forms
part of our large-scale regenerative agriculture programme
which is growing with projects in new crops and an increasing
number of geographies.
One of the key parts of our approach to regenerating nature is
water stewardship. We have set a target to implement water
stewardship programmes at 100 locations in water-stressed
areas by 2030. Since we set this target, we have identified
a number of our factories to introduce these programmes
at, and by the end of 2022 we had implemented eight.
Additionally, we are working with partners in the catchments
of these sites to improve rainwater capture and groundwater
recharge, as well as with local farming communities to
improve water efficiency and yield. We are assessing new sites
to expand our water stewardship programmes next year.
We believe our work to protect and regenerate nature will
increase our capacity to reduce GHG emissions, increase
biodiversity and protect water systems, within and beyond
our value chain. During 2022, we made progress towards
our target of helping to protect and regenerate 1.5 million
hectares of land, forests, and oceans by 2030. By the end
of 2022, we had played an active role in protecting and
regenerating 0.2 million hectares. This year, we have
continued our partnerships with local governments as well
as Conservation International, WWF, IDH and Inobu as part of
our landscape projects across key palm oil production areas
in Malaysia and Indonesia. Additionally, we are working to
scale our efforts with our brands through our involvement in
initiatives such as the Rimba Collective, of which we are a
founding member.
Waste-free world
We have made progress across all our ambitious plastic
goals, including reducing our use of virgin plastic by rethinking
packaging designs, materials, and business models. While we
know there is still a lot more work to do, we remain committed
to our goals.
We continuously review the quality of our sustainability
reporting to ensure that we are using the best available
information, as our access to data and the accuracy of that
data is improving all the time. This occasionally means that we
need to restate our historic performance to ensure that we are
providing the most accurate view possible.
Historically, we have measured and reported on our target
to reduce the amount of virgin plastic we use by 50% by 2025
against a 2018 baseline. This baseline was developed using
a combination of the best available data and estimates. We
have been working hard to enhance our data accuracy and
have been able to develop a more complete view of the virgin
plastic used in 2019 than we had for prior years. Consequently,
we believe that this is a more robust baseline for measuring
subsequent performance. We have, therefore, updated our
baseline year from 2018 to 2019, but are keeping our target
as a 50% reduction on this new baseline by 2025.
As a result, we are restating our 2021 performance for virgin
plastic reduction against the new baseline as -8% (previously
-16%). In 2022, we delivered an additional reduction of -5% to
give a cumulative reduction of -13%.
The reduction of our virgin plastic footprint has been achieved
through the increased use of recycled plastic, combined with
innovations that use less plastic. We’ve now increased our use
of recycled plastic to 21% of our total packaging footprint – an
increase of 3% on last year. Therefore, we are still on track to
meet our commitment of at least 25% by 2025. We continue to
focus our initiatives on our biggest brands for the greatest
possible impact. For example, our laundry brand OMO (also
known as Persil and Skip) uses 25% recycled plastic in its
bottles, and up to 100% where possible. Across Europe
and North America, Hellmann's is also using 100% recycled
mayonnaise bottles, while Dove uses 100% recycled plastic
in its bottles where technically feasible.
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Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Planet & Society
-
the Circulate Capital Ocean Fund – the world’s first investment
fund dedicated to preventing ocean plastic.
The challenges we face are industry-wide, primarily driven
by the lack of collection and recycling infrastructure. While
we’re working with partners to close this gap, we also need
policymakers to level the playing field for industry and help
facilitate the implementation of solutions at scale. That is why
we are advocating for a robust, legally binding UN Global
Plastic Treaty, which seeks to harmonise global standards
and set mandatory targets which will help reduce plastic
pollution. In September 2022, alongside more than 80 other
organisations, we joined the Business Coalition for a Global
Plastic Treaty.
Positive nutrition
As a global player in the foods industry with sizeable Nutrition
and Ice Cream portfolios, we are aiming to increase the
nutritional value of our products by reducing salt, sugar and
calories in our foods and refreshments. Currently, 64% of our
products meet WHO-aligned nutritional standards against our
commitment to achieve 70% by 2022, while 82% of our portfolio
helps consumers reduce their salt intake to no more than
5g per day, against our commitment to achieve 85% by 2022.
Although we have made good progress towards both, due
to unprecedented supply chain challenges and raw material
shortages, we have not been able to innovate and reformulate
our products at the pace or scale we had planned. As a result,
we have fallen slightly short of achieving these commitments
in 2022 – see page 61 for more on our performance. We remain
committed to sugar and salt reduction, guided by our new
Unilever Science-based Nutrition Criteria (USNC) commitment
which is described below.
Alongside our voluntary efforts on responsible marketing to
children, we are improving the nutritional standards of our
ice cream products. In 2022, 94% of our packaged ice cream
sales volumes had less than 250 kcal per serving while 89%
of packaged ice cream sales volumes contained no more than
22g total sugar per serving.
We continue to drive our positive nutrition agenda across
our Ice Cream and Nutrition portfolios. Our aim is to double
the number of food products sold that meet Unilever's
standards for positive nutrition, which include meaningful
amounts of ingredients such as vegetables and fruits, or
micronutrients. At the end of 2022, 48% of our portfolio offered
positive nutrition. Brands such as Horlicks and Knorr are also
tackling malnutrition through fortification. Since 2017, we have
delivered more than 236 billion servings of products fortified
with critical micronutrients.
Building on our nutritional standards work and positive
nutrition agenda, we have decided to raise the bar on the
nutritional profile of our Nutrition and Ice Cream products. By
2028, we want 85% of our servings to meet our new Unilever
Science-based Nutrition Criteria (USNC). These product-specific
criteria set thresholds for calories, sugar, salt and saturated
fat. We are also working with partners to incentivise
reformulation at scale and enhance the impact on public
health. As a step towards this, in 2022 we were the first global
food company to publicly report on the performance of our
product portfolio against six different externally endorsed
Nutrient Profile Models. We are advocating for an industry-
wide standard Nutrient Profile Model that every food company
can report against.
We are also working hard to reduce the overall amount of
plastic used in our packaging. One of the ways we are doing
this is by shifting to alternative packaging materials to help
remove plastic entirely from some of our products. In France,
our laundry brand Skip has introduced a new cardboard box
for its 3-in-1 laundry capsules, which is set to save around
6,000 tonnes of plastic from our portfolio per year. In the
UK, Carte D’Or switched its entire range from plastic packs
to recyclable paper tubs, which is set to save 900 tonnes of
plastic annually.
Reuse and refill initiatives are a key part of our plan to reduce
the amount of plastic we use. To date, we have conducted
around 50 pilots and continue to expand our refill-at-home
and dilute-at-home solutions to other brands and markets.
For example, we have had success with dilute-at-home OMO
laundry detergent – which gained record market share in Latin
America with its superior, sustainable, and affordable format.
In 2022, we also launched the first concentrated Dove Body
Wash in refillable aluminium bottles, as well as Vaseline’s
classic petroleum jelly in refillable glass jars in China.
55% of our plastic packaging portfolio is reusable, recyclable,
or compostable. This is our actual recyclability rate, based
on the Ellen MacArthur Foundation's Global definition of
'recyclable'. This remains considerably lower than the
percentage of our packaging that is ‘technically recyclable’
with existing technology, which has increased to 71% in 2022.
We launched a packaging innovation for Signal and
Mentadent in France and Italy, which means that the
equivalent of 62 million toothpaste tubes sold during 2022
were technically recyclable. We also introduced recyclable
trigger sprays in Europe across a number of brands including
Cif, Domestos and Lifebuoy. While we are making progress on
implementing solutions that are technically recyclable, we
know that this is only a first step – and that the development
of the necessary recycling infrastructure will take longer.
Another critical part of our plastic agenda is the collection
and processing of more plastic than we sell by 2025. Achieving
this target helps us to tackle plastic pollution and increase
the availability of high-quality recycled plastic in the market.
We’ve made good progress this year in helping to collect
and process approximately 58% of our 2022 global plastic
packaging footprint. Our businesses in India, Indonesia and
Vietnam are the latest markets to have collected and
processed more plastic than they sold through physical
collection and the purchase of recycled plastic.
Across parts of Indonesia, we have expanded our network
of waste banks to around 4,000. These waste banks reward
people in the community for collecting, sorting and returning
used packaging, and in some cases trialling refill stations.
Our partnerships and industry collaborations enable progress,
such as our pledge with industry peers to collectively invest in
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
33
- Planet & Society
providing targeted training and financial support to our value
chain partners. For example, in Pakistan we are working with
a financial services platform to digitise payments between
retailers and distributors. This gives retailers a secure and
convenient way to pay our distributors, as well as access to
credit so they can extend their range of Unilever products
in store.
Future of work
We are taking a number of actions to future-proof our business
and our people against changes in the world of work. See Our
People & Culture on page 28 for more.
Human rights
We aim to advance and promote respect for human rights in
everything we do. In pursuit of this, we continue to implement
action plans relating to our salient human rights issues. For
example, we are using digital tools to assess social risks in our
supply chain, including land rights and forced labour – starting
with palm oil. We launched a Gender Equity Framework
designed to address gender discrimination in agriculture,
manufacturing and women-led last-mile distribution networks.
We also continue to make progress on the elimination of
recruitment fees paid by workers in our supply chain, by
actively monitoring remediation of identified cases.
As part of our human rights due diligence processes, this
year we commissioned independent Human Rights Impact
Assessments in Brazil and the US. We also became a founding
member of the Fair Circularity Initiative to encourage the
adoption of principles on respecting the rights of waste
collectors in the recycling industry’s informal sector, such
as those that exist in India and Indonesia.
We expect our suppliers to conduct business with high
standards of integrity, human rights and environmental
sustainability. The proportion of spend from suppliers who met
the requirements of our Responsible Sourcing Policy was 76% in
2022, a slight fall versus 2021 due to supply chain disruptions,
resource constraints in the social audit service industry, and
labour shortages for remediation activities – which impacted
compliance rates. To reflect the evolving nature of our third
parties and value chain, in December 2022 we published our
Responsible Partner Policy, which replaces the Responsible
Sourcing Policy. The new policy has a broader scope and
includes guidance on reducing GHG emissions, minimising
waste, safeguarding nature and protecting personal data.
Please visit the Unilever UK website for our most recent Modern
Slavery & Human Trafficking Statement.
Health and wellbeing
In line with our goal to improve health and wellbeing and
advance equity and inclusion of 1 billion people per year by
2030, Dove, Lifebuoy, Signal/Pepsodent and Vaseline continue
to take action on issues which resonate strongly with the core
of the brand – such as body confidence and self-esteem, hand
hygiene, oral health, and skin health and healing. In 2022,
we reached 667 million people through our brand purpose
health and wellbeing programmes. See Personal Care on
page 17 and Beauty & Wellbeing on page 14 for more.
Equity, diversity and inclusion
On top of the critical work we are doing in our business to
advance equity, diversity and inclusion (see page 28), we are
also taking action in our advertising and with our suppliers.
As one of the world’s largest advertisers by spend, we have
a responsibility to ensure our advertisements represent
the communities we serve. We are working to increase the
representation of diverse groups in our advertising through
our Act 2 Unstereotype programme. This looks at our end-to-
end marketing process to give opportunities to under-
represented and under-served communities, both on-screen
and behind the camera. While there is still more work to do,
we are encouraged by analysis from Kantar which found
that we are industry leading on our progressive approach to
representation in advertising. Kantar also found that our most
progressive advertising has the potential to deliver almost
double the branded impact than the least progressive.
We have committed to spend €2 billion annually with diverse
businesses worldwide by 2025. These are businesses which
are owned, managed and controlled by members of under-
represented or minority groups in the country in which they
operate. In 2022, our spend reached €818 million thanks to the
growth of our supplier diversity programme which is now live in
22 key markets. Through the programme, we are supporting
our diverse suppliers to access skills, mentoring and finance.
For example, in Kenya we are partnering with Citibank to offer
access to preferential financing for suppliers which are owned
by women.
Raise living standards
Millions of people depend on Unilever to earn a living and we
are already accredited as a global living wage employer by the
Fair Wage Network. We are working to raise living standards
throughout our value chain. A key pillar of our approach is
our work to ensure that everyone who directly provides goods
and services to Unilever earns at least a living wage or income
by 2030. This year, our focus has been on the collaborative
manufacturing partners who are dedicated solely to Unilever
production. Some of our partners have already confirmed that
workers at collaborative manufacturing sites are being paid
a living wage.
We have made good progress in laying the foundations to
ensure that suppliers who provide core services to Unilever
also pay a living wage. Through a comprehensive advocacy
programme, we are asking for widespread adoption of
living wage commitments by all stakeholders, companies,
governments, NGOs and investors, and have started various
studies to demonstrate impact on workers and companies,
for example with Oxfam in India.
Supporting the small and medium-sized enterprises (SMEs)
in our value chain is another part of our approach to raising
living standards. Our goal is to help 5 million SMEs grow their
businesses by 2025. At the end of 2022, 1.8 million small retailer
stores used our digital platforms, enabling them to purchase
our products and in turn grow their business. We are also
€818m
Spend with diverse businesses.
34
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Planet & Society: Climate Transition Action Plan Annual Progress Report
-
Climate Transition Action Plan: Annual Progress Report
Analysis of our net zero value chain GHG emissions (%)
~ 59%
Raw materials
and ingredients'
I
1 Including third-party manufactured products
lnclud ng third-party manufactured products
lnclud ng Unilever's own manufacturing facilities, offices, ware houses and labs
2 Including Unilever's own manufacturing facilitie
s, offices, ware houses and labs
3 Including disposal of waste and packaging and biodegradation
lnclud ng disposal of waste and packaging and biodegradation
w.} 10%
Ci13%
Packa~ing
materials
I
Retail emissions
from ice cream
freezers
I
'1 11%
Product
end of life'
'-~;~~521
Q. 3%
Direct consumer use
(HFC propellants)
Downstream logistics
and distribution
Working towards net zero
Raw materials and ingredients
Unilever's Climate Transition Action Plan (CTAP), which is
available on our website, outlines our climate targets and
the actions we will take to reduce greenhouse gas (GHG)
emissions in our business and value chain as we seek to make
progress towards them. This is our second CTAP progress
report. It sets out our progress against strategic programmes
to deliver net zero, outlines how we are using our influence
for change, and provides an analysis of our GHG emissions.
It also provides an update on our approach to climate
governance, disclosure and emissions measurement, and
demonstrates how closely linked our climate actions are to
delivering our nature goals. For more information on our goals
to protect and regenerate nature, please see page 32.
The complex nature of our business, operating across many
categories, product formats and geographies, means that
our pathway to net zero will consist of a significant number
of initiatives which tackle our biggest emissions sources. The
work we have undertaken in 2022 has helped us to clarify and
prioritise these initiatives within each of our five Business
Groups. Our focus will now be on scaling these initiatives
over the short to medium term to deliver annual absolute
GHG emission reductions.
Our progress this year
In 2022, we made good progress against our targets. We
reduced the Scope 1 and 2 GHG emissions from our operations
by 13% versus 2021 (68% against a 2015 baseline). Our full
value chain Scope 1, 2 and 3 GHG emissions, on a per
consumer use basis, reduced by 5% versus 2021 (19% against
a 2010 baseline), which is another important step towards
halving the emissions of our products per consumer use
by 2030.
When we focus in on our Scope 1, 2 and 3 GHG emissions
in scope of our net zero target ('our GHG emissions'), which
excludes emissions from indirect consumer use, we see
that whilst there was a reduction in product volumes in the
measured period, our GHG emissions increased by 2%. The
progress we have made in reducing GHG emissions from our
operations, packaging, logistics, and our retail emissions,
was offset by an increase in emissions from raw materials and
ingredients and an increase in direct consumer use emissions.
A table detailing our progress against our climate metrics and
targets and an analysis of GHG emissions over the last three
years can be found in our climate metrics and targets section
on pages 38 to 41. The graphic above provides a breakdown of
our GHG emissions.
Emissions from our raw materials and ingredients represent
59% of our GHG emissions. These emissions increased by 4%
from 2021 driven by changes in sales mix within our Nutrition
and Ice Cream Business Groups and changes in the reported
emissions of various raw materials, as a result of now having
improved emissions data. The improvements that we have
made to our data include the use of supplier data, rather
than industry averages, for the production of soda ash (used
in many of our Home Care products), and the use of more
accurate data for the specific types of chocolate and soy we
use in our Nutrition and Ice Cream businesses.
Since emissions associated with raw materials are outside
our direct control, we collaborate closely with our suppliers.
In 2021, we announced the Unilever Supplier Climate
Programme, which aims to accelerate the decarbonisation of
our shared supply chains across raw materials and ingredients
and packaging materials. For more details on packaging
materials see pages 32 to 33.
We are targeting 300 priority suppliers for this programme
and during 2022, we ran a pilot with 35 raw material suppliers
of varying sizes and climate maturities, covering a range of
industries and geographies. Suppliers participating in the pilot
were able to build their climate knowledge and develop expert
capabilities to calculate and share their GHG emissions data.
The feedback from this pilot is informing the roll-out and scale-
up of this important programme in 2023.
Renewable and recycled ingredients
While our business relies on chemicals derived from fossil
fuels, we can reduce our emissions by transitioning towards
ingredients which use renewable or recycled carbon. Our
Home Care Business Group’s Clean Future strategy is at
the forefront of this pioneering approach, identifying
opportunities to replace fossil-fuel-based ingredients with
renewable and recyclable alternatives.
Alternative ingredients are critical to our plans to achieve net
zero and will help us future-proof our portfolio by diversifying
our supply chains while offering consumers more sustainable,
lower emission products. This year we launched a €115 million
($120 million) joint venture with Genomatica, a US-based
biotech company, to commercialise and scale low-carbon
plant-based feedstock ingredients. We expect these
alternative ingredients to deliver GHG emission reductions
in the medium to long term.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
35
- Planet & Society: Climate Transition Action Plan Annual Progress Report
Deforestation-free supply chains and promoting
regenerative agriculture
Forests play a key role in removing carbon from the
atmosphere. We are working towards achieving our goal
of a deforestation-free supply chain for palm oil, paper and
board, tea, soy and cocoa by the end of 2023. This requires
close collaboration with a complex array of suppliers from
smallholder farmers to multinational companies.
We are working towards this by investing in the transformation
of our manufacturing infrastructure. In 2022, we began the
upgrade of our Unilever Oleochemicals facility in North
Sumatra, with a spend of €59 million ($63 million). €70 million
($75 million) is forecasted for further upgrades in 2023. The aim
of this project is to simplify our supply chain and allow us to
process oil from independent mills and smallholder farmers.
Read more about our progress to achieving our deforestation-
free target on page 32.
Our regenerative agriculture programme plays an important
role in transforming our value chain to enable us to achieve
our net zero goals. In 2022, supported by our Climate & Nature
Fund, our Knorr brand has established pilot projects to reduce
the environmental impact of the ingredients used in its
products. Knorr will launch 50 projects in collaboration with
farmers to lower and sequester GHG emissions and reduce
water consumption, while improving biodiversity, soil health
and livelihoods. These form part of our overall regenerative
agriculture programme. Read more about regenerative
agriculture on page 32.
Climate & Nature Fund
Our Climate & Nature Fund is a commitment to invest
€1 billion by 2030 in climate, nature and waste projects. It
aims to connect value chain transformation with our brands
and will help us to take targeted action to address climate
change, protect nature and grow responsibly, ultimately
helping us achieve our net zero ambition. By the end of
2022, we had spent and committed over €200 million.
Low-carbon dairy
Dairy products are a priority raw material used by our Ice
Cream brands such as Wall’s, Magnum and Ben & Jerry’s.
Cows emit large amounts of methane – one of the most
potent greenhouse gases. Lowering GHG emissions from dairy
products is therefore essential for the delivery of our net zero
goal. As well as exploring the use of regenerative farming
practices to reduce the GHG emissions of our dairy value chain,
we are evaluating new technologies to reduce dairy emissions
at source.
In 2022, in the US and Europe, we launched a pilot through
our Ben & Jerry’s brand to work with 15 dairy farms with the
aim of reducing emissions by up to half by 2024.
Packaging materials
Emissions associated with our packaging materials make
up 13% of our GHG emissions. In 2022, our emissions from
packaging reduced by 1% versus 2021, driven by a reduction
in the use of virgin plastic which is made from a derivative of
crude oil and natural gas. Read more about plastic packaging
on pages 32 to 33.
Our operations
Despite the GHG emissions from our operations being
relatively small at 2%, they are where we have the greatest
influence. We are working to achieve a 100% reduction in our
operational Scope 1 and 2 GHG emissions from our factories,
offices, research laboratories and warehouses by 2030,
against a 2015 baseline. In 2022, we reduced our operational
GHG emissions by 13%. This means that in total we have
reduced our operational GHG emissions by 68% versus 2015,
putting us on track to achieve our interim target of a 70%
reduction by 2025. We are making progress by converting to
renewable electricity and energy while, at the same time,
improving our energy efficiency.
Renewable electricity
In 2022, 93% of our electricity was from renewable sources,
an increase of almost 7% since 2021. We report in line with
RE100’s best practice on renewable electricity reporting,
which means that we only report electricity as 'renewable'
when the accompanying Renewable Energy Certificates (RECs),
originate in the same market in which we are operating. We
also include renewable electricity generated at our factories,
such as the electricity from our combined heat and power
plants (CHPs) and on-site solar installations.
Renewable energy
Decarbonisation of the energy we use to generate heat is
critical in the next phase of our strategy to achieve our 2030
operational emissions goal, including 100% renewable thermal
energy. In 2022, over a third of our thermal energy came from
renewable sources. Our factories also achieved a full year of
production without direct coal use in our operations. In June
2022, we responded to the growing external debate on the
sustainability of biogenic fuel sources with the publication of
the Unilever position on the sustainable sourcing of biofuels.
Energy efficiency
We are focused on improving energy efficiency and in 2022,
our factories reduced their operational energy consumption
by 4%, versus 2021. In 2022, we invested €37 million in capital
expenditure projects via our Clean Technology Fund. These
projects were mainly focused on renewable energy and
resource efficiency, and we estimate that they will result in an
88,000 tonne reduction in GHG emissions across their lifecycles.
We also use an internal carbon price of €70 per tonne of CO2
to inform our investment decision-making.
Plant-based foods
Food waste
Another part of our climate transition strategy is to introduce
more plant-based options into our Ice Cream and Nutrition
portfolios, increasing sales of dairy alternatives and meat
replacement products. In 2022, Unilever Nutrition and Ice
Cream achieved €1.2 billion in sales from plant-based
products. In our Ice Cream business, our non-dairy, plant-
based portfolio represents 8% of the Business Group's turnover.
In 2022, we launched new vegan products, including Magnum
Vegan Mini Classics.
Tackling food waste helps to mitigate climate change,
address food insecurity, protect natural resources and deliver
economic benefits. That is why we are aiming to halve food
waste in our operations by 2025 (measured in tonnes rather
than CO2e). In 2022, our company-wide food waste warrior
programmes resulted in good progress against this goal,
and reduced food waste per tonne of food handled in our
operations by 17%, versus a 2019 baseline.
36
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
-
Product end of life
The disposal of waste products and packaging, including the
biodegradation of product formulations after their use, makes
up 11% of our GHG emissions.
Our goal is that 100% of our ingredients will be biodegradable
by 2030. We want consumers to be confident that the products
they use will not leave a physical trace in the environment. We
are therefore focusing on product reformulation to replace
the small percentage of our ingredients which do not meet
our biodegradability standards. We are also using new
biodegradable ingredients such as coconut oil instead of
silicone in our Hair Care portfolio.
We recognise that this goal creates a tension with our net
zero target because when products biodegrade, they break
down into their component parts, which could include CO2,
producing additional emissions. Therefore, we remain focused
on increasing our use of renewable and recycled ingredients
which will lower GHG emissions as our products biodegrade.
For more details, please see our update on renewable and
recycled ingredients on page 35.
Halving the GHG impact of our products
across the full product lifecycle
Around two-thirds of our products' full value chain GHG
emissions come from their use by consumers (indirect
consumer use). This includes, for instance, the energy used by
washing machines and hot water used for showering. There is
a limit to how much we can influence emissions from product
use as consumers make their own choices on how long they
shower, which energy provider they use, and how efficient
their home appliances are. We are therefore reliant, as many
companies are, on the decarbonisation of the energy grid
to reduce our downstream indirect use emissions. We are
advocating for system-wide change, such as the acceleration
of renewable energy globally. In 2022, we were awarded the
RE100 Market Trailblazer award for our commitment to driving
market change through our electricity procurement approach
and our external policy advocacy.
In 2022, our indirect consumer use emissions fell by 11% from
2021. This was driven by a number of factors, across many
of our key markets: grid energy decarbonisation in the UK,
Germany, the Netherlands and Turkey, sales mix changes and
higher product volume growth in markets where cold washing
and handwashing is predominant. This reduction in indirect
consumer use emissions was the primary driver of the 5%
reduction in our full value chain GHG emissions per consumer
use since 2021.
Planet & Society: Climate Transition Action Plan Annual Progress Report
Logistics and distribution
Downstream logistics and distribution make up 3% of our GHG
emissions. Emissions from upstream logistics and distribution
are included in the raw material and ingredients category.
In 2022, we reduced our total logistics emissions by 7% versus
2020. One of the ways we have achieved this is by reducing the
number of kilometres travelled, by 11% versus 2020.
We are also piloting new alternative fuels and zero emission
technologies in collaboration with our logistics partners. For
example, in the Netherlands, we have been trialling zero
emission refrigeration technology for transporting our ice
cream products which uses electricity instead of diesel.
We strongly support the transition to electric vehicles (EVs)
and have committed to 100% EVs or hybrids in our global car
fleet by 2030. EVs and hybrids currently make up over 8% of
our fleet.
In 2022, we conducted a pilot in Italy and Denmark
to understand the carbon emissions of our customer
development operations and identify the areas of greatest
impact to inform our actions in 2023 and beyond.
Retail emissions from ice cream freezers
Ice cream freezers in retail stores make up 10% of our GHG
emissions. Retail emissions decreased by 5% from 2021,
primarily as a result of the wider industry energy grid
decarbonisation and our continued transition to lower
impact point-of-sale cabinets.
This year, we continued the progress made in 2021 and
all new freezers we purchased used lower carbon, natural
hydrocarbon refrigerants. We estimate that over 95% of our
3 million freezers now use these refrigerants. We also continue
to invest in energy efficient freezers, with the average energy
use per unit falling by 2.5% compared to 2021.
In 2022, we completed a market trial in Germany of
‘warming up’ freezers from -18°C to -12°C, to reduce energy
consumption. The result of this trial was positive: with suitable
product formulations, we can achieve an energy saving of up
to 30% while not compromising on ice cream quality. A second
trial will follow in Indonesia in 2023.
Direct consumer use (HFC propellants)
Propellants are used in aerosol products: hair sprays, body
sprays and deodorant sprays. In the US, Volatile Organic
Compound (VOC) regulations restrict the use of the
hydrocarbon propellants that we use elsewhere. Instead,
hydrofluorocarbon (HFC) propellants are used to reduce the
VOC levels in aerosol products in the US. HFC propellants
typically have a Global Warming Potential (GWP) of around
120, meaning they are 120 times more potent than carbon
dioxide in contributing to global warming. As a result,
HFC propellants in North America make up 2% of our
GHG emissions.
In 2022, GHG emissions from direct consumer use of sold
products increased by 15% from 2021. This was driven by a
post Covid bounce back in the sales of hair sprays, deodorant
sprays and body sprays in the US. Additionally, a change in
the US regulation which requires a lowering of VOCs led to
an increase in the HFCs used in the short term. However,
we believe this regulatory change will, in the future, enable
innovation on alternative propellant systems to facilitate
significantly lower GHG emissions from hair sprays, dry
shampoos, deodorant sprays and body sprays. We remain
committed to leading the development of alternative, low
GWP propellants and formats. For example, in 2022 our natural
Personal Care brand Schmidt’s launched an innovation which
uses nitrogen-propelled air spray in the US.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
37
- Planet & Society: Climate Transition Action Plan Annual Progress Report
Using our influence
Our climate metrics and targets
We use a number of key metrics and targets to assess and
manage climate risks and opportunities across our full value
chain. Two of the targets have been recognised as science-
based by the Science Based Targets initiative ('SBTi'):
■ Reduce in absolute terms our operational (Scope 1 and 2)
emissions by 100% by 2030 against a 2015 baseline, with
an interim goal to achieve a 70% reduction by 2025 against
a 2015 baseline (medium-term emissions target).
■ Halve the full value chain emissions (Scope 1 to 3) of our
products on a per consumer use basis by 2030 against
a 2010 baseline (medium-term intensity target).
While our operational target is consistent with the 1.5°C
ambition of the Paris Agreement, our full value chain target
is consistent with a 2°C temperature increase. This is because
it was set in 2010 and validated by the Science Based Targets
initiative before the 1.5°C validation was introduced.
We have a target to achieve net zero emissions by 2039. We
are currently completing a review of our 2030 full value chain
target and intend to submit an updated target, along with our
net zero target, to SBTi for validation in 2023.
We also have a number of nature, waste and nutrition related
targets which play an important role in tackling climate
change.
We are using our voice to advocate for systematic change
that will help us, and others, achieve our climate goals in
line with the Paris Agreement. In 2022, our policy advocacy
priorities included:
■ Securing high ambition outcomes in emerging frameworks
around net zero targets and climate transition plans.
■ Helping to shape the evolution of the voluntary carbon
market in a way that supports additional financial flows
to forest protection and nature regeneration, without
removing the pressure on companies to reduce emissions.
■ Continuing to push for high ambition policy outcomes
within international forums such as the COP27 climate
summit and the G20.
This work was primarily conducted in partnership with
other businesses through coalitions, and through direct
engagement and advocacy with policymakers in a number
of key markets.
Our CEO Alan Jope continued to support the UK COP26
Presidency as a member of the COP26 Business Leaders Group.
We also attended COP27, working in partnership with groups
such as the We Mean Business Coalition, to call for higher
ambition national climate plans, increased finance for climate
mitigation and adaptation in vulnerable countries, and energy
and food systems transformation, including the building
of more resilient and sustainable food chains through
regenerative agriculture.
We are conducting a global trade association review. As
part of this, we are assessing whether trade associations are
aligned with the Paris Agreement, our climate policy position
and sustainability commitments. We disclose a list of our
principal trade associations by region on our website. In 2022,
we also supported the launch, at COP27 Sharm El-Sheikh, of
the Corporate Knights Action Declaration on Climate Policy
Engagement.
Governance and disclosure
Governance
Full details of our climate governance are included in our TCFD
reporting on page 42. In 2022, we introduced new internal
governance mechanisms to oversee progress against our
climate goals. These included the creation of a quarterly
sustainability review undertaken by the Unilever Leadership
Executive where progress against climate and other
sustainability targets is reviewed.
Disclosure
We believe that transparency on our GHG emissions and
the progress we are making towards our targets is key
to delivering our net zero goal. In addition to the climate
disclosures in our Annual Report and Accounts, we provide
detailed information on our climate strategy and performance
to CDP, the leading disclosure platform. In 2022, we received a
rating of A for both Climate and Forests and A- for our Water
disclosures based on our submissions of 2021 data. Our CDP
submissions are publicly available on our website.
38
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Planet & Society: Climate Transition Action Plan Annual Progress Report
-
Progress against climate metrics and targets
The table below shows our progress against the key metrics and targets that we are currently able to measure. Refer to pages 35
to 38 for further details on our progress.
Metrics and targets
Net zero GHG emissions across our value chain by 2039 (million tonnes CO2e)(a)
Scope 1 and 2 GHG emissions (Unilever operations)
Reduce GHG emissions in our operations by 100% by 2030 (reduction in emissions from
energy and refrigerant use in our operations since 2015)(b)
100% renewable electricity in our operations(b)
Energy use in GJ per tonne of production in our manufacturing sites(b)
CO2 emissions from energy use in kg per tonne of production in our manufacturing sites(b)
100% EVs or hybrids in our global car fleet by 2030(a)
Scope 1, 2 and 3 GHG emissions (Unilever operations, upstream and downstream)
Estimated 40%-50% reduction in logistics emissions by 2030 (% change since 2020)
Halve greenhouse gas impact of our products across the lifecycle by 2030(a) (% change since
2010)
Nature
100% sustainable sourcing for key agricultural crops
Implement water stewardship programmes in 100 locations in water-stressed areas
by 2030
Help protect and regenerate 1.5 million hectares of land, forests and oceans by 2030
(hectares)
Waste
25% recycled plastic by 2025(a)
Halve food waste in our operations by 2025 (% change since 2019)
Nutrition
€1.5 billion of sales per annum from plant-based products in categories whose products
are traditionally using animal-derived ingredients by 2025
Supported by:
€1 billion Climate & Nature Fund – spent and committed
Note
1
2022
34.31
2021
33.74
2020
35.67
2
3
'-68%†
93%
1.22†
30.35†
8%
-64%
86%
1.23
34.06
–
-58%
80%
1.21
38.93
–
-7%
–
–
4
-19%
-14%Θ
'
-10%
81%
79%
8
–
0.2m
0.1m
21%
-17%
18%
'-4%(c)
€1.2bn
€0.2bn
–
0
–
–
–
–
–
–
–
†
Θ
This metric was subject to independent limited assurance by PricewaterhouseCoopers LLP (‘PwC’) in 2022. For PwC's 2022 Limited Assurance report and the 2022
Unilever Basis of Preparation for assured metrics, see www.unilever.com/planet-and-society/sustainability-reporting-centre/independent-assurance.
This metric was subject to independent limited assurance by PwC in 2021. For details and 2021 Basis of Preparation, see www.unilever.com/planet-and-
society/sustainability-reporting-centre/reporting-archive.
(a) Measured for the 12 month period ended 30 June.
(b) Measured for the 12 month period ended 30 September.
(c) We have updated our 2019 baseline to reflect the divestment of our Tea business. Therefore, we are restating our 2021 performance.
Notes on metrics and targets
Note 1: Analysis of GHG emissions
GHG emissions (million tonnes CO2e)
Scope 1 and 2 GHG emissions: Unilever operations(a) (Note 2)
Scope 3 GHG emissions(b)
Raw materials and ingredients
Packaging materials
Downstream logistics and distribution
Retail ice cream freezers
Direct consumer use (HFC propellants)
Product end of life
Scope 1, 2 and 3 GHG emissions in scope of net zero target
Scope 3 GHG emissions – indirect consumer use(b)
Total Scope 1, 2 and 3 GHG emissions
2022
0.62
33.69
20.16
4.54
1.00
3.55
0.82
3.62
34.31
57.54
91.85
2021
0.71
33.03
19.35
4.60
1.02(c)
3.75
0.71
3.60
33.74
64.87
98.61
2020
0.82
34.85
19.32
4.53
2.78
4.01
0.77
3.44
35.67
65.76
101.43
2022 – 2021
% change
-13%
2%
4%
-1%
-2%
-5%
15%
1%
2%
-11%
-7%
(a) Measured for the 12 month period ended 30 September.
(b) Measured for the 12 month period ended 30 June.
(c) The change in our logistics and distribution emissions between 2020 and 2021 is a result of a move from using industry-standard global GHG emission conversion
factors to industry-standard regional GHG conversion factors in our calculations.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
39
- Planet & Society: Climate Transition Action Plan Annual Progress Report
GHG emissions consist of our measured Scope 1 and 2
emissions plus an estimate of our Scope 3 emissions.
value chain GHG emissions figure by a simple extrapolation
of the calculated GHG emissions from the 14 countries.
Scope 1 encompasses direct GHG emissions from energy
generated from fossil fuels such as gas and oil, as well as
emissions from refrigerants. Scope 2 encompasses indirect
GHG emissions from the on-site generation and purchase
of electricity according to the ‘market-based method’ and
purchased thermal energy.
Scope 1 and 2 GHG emissions come from energy and
refrigerants used in our own operations, largely in our factories
which produce most of our emissions.
Scope 3 GHG emissions are estimated by measuring the
emissions of a representative sample of approximately
3,000 products across 12 categories and 14 countries through
a detailed footprinting exercise. For each representative
product, internal and external data sources are used to
represent various lifecycle activities and inputs (for example,
specification of product, energy for site of manufacture and
consumer use data). The GHG emissions impact of ingredients
and packaging are obtained from external databases (based
on industry averages) or internal expert studies.
We then extrapolate the results at a country level across the
unsampled products to obtain the estimated GHG emissions
for each of the 14 countries. These 14 countries account for
60-70% of our total sales volumes. We estimate our global full
Note 2: Analysis of GHG emissions in our operations
Scope 1 and 2 GHG emissions (million tonnes CO2e)
Scope 1 GHG emissions(a)
Renewable energy
Non-renewable energy
Refrigerants
Scope 2 GHG emissions(a)
Purchased renewable electricity
Purchased non-renewable electricity
Purchased renewable thermal energy
Purchased non-renewable thermal energy
Total Scope 1 and 2 GHG emissions
As set out in our CTAP, and in line with the SBTi’s approach,
the GHG emissions included in the scope of our net zero target
('our GHG emissions') exclude the indirect consumer use
emissions associated with our products.
We are on a continuous journey to update and improve the
accuracy of our reported emissions by reducing the level of
estimation and by replacing the use of industry averages with
more specific supplier data. These changes can affect both the
emissions in a baseline year for our approved targets and the
annual emissions we report.
Measuring Scope 3 emissions is challenging for most
companies with measurement methodologies reliant on
estimations and the use of industry-average data. Following
a successful pilot earlier this year, through the Partnership for
Carbon Transparency (PACT), hosted by the World Business
Council for Sustainable Development, we have now
successfully exchanged emissions data with several partners.
This work demonstrates proof of concept for what we believe
will be a significant shift in the way that Scope 3 emissions are
standardised, measured and reported in the future.
2022
0.50
0
0.48
0.02
0.12
0
0.03
0
0.09
0.62
2021
0.56
0
0.54
0.02
0.15
0
0.06
0
0.09
0.71
2020
0.60
0
0.59
0.01
0.22
0
0.13
0
0.09
0.82
Reduction in Scope 1 and 2 GHG emissions from energy and refrigerant use in our
operations since 2015 (%)
'-68% †
-64%
-58%
†
This metric was subject to independent limited assurance by PricewaterhouseCoopers LLP (‘PwC’) in 2022. For PwC's 2022 Limited Assurance report and the 2022
Unilever Basis of Preparation for assured metrics, see www.unilever.com/planet-and-society/sustainability-reporting-centre/independent-assurance.
(a) Measured for the 12 month period ended 30 September.
40
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Planet & Society: Climate Transition Action Plan Annual Progress Report
Note 3: Analysis of renewable and non-renewable electricity in our operations
Renewable electricity (% of kWh)
On-site renewable self-generation
Purchased renewable electricity:
On-site Purchase Power Agreements
Off-site Purchase Power Agreements
Green electricity products from an energy supplier (green tariffs/bundled RECs)
Green electricity purchased in markets with greater than 95% renewable grid
Unbundled RECs bought in market
Total renewable electricity
Non-renewable electricity (% of kWh)
On-site non-renewable electricity generation (e.g. gas-fired on-site CHP)
Purchased non-renewable electricity (e.g. non-grid transfer of CHP)
Unbundled RECs bought in an adjacent market
Total non-renewable electricity
Note 4: Analysis of GHG emissions per consumer use
GHG per consumer use
GHG impact per consumer use (grams CO2e)
Reduction in GHG impact per consumer use since 2010 (%)
-
2022
1.4%
91.6%
0.4%
12.1%
18.0%
0.2%
69.3%
93.0%
2022
3.6%
0.1%
3.3%
7.0%
2021
2.5%
83.8%
0.3%
9.8%
24.5%
0.2%
65.2%
86.3%
2021
7.5%
0.1%
6.1%
13.7%
2020
1.0%
78.8%
0.5%
15.3%
18.8%
0.1%
65.4%
79.8%
2020
7.7%
5.8%
6.7%
20.2%
2022
41.4
-19%
2021
43.6Θ
-14%Θ
'
2020
45.6
-10%
Θ
This metric was subject to independent limited assurance by PwC in 2021. For details and 2021 Basis of Preparation, see www.unilever.com/planet-and-
society/sustainability-reporting-centre/reporting-archive.
Our 2030 full value chain GHG emissions target is expressed on a 'per consumer use' basis. This means a single use, portion or
serving of a product. This target covers Scope 1, 2 and 3 emissions across the full value chain including both direct and indirect
consumer use emissions. Consumer use is based on either consumer habits studies or on-pack recommendations. In cases where
relevant consumer habits studies are unavailable, internal expert opinion is also used.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
41
- Planet & Society: Task Force on Climate-related Financial Disclosures statement
Task Force on Climate-related
Financial Disclosures statement
The following statement, which Unilever believes is consistent
with the Task Force on Climate-related Financial Disclosures
(TCFD) Recommendations and Recommended Disclosures,
details the risks and opportunities arising from climate
change, the potential impact on our business and the actions
we’re taking to respond. We also integrate climate-related
disclosures throughout this Annual Report and Accounts,
including in our Climate Transition Action Plan (CTAP) Annual
Progress Report on pages 35 to 41. A detailed breakdown
of our emissions can be found on page 39. See our website
for our CTAP.
Governance
The overall governance structure for managing Unilever’s
climate risks and opportunities is the same as for any of
Unilever’s other key risks and opportunities i.e. all of the
following play a key role in governance: the Board, the Board
subcommittees, ULE, ULE subcommittees, Business Group
leadership teams, specialist management governance groups
and specialist teams together with the support of relevant
policies and procedures applied by everyone in the business.
Whilst the Board takes overall accountability for the
management of all risks and opportunities, including climate
change (see page 67), our CEO is ultimately responsible for
oversight of our climate change agenda. The Board delegates
specific climate change matters to each of the Board
subcommittees:
■ The Corporate Responsibility Committee – oversees the
development of Unilever’s sustainability agenda (which
includes climate matters), the progress against that agenda,
including performance against specific targets, whilst also
reviewing sustainability-related risks, developments and
opportunities (see page 107).
■ The Audit Committee – oversees the non-financial
disclosures in our Annual Report and Accounts, which
includes climate-related disclosures. This includes reviewing
the scope and results of any internal and external assurance
activities obtained over the disclosures (see page 102).
■ The Compensation Committee – supports the sustainability
strategy which includes the climate strategy through
alignment of Unilever’s incentive plan to the sustainability
agenda and ambitions (see page 112).
■ The Nominating and Corporate Governance Committee –
is responsible for ensuring that the composition of the Board
provides sufficient skills and experience in sustainability
matters including climate change to deliver on the
sustainability agenda (see page 98).
■ The Board is supported by ULE and the Sustainability
Advisory Council. The Council is made up of seven
independent external specialists in social and
environmental matters and meets twice a year to guide
and critique our strategy. The ULE discuss key strategic
sustainability matters at least quarterly. During 2022,
climate change matters were discussed at each meeting
including progress against our climate-related Compass
goals. The specific topics discussed included our net zero
roadmaps, changes in the SBTi guidelines and implications
on our targets, and Climate & Nature Fund progress and
priorities.
Additional ULE subcommittees are also in place to support
our climate agenda and ULE decision-making, including:
■ Business Operations Sustainability Steering Committee:
Provides strategic guidance on implementation of our
Climate, Nature and Social Compass commitments within
our extended supply chain. Chaired by our Chief Business
Operations Officer, attended together with our Chief
Sustainability Officer (CSO), Chief Procurement Officer
and Head of Sustainable Business and Reporting.
■ Climate and Nature Investment Committee: Evaluates
and approves investment proposals, reviews progress
against key milestones for the Climate & Nature Fund,
our €1 billion commitment to commercialising sustainability
through disruptive transformations of our value chain.
Chaired by our Chief Business Operations Officer together
with our CSO, Chief R&D Officer, Head of Sustainable
Business and Reporting and our five Business Group
Presidents.
Each Business Group has a sustainability lead to ensure that
sustainability risks and opportunities are embedded into their
strategies and performance is monitored.
We also have a specialist Corporate team, the Global
Sustainability Function, led by our CSO. This team supports the
Business Group teams in developing their business strategies
whilst also driving transformational change across markets
through advocacy and partnerships. Our CSO also chairs the
Unilever Next Gen Sustainability Council which 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.
In addition, included within the Supply Chain, R&D and Finance
corporate functions, we have teams of experts who are
focused on the sustainability agenda which includes climate-
related matters. Their activities include developing relevant
policies and procedures e.g. responsible sourcing, sustainable
capex and metric definitions (scope and calculation
methodologies).
We regularly engage with our investors on a wide range of
sustainability matters including our climate strategy. In 2021,
we achieved shareholder support for our CTAP through an
advisory vote at our AGM. We will continue to have an advisory
vote on the CTAP every three years.
Remuneration for management employees – up to and
including the ULE – continues to be formally linked to
performance against climate change goals. Their reward
packages include fixed pay, a bonus as a percentage of fixed
pay and eligibility to participate in a long-term Performance
Share Plan (PSP).
The PSP is linked to financial and sustainability performance,
guided by our Sustainability Progress Index (SPI), which
accounts for 25% of the total PSP award. The SPI in 2022 is
determined by considering performance against a number
of sustainability targets – see page 117 for details.
See pages 117 to 118 for more on PSP including the role
of the Board’s Compensation Committee and Corporate
Responsibility Committee in determining how the PSP
operates, and the SPI outcome each year.
42
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Planet & Society: Task Force on Climate-related Financial Disclosures statement
-
Strategy and risk management
Climate change is a principal risk to Unilever which has the
potential – to varying degrees – to impact our business in the
short-, medium- and long-term. We face potential physical
environment risks from the effects of climate change on our
business, including extreme weather and water scarcity.
Potential regulatory and transition market risks associated
with the shift to a low-carbon economy include changing
consumer preferences and future government policy and
regulation. These also present opportunities. The potential
impacts of climate change are taken into account in
developing the overall strategy, our Business Group strategies
and financial plans.
More detail on these risks, opportunities and the mitigating
actions we’re taking can be found on pages 44 to 51.
The process for assessing and identifying climate-related
risks is the same for each of the principal risks and is described
on page 67. The risks are reviewed and assessed on an
ongoing basis and formally at least once per year. For each
of our principal risks we have a risk management framework
detailing the controls we have in place, who is responsible for
managing both the overall risk and the individual controls
mitigating it. We monitor risks throughout the year to identify
changes in the risk profile.
We regularly, where appropriate, carry out climate-related risk
assessments at site level, supplier level, as well as innovation-
project level. Climate-related risks are managed by the team
relevant to where the risk resides. For example, climate risks in
relation to commodities in the supply chain are managed by
our procurement team.
Understanding financial impact: scenario analysis
We have conducted several high-level scenario analyses on
the potential impacts of climate change to help us consider
and adapt our strategies and financial planning. In prior
years, we have reported the potential financial impacts of
climate change on our business in 2030 if average global
temperatures were to rise by 2°C and 4°C above pre-industrial
levels by 2100. This analysis led us to understand that limiting
warming to 2°C would primarily expose us to economic and
regulatory transition risks, whereas a 4°C warming level would
expose us to unprecedented physical risks. In 2021, as new
scientific evidence was released by the UN’s Intergovernmental
Panel on Climate Change (IPCC) and the global consensus
around the need for governments to commit to a 1.5°C world
strengthened, we extended our scenario analyses to assess
the impacts of a 1.5°C temperature increase above pre-
industrial levels by 2100 on our business in 2030, 2039
and 2050.
Understanding and modelling the potential financial
impact on the business in 2030, 2039 and 2050 of
limiting global warming to 1.5°C
The IPCC’s sixth assessment report (AR6), the most up-to-
date compendium from the global scientific community on
climate change, states that limiting warming to 1.5°C above
pre-industrial levels is necessary to prevent the severe
environmental consequences that are likely to occur in a 2°C
warmer world, and the catastrophic impacts that would
materialise if temperatures rose by 4°C.
However, it also noted that achieving a 1.5°C world would
still imply major disruption and would necessitate a fast and
aggressive transition of our global economy, encompassing
policy and regulation, production and consumption systems,
societal and economic structures and behaviours, and
infrastructure development and deployment of new
technologies.
The IPCC also sets out multiple pathways that the world
could take to limit global warming to 1.5°C. The nature
of the pathway taken significantly impacts the risks and
opportunities that a business will face.
In assessing the material risks and opportunities Unilever
would face in a world focused on achieving 1.5°C we have
reviewed in detail two pathways, ‘proactive’ and ‘reactive’,
that we assessed as more likely than other more extreme
possible pathways. In the ‘proactive’ route, there is an early
and steady reduction of emissions as a result of a fast
response from all economic actors, meaning there is less
dependence on technological advancements to remove
carbon from the atmosphere in the second half of the century.
Conversely, in the ‘reactive’ route, significant action by
economic actors is delayed to 2030, after which a very rapid
transition across all actors is required, accompanied by
deployment at a very large scale of low-carbon energy and
carbon removal activities and technology.
Key climate scenarios: 1.5°C, 2°C and 4°C
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Speed of Innovation
Proactive route
■ Aggressive and persistent
regulation from today
■ Dramatic changes to
lifestyle from today,
towards minimising
climate impact and social
inequality
■ Reliance on available and
proven technologies
Reactive route
■ Gradual regulation by
2030, very aggressive
post-2030
■ Continuation of historical
societal trends until 2030,
then rapid pivot
■ Major reliance on
technologies that are not
yet proven to scale
■ Lower reliance on carbon
removal technologies
■ Higher reliance on carbon
removal technologies
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
43
- Planet & Society: Task Force on Climate-related Financial Disclosures statement
Risks and opportunities assessed in creating our
1.5°C scenario
In creating our 1.5°C scenario analysis, we took the two
pathways and considered the five broad types of risks and
opportunities using the TCFD risk framework: Regulatory risks;
Market risks; Physical environment risks; Innovative products
and services opportunities; and Resource efficiency, resilience,
and market opportunities. We identified approximately 40
specific risk and opportunity areas which could impact us in
2030, 2039 and 2050, each of which we assessed qualitatively,
supported where possible with high-level quantitative
assessments. The assessments are based on financial
scenarios and do not represent financial forecasts. They
exclude any actions that we might undertake to mitigate
or adapt to these risks.
The quantitative assessments were developed to understand
high-level materiality and order of magnitude financial impact
rather than perform detailed simulations or forecasts on the
long-term future of markets and products.
The data used was from internal environmental, operational,
and financial data and external science-based data and
assumptions from reputable and broadly used sources such
as the IPCC or the International Energy Agency.
Key risks and opportunities
Out of all the risks and opportunities we assessed as part of
our 1.5°C scenario assessment, there are 11 which we believe
are significant and could at some time in the future be
material to our business. We have combined the outputs
from the ‘proactive’ and ‘reactive’ analyses since the risks and
opportunities are similar, with the differences only being in the
size and timing of impact. Due to the nature of climate risks
and opportunities we are monitoring them across a number
of time horizons. Short term (up to three years) – this aligns
with our three-year strategic plans, medium term (three to
ten years) and long term (beyond ten years).
Where we have been able to quantify the risk, the ranges
represent potential impacts of the different pathways.
Actions to mitigate the risks and capitalise on the
opportunities have been consolidated into our Compass
strategy (page 4) and our CTAP (pages 35 to 41).
Below we summarise the 11 risks and opportunities. Given
the nature of our products, all of the risks noted below are
applicable to all our Business Groups and there are only
modest variations in their relative significance for each
Business Group. For more details on key targets, see pages 60
to 61.
Risk
Carbon tax
Regulatory risks
Management of risk
Actions:
This includes carbon taxes and voluntary removal or offset
costs. Tightening regional or national regulations as well as
climate commitments across individual businesses could drive
widespread implementation of these taxes or market schemes.
This could translate into rising direct and indirect costs linked
to carbon emissions, where the strongest impact would likely
be on costs of sales linked to raw materials, production, and
distribution emissions. Carbon taxes on household emissions
or costs passed through to our consumers linked to household
emissions may impact their disposable income and ultimately
their purchasing power.
Impact on Business Groups
All Business Groups could be impacted by carbon taxes or
voluntary removal costs. Per unit of consumption, our Ice Cream
business has the highest carbon emissions from the use of
dairy ingredients and the energy used in ice cream storage/
transport/point-of-sale freezer cabinets. The highest absolute
carbon emissions from sourcing materials, production and
distribution, is in Home Care whereas it is lowest in Beauty &
Wellbeing.
Timeframe: Medium term to long term
We have developed a CTAP which sets out in detail activities
to reduce our carbon emissions. For example, our eco-
efficiency programmes aim to reduce energy demand and
emissions in our operations, and beyond our operations,
we are working with agricultural raw material suppliers on
climate-smart agriculture and aim to cut emissions from
energy use in more than 3 million point-of-sale ice cream
cabinets.
We support the use of internal carbon pricing as a tool to
help us achieve our zero emissions goal. We use an internal
carbon price of €70 per tonne to inform our investment
decision-making.
Key targets:
■ Halve greenhouse gas impact of our products across the
lifecycle by 2030
■ Zero GHG emissions in our operations by 2030
■ Net zero GHG emissions across our value chain by 2039
44
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Planet & Society: Task Force on Climate-related Financial Disclosures statement
-
Risk
Land use regulations
Regulatory risks continued
Management of risk
Actions:
These could drive reforms to radically restructure current global
land use patterns to conserve and expand forest land, serving
as the main natural carbon removal solution. This could reduce
land available for food crops, pasture, and timber and hence
access to our primary commodities which could drive reduced
crop output and increase raw material prices.
We monitor potential land use regulations to ensure we
understand their implications so that we can adapt our
raw material supply strategy. In partnership with others, we
continue to work towards a deforestation-free supply chain
for our key agricultural raw materials. In addition, we are
working with farmers across our supply chain to drive
sustainable sourcing and regenerative agriculture.
Impact on Business Groups
All Business Groups could be impacted by land use regulation.
The majority of our products are derived from agricultural raw
materials and thus any limitations placed on land use would
have a similar impact across each Business Group. Specific
land use regulations vis-à-vis certain usages/crops could
impact the Business Groups differently e.g. if dairy farming
land was restricted and nothing else, then the Ice Cream
business would be most impacted.
Timeframe: Medium term to long term
Key targets:
■ Deforestation-free supply chain in palm oil, paper and
board, tea, soy and cocoa by 2023
■ Help protect and regenerate 1.5 million hectares of land,
forests and oceans by 2030
Product composition regulations
Actions:
These could restrict or ban the use of certain GHG-intensive
components and ingredients in everyday products. This would
require the redesign of products and packaging to comply,
which could increase costs.
Impact on Business Groups
All Business Groups could be impacted by product composition
regulations. If there was a ban on the use of GHG-intensive
ingredients/components, then there is a greater likelihood that
the impact on our Personal Care and Home Care businesses
would be greater than on our other businesses, as some
personal care products in certain countries use HFC propellants
and in home care, various chemicals such as soda ash are used.
Timeframe: Medium term to long term
We monitor regulatory developments to ensure that our
product composition is compliant and that future
innovations/products are designed to consider forthcoming
climate-related legislation. As part of our CTAP, we are
committed to reducing the GHG impact of our products
and as part of this, we are reviewing our intensive GHG
components and ingredients and looking for substitutions
or how changes in their production processes can reduce
their GHG emissions. We have a diverse portfolio of products
and offer a range of formats to meet consumer's needs and
this helps mitigate the potential impact of restrictions or
bans on specific GHG-intensive materials. Specifically on
HFC propellants, we are working with regulators to change
the regulations to allow the use of alternative propellant
systems.
Key targets:
■ Replace fossil-fuel-derived carbon with renewable or
recycled carbon in all our cleaning and laundry product
formulations by 2030
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
45
- Planet & Society: Task Force on Climate-related Financial Disclosures statement
Regulatory risks continued
Risk
Sourcing transparency and product labelling
regulations
These could increase significantly through pressure from
regulators, consumers, and investors. This could lead to
disclosure compliance risks and rising commodity costs linked
to radical transition to transparent supply chains, as well as a
potential loss of market share to more transparent competitors.
Impact on Business Groups
All Business Groups could be impacted by sourcing
transparency and product labelling regulations and, given the
nature of all the raw materials used, the risk to each Business
Group is equal.
Timeframe: Medium term to long term
Management of risk
Actions:
We monitor regulatory developments to ensure that our
product labelling is compliant and that future innovations/
products are designed to consider forthcoming climate-
related legislation. As part of our CTAP we are committed to
improving sourcing transparency, through collaboration with
our suppliers, and transparency with consumers through
communicating the carbon footprint of our products. We
have a diverse portfolio of products and offer a range of
formats to meet consumer's needs and this helps mitigate
the potential impact of product labelling regulations.
Key targets:
■ 100% sustainable sourcing for key agricultural crops
■ Communicate a carbon footprint for every product we sell
Extended producer responsibility (EPR)
Actions:
This means that producers are held accountable for their
environmental and social impacts across the product value
chain. This could lead to improvements of lifecycle traceability
from sourcing to managing end-of-life treatment of products
and packaging. Circular product design and manufacturing
practices could become a requirement in many regions to
incentivise efficient and responsible resource extraction, and
pass waste management costs through higher disposal and
recycling fees to producers.
We support EPR policies and schemes and we’re
investing directly in waste collection, processing and
capacity-building projects to recycle more plastic.
Innovation is also critical to help develop:
■ Suitable packaging that is fully recyclable and more
widely recyclable.
■ Product formats suitable for refill and reusable
packaging solutions.
■ Higher levels of recycled material into our packaging
Impact on Business Groups
All Business Groups could be impacted by the extended
producer responsibility risk. Given the nature of our products
and their packaging, the risk to each Business Group is equal,
apart from Home Care and Personal Care businesses which use
sachets to serve the needs of low-income consumers. These
sachets are difficult to collect and recycle.
Timeframe: Short term to long term
and components.
Key targets:
■ 50% virgin plastic reduction by 2025
■ 100% reusable, recyclable or compostable plastic
packaging by 2025
■ 25% recycled plastic by 2025
■ Collect and process more plastic than we sell by 2025
46
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Planet & Society: Task Force on Climate-related Financial Disclosures statement
-
Risk
Market risks
Management of risk
Energy transition and rising energy prices
Actions:
This could be driven by increased electrification, the
deployment of renewable energy solutions, associated
transmission, distribution and storage infrastructure, as well
as the adoption of emerging low-carbon technologies such
as biogas, green hydrogen and ammonia. This could increase
our operations, suppliers, and end-consumers’ utility costs.
We mitigate our market risks by decarbonising our
operations through eco-efficiency measures in our factories,
powering our operations with renewables and transitioning
heating and cooling for our factories to lower emission and
renewable sources (see page 36).
Impact on Business Groups
All Business Groups could be impacted by energy transition
and rising energy prices and the likely impact would be equal
across all the Business Groups.
Timeframe: Short term to long term
Key targets:
■ 100% renewable electricity by 2030
■ Transition to 100% renewable heat by 2030
Energy and commodity market volatility
Actions:
This could potentially lead to increased uncertainty in financial
planning and forecasting for key commodities, as well as
a higher cost associated with risk management. Other
considerations include potential manufacturing or supply
disruptions linked to availability or higher cost of energy and
sourced commodities.
Impact on Business Groups
All Business Groups could be impacted by energy and
commodity market volatility and the likely impact would be
equal across all the Business Groups.
Timeframe: Short term to long term
We manage commodity price risks through forward-buying
of traded commodities and other hedging mechanisms.
Key targets:
■ 100% sustainable sourcing for key agricultural crops
■ Empower farmers and smallholders to protect and
regenerate farm environments
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
47
- Planet & Society: Task Force on Climate-related Financial Disclosures statement
Risk
Water scarcity
Physical environment risks
Management of risk
Actions:
This could lead to increased droughts while limited resources to
irrigate soils could reduce crop outputs. Water shortages could
also impact our manufacturing sites and our ability to supply
water-based products. Our consumers could also face water
shortages in their everyday activities in certain regions, creating
a need for water-smart or waterless products or services.
Impact on Business Groups
All Business Groups could be impacted by water scarcity.
Given the nature of our products, the impact of drought on
crop production would be equal across all Business Groups.
However, the impact of water shortages on consumers would
likely impact their washing behaviours and hence impact the
Personal Care and Home Care businesses to a greater extent.
Timeframe: Medium term to long term
We mitigate physical environment risks by investing in new
products and formulations that work with less water, poor
quality water or no water. Many of our hair care products
now have fast-rinse technology as standard, using less
water. We are working with local communities to develop
water stewardship programmes. We monitor changing
weather patterns on a short-term basis and integrate
weather system modelling into our forecasting process.
Key targets:
■ Implement water stewardship programmes in
100 locations in water-stressed areas by 2030
Extreme weather events
Actions:
This could significantly disrupt our entire value chain. Sustained
high temperatures could lead to reduced crop outputs due to
reduction in soil productivity which could translate into higher
raw material prices. Weather events such as hurricanes or
floods, which would become increasingly common and
intense, could cause plant outages or disrupt our distribution
infrastructure. Additionally, macroeconomic negative shocks,
caused by extreme weather events, could reduce or destroy
consumer demand and purchasing power among affected
communities.
We have extreme weather contingency plans which we
implement as necessary to secure alternative key material
supplies at short notice or transfer or share production
between manufacturing sites. We manage commodity price
risks through forward-buying of traded commodities and
other hedging mechanisms. Our Regenerative Agriculture
Principles and Sustainable Agriculture Code encourage our
agricultural raw material suppliers to adopt practices which
increase their productivity and resilience to extreme weather
and we aim to increase the hectares of protected and
regenerated land.
Impact on Business Groups
All Business Groups could be impacted by extreme weather,
the most likely significant impact being the reduction of crop
outputs which, given the nature of our products, would impact
the Business Groups equally.
Timeframe: Medium term to long term
Key targets:
■ Empower farmers and smallholders to protect and
regenerate farm environments
■ Help protect and regenerate 1.5 million hectares of land
48
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Planet & Society: Task Force on Climate-related Financial Disclosures statement
-
Opportunity
Capitalisation of opportunity
Innovative products and services opportunities
Growth in plant-based or lab-grown foods
Actions:
This could increase rapidly in the coming years. As people
become more environmentally conscious and there is
regulation on land use, we could see a rise in plant-based
diets away from animal-based protein.
Timeframe: Short term to long term
We're capitalising on innovative product and service
opportunities by offering a range of vegan and vegetarian
products.
Key targets:
■ €1.5 billion of sales per annum from plant-based products
in categories whose products are traditionally using
animal-derived ingredients by 2025
Opportunity
Capitalisation of opportunity
Resource efficiency, resilience, and market opportunities
Investment in energy transition technologies
Actions:
This represents a shift to efficient and less centralised energy
supply and consumption (e.g. through on-site renewable
energy generation and storage), zero-emission logistics and
designing products for resource-efficient consumption. This
could drive decarbonisation across the value chain, while
opening up the opportunity to access the utility market as an
off-grid generator and create new revenue streams from grid
balancing or demand side response services or providing
excess renewable power of oversized capacity to supply
chain partners.
We capitalise on resource efficiency opportunities by
generating renewable electricity at our factory sites
where feasible (see page 36), targeting emissions
reduction from our logistics suppliers and own
vehicle fleet (see page 38) and through product
reformulations which make our products more
resource efficient in use – for example, many of our
laundry products are now low-temperature washing
as standard (see page 19).
Timeframe: Short term to long term
Key targets:
■ Zero GHG emissions in our operations by 2030
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
49
-
Planet & Society: Task Force on Climate-related Financial Disclosures statement
Summary of high-level quantitative assessment
We have undertaken high-level quantitative assessments for
six risks and opportunities. The results are shown in the tables
below. These assessments show the gross impact before any
action which Unilever might take to respond. The ranges reflect
the different results from the reactive (ɾ) and proactive (ρ)
pathways assessed.
We first undertook scenario analysis in 2017 on 2°C and 4°C
scenarios. In 2021, we completed a 1.5°C scenario analysis.
The results of this work on the way to 1.5°C is consistent with
this previous work. The key differences are due to: the more
extreme measures that would need to be taken to achieve
a 1.5°C outcome; the evolution of the scientific assumptions
contained within the IPCC's AR6 report; and a more detailed
approach to the scenario analysis. The financial impact in
2030 is more significant in the 1.5°C scenario. However, the
scenario avoids the greater negative impacts from the physical
risks associated with higher temperature rise scenarios in 2050
and beyond.
Financial quantification of assessed risks and opportunities
Potential financial impact on
profit in the year (€bn)(a)
Regulatory and Market Risks
Key assumptions
Sensitivity
2030
2039
2050
1. Carbon tax and voluntary carbon
removal costs
We quantified how high prices from
carbon regulations and voluntary offset
markets for our upstream Scope 3
emissions might impact our raw and
packaging materials costs, our
distribution costs and the neutralisation
of our residual emissions post-2039.
2. Land use regulation impact on food
crop outputs
We quantified how changing land use
regulation to promote the conversion of
current and future food crops to forests
could drive reduced crop output and
lead to increased raw material prices,
impacting sourcing costs.
■ Absolute zero Scope 1 and 2 emissions
by 2030
■ Scope 3 emissions exclude consumer
use emissions
■ Carbon price would reach 245 USD/
tonne by 2050, rising more aggressively
in early years in a proactive scenario
■ The price of carbon offsetting would
reach 65 USD/ tonne by 2050
■ Offsetting 100% of emissions on and
after 2039
■ By 2050, in a proactive scenario, land
use regulation would increase prices by:
■ Palm: ~28%
■ Commodities and food ingredients:
~33%
■ By 2050, in a reactive scenario, land use
regulation would increase prices by:
■ Palm: ~10%;
■ Commodities and food ingredients:
~11%
3. Impact of rising energy prices for
suppliers and in manufacturing
We quantified how electricity and gas
price increases could impact both total
energy annual spend as well as indirect
cost increases passed through from raw
material suppliers.
■ High uncertainty surrounds possible
shifts to energy prices during a
transition to 1.5°C world
■ Analysis assumes that by 2050 average
electricity prices would:
■ Rise ~16% in The Americas
■ Rise ~18% in Europe
■ Decline ~1% in ASIA/AMET/RUB(b)
■ By 2050 average global gas prices
would rise by ~141%
ρ
ɾ
ρ
ɾ
ρ
ɾ
-3.2
-5.2
-6.1
-2.4
-4.8
-6.1
-0.8
-2.1
-5.1
-0.3
-0.7
-1.7
-0.6
-1.5
-3.4
-0.6
-1.5
-3.4
Physical Environmental Risks
Key assumptions
Sensitivity
2030
2039
2050
4. Water scarcity impact on crop yields
■ By 2050, in a proactive scenario, water
We quantified how increased water-
stressed areas and prolonged droughts
would reduce crop outputs due to water
scarcity in agricultural regions, decreasing
crop viability, and impacting raw material
prices.
scarcity would increase prices by:
■ Palm: ~10%; Commodities and food
ingredients: ~11%
■ By 2050, in a reactive scenario, water
scarcity would increase prices by:
■ Palm: ~14%; Commodities and food
ingredients: ~16%
ρ
ɾ
-0.2
-0.5
-1.2
-0.3
-0.7
-1.7
50
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
Planet & Society: Task Force on Climate-related Financial Disclosures statement
-
Financial quantification of assessed risks and opportunities
Potential financial impact on
profit in the year (€bn)(a)
Physical Environmental Risks
Key assumptions
Sensitivity
2030
2039
2050
5. Extreme weather (temperature)
impact on crop yields
We quantified how extreme weather
events such as sustained high
temperatures could impact crop output
and therefore sourcing costs across key
commodities.
■ By 2050, in a proactive scenario,
extreme weather would increase
prices by:
■ Palm: ~12%; Commodities and food
ingredients: ~14%
■ By 2050, in a reactive scenario, extreme
weather would increase prices by:
■ Palm: ~18%; Commodities and food
ingredients: ~21%
ρ
ɾ
-0.3
-0.8
-1.9
-0.4
-1.1
-2.8
Opportunities
Key assumptions
Sensitivity
2030
2039
2050
6. Growth in plant-based foods category
We quantified the potential revenue
opportunity from anticipated growth
in the global plant-based foods market
and possible market share in 2025.
■ By 2050, the total global market for
plant-based products would rise to
~USD 1.6 trillion
■ Maintain a constant market share
■ Product mix and product margins would
remain constant
ρ
ɾ
0.5
1.7
6.4
0.5
1.7
6.4
(a) These potential financial impacts are based on high-level quantitative assessments of certain risk and opportunity areas which could impact us in 2030, 2039 and 2050
and assume no actions to mitigate risk are taken and if no actions to capitalise on opportunities are taken.
(b) Refers to Asia, Africa, Middle East, Turkey, Russia, Ukraine and Belarus.
There is still much to do to advance our understanding of the
risk and opportunities facing our business and our industry,
and our strategic responses to such a radically different future.
This analysis represents an important step to continue to
engage and challenge our business and our stakeholders to
define how we can make sustainable living commonplace.
Metrics and targets
Our CTAP includes key metrics and targets to assess and
manage climate risks and opportunities across our value
chain. Two of the targets have been recognised as science-
based targets by the Science Based Targets initiative – see
page 38 for more details. A summary of the climate metrics
and targets we are currently able to measure can be found
on pages 38 to 41, and form part of these TCFD disclosures.
Next steps
The analysis suggests that policy interventions and changing
socio-economic trends, such as regulations related to carbon
pricing, land use, product composition, sourcing transparency
and product labelling, and EPR would have the most
significant impact on our value chain along the journey to
a 1.5°C world. The next level of impact would be as a result of
the transition of the energy system with rising energy prices
and market volatility. We would also experience the impact of
physical environment risks associated with a warmer climate,
even in a 1.5°C world. While the potential risks and financial
impact of limiting global warming to 1.5°C are significant if no
mitigating actions are taken, the impact of the potential risks
that would exist if we were not to reduce warming to 1.5°C are
potentially even more significant.
The outcomes from our analysis provide us with initial high-
level insights into these potential business and financial
impacts. These form an important input to our strategic
planning process.
In summary, the radical and disruptive system-wide
transformation we could face in the journey to limit warming
to 1.5°C by 2100, would present a significant range of material
risks, where regulatory and economic risks would be the most
disruptive. However, many opportunities would also emerge,
which we would be well placed to seize given our ambitious
commitments are aligned with a proactive route towards net
zero by 2039.
Unilever Annual Report and Accounts 2022 | Strategic Report – Review of the Year
51
-
Financial performance
Unilever Group performance
Unilever
Turnover growth
Underlying sales growth*
Underlying volume growth*
Operating margin
Underlying operating margin*
Free cash flow*
Cash flow from operating activities
Net cash flow (used in)/from investing activities
Net cash flow (used in)/from financing activities
Business Group performance
Beauty & Wellbeing
Turnover
Turnover growth
Underlying sales growth
Operating margin
Underlying operating margin*
Personal Care
Turnover
Turnover growth
Underlying sales growth
Operating margin
Underlying operating margin*
2022
14.5 %
9.0 %
(2.1) %
17.9 %
16.1 %
€5.2bn
€10.1bn
€2.5bn
€(8.9)bn
2022
€12.3bn
20.8 %
7.8%
17.6%
18.7%
2022
€13.6bn
15.9 %
7.9%
16.6%
19.6 %
2021
3.4 %
4.5 %
1.6 %
16.6 %
18.4 %
€6.4bn
€10.3bn
€(3.2)bn
€(7.1)bn
2021
€10.1bn
11.6 %
8.5 %
21.1 %
22.1 %
2020
(2.4) %
1.9 %
1.6 %
16.4 %
18.5 %
€7.7bn
€10.9bn
€(1.5)bn
€(5.8)bn
2020
€9.1bn
(7.2) %
(3.9) %
19.2 %
20.4 %
2021
€11.7bn
2020
€12.0bn
(2.3) %
0.3 %
19.9 %
21.3 %
(0.3) %
5.3 %
21.3 %
22.7 %
52
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
Financial performance
Business Group performance continued
-
Home Care
Turnover
Turnover growth
Underlying sales growth
Operating margin
Underlying operating margin*
Nutrition
Turnover
Turnover growth
Underlying sales growth
Operating margin
Underlying operating margin*
Ice Cream
Turnover
Turnover growth
Underlying sales growth
Operating margin
Underlying operating margin*
∗ Key Financial Indicators.
2022
€12.4bn
2021
€10.6bn
2020
€10.5bn
17.3 %
11.8 %
8.6 %
10.8 %
2022
€13.9bn
6.1 %
8.6 %
32.4 %
17.6 %
2022
€7.9bn
14.8 %
9.0 %
9.8 %
11.7 %
1.1 %
3.9 %
12.2 %
13.4 %
(3.4) %
4.5 %
11.9 %
14.5 %
2021
€13.1bn
2020
€12.5bn
4.9 %
5.5 %
16.1 %
19.3 %
2021
€6.9bn
3.2 %
5.7 %
12.1 %
13.9 %
0.7 %
1.8 %
16.3 %
18.9 %
2020
€6.6bn
(3.4) %
0.2 %
10.8 %
13.4 %
Underlying sales growth, underlying volume growth, underlying operating margin and free cash flow are non-GAAP measures. For further information about these
measures, and the reasons why we believe they are important for an understanding of the performance of the business, please refer to our commentary on non-GAAP
measures on pages 55 to 59.
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
53
- Financial performance: Additional financial disclosures
Additional financial disclosures
Cash flow
Cash flow from operating activities decreased by €(0.2) billion
primarily as a result of a €0.4 billion unfavourable working
capital movement. Inventories saw an increase of €1 billion
from Prestige Beauty and resilience building amidst supply
constraints in Ice Cream. This was partly offset by €0.6 billion
movement in payables net of receivables.
€ million
Operating profit
Depreciation, amortisation and impairment
Changes in working capital
Pensions and similar obligations less payments
Provisions less payments
Elimination of (profits)/losses on disposals
Non-cash charge for share-based compensation
Other adjustments
Cash flow from operating activities
Income tax paid
Net capital expenditure
Net interest and preference dividends paid
Free cash flow*
Net cash flow (used in)/from investing activities
Net cash flow (used in)/from financing activities
2022
10,755
1,946
(422)
(119)
203
(2,335)
177
(116)
2021
8,702
1,763
(47)
(183)
(61)
23
161
(53)
10,089
10,305
(2,807)
(2,333)
(1,627)
(1,239)
(457)
(340)
5,198
2,453
6,393
(3,246)
(8,890)
(7,099)
Income tax paid increased by €0.5 billion compared to the
prior year due to €0.3 billion tax on separation of ekaterra,
country tax rate mix effect, reduced benefits in tax settlements
and other one-off items.
Net cash flow from investing activities was €2.5 billion
compared to €(3.2) billion in the prior year primarily driven
by proceeds from sale of the Tea business of €4.6 billion
partly offset by net consideration of €0.8 billion paid for
Nutrafol acquisition. Capital expenditure further increased
in 2022 by €0.4 billion.
Net cash flow used in financing activities was €(8.9) billion
compared to €(7.1) billion in the prior year primarily due
to higher net repayment of borrowings by €3.1 billion. This was
partially offset by reduction in share buybacks of €1.5 billion
compared to the prior year.
Balance sheet
€ million
Goodwill and intangible assets
Other non-current assets
Current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders’ equity
Non-controlling interest
Total equity
Total liabilities and equity
2022
2021
40,489
38,591
18,175
19,103
19,157
17,401
77,821
75,095
25,427
24,778
Goodwill and intangible assets were €40.5 billion. This was
an increase of €1.9 billion compared to the prior year. The
increase was driven by Nutrafol acquisition which contributed
€1.2 billion and a positive impact from currency of €0.8 billion
offset by €0.2 billion decrease due to Dollar Shave Club
impairment. See note 21 on pages 198 to 201 and note 9
on pages 172 to 198 for more.
Other non-current assets decreased by €(0.9) billion primarily
as a result of fall in values of pension assets as a result of
higher interest rates. Current assets increased by €1.8 billion
led by inventories, trade and other current receivables and
cash and cash equivalents, partly offset by reduction in assets
held for sale following the Tea business disposal. Inventories
increased by €1.2 billion driven by cost inflation and increased
holdings for supply resilience. Trade and other current
receivables increased by €1.6 billion driven by transitional
service agreement relating to sale of the Tea business and
turnover growth. Cash and cash equivalents increased by
€0.9 billion driven by cash inflows from operating and investing
activities partly offset by financing activities.
Non-controlling interest was flat versus the prior year as
increase in profits was offset by dividends.
Net debt*
Closing net debt was €23.7 billion compared to €25.5 billion
as at 31 December 2021 driven by free cash flow and proceeds
from disposals net of acquisitions, partly offset by dividends,
share buybacks and currency impact. Net debt to underlying
earnings before interest, taxation, depreciation and
amortisation (UEBITDA)* was 2.1 as at 31 December 2022
versus 2.2 in the prior year. Underlying EBITDA means operating
profit before the impact of depreciation, amortisation and
non-underlying items within operating profit. This is primarily
used to assess our leverage level.
Movement in net pension liability/asset
The table below shows the movement in net pension liability/
asset during the year. Pension assets net of liabilities were
in surplus of €2.6 billion at the end of 2022 compared with a
surplus of €3.0 billion at the end of 2021. Values of assets and
liabilities reduced by €7.2 billion and €7.6 billion respectively,
primarily driven by higher interest rates.
€ million
1 January
Gross service cost
Employee contributions
Actual return on plan assets (excluding interest)
Net interest income/(cost)
Actuarial gain/(loss)
Employer contributions
Currency retranslation
Other movements(a)
31 December
2022
2,993
(186)
12
(6,483)
44
6,130
303
(63)
(181)
2,569
30,693
30,571
(a) Other movements relate to special termination benefits, changes in asset
56,120
55,349
19,021
2,680
17,107
2,639
21,701
19,746
77,821
75,095
ceiling, past service costs including losses/(gains) on curtailment, settlements
and other immaterial movements. For more details see note 4B on pages 162
to 167.
*
Certain measures used in our reporting are not defined under IFRS. For further
information about these measures, please refer to the commentary on non-
GAAP measures on pages 55 to 59.
54
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
-
Financial performance: Additional financial disclosures
Finance and liquidity
Approximately €1.1 billion (or 26%) of the Group’s cash and
cash equivalents are held in the parent and central finance
companies, for maximum flexibility. These companies provide
loans to our subsidiaries that are also funded through retained
earnings and third-party borrowings. We maintain access to
global debt markets through an infrastructure of short and
long-term debt programmes. We make use of plain vanilla
derivatives, such as interest rate swaps and foreign exchange
contracts, to help mitigate risks. More detail is provided in
notes 16, 16A, 16B and 16C on pages 186 to 191. The remaining
€3.2 billion (or 74%) of the Group’s cash and cash equivalents
are held in foreign subsidiaries which repatriate distributable
reserves on a regular basis. For most countries, this is done
through dividends which are in some cases subject to
withholding or distribution tax. This balance includes
€449 million (2021: €83 million, 2020: €98 million) of cash that
is held in a few countries where we face cross-border foreign
exchange controls and/or other legal restrictions that inhibit
our ability to make these balances available in any means for
general use by the wider business. The cash will generally be
invested or held in the relevant country and, given the other
capital resources available to the Group, does not significantly
affect the ability of the Group to meet its cash obligations. We
closely monitor all our exposures and counter-party limits.
Unilever has committed credit facilities in place for general
corporate purposes. The undrawn bilateral committed credit
facilities in place on 31 December 2022 were $5,200 million
and €2,550 million. The additional undrawn revolving 364-day
bilateral credit facilities of €1,500 million as on 31 December
2021 were cancelled in 2022. Further information on liquidity
management is set out in note 16A to the consolidated
financial statements.
Material cash commitments from contractual and
other obligations
The following table shows the amount of our contractual and
other obligations as at 31 December 2022. The material cash
commitments from contractual and other obligations arise
from our borrowings which include bonds, commercial paper,
bank and other loans, interest on these borrowings and trade
payables and accruals.
€ million
Bonds
Commercial paper,
bank and other
loans
Interest on
financial liabilities
Trade payables
and accruals
Lease liabilities
Other lease
commitments
Purchase
(a) &
obligations
other long-term
commitments
Others (b)
Total
Due
within 1
year
2022
25,094
2,585
Due in
1-3 years
5,757
Due in
3-5 years
Due in
over 5
years
4,242
12,510
2,657
2,646
5
—
6
3,692
518
839
668
1,667
17,334
17,166
1,649
397
102
565
28
340
38
347
319
64
52
39
164
4,057
1,806
610
183
55,412
25,365
1,332
427
9,079
688
—
231
—
6,005
14,963
(a) For raw and packaging materials and finished goods.
(b)
Includes other financial liabilities and deferred consideration for acquisitions.
Further details are set out in the following notes to the
consolidated financial statements: note 10 on pages 175 to
177, note 15C on pages 183 to 185, and note 20 on pages 197
and 198. We are satisfied that our financing arrangements
are adequate to meet our short term and long term cash
requirements. In relation to the facilities available to the
Group, borrowing requirements do not fluctuate materially
during the year and are not seasonal.
Guaranteed US debt securities
At 31 December 2022 the Group had in issue US$10.8 billion
(2021: US$12.1 billion; 2020: US$11.5 billion) bonds in
connection with a US shelf registration. See page 235 for
more information on these bonds and related commentary
on guarantor information.
Non-GAAP measures
Certain discussions and analyses set out in this Annual Report
and Accounts (and the Additional Information for US Listing
Purposes) include measures which are not defined by
generally accepted accounting principles (GAAP) such as IFRS.
We believe this information, along with comparable GAAP
measurements, is useful to investors because it provides a
basis for measuring our operating performance, and our
ability to retire debt and invest in new business opportunities.
Our management uses these financial measures, along with
the most directly comparable GAAP financial measures, in
evaluating our operating performance and value creation.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
presented in compliance with GAAP. Wherever appropriate
and practical, we provide reconciliation to relevant
GAAP measures.
Explanation and reconciliation of non-GAAP
measures
Unilever uses ‘constant rate’ and ‘underlying’ measures
primarily for internal performance analysis and targeting
purposes. We present certain items, percentages and
movements, using constant exchange rates, which exclude
the impact of fluctuations in foreign currency exchange rates.
We calculate constant currency values by translating both the
current and the prior period local currency amounts using the
prior year average exchange rates into euro, except for the
local currency of entities that operate in hyperinflationary
economies. These currencies are translated into euros using
the prior year closing exchange rate before the application
of IAS 29.
The table below shows exchange rate movements in our
key markets.
Brazilian real (€1 = BRL)
Chinese yuan (€1 = CNY)
Indian rupee (€1 = INR)
Indonesia rupiah (€1 = IDR)
Philippine peso (€1 = PHP)
UK pound sterling (€1 = GBP)
US dollar (€1 = US$)
Annual average
rate in 2022
Annual average
rate in 2021
5.414
7.047
82.303
15,535
57.194
0.851
1.050
6.366
7.663
87.599
16,983
58.401
0.861
1.187
In the following sections, we set out our definitions of the
following non-GAAP measures and provide reconciliation
to relevant GAAP measures:
■ underlying sales growth;
■ underlying volume growth;
■ underlying price growth;
■ non-underlying items;
■ underlying earnings per share;
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
55
- Financial performance: Additional financial disclosures
■ underlying operating profit and underlying operating
margin;
■ underlying effective tax rate;
■ constant underlying earnings per share;
■ free cash flow;
■ underlying return on assets;
■ net debt; and
■ underlying return on invested capital.
Underlying sales growth
Underlying sales growth (USG) refers to the increase in
turnover for the period, excluding any change in turnover
resulting from acquisitions, disposals, changes in currency
and price growth in excess of 26% in hyperinflationary
economies. Inflation of 26% per year compounded over
three years is one of the key indicators within IAS 29 to assess
whether an economy is deemed to be hyperinflationary. We
believe this measure provides valuable additional information
on the underlying sales performance of the business and is a
key measure used internally. The impact of acquisitions and
disposals is excluded from USG for a period of 12 calendar
months from the applicable closing date. Turnover from
acquired brands that are launched in countries where they
were not previously sold is included in USG as such turnover
is more attributable to our existing sales and distribution
network than the acquisition itself.
The reconciliation of changes in the GAAP measure of turnover to USG is as follows:
2022 vs 2021 (%)
Turnover growth(a)
Effect of acquisitions
Effect of disposals
Effect of currency-related items,
of which:
Exchange rate changes
Extreme price growth in hyperinflationary markets(b)
Underlying sales growth(b)
2021 vs 2020 (%)
Turnover growth(a)
Effect of acquisitions
Effect of disposals
Effect of currency-related items,
of which:
Exchange rate changes
Extreme price growth in hyperinflationary markets(b)
Underlying sales growth(b)
2020 vs 2019 (%)
Turnover growth(a)
Effect of acquisitions
Effect of disposals
Effect of currency-related items,
of which:
Exchange rate changes
Extreme price growth in hyperinflationary markets(b)
Underlying sales growth(b)
Beauty &
Wellbeing Personal Care
Home Care
Nutrition
Ice Cream
20.8
3.8
(0.1)
8.1
6.9
1.0
7.8
11.6
6.0
—
(3.0)
(3.1)
0.2
8.5
(7.2)
1.9
—
(5.2)
(5.4)
0.2
(3.9)
15.9
—
—
7.4
6.2
1.1
7.9
(2.3)
—
—
(2.6)
(2.9)
0.3
0.3
(0.3)
0.2
—
(5.5)
(5.7)
0.2
5.3
17.3
—
—
4.9
2.6
2.2
11.8
1.1
—
(0.1)
(2.6)
(2.9)
0.3
3.9
(3.4)
0.2
(0.2)
(7.5)
(7.8)
0.3
4.5
6.1
0.3
(7.1)
4.9
3.6
1.2
8.6
4.9
1.3
(0.3)
(1.5)
(1.8)
0.3
5.5
0.7
4.1
(0.5)
(4.6)
(4.8)
0.3
1.8
14.8
—
—
5.4
3.9
1.5
9.0
3.2
—
(0.1)
(2.3)
(2.6)
0.4
5.7
(3.4)
—
(0.1)
(3.5)
(4.3)
0.8
0.2
Group
14.5
0.8
(1.8)
6.2
4.7
1.4
9.0
3.4
1.4
(0.1)
(2.4)
(2.6)
0.3
4.5
(2.4)
1.4
(0.2)
(5.4)
(5.7)
0.3
1.9
(a) Turnover growth is made up of distinct individual growth components, namely underlying sales, currency impact, acquisitions and disposals. Turnover growth is arrived
at by multiplying these individual components on a compounded basis as there is a currency impact on each of the other components. Accordingly, turnover growth is
more than just the sum of the individual components.
(b) Underlying price growth in excess of 26% per year in hyperinflationary economies has been excluded when calculating the underlying sales growth in the tables above,
and an equal and opposite amount is shown as extreme price growth in hyperinflationary markets.
Underlying price growth
Underlying volume growth
Underlying price growth (UPG) is part of USG and means, for
the applicable period, the increase in turnover attributable to
changes in prices during the period. UPG therefore excludes
the impact to USG due to (i) the volume of products sold; and
(ii) the composition of products sold during the period. In
determining changes in price we exclude the impact of price
growth in excess of 26% per year in hyperinflationary
economies as explained in USG above.
Underlying volume growth (UVG) is part of USG and means,
for the applicable period, the increase in turnover in such
period calculated as the sum of (i) the increase in turnover
attributable to the volume of products sold; and (ii) the
increase in turnover attributable to the composition of
products sold during such period. UVG therefore excludes
any impact on USG due to changes in prices.
56
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
Financial performance: Additional financial disclosures
-
The relationship between USG, UVG and UPG is set out below:
Underlying earnings per share
Underlying volume growth (%)
Underlying price growth (%)
Underlying sales growth (%)
2022 vs
2021
2021 vs
2020
2020 vs
2019
(2.1)
11.3
9.0
1.6
2.9
4.5
1.6
0.3
1.9
Refer to page 52 for the relationship between USG, UVG and
UPG for each of the Business groups.
Non-underlying items
Several non-GAAP measures are adjusted to exclude items
defined as non-underlying due to their nature and/or
frequency of occurrence.
■ Non-underlying items within operating profit are: gains
or losses on business disposals, acquisition and disposal
related costs, restructuring costs, impairments and other
items within operating profit classified here due to their
nature and frequency.
■ Non-underlying items not in operating profit but within
net profit are: net monetary gain/(loss) arising from
hyperinflationary economies and significant and unusual
items in net finance cost, share of profit/(loss) of joint
ventures and associates and taxation.
■ Non-underlying items are both non-underlying items
within operating profit and those non-underlying items
not in operating profit but within net profit.
Refer to note 3 for details of non-underlying items.
Underlying operating profit and underlying
operating margin
Underlying operating profit and underlying operating margin
mean operating profit and operating margin before the
impact of non-underlying items within operating profit.
Underlying operating profit represents our measure of
segment profit or loss as it is the primary measure used for
making decisions about allocating resources and assessing
performance of the segments.
The Group reconciliation of operating profit to underlying
operating profit is as follows:
€ million
Operating profit
Non-underlying items within operating
profit (see note 3)
Underlying operating profit
Turnover
Operating margin
Underlying operating margin
2022
10,755
2021
8,702
2020
8,303
(1,072)
9,683
60,073
17.9%
934
9,636
52,444
16.6%
1,064
9,367
50,724
16.4%
16.1%
18.4%
18.5%
Further details of non-underlying items can be found in note 3
on page 159 of the consolidated financial statements.
Refer to note 2 on page 155 for the reconciliation of operating
profit to underlying operating profit by division. For each
division, operating margin is computed as operating profit
divided by turnover and underlying operating margin is
computed as underlying operating profit divided by turnover.
Underlying earnings per share (underlying EPS) is calculated
as underlying profit attributable to shareholders’ equity
divided by the diluted average number of ordinary shares.
In calculating underlying profit attributable to shareholders’
equity, net profit attributable to shareholders’ equity is
adjusted to eliminate the post-tax impact of non-underlying
items. This measure reflects the underlying earnings for each
share unit of the Group. Refer to note 7 for reconciliation of net
profit attributable to shareholders’ equity to underlying profit
attributable to shareholders' equity.
Underlying effective tax rate
The underlying effective tax rate is calculated by dividing
taxation excluding the tax impact of non-underlying items by
profit before tax excluding the impact of non-underlying items
and share of net profit/(loss) of joint ventures and associates.
This measure reflects the underlying tax rate in relation to
profit before tax excluding non-underlying items before tax
and share of net (profit)/loss of joint ventures and associates.
Tax impact on non-underlying items within operating profit is
the sum of the tax on each non-underlying item, based on the
applicable country tax rates and tax treatment.
This is shown in the table:
€ million
Taxation
Tax impact of:
Non-underlying items within operating profit(a)
Non-underlying items not in operating profit but
within net profit(a)
Taxation before tax impact of non-underlying
Profit before taxation
Share of net (profit)/loss of joint ventures and
associates
Profit before tax excluding share of net profit/
(loss) of joint ventures and associates
Non-underlying items within operating profit
before tax(a)
2022
2021
2,068
1,935
273
219
(121)
(41)
2,220
10,337
2,113
8,556
(208)
(191)
10,129
8,365
(1,072)
934
Non-underlying items not in operating profit but
within net profit before tax
164
64
Profit before tax excluding non-underlying items
before tax and share of net profit/(loss) of joint
ventures and associates
Effective tax rate
Underlying effective tax rate
(a) Refer to note 3 for further details on these items.
9,221
9,363
20.4
24.1
23.1
22.6
Constant underlying earnings per share
Constant underlying earnings per share (constant underlying
EPS) is calculated as underlying profit attributable to
shareholders’ equity at constant exchange rates and
excluding the impact of both translational hedges and
price growth in excess of 26% per year in hyperinflationary
economies divided by the diluted average number of ordinary
share units. This measure reflects the underlying earnings
for each ordinary share unit of the Group in constant
exchange rates.
The reconciliation of underlying profit attributable to
shareholders’ equity to constant underlying earnings
attributable to shareholders’ equity and the calculation
of constant underlying EPS is as follows:
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
57
- Financial performance: Additional financial disclosures
€ million
Underlying profit attributable to shareholders’
equity(a)
Impact of translation from current to constant
exchange rates and translational hedges
Impact of price growth in excess of 26% per year in
hyperinflationary economies(b)
Constant underlying earnings attributable to
shareholders’ equity
Diluted average number of share units (millions of
units)
Constant underlying EPS (€)
(a) See note 7.
(b) See pages 55 and 56 for further details.
Free cash flow
2022
2021
€ million
6,568
6,839
Total financial liabilities
Current financial liabilities
(307)
(106)
(200)
—
6,061
6,733
2,559.8
2,609.6
2.37
2.58
Non-current financial liabilities
Cash and cash equivalents as per
balance sheet
Cash and cash equivalents as per
cash flow statement
Add: bank overdrafts deducted
therein
Less: cash and cash equivalents
held for sale
Other current financial assets
Non-current financial assets
derivatives that relate to financial
liabilities
Net debt
2022
(29,488)
(5,775)
(23,713)
4,326
4,225
101
—
1,435
2021
(30,133)
(7,252)
(22,881)
3,415
3,387
106
(78)
1,156
51
52
(23,676)
(25,510)
Free cash flow (FCF) is defined as cash flow from operating
activities, less income taxes paid, net capital expenditure
and net interest payments. It does not represent residual
cash flows entirely available for discretionary purposes; for
example, the repayment of principal amounts borrowed is not
deducted from FCF. FCF reflects an additional way of viewing
our liquidity that we believe is useful to investors because
it represents cash flows that could be used for distribution
of dividends, repayment of debt or to fund our strategic
initiatives, including acquisitions, if any.
The reconciliation of cash flow from operating activities to
FCF is as follows:
€ million
2022
2021
2020
Cash flow from operating activities
10,089
10,305
10,933
Income tax paid
Net capital expenditure
Net interest payments
Free cash flow
Net cash flow (used in)/from investing
activities
Net cash flow (used in)/from financing
activities
(2,807)
(2,333)
(1,875)
(1,627)
(1,239)
(457)
5,198
(340)
6,393
(932)
(455)
7,671
2,453
(3,246)
(1,481)
(8,890)
(7,099)
(5,804)
Net debt
Net debt is a measure that provides valuable additional
information on the summary presentation of the Group’s net
financial liabilities and is a measure in common use elsewhere.
Net debt is defined as the excess of total financial liabilities,
excluding trade payables and other current liabilities, over
cash, cash equivalents and other current financial assets,
excluding trade and other current receivables, and non-
current financial asset derivatives that relate to
financial liabilities.
Underlying return on invested capital
Underlying return on invested capital (ROIC) is a measure of
the return generated on capital invested by the Group. The
measure provides a guide rail for long-term value creation and
encourages compounding reinvestment within the business
and discipline around acquisitions with low returns and long
payback. Underlying ROIC is calculated as underlying
operating profit after tax divided by the annual average of:
goodwill, intangible assets, property, plant and equipment,
net assets held for sale, inventories, trade and other current
receivables, and trade payables and other current liabilities.
€ million
Operating profit
Non-underlying items within
operating profit (see note 3)
Underlying operating profit before
tax
2022
10,755
(1,072)
2021
8,702
934
9,683
9,636
Tax on underlying operating profit(a)
(2,331)
(2,175)
Underlying operating profit after
tax
Goodwill
Intangible assets
Property, plant and equipment
Net assets held for sale
Inventories
Trade and other current receivables
Trade payables and other current
liabilities
Period-end invested capital
Average invested capital for the
period
Underlying return on invested
capital (%)
7,352
21,609
18,880
10,770
24
5,931
7,056
7,461
20,330
18,261
10,347
1,581
4,683
5,422
(18,023)
46,247
(14,861)
45,763
46,005
43,279
16.0
17.2
(a) Tax on underlying operating profit is calculated as underlying operating profit
before tax multiplied by underlying effective tax rate of 24.1% (2021: 22.6%)
which is shown on page 57.
58
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
-
Financial performance: Additional financial disclosures
Underlying return on assets
Underlying return on assets is a measure of the return
generated on assets for each Business Group. This measure
provides additional insight on the performance of the Business
Groups and assists in formulating long-term strategies with
respect to allocation of capital across Business Groups.
Business Group underlying return on assets is calculated as
underlying operating profit after tax for the Business Group
divided by the annual average of: property, plant and
equipment, net assets held for sale (excluding goodwill and
intangibles), inventories, trade and other current receivables,
and trade payables and other current liabilities for each
Business Group. The annual average is computed by adding
the amounts at the beginning and the end of the calendar
year and dividing by two.
€ million
2022
Underlying operating profit before tax
Tax on underlying operating profit
Underlying operating profit after tax
Property plant and equipment
Net assets held for sale
Inventories
Trade and other receivables
Trade payables and other current liabilities
Period-end assets (net)
Average assets for the period (net)
Underlying return on assets (%)
2021
Underlying operating profit before tax
Tax on underlying operating profit
Underlying operating profit after tax
Property plant and equipment
Net assets held for sale
Inventories
Trade and other receivables
Trade payables and other current liabilities
Period-end assets (net)
Average assets for the period (net)
Underlying return on assets (%)
Beauty &
Wellbeing
Personal Care
Home Care
Nutrition
Ice Cream
2,292
(552)
1,740
1,775
—
1,386
1,439
(3,562)
1,038
979
178
2,237
(505)
1,732
1,541
—
1,074
1,048
(2,743)
920
863
201
2,679
(644)
2,035
2,259
2
1,352
1,601
(3,918)
1,296
1,403
145
2,505
(565)
1,940
2,422
2
1,083
1,216
(3,214)
1,509
1,355
143
1,344
(324)
1,020
2,112
—
909
1,457
(3,955)
523
558
183
1,417
(320)
1,097
1,913
—
765
1,093
(3,178)
593
638
172
2,449
(590)
1,859
2,196
20
1,267
1,632
919
(221)
698
2,428
—
1,017
927
Total
9,683
(2,331)
7,352
10,770
22
5,931
7,056
(4,095)
(2,493)
(18,023)
1,020
1,295
144
2,525
(570)
1,955
2,235
678
974
1,355
(3,673)
1,569
1,643
119
1,879
1,780
39
952
(215)
737
2,236
—
787
710
5,756
6,015
122
9,636
(2,175)
7,461
10,347
680
4,683
5,422
(2,053)
(14,861)
1,680
1,564
47
6,271
6,063
123
Other information
Auditor's report
Accounting standards and critical accounting policies
The consolidated financial statements have been prepared
in accordance with IFRS as adopted by the UK and IFRS as
issued by the International Accounting Standards Board. The
accounting policies are consistent with those applied in 2021
except for the recent accounting developments as set out in
note 1 on pages 154 to 155. The critical accounting estimates
and judgements and those that are most significant in
connection with our financial reporting are set out in note 1
on pages 154 to 155.
The Independent Auditor’s Report issued by KPMG LLP on the
consolidated results of the Group, as set out in the financial
statements, was unqualified and contained no exceptions or
emphasis of matter. For more details see pages 135 to 149.
2021 financial review
The financial review for the year ended 31 December 2021 can
be found on pages 36 to 43 of our Annual Report and Accounts
on Form 20-F filed with the United States Securities and
Exchange Commission on 9 March 2022.
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
59
-
Non-financial performance
Improve the health of the planet
Climate action
Target
2022
2021
2020
Zero GHG emissions in our operations by 2030 (% change
in tonnes of GHG emissions from energy and refrigerant
use since 2015)(a)
-100%
-68%†
'
-64%
-58%
Halve GHG impact of our products across the lifecycle
by 2030 (% change in grams of CO2e per consumer use
since 2010)(b)
-50%
-19%
'
-14%Θ
'
-10%
Protect and regenerate nature
Target
2022
2021
2020
Help protect and regenerate 1.5 million hectares of land,
forests and oceans by 2030 (hectares)
1.5m
100% sustainable sourcing of our key agricultural crops
(% purchased)
100%
Implement water stewardship programmes in 100 locations
in water-stressed areas by 2030 (number of water
stewardship programmes)
100
0.2m
81%
0.1m
79%
8
–
–
–
–
Waste-free world
Target
2022
2021
2020
50% virgin plastic reduction by 2025 (% change in total
tonnes of virgin plastic used vs 2019 baseline)(b)(c)(d)
25% recycled plastic by 2025 (% of total used in
packaging)(b)(c)(d)
100% reusable, recyclable or compostable plastic
packaging by 2025 (% of total tonnes of reusable,
recyclable or compostable plastic packaging used)(b)(c)(d)(f)
-50%
25%
100%
-13%
-8%(e)
'
18%
21%
55%†
53%
52%
–
–
Collect and process more plastic than we sell by 2025
(tonnes of plastic packaging collected and processed,
% of tonnes of plastic sold)(b)(c)(d)
100%
58%
Maintain zero non-hazardous waste to landfill in
our factories (% disposed)
0%
0%
–
0%
Halve food waste in our operations by 2025
(% change since 2019)
-50%
'
-17%
-4%(g)
'
–
0%
–
60
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
Non-financial performance
Improve people’s health, confidence and wellbeing
Positive nutrition
Target
2022
Double the number of products sold that deliver positive
nutrition by 2025 (% of servings sold)(a)
70% of our portfolio to meet WHO-aligned nutritional
standards by 2022 (% of sales by volume)(a)(h)
95% of packaged ice cream to contain no more than 22g
total sugar per serving by 2025 (% of sales by volume)(a)
95% of packaged ice cream to contain no more than
250 kcal per serving by 2025 (% of sales by volume)(a)
85% of our Foods portfolio to help consumers reduce their
salt intake to no more than 5g per day by 2022 (% of sales
by volume)(a)(h)
54%
70%
95%
95%
85%
48%†
64%†
89%
94%
82%†
-
2021
2020
41%
27%
63%Θ
61%△
89%
–
94%
93%
81%Θ
77%
€1.5 billion of sales per annum from plant-based products
in categories whose products are traditionally using
animal- derived ingredients by 2025 (€ sales)
€1.5bn €1.2bn
–
–
Health and wellbeing
Target
2022
2021
2020
Take action through our brands to improve health and
wellbeing and advance equity and inclusion, reaching
1 billion people per year by 2030 (number of people reached
through brand communications and initiatives)
1bn
667m
686m
–
Contribute to a fairer and more socially inclusive world
Equity, diversity and inclusion
Target
2022
2021
Spend €2 billion annually with diverse businesses
worldwide by 2025 (€ spend)
€2bn
€818m
€445m
2020
–
Raise living standards
Help 5 million SMEs to grow their business by 2025
(number of SMEs)(i)
Future of work
Target
5m
Target
2022
2021
2020
1.8m†
1.2m
–
2022
2021
2020
Reskill or upskill our employees with future-fit skills by 2025
(% of employees with future-fit skills)
100%
15%
7%
–
†
Θ
Δ
This metric was subject to independent limited assurance by PricewaterhouseCoopers LLP (‘PwC’) in 2022. For PwC's 2022 Limited Assurance report and the
2022 Unilever Basis of Preparation for assured metrics see www.unilever.com/planet-and-society/sustainability-reporting-centre/independent-assurance.
This metric was subject to independent limited assurance by PwC in 2021. For details and 2021 Basis of Preparation, see www.unilever.com/planet-and-
society/sustainability-reporting-centre/reporting-archive.
This metric was subject to independent limited assurance by PwC in 2020. For details and 2020 Basis of Preparation, see www.unilever.com/planet-and-
society/sustainability-reporting-centre/reporting-archive.
(a) Measured for 12 month period ended 30 September.
(b) Measured for 12 month period ended 30 June.
(c) For the vast majority of products in scope, we have used the actual weight of plastic packaging sold to calculate this metric. For the remainder, we estimate the weight
using the average packaging weight of similar products.
(d) We have updated the scope of reporting on our plastic commitments from 29 to 27 countries to improve our data accuracy.
(e) We have updated our baseline period for reporting from 1 July 2017 – 30 June 2018 to 1 January – 31 December 2019 to improve our data quality. We have therefore
restated our 2021 performance using the 2019 baseline. Please see pages 32 to 33 for more details.
(f) Refers to ‘actual recyclability’ of plastic packaging, meaning that it is both technically possible to recycle the material; and that there are established examples to
recycle the material in the region where it is sold. The 'technical recyclability' metric was subject to independent limited assurance by PwC, see page 33.
(g) We have updated our 2019 baseline to reflect the divestment of our Tea business. Therefore, we are restating our 2021 performance.
(h) From 2023, these commitments will be replaced with a new target to ensure that 85% of our servings meet Unilever's Science-based Nutrition Criteria (USNC) by 2028.
(i) Measured for the 3 month period October to December.
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
61
- Non-financial performance: Additional non-financial disclosures
Additional non-financial disclosures
Unilever is subject to a number of mandatory reporting requirements. In the following pages, we provide part of our Section 172
disclosure, our Streamlined Energy and Carbon Reporting disclosure, employee gender reporting in alignment with the UK
Corporate Governance Code, our non-financial and sustainability information statement in line with the UK Companies Act 2006,
and our EU Taxonomy disclosure.
Section 172: Engaging with our stakeholders
The information set out below, together with the information on page 87 of our Governance Report, which explains how the
Board considers and engages with stakeholders, forms our section 172 statement under the UK Companies Act 2006. The
Unilever Compass Strategy for Sustainable Growth on page 4 details the six stakeholder groups we have identified as critical
to our future success: shareholders, our people, consumers, customers, suppliers & business partners and planet & society.
Throughout the Strategic Report we explain how we’ve worked to create value for each in 2022, as well as how our business
benefits from these vital relationships.
Stakeholder
How we engaged in 2022
Find out more
Shareholders
We engage with our
shareholders on our strategy,
business performance and
sustainability.
Our people
Our 127,000 talented people
give their skills and time in
Unilever offices, factories and
R&D laboratories around the
world.
■ We speak directly to shareholders through quarterly results
Pages 87 and 90
broadcasts and conference presentations, as well as through
meetings and calls about aspects of business performance,
consumer trends and sustainability issues.
■ Senior leaders and our Board speak directly to shareholders on
a broad range of issues. For example, in 2022 we presented to
investors on our Prestige business and our Health & Wellbeing
brand strategies.
■ We ran an investor event focused on our strategy for delivering
growth in December 2022.
■ Through our UniVoice survey we engaged with around 96,000 office
and factory-based employees in 2022 across a number of topics,
from employee wellbeing to leadership performance.
■ We also continued our UniPulse questionnaires, asking employees to
rate certain aspect of the company such as culture, work-life balance
and development opportunities.
■ We continued our ‘Your Call’ sessions with our CEO and ULE members
to give our workforce direct and regular access to our leadership
team to ask questions on issues of concern to them as employees,
such as our new Compass Organisation, diversity and inclusion,
returning to the workplace and company financial performance. Our
Chair, Nils Andersen, participated in a Your Call in November 2022.
■ At a market level, we held regular local, leader-led virtual townhall
meetings to engage with employees on locally relevant topics and
issues.
■ For the second year running, we held a virtual Compass Live event to
engage our employees on our Compass strategy, progress and
factors affecting our performance.
Pages 27 to 29
and 89
Consumers
3.4 billion people use our
products every day.
■ We use consumer research from partners such as Kantar, Nielsen
Pages 12 to 26
and Ipsos, who we engage through their regular surveys and panels.
■ We engage around three million consumers through our various
engagement platforms annually.
62
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
Non-financial performance: Additional non-financial disclosures
-
Stakeholder
How we engaged in 2022
Find out more
Customers
We partner with global
retailers and digital commerce
marketplaces through to small
family-owned stores, to grow
our business and theirs.
Suppliers & business partners
We work with suppliers in
over 150 countries to source
materials and provide
critical services for us, while
supporting mutual and
sustainable growth.
Planet & society
As a global business with a
global footprint, we consider
the planet and all its citizens
to be a key stakeholder.
■ We are members of the Advantage Group Survey to help us
understand how we can improve our customers’ experience.
■ Our larger retail partners have direct channels into us via our
Customer Development teams, meeting regularly to discuss a range
of topics including shopper insights and ways to drive category
growth and sales. Through these relationships we produce Joint
Business Plans for mutual benefit.
■ We use an online platform to provide shopper insights and research
for our smaller retailer customers.
Pages 12 to 27
■ Through our Supply Chain and Procurement teams, we communicate
with our suppliers and business partners frequently.
■ We conduct an annual Partner with Purpose survey to understand
how our suppliers feel about working with Unilever and areas for
improvement.
Pages 32, 34
and 36
■ As part of our sustainability materiality process, we analyse insights
from our key stakeholders to make sure we’re focusing on the most
important sustainability issues and to inform our reporting – see our
website for more details.
Pages 30 to 41
and 87
■ We continued our partnerships with other businesses throughout
the year, advocating for policy change on a range of sustainability
topics, including increased levels of national climate ambition and
access to finance for the vulnerable communities most affected by
the impacts of climate change.
■ Our CEO continued to support the UK COP26 presidency as a
member of the COP26 Business Leaders Group in 2022. We also
attended COP27.
Employee diversity
As part of our disclosure to comply with the UK Corporate Governance Code 2018, the table below shows our workforce diversity
by gender and work level as at 31 December 2022.
Gender statistics
Board
Unilever Leadership Executive (ULE)
Senior management (reporting to ULE)
Management(a)
Total workforce
2022
2021
Female
5
38%
3
23%
27
31%
8,740
54%
46,014
36%
Male Unspecified
0
8
62%
10
77%
60
69%
7,583
46%
80,974
64%
0
0
18
0.1%
68
0.06%
Female
6
46%
4
31%
20
27%
8,733
52%
52,925
36%
Male Unspecified
0
7
54%
9
69%
55
73%
8,047
48%
95,087
64%
0
0
7
0.04%
32
0.02%
(a)
Includes ULE and senior management.
Unspecified includes those who are not identified as male or female in our systems.
Employees who are statutory directors of the corporate entities included in this Annual Report and Accounts: 467 (63%) males and 280 (37%) females
(see pages 214 to 224).
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
63
- Non-financial performance: Additional non-financial disclosures
Streamlined Energy and Carbon Reporting (SECR)
In line with the requirements set out in the UK Government’s guidance on Streamlined Energy and Carbon Reporting, the
table below represents Unilever’s energy use and associated GHG emissions from electricity and fuel in the UK (1 October to
30 September), calculated with reference to the Greenhouse Gas Protocol. The scope of this data includes eight manufacturing
sites and 11 non-manufacturing sites based in the UK. In 2022, the UK accounted for 7% of our global total Scope 1 and 2
emissions as well as 7% of our global energy use, outlined in the table below. See page 36 for more on energy efficiency
measures taken during 2022.
UK operations
Biogas (kWh)
Natural gas (kWh)
LPG (kWh)
Fuel oils (kWh)
Coal (kWh)
Electricity (kWh)
Heat and steam (kWh)
Total UK energy (kWh)(a)
Total global energy (kWh)
Total UK Scope 1 emissions (tonnes CO2)(b)
UK Scope 1 emissions (kg CO2) per tonne of production
Total UK Scope 2 emissions (tonnes CO2)(b)(c)
UK Scope 2 emissions (kg CO2) per tonne of production
2022
2021
2020
13,520,000
10,025,000
9,420,000
242,688,000
226,110,000
231,832,000
937,000
1,411,000
0
0
0
0
1,464,000
59,000
0
107,309,000
171,897,000
190,790,000
255,480,000
192,738,000
201,709,000
362,788,000
364,635,000
392,499,000
6,609,692,000
7,002,482,000
7,037,674,000
39,545
50.5
0
0
45,740
56.9
0
0
46,918
49.1
527
0.6
(a) Fleet and associated diesel use excluded as it is not material. Transportation is operated by a third party and accounted for under Scope 3.
(b) We report our emissions with reference to the latest Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol). Our only material GHG
from energy is CO2, reported as required by the GHG Protocol. Other gases are immaterial. Energy use data is taken from meter reads and energy invoices from each
site and then converted to kWh using standard conversion factors as published by the IPCC.
(c) Carbon emission factors for grid electricity calculated according to the ‘market-based method’. Total Scope 2 emissions reported as zero as we now use 100%
renewable grid electricity across all our sites in the UK.
64
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
Non-financial performance: Additional non-financial disclosures
-
Non-financial and sustainability information statement
In accordance with sections 414CA and 414CB of the Companies Act 2006 which outline requirements for non-financial
reporting, the table below is intended to provide our stakeholders with the content they need to understand our development,
performance, position and the impact of our activities with regards to specified non-financial matters. Our business model
can be found on pages 2 to 3, which identifies our stakeholder groups, and our principal risks can be found on pages 67 to 75.
Further information on these matters can be found on our website and in our Human Rights Report, including relevant policies.
Non-financial matter and relevant sections of
Annual Report
Environmental matters
Relevant sections of Annual Report and Accounts:
■ Climate action
■ Waste-free world
■ Protect and regenerate nature
■ Our Climate Transition Action Plan: Annual Progress Report
■ Task Force on Climate-related Financial Disclosures
statement
Social and community matters
Relevant sections of Annual Report and Accounts:
■ Raise living standards
Employee matters
Relevant sections of Annual Report and Accounts:
■ Our People & Culture
■ Equity, diversity and inclusion
■ Raise living standards
■ Future of work
■ Employee health and wellbeing
■ Safety at work
Human rights matters
Relevant sections of Annual Report and Accounts:
■ Raise living standards
■ Human rights
Anti-corruption and bribery matters
Relevant sections of Annual Report and Accounts:
■ Culture of integrity
Annual Report page reference
■ Policies and due diligence: pages 32 to 33 and 35 to 41
■ Position and performance (including relevant non-
financial KPIs): pages 39 to 40 and 60
■ Risk: pages 43 to 51 and 69 and 70
■ Impact: pages 32 and 33 and 43 to 51
■ Policies and due diligence: page 34
■ Position and performance (including relevant non-
financial KPIs): pages 34 and 61
■ Risk: pages 34 and 74
■ Impact: page 34
■ Policies and due diligence: pages 27 to 29
■ Position and performance (including relevant non-
financial KPIs): pages 27 to 29 and 61
■ Risk: pages 27 to 29 and 71
■ Impact: pages 27 to 29
■ Policies and due diligence: page 34
■ Position and performance (including relevant non-
financial KPIs): pages 34 and 61
■ Risk: pages 34 and 74
■ Impact: page 34
■ Policies and due diligence: page 29
■ Position and performance (including relevant non-
financial KPIs): page 29
■ Risk: pages 29 and 74
■ Impact: page 29
WEF/IBC metrics
The World Economic Forum (WEF) and the International Business Council (IBC) have defined a number of metrics and disclosures
to help standardise environmental, social and governance reporting. Our Annual Report and Accounts includes a number of
the 'core' WEF/IBC metrics and disclosures, including: Governing purpose (pages 4 to 5), Ethical behaviour (page 29), Risk and
opportunity oversight (pages 67 to 75), Climate change (pages 35 to 41), and Employment and wealth generation (pages 27 to
28 and 34. Further information on core metrics will be available on our website.
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
65
-
Non-financial performance: Additional non-financial disclosures
EU Taxonomy disclosures
The EU Taxonomy sets out reporting obligations for certain European businesses. It outlines certain activities deemed to be
environmentally sustainable, and refers to them as “eligible” and “aligned” activities. For each eligible activity, businesses
need to assess whether they make a substantial contribution to the climate change mitigation and adaptation objectives
and whether they cause any significant harm with respect to the following environmental objectives: i) sustainable use and
protection of water and marine resources, ii) transition to a circular economy, iii) pollution prevention and control, and
iv) protection and restoration of biodiversity and ecosystems.
If the eligible activities are considered to make a substantial contribution and do no significant harm in accordance with the
criteria set out in the regulations, then the eligible activities are designated as “aligned” as long as the business also meets
a minimum set of criteria with respect to human rights, bribery and corruption, taxation and fair competition.
The EU Taxonomy is work in progress, and in creating the current list of environmentally sustainable activities, the European
Commission have not yet considered our industry, focusing instead on the more carbon intensive industries where they believe
there is the most potential for climate change mitigation or adaptation.
Using the current list of eligible activities and the alignment criteria, we have reviewed the Group’s turnover, capital expenditure
and operating expenditure (as defined by the EU Taxonomy) to identify the extent of any eligible and aligned activities within
our business. The outcome of our review is presented below.
As the EU Taxonomy is not yet applicable to us and we are providing these disclosures voluntarily, we have chosen to set out
the extent of our eligible and aligned activities in a simplified format instead of showing them in the tables prescribed by the
EU Taxonomy.
Turnover
None of our turnover as detailed in our consolidated income statement (page 149) for the year ended 31 December 2022 is
derived from eligible activities. As a consequence, none of our turnover can be classified as aligned.
Operating expenditure
Operating expenditure as per the EU Taxonomy is defined as directly incurred, non-capitalised costs relating to research and
development, building renovations, short-term leases and the repair and maintenance of property, plant and equipment.
None of our operating expenditure for the year ended 31 December 2022 is in respect of eligible activities. As a consequence,
none of our operating expenditure can be classified as aligned.
Capital expenditure (intangible assets and property, plant and equipment)
17.7% of our capital expenditure for the year ended 31 December 2022, as detailed in our consolidated financial statements
(pages 173 and 175 to 176) is in respect of eligible activities. The majority of this relates to the acquisition of buildings as shown
in the table below. We have determined that none of this eligible capital expenditure can be classified as aligned. The principal
reason is because we do not have sufficient detailed documentation to support that this expenditure makes a substantial
contribution to either the climate change mitigation or climate change adaptation environmental objectives. It should be noted
that we do meet the minimum set of criteria with respect to human rights, bribery and corruption, taxation and fair competition.
Taxonomy-eligible but not Taxonomy-aligned activities
4. Energy
4.1 – Electricity generation using solar photovoltaic technology
4.9 – Transmission and distribution of electricity
4.15 – District heating/cooling distribution
4.23 – Production of heat/cool from renewable non-fossil gaseous and liquid fuels
4.24 – Production of heat/cool from bioenergy
5. Water supply, sewage, waste management and remediation
5.1 – Construction, extension and operation of water collection, treatment and supply systems
5.3 – Construction, extension and operation of wastewater collection and treatment
5.5 – Collection and transport of non-hazardous waste in source segregated fractions
5.7 – Anaerobic digestion of bio-waste
5.9 – Material recovery from non-hazardous waste
6. Transport
6.5 – Transport by motorbikes, passenger cars and light commercial vehicles
7. Construction and real estate
7.2 – Renovation of existing buildings
7.3 – Installation, maintenance and repair of energy efficiency equipment
7.6 – Installation, maintenance and repair of renewable energy technologies
7.7 – Acquisition and ownership of buildings
Total Taxonomy-eligible but not Taxonomy-aligned activities
€ million
% Capex
0.6
1.2
2.0
0.1
0.1
0.4
1.0
0.1
0.1
0.5
5.0
3.3
5.1
0.8
457.7
478.0
0.0%
0.1%
0.1%
0.0%
0.0%
0.0%
0.1%
0.0%
0.0%
0.0%
0.2%
0.1%
0.2%
0.0%
16.9%
17.7%
66
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Performance
-
Our Principal Risks
Our risk appetite and approach
to risk management
Risk management is integral to Unilever’s strategy and the
achievement of Unilever’s long-term goals. Our success as
an organisation depends on our ability to identify and exploit
the opportunities generated by our business and in our
markets. In doing this, we take an embedded approach to risk
management which puts risk and opportunity assessment at
the core of the Board agenda, which is where we believe it
should be.
Unilever’s appetite for risk is driven by the following:
■ Our growth should be consistent, competitive,
profitable and responsible.
■ Our actions on issues such as plastic and climate change
must reflect their urgency, and not be constrained by the
uncertainty of potential impacts.
■ Our behaviours must be in line with our Code of Business
Principles and Code Policies.
■ Our ambition to continuously improve our operational
efficiency and effectiveness.
■ Our aim to maintain a minimum A/A2 credit rating on
a long-term basis.
Our approach to risk management is designed to provide
reasonable, but not absolute, assurance that our assets are
safeguarded, the risks facing the business are being assessed
and mitigated, and all information that may be required to
be disclosed is reported to Unilever’s senior management
including, where appropriate, the CEO and CFO.
Organisation
The Board has overall accountability for the management
of risk and for reviewing the effectiveness of Unilever’s risk
management and internal control systems. The Board has
established a clear organisational structure with well-defined
accountabilities for the principal risks that Unilever faces in
the short, medium and long term. This organisational structure
and distribution of accountabilities and responsibilities ensure
that every segment (either Business Group or country) through
which we operate has specific resources and processes for
risk reviews and risk mitigation. This is supported by the ULE,
which takes active responsibility for focusing on the principal
areas of risk to Unilever, including any emerging areas of
risks. The Board regularly review these risk areas, including
consideration of environmental, social and governance
matters, and retain responsibility for determining the nature
and extent of the significant risks that Unilever is prepared to
take to achieve its strategic objectives.
Foundation and principles
Unilever’s approach to doing business is framed by our
purpose and values (see page 4). Our Code of Business
Principles sets out the standards of behaviour that we
expect all employees to adhere to. Day-to-day responsibility
for ensuring these principles are applied rests with senior
management across Business Groups, geographies
and functions.
A network of Business Integrity Officers and Committees
supports the activities necessary to communicate the Code,
deliver training, maintain processes and procedures (including
support lines) to report and respond to alleged breaches, and
to capture and communicate learnings. We have a framework
of Code Policies that underpins the Code of Business Principles
and sets out the non-negotiable standards of behaviour
expected from all our employees.
For each of our principal risks we have a risk management
framework detailing the controls we have in place and who
is responsible for managing both the overall risk and the
individual controls mitigating that risk. Unilever’s functional
standards define mandatory requirements across a range of
specialist areas, which are key controls in mitigating these
risks. Examples include health and safety, cyber, accounting
and reporting, and financial risk management.
Our assessment of risk considers both short-term and long-
term risks, including how these risks are changing, together
with emerging risk areas. These are reviewed on an ongoing
basis, and formally by senior management and the Board at
least once a year.
Processes
Unilever operates a wide range of processes and activities
across all its operations covering strategy, planning, execution
and performance management. Risk management is
integrated into every stage.
Assurance and re-assurance
Assurance on compliance with the Code of Business Principles
and our Code Policies is obtained annually from Unilever
management via a formal Code declaration. In addition,
there are specialist awareness and training programmes
which are run throughout the year and vary depending on the
business priorities. These specialist compliance programmes
supplement the Code declaration. Our Corporate Audit
function plays a vital role in providing to both management
and the Board an objective and independent review of the
effectiveness of risk management and internal control systems
throughout Unilever.
Board assessment of compliance with the risk
management frameworks
The Board, advised by the Committees where appropriate,
regularly review the significant risks and decisions that could
have a material impact on Unilever. These reviews consider the
level of risk that Unilever is prepared to take in pursuit of the
business strategy and the effectiveness of the management
controls in place to mitigate the risk exposure.
The Board, through the Audit Committee, has reviewed the
assessment of risks, internal controls and disclosure controls
and procedures in operation within Unilever. They have also
considered the effectiveness of any remedial actions taken for
the year covered by this Annual Report and Accounts and up
to the date of its approval by the Board.
Details of the activities of the Audit Committee in relation to
this can be found in the Report of the Audit Committee on
pages 102 to 103.
Further statements on compliance with the specific risk
management and control requirements in the UK Corporate
Governance Code (2018), the US Securities Exchange Act (1934)
and the US Sarbanes-Oxley Act (2002) can be found on
page 93.
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Principal Risks
67
- Principal risks
Principal risks
Our business is subject to risks and uncertainties. On the
following pages we have identified the risks that we regard
as the most material to Unilever’s business and performance
at this time.
Our principal risks include risks that could impact our business
in the short term (i.e. the next two years), medium term (i.e. the
next three to ten years) or over the longer term (i.e. beyond ten
years). As part of our process to review our principal risks, we
also consider any additional risks that could emerge in the
future.
Our principal risks have not changed this year. We also reflect
on whether we think the level of risk associated with each of
our principal risks is increasing or decreasing. There are three
principal risks where we believe there is an increased level of
risk compared with last year:
■ Business transformation: the transformation resulting
from the Compass reorganisation will span the next two
years. This is coupled with the ongoing transformation
of our core business processes to create a superior
customer experience.
■ Climate change: this risk has intensified during 2022, as
actions to address global warming are not moving at the
pace anticipated and there has been an increase in physical
climate risks seen by increased flooding and droughts
together with the ongoing global energy crisis.
■ Economic and political instability: heightened risk due to
growing geopolitical tensions and supply chain pressures,
including the impact of the Russia-Ukraine war. Further,
2022 has seen unprecedented levels of inflation and
a possible recession impeding growth and delivery of
shareholder value.
Biodiversity loss has the characteristics of an emerging risk.
A loss of forests and soil due to potential physical and
regulatory risks could make future harvests more difficult
and expensive in the long term (see pages 45 and 48). Another
emerging risk is the potential failure to keep pace with
advancements such as artificial intelligence, machine learning
and augmented reality which are predicted to become critical
in understanding consumer preferences in the future.
We set out below certain mitigating actions that we believe
help us to manage our principal risks. However, we may not be
successful in deploying some or all of these mitigating actions.
If the circumstances in these risks occur or are not successfully
mitigated, our cash flow, operating results, financial position,
business and reputation could be materially adversely
affected. In addition, risks and uncertainties could cause
actual results to vary from those described, which may include
forward-looking statements, or could impact on our ability
to meet our targets or be detrimental to our profitability
or reputation.
Risk
Brand
preference
Level of risk
No change
Risk description
Our success depends on the value and
relevance of our brands and products to
consumers around the world and on our
ability to innovate and remain competitive.
Consumer tastes, preferences and
behaviours are changing more rapidly than
ever before. We see a growing trend for
consumers preferring brands which both
meet their functional needs and have an
explicit social or environmental purpose.
Technological change is disrupting our
traditional brand communication models.
Our ability to develop and deploy the right
communication, both in terms of messaging
content and medium is critical to the
continued strength of our brands.
We are dependent on creating innovative
products that continue to meet the needs
of our consumers and getting these new
products to market with speed.
Management of risk
We monitor external market trends and
collate consumer, customer and shopper
insights in order to develop category and
brand strategies. We invest in markets and
segments where we have built, or are
confident that we can build, competitive
advantage.
Our brand communication strategies are
designed to optimise digital communication
opportunities. We develop and customise
brand messaging content specifically for each
of our chosen communication channels (both
traditional and digital) to ensure that our
brand messages reach our target consumers.
Brand teams are driving social purpose into
their brand’s proposition and communication.
Our Research and Development function
actively searches for ways in which to
translate the trends in consumer preference
and taste into new technologies for
incorporation into future products.
Our innovation management process
converts category strategies into projects
which deliver new products to market. We
develop product ideas both in-house and with
selected partners to enable us to respond to
rapidly changing consumer trends with speed.
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Unilever Annual Report and Accounts 2022 | Strategic Report – Our Principal Risks
-
Principal risks
Risk
Portfolio
management
Risk description
Unilever’s strategic investment choices will
affect the long-term growth and profits of
our business.
Unilever’s growth and profitability are
determined by our portfolio of Business
Groups, geographies and channels and
how these evolve over time. If Unilever does
not make optimal strategic investment
decisions, then opportunities for growth
and improved margin could be missed.
Management of risk
Our Business Group strategies and our
business plans are designed to ensure that
resources are prioritised towards those
categories and markets having the greatest
long-term potential for Unilever.
Our acquisition and disposal activity is driven
by our portfolio strategy with a clear, defined
evaluation process.
Level of risk
No change
Climate change Climate change and governmental actions
to reduce such change may disrupt our
operations and/or reduce consumer
demand for our products.
Climate change is already impacting our
business in various ways. Government
action to reduce climate change such as
the introduction of a carbon tax, land
use regulations or product composition
regulations which restrict or ban certain
GHG intensive ingredients, could impact our
business through higher costs or reduced
flexibility of operations.
Physical environment risks such as water
scarcity could impact our operations or
reduce demand for our products that
require water during consumer use.
Increased frequency of extreme weather
events such as high temperatures,
hurricanes or floods could cause increased
incidence of disruption to our supply chain,
manufacturing and distribution network. If
we do not take action, climate change could
result in increased costs, reduced profit and
reduced growth.
Increase
t
We monitor climate change and in 2021
we published our Climate Transition Action
Plan which provides details on how we
are reducing the carbon intensity of our
operations, developing products with a lower
carbon footprint or that require less water
during consumer use including details of how
we will achieve our GHG reduction targets
which include net zero emissions across our
value chain by 2039 and zero emissions in our
operations by 2030.
We are decarbonising our operations
through eco-efficiency measures, powering
our factories with renewable electricity,
transitioning to renewable energy for heating
and cooling and replacing climate harmful
refrigerants. We invest in new products and
formulations so that our products work with
less water, poor quality water or no water.
We monitor trends in raw material availability
and pricing due to short-term weather
impacts to ensure continued availability of
input materials and integrate weather system
modelling into our forecasting process.
We also monitor government policy and
actions to combat climate change and take
proactive action to minimise the impact on
our business and advocate for changes to
public policy frameworks consistent with the
1.5°C ambition of the Paris Agreement.
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Principal Risks
69
-
Principal risks
Risk
Plastic
packaging
Level of risk
No change
Risk description
We use a significant amount of plastic to
package our products. A reduction in the
amount of virgin plastic we use, the use
of recycled plastic and an increase in the
recyclability of our packaging are critical
to our future success.
Both consumer and customer responses to
the environmental impact of plastic waste
and emerging regulations by governments
to tax or ban the use of certain plastics
requires us to find solutions to reduce the
amount of plastic we use, increase recycling
post-consumer use and source recycled
plastic for use in our packaging. We are
also dependent on the work of our industry
partners to create and improve recycling
infrastructure throughout the world.
There is a risk around finding appropriate
replacement materials, but also due to high
demand, the cost of recycled plastic or other
alternative packaging materials could
significantly increase in the foreseeable
future and this could impact our business
performance. We could also be exposed
to higher costs as a result of taxes or fines
if we are unable to comply with plastic
regulations, which would again impact
our profitability and reputation.
Management of risk
We are committed to reducing the amount
of post-consumer plastic packaging waste
going to landfill. We have committed to
ensuring 100% of our plastic packaging is
reusable, recyclable or compostable by 2025.
We aim to halve our use of virgin plastic
by both reducing usage and accelerating
use of recycled plastic. This requires us to
redesign products by considering multiple-
use packs, wider use of refills, recycling and
using post-consumer recycled materials in
innovative ways.
We are working on innovative solutions
through new business models. We aim to
collect and process more plastic packaging
than we sell, enabled through driving
systematic change in circular thinking at an
industry level working with partners such as
the Ellen MacArthur Foundation. We are also
working with governments, industry partners,
suppliers and consumers to raise awareness
and find solutions to improve the recycling
infrastructure for plastics. We are helping
consumers to understand disposal methods
and supporting collection schemes and
facilities.
Customer
Successful customer relationships are vital
to our business and continued growth.
Maintaining strong relationships with
our existing customers and building
relationships with new customers who have
built new technology-enabled business
models to serve changing shopper habits
are necessary to ensure our brands are well
presented to our consumers and available
for purchase at all times. Digital commerce
continues to be a critical channel for growth.
The strength of our customer relationships
also affects our ability to obtain pricing and
competitive trade terms. Failure to maintain
strong relationships with customers could
negatively impact our terms of business
with affected customers and reduce the
availability of our products to consumers.
No change
We build and maintain trading relationships
across a broad spectrum of channels ranging
from centrally managed multinational
customers through to small traders accessed
via distributors in many emerging markets.
We identify changing shopper habits and
build relationships with new customers,
such as those serving the digital commerce
channel.
We develop joint business plans with our key
customers that include detailed investment
plans and customer service objectives and
we regularly monitor progress.
We have developed capabilities for customer
sales and outlet design which enable us
to find new ways to improve customer
performance and enhance our customer
relationships. We invest in technology to
optimise order and stock management
processes for our distributive trade customers.
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Unilever Annual Report and Accounts 2022 | Strategic Report – Our Principal Risks
-
Level of risk
No change
No change
Principal risks
Risk
Talent
Business
Operations
Management of risk
We have an integrated management
development process which includes regular
performance reviews underpinned by a
common set of leadership behaviours, skills
and competencies. We have development
plans to upskill and reskill employees for
future roles and will bring in flexible talent
to access new skills.
We have targeted programmes to attract
and retain top talent and we actively monitor
our performance in retaining a diverse talent
pool within Unilever.
We regularly review our ways of working
to drive speed and simplicity through our
business in order to remain agile and
responsive to marketplace trends.
A move to more agile ways of working is
ongoing to unlock internal capacity and
prioritise work based on growth and impact.
We have contingency plans designed to
enable us to secure alternative key material
supplies at short notice, to transfer or share
production between manufacturing sites and
to use substitute materials in our product
formulations and recipes.
We have policies and procedures designed
to ensure the health and safety of our
employees and the products in our facilities,
and to deal with major incidents including
business continuity and disaster recovery.
Commodity price risk is managed through
forward buying of traded commodities, other
appropriate hedging mechanisms and
product pricing. Trends are monitored and
modelled regularly and integrated into our
forecasting process.
Risk description
A skilled workforce and agile ways of
working are essential for the continued
success of our business.
With the rapidly changing nature of work
and skills, there is a risk that our workforce
is not equipped with the skills required for
the new environment.
Our ability to attract, develop and retain
a diverse range of skilled people is critical
if we are to compete and grow effectively.
This is especially true in our key emerging
markets where there can be a high level
of competition for a limited talent pool.
The loss of management or other key
personnel or the inability to identify, attract
and retain qualified personnel could make
it difficult to manage the business and
could adversely affect operations and
financial results.
Our business depends on purchasing
materials, efficient manufacturing and
the timely distribution of products to
our customers.
Our supply chain network is exposed to
potentially adverse events such as geo
-
political sanctions, physical disruptions,
environmental and industrial accidents,
trade restrictions or disruptions at a key
supplier, which could impact our ability
to deliver orders to our customers. The
Russia-Ukraine war is an adverse event that
has challenged and continues to challenge
the continuity and cost of our supply chain
in 2022.
Maintaining manufacturing operations
whilst adhering to changing local
regulations and meeting enhanced health
and safety standards has proven possible
but has required significant management. In
addition, ensuring the operation of a global
logistics network for both input materials
and finished goods continues to present
challenges and requires continued focus
and flexibility.
The cost of our products can be significantly
affected by the cost of the underlying
commodities and materials from which
they are made.
Fluctuations in these costs cannot always be
passed on to the consumer through pricing.
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Principal Risks
71
- Principal risks
Risk
Safe and high-
quality
products
Risk description
The quality and safety of our products are
of paramount importance for our brands
and our reputation.
The risk that raw materials are accidentally
or maliciously contaminated throughout the
supply chain or that other product defects
occur due to human error, equipment failure
or other factors cannot be excluded.
Labelling errors can have potentially serious
consequences for both consumer safety
and brand reputation. Therefore, on-pack
labelling needs to provide clear and
accurate ingredient information in order
that consumers can make informed
decisions regarding the products they buy.
Systems and
information
Unilever’s operations are increasingly
dependent on IT systems and the
management of information.
The cyber-attack threat of unauthorised
access and misuse of sensitive information
or disruption to operations continues to
increase with the level of incidents rising
year on year. Such an attack could inhibit our
business operations in a number of ways,
including disruption to sales, production and
cash flows, ultimately impacting our results.
In addition, increasing digital interactions
with customers, suppliers and consumers
place ever greater emphasis on the need
for secure and reliable IT systems and
infrastructure and careful management
of the information that is in our possession
to ensure data privacy.
Level of risk
No change
No change
Management of risk
Our product quality processes and controls
are comprehensive, from product design to
customer shelf. They are verified annually and
regularly monitored through performance
indicators that drive improvement activities.
Our key suppliers are externally certified and
the quality of material received is regularly
monitored to ensure that it meets the rigorous
quality standards that our products require.
In the event of an incident relating to the
safety of our consumers or the quality of our
products, incident management teams are
activated in the affected markets under the
direction of our product quality, science and
communications experts, to ensure timely and
effective marketplace action.
We have processes in place to ensure that the
data used to generate on-pack labelling is
compliant with applicable regulations and
with relevant Unilever labelling policies in
order to provide the clarity and transparency
needed for consumers.
To reduce the impact of external cyber-
attacks impacting our business we have
firewalls and threat monitoring systems in
place, complete with immediate response
capabilities to mitigate identified threats. We
also maintain a global system for the control
and reporting of access to our critical IT
systems. This is supported by an annual
programme of testing of access controls.
We have policies covering the protection of
both business and personal information, as
well as the use of IT systems and applications
by our employees. Our employees are trained
to understand these requirements.
We also have a set of IT security standards
and closely monitor their operation to protect
our systems and information. Hardware that
runs and manages core operating data is fully
backed up with separate contingency systems
to provide real-time backup operations
should they ever be required.
We have standardised ways of hosting
information on our public websites and have
systems in place to monitor compliance with
appropriate privacy laws and regulations,
and with our own policies.
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Unilever Annual Report and Accounts 2022 | Strategic Report – Our Principal Risks
-
Level of risk
Increase
t
Increase
t
Principal risks
Risk
Business
Transformation
Economic
and political
instability
Management of risk
All acquisitions, disposals and global
organisational transformation projects are
sponsored by a member of the ULE. All such
projects have steering groups in place led
by a senior executive and regular progress
updates are provided to the ULE and Board
(where relevant). Sound project disciplines are
used in all transformation projects and these
projects are resourced by dedicated and
appropriately qualified personnel.
The digitalisation of our business is led by
a dedicated specialist team together with
representatives from all parts of the business
to ensure an integrated and holistic
approach.
A significant part of the organisational
transformation involves the transfer of
activities to third parties on and offshore.
New ways of working are being developed
to manage this new business model.
Unilever also monitors the volume of change
programmes under way in an effort to
stagger the impact on current operations
and to ensure minimal disruption.
The breadth of Unilever’s portfolio and
our geographic reach help to mitigate our
exposure to any particular localised risk. Our
flexible business model allows us to adapt
our portfolio and respond quickly to develop
new offerings that suit consumers’ and
customers’ changing needs during economic
downturns.
We regularly update our forecast of business
results and cash flows and, where necessary,
rebalance investment priorities.
We believe that many years of exposure to
emerging markets have given us experience
of operating and developing our business
successfully during periods of economic and
political volatility.
Risk description
Successful execution of business
transformation projects is key to delivering
their intended business benefits and
avoiding disruption to other business
activities.
In 2022, we announced the Compass
Organisation, a significant transformation
to the way Unilever operates through
five new Business Groups. We are also
continually engaged in major change
projects, including acquisitions and
disposals. These changes drive continuous
improvement in our business and
strengthen our portfolio and capabilities.
Continued digitalisation of our business
models and processes, together with
enhancing data management capabilities,
is a critical part of our transformation.
We have an extensive programme of
transformation projects. Failure to execute
such initiatives successfully could result in
under-delivery of the expected benefits and
there could be a significant impact on the
value of the business.
Adverse economic conditions may affect
one or more countries, regions or may
extend globally. Unilever operates around
the world and is exposed to economic
and political instability that may reduce
consumer demand for our products, disrupt
sales operations and/or impact the
profitability of our operations.
In 2022, organisations have seen significant
disruption and cost inflation coupled with
increased geopolitical tensions, such as the
Russia-Ukraine war. Further potential trade
and economic sanctions risk global supply
chain disruption and deep recession. Risks
associated with the global energy crisis are
leading to significantly higher energy prices
and could disrupt our operations.
Government actions such as trade and
economic sanctions, foreign exchange or
price controls can impact on the growth
and profitability of our local operations.
Unilever has more than half of its turnover
in emerging markets which can offer greater
growth opportunities but also exposes
Unilever to related economic and political
volatility.
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Principal Risks
73
- Principal risks
Risk
Treasury
and Tax
Ethical
Level of risk
No change
No change
Risk description
Unilever is exposed to a variety of external
financial risks in relation to Treasury
and Tax.
The relative value of currencies can
fluctuate widely and could have a
significant impact on business results.
Further, because Unilever consolidates its
financial statements in euros it is subject
to exchange risks associated with the
translation of the underlying net assets
and earnings of its foreign subsidiaries.
We are also subject to the imposition of
exchange controls by individual countries
which could limit our ability to import
materials paid in foreign currency or to
remit dividends to the parent company.
A material shortfall in our cash flow could
undermine Unilever’s credit rating, impair
investor confidence and restrict Unilever’s
ability to raise funds. In times of financial
crisis, there is a further risk that we may
not be able to raise funds due to market
illiquidity.
We are exposed to counter-party risks with
banks, suppliers and customers, which could
result in financial losses.
Tax is a complex and evolving area where
laws and their interpretation are changing
regularly, leading to the risk of unexpected
tax exposures. International tax reform
remains a key focus of attention.
Unilever’s brands and reputation are
valuable assets and the way in which we
operate, contribute to society and engage
with the world around us is always under
scrutiny both internally and externally.
Acting in an ethical manner, consistent with
the expectations of customers, consumers
and other stakeholders, is essential for the
protection of the reputation of Unilever and
its brands.
A key element of our ethical approach to
business is to reduce inequality and promote
fairness. Our activities touch the lives of
millions of people and it is our responsibility
to protect their rights and help them live
well.
The safety of our employees and the people
and communities we work with is critical.
Failure to meet these high standards could
result in damage to Unilever’s corporate
reputation and business results.
Management of risk
Currency exposures are managed within
prescribed limits and by the use of financial
hedging instruments. Further, operating
companies borrow in local currency except
where inhibited by local regulations, lack of
local liquidity or local market conditions.
We seek to maintain access to global debt
markets through short-term and long-term
debt programmes. In addition, we maintain
significant undrawn committed credit
facilities for general corporate purposes
as disclosed in note 16A.
Group treasury regularly monitors exposure
to our banks, tightening counter-party limits
where appropriate. Unilever actively manages
its banking exposures on a daily basis. We
regularly assess and monitor counter-party
risk in our suppliers and customers and take
appropriate action to manage our exposures.
Our Global Tax Principles provide overarching
governance and we have a process in place
to monitor compliance with the Tax Principles.
We have a Tax Risk Framework in place which
sets out the controls established to assess
and monitor tax risk for direct and indirect
taxes. We monitor proposed changes in
taxation legislation and ensure these are
taken into account when we consider our
future business plans.
Our Code of Business Principles and our
Code Policies govern the behaviour of our
employees, suppliers, distributors and other
third parties who work with us. Our processes
for identifying and resolving breaches of our
Code of Business Principles and our Code
Policies are clearly defined and regularly
communicated throughout Unilever. Data
relating to such breaches is reviewed by the
ULE and by relevant Board Committees and
helps to determine the allocation of resources
for future policy development, process
improvement, training and awareness
initiatives.
Our Responsible Partner Policy helps us to
improve the lives of the people in our supply
chains by ensuring human rights are
protected and makes a healthy and safe
workplace a mandatory requirement for our
suppliers. We have detailed safety standards
and monitor safety incidents at the highest
level.
Through our Brands with Purpose agenda,
a number of our brands are taking action on
societal issues such as fairness and equality.
74
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Principal Risks
Principal risks
-
Risk
Legal and
regulatory
Risk description
Compliance with laws and regulations is
an essential part of Unilever’s business
operations.
Unilever is subject to national and regional
laws and regulations in such diverse
areas as product safety, product claims,
trademarks, copyright, patents, competition,
health and safety, data privacy, the
environment, corporate governance, listing
and disclosure, employment and taxes.
Failure to comply with laws and regulations
could expose Unilever to civil and/or criminal
actions leading to damages, fines and
criminal sanctions against us and/or our
employees with possible consequences for
our corporate reputation.
Changes to laws and regulations could
have a material impact on the cost of
doing business.
Level of risk
No change
Management of risk
Unilever is committed to complying with the
laws and regulations of the countries in which
we operate. In specialist areas the relevant
teams at global, regional or local levels are
responsible for setting detailed standards
and ensuring that all employees are aware of
and comply with regulations and laws specific
and relevant to their roles.
Our legal and regulatory specialists are
heavily involved in monitoring and reviewing
our practices to provide reasonable
assurance that we remain aware of and
in line with all relevant laws and legal
obligations.
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Principal Risks
75
- Principal risks
Viability statement
The Directors have reviewed the long-term prospects of the
Group in order to assess its viability. This review incorporated
the activities and key risks of the Group together with the
factors likely to affect the Group’s future development,
performance, financial position, cash flows, liquidity position
and borrowing facilities as described on pages 1 to 59. In
addition, we describe in notes 15 to 18 on pages 180 to 195
the Group’s objectives, policies and processes for managing
its capital, its financial risk management objectives, details
of its financial instruments and hedging activities and its
exposures to credit and liquidity risk.
Assessment
In order to report on the long-term viability of the Group,
the Directors reviewed the overall funding capacity and
headroom available to withstand severe events and carried
out a robust assessment of the principal risks facing the Group,
including those that would threaten its business model, future
performance, solvency or liquidity. This includes consideration
of external factors such as rises in inflation and slowing GDP
growth. The assessment also included reviewing and
understanding the mitigation factors in respect of each
principal risk. The risks and mitigating factors are summarised
on pages 68 to 75.
The viability assessment has three parts:
■ First, the Directors considered the period over which they
have a reasonable expectation that the Group will continue
to operate and meet its liabilities,
■ Second, they considered the current debt facilities and debt
headroom over the viability period, assuming that any debt
maturing can be re-financed at commercially acceptable
terms; and
■ Third, they considered the potential impact of severe but
plausible scenarios over this period including:
■ assessing scenarios for each individual principal risk, for
example the inability to recover from inflationary impacts;
the termination of our relationships with the three largest
global customers; the loss of all material litigation cases;
a major IT data breach; the lost cost and growth
opportunities from not keeping up with technological
changes and increase in physical climate risks including
its impact on operational costs; and
■ assessing scenarios that involve more than one principal
risk including the following multi-risk scenarios:
Multi-risk scenarios modelled
Contamination issue with one of our
brands and the temporary closure of
three of our largest factories.
Geopolitical tensions leading to a major
global incident affecting the availability
of key materials from a location and
inability to recover all the increased cost
due to inflationary pressures.
Climate change-related flooding driving
closure of a key sourcing unit and
significant water shortages in key
markets.
Cyber-attack causing a temporary
shutdown of our systems and the impact
on profit if management failed to deliver
a major transformation project.
Findings
Level of severity reviewed
Significant reduction in sales of our largest
brand along with percolating impact on other
brands and closure of three of our largest
factories for a period of six months.
Closure of a key geographic market impacting
availability of raw materials and increased
operational costs due to inflationary pressures
not completely recovered.
Link to principal risk
■ Safe and high-quality products
■ Brand preference
■ Supply chain
■ Economic and political
instability
■ Supply chain
Closure of a sourcing unit for a period of six
months and significant water shortages causing
supply chain disruption in water-stressed sites
and changing consumer preference towards
water efficient products.
■ Climate change
■ Supply chain
■ Brand preference
Loss of turnover coupled with reduction margins
and ongoing reputational damage and loss of
confidence from our customers and consumers.
■ Systems and information
■ Business transformation
■ Firstly, a three-year period is considered appropriate for this
viability assessment because it is the period covered by the
strategic plan; and it enables a high level of confidence in
assessing viability, even in extreme adverse events, due to
factors such as:
■ the Group has considerable financial resources together
with established business relationships with many
customers and suppliers in countries throughout the
world;
■ high cash generation by the Group’s operations and
access to the external debt markets;
■ flexibility of cash outflow with respect to significant
marketing programmes and capital expenditure projects
which usually have a two-to-three year horizon; and
■ the Group’s diverse product and geographical activities
which are impacted by continuously evolving technology
and innovation.
■ Secondly, the Group’s debt headroom and funding profile
was assessed. None of the future outlooks considered
resulted in significant liquidity headroom issues, primarily
because:
■ the Group has a healthy balance of short-term and long-
term debt programmes, with repayment profiles ensuring
short-term commercial paper maturities do not exceed
€0.5 billion in any given week and long-term debt
maturities do not exceed €4.0 billion in any given year
■ the Group has the equivalent of €7.4 billion in committed
credit facilities with a maturity of 364 days which are used
for backing up our commercial paper programmes.
■ Thirdly, for each of our 14 principal risks, one of which is
climate, worst-case plausible scenarios have been assessed
together with multi-risk scenarios. None of the scenarios
reviewed, either individually or in aggregate would cause
Unilever to cease to be viable.
Conclusion
On the basis described above, the Directors have a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the
three-year period of their assessment.
76
Unilever Annual Report and Accounts 2022 | Strategic Report – Our Principal Risks
Governance
78 Chair's Governance statement
80 Board of Directors
82 Unilever Leadership Executive (ULE)
84 Corporate Governance statement
95 Report of the Nominating and Corporate Governance Committee
100 Report of the Audit Committee
105 Report of the Corporate Responsibility Committee
109 Directors' Remuneration Report
-
Chair's Governance statement
We have taken decisions
underpinned by high
corporate standards.
Nils Andersen
Chair
As outlined in my letter on pages 6 to 7, Unilever has
responded well to challenging macroeconomic events while
at the same time transforming its organisational model. As a
Board, we are confident that this transformation will deliver
greater speed, agility and accountability across the Group.
In a year of change, I am pleased to present our Corporate
Governance Report. The purpose of this Report is to update
you on developments within Unilever’s corporate governance
in the last year. We explain how we, as a Board, have taken
decisions, underpinned by high corporate governance
standards.
Board priorities and delivery
The focus of the Board in 2022 has been to drive the
Company’s vision; to deliver winning performance by being
the global leader in sustainable business. The Board has been
highly engaged in supporting the ULE and wider management
in this objective – especially through the aftermath of the
Covid pandemic and the current and continuing challenging
macroeconomic headwinds. In our meetings, we reviewed
and discussed the direction and strategies of each of the five
Business Groups as well as Unilever’s overall strategies in
respect of financial plan, supply chain operations, research
and development, and sustainability. In addition, the Board
has continued to engage with external stakeholders and
partake in deep dive knowledge sessions into certain areas
of the business such as cyber security management and
the Company’s ways of working following the Compass
Organisation transformation. The Board was also pleased
to be able to step up its face-to-face engagements with the
Unilever business overseas in 2022, following the relaxation
of many Covid restrictions. The Board held Board and
Committee meetings in the US and Singapore, and undertook
visits to Unilever’s businesses in India, Indonesia and Vietnam.
Details of the Board’s activity and focus during 2022 are set out
on page 86.
Culture
Consistent with previous years, the Board recognises the
importance and differentiation that culture brings in the
delivery of performance. At the heart of our Compass Strategy
for Sustainable Growth lies our purpose to make sustainable
living commonplace, delivered through our belief that
brands with purpose grow, companies with purpose last, and
importantly, people with purpose thrive. As a Board and as
Directors individually we aim to lead by example, promoting
a purposeful, accountable and high-performance culture.
We remain proud of the Company’s commitment to help equip
employees to stay fit for the future of work and build a strong
talent pipeline through our personalised future-fit
development plans.
The Board remains engaged in the furtherance of equity,
diversity and inclusion initiatives across our business. We want
to drive the Company’s vision to be a beacon for diversity
and inclusion in order to build a fairer, more inclusive society
through an equitable workplace. The Non-Executive Directors
actively participate in workforce engagement sessions across
the year, listening to employees and discussing focus topics
such as equity, diversity and inclusion, agile ways of working
and performance culture. The Board receives reports from
these sessions throughout the year as well as the results of
employee perception surveys and feedback from town hall
meetings. It is pleasing to see that the most recent UniVoice
survey, in which approximately 96,000 employees participated
globally, showed an overall employee engagement score of
81% in offices and 84% in factories. In particular, consistent
with the previous year, 94% of employees who participated
consider that Unilever conducted its business with integrity
and 87% of employees see Unilever as having an inclusive
working environment in which everyone’s views are valued.
These results demonstrate that people hold a positive view
of Unilever’s culture. The Board and the ULE will continue
to ensure that this permeates across the organisation.
78
Unilever Annual Report and Accounts 2022 | Governance
Chair's Governance statement
Board composition and succession
The Board saw a number of changes during the year, with the
appointment of Nelson Peltz and Hein Schumacher as Non-
Executive Directors, and the decision of our CEO, Alan Jope,
to retire in 2023. The Board is delighted that, after a thorough
global search, Hein Schumacher has been appointed as the
new CEO from 1 July 2023. More details on these appointments
can be found on pages 96 and 97.
It is my responsibility as Chair to provide leadership and
ensure that we have a Board able to make high-quality
decisions. A key part of that role is to ensure the Board works
collaboratively with the executive team, providing support and
guidance and constructively challenging management when
necessary. This requires Directors who have a diverse range
of skills, experience and attributes, which I am pleased, I can
confidently say, we have in our current Board.
Board and Committee evaluation
In line with our three-year cycle, the Board conducted an
evaluation of its performance in 2022. The Board’s review
was externally facilitated by an independent expert and
was conducted in tandem with internal evaluations of the
Committees. The findings from both processes provide a clear
agenda for us to continue to improve as a Board in 2023 and
provide areas for future focus, which are discussed in more
detail later in this report. The review confirmed that the Board
and its Committees are effective.
In particular, during 2022, the Board gave its full support
to Alan Jope in driving the Compass Organisation
transformation. With the appointment by the Board of a
new CEO from 1 July 2023, the Board will prioritise supporting
his effectiveness, alongside a focus on driving shareholder
value for the short, medium and long term, together with a
continued commitment to Unilever’s purpose and values.
The Board has confidence that Unilever’s new structure
together with its new leadership will prove a powerful
combination to enhance Unilever’s performance and, in
turn, bring value creation for its key stakeholders. Over
the course of 2023, the Board will continue to give its full
support to management in driving top line growth during
2023 and beyond.
Nils Andersen
Chair
-
The Board of Unilever has implemented
standards of corporate governance and
disclosure policies applicable to a UK
incorporated company, with listings in
London, Amsterdam and New York.
Application of the provisions of the 2018 UK
Corporate Governance Code (the ‘Code’)
In respect of the year ended 31 December 2022, Unilever
was subject to the Code (available from www.frc.org.uk).
The Board is pleased to confirm that Unilever applied the
principles and complied with all the provisions of the Code
throughout the year. Further information on compliance
with the Code can be found as follows:
Board leadership and Company purpose
Long-term value and sustainability
Culture
Shareholder engagement
Other stakeholder engagement
Conflicts of interest
Role of the Chair
Division of responsibilities
Non-Executive Directors
Independence
Composition, succession and evaluation
Appointments and succession planning
Skills, experience and knowledge
Length of service
Evaluation
Diversity
Audit, risk and internal control
Committee
Integrity of financial statements
Fair, balanced and understandable
Internal controls and risk management
External auditor
Principal and emerging risks
page
102
27, 78
90
87
88
85
85
88
96 – 97
98
99
88 – 89
97
101
101
102
103
103
102
Remuneration
Policies and practices
Alignment with purpose, values and long-term
strategy
Independent judgement and discretion
109 -131
113
109
Unilever also complied with the Listing Standards of
the New York Stock Exchange applicable to foreign
private issuers. Please see page 79 for further information.
Unilever Annual Report and Accounts 2022 | Governance
79
-
Board of Directors
Nils Andersen
Chair and Non-Executive Director
Alan Jope
CEO
Graeme Pitkethly
CFO
Nationality
Danish
Age 64, Male
Appointed April
2015
Nationality British
Age 58, Male
Appointed CEO
January 2019
Appointed
Director May 2019
Nationality British
Age 56, Male
Appointed CFO
October 2015
Appointed
Director April 2016
Current external appointments:
AkzoNobel NV (Chair); Worldwide
Flight Services (Chair); Salling
Foundation (NED); European Round
Table of Industrialists (member).
Previous experience: Faerch Plast
(Chair); Salling Group (Chair); BP plc
(NED); A.P. Moller – Maersk A/S (Group
CEO); Carlsberg A/S and Carlsberg
Breweries A/S (CEO); European Round
Table of Industrialists (Vice Chairman);
Unifeeder S/A (Chairman).
Current external appointments:
Generation Unlimited (Chair).
Previous experience: Beauty &
Personal Care Division (President);
Unilever Russia, Africa and Middle East
(President); Unilever North Asia
(President); SCC and Dressings (Global
Category Leader); Home and Personal
Care North America (President).
Current external appointments:
Pearson plc (NED); Financial Stability
Board Task Force on Climate-related
Financial Disclosures (Vice Chair);
The 100 Group Main Committee (Vice
Chair); UN Global Compact (CFO Task
Force).
Previous experience: Unilever UK
and Ireland (EVP and General
Manager); Finance Global Markets
(EVP); Group Treasurer; Head of M&A;
FLAG Telecom (VP Corporate
Development); PwC.
Andrea Jung Vice Chair/
Senior Independent Director
Dr Judith Hartmann
Non-Executive Director
Adrian Hennah
Non-Executive Director
Nationality
American/
Canadian
Age 63, Female
Appointed May
2018
Nationality
Austrian
Age 53, Female
Appointed April
2015
Nationality British
Age 65, Male
Appointed
November 2021
Current external appointments:
Grameen America Inc. (President and
CEO); Mastercard Inc. (NED); Harvard
Business School (Professor).
Previous experience: Avon Products
Inc. (CEO); General Electric (Board
member); Daimler AG (Board member).
Current external appointments:
None.
Previous experience: ENGIE Group
(Deputy CEO); Suez (NED); General
Electric (various roles); Bertelsmann SE
& Co. KGaA (CFO); RTL Group SA (NED);
Penguin Random House LLC (NED).
Current external appointments:
J Sainsbury plc (NED); Oxford
Nanopore Technologies plc (NED).
Previous experience: Reckitt
Benckiser Group plc (Executive Director
& CFO); RELX plc (NED).
80
Unilever Annual Report and Accounts 2022 | Governance
-
Board of Directors
Susan Kilsby
Non-Executive Director
Ruby Lu
Non-Executive Director
Strive Masiyiwa
Non-Executive Director
Nationality
American/British
Age 64, Female
Appointed August
2019
Nationality
Chinese
Age 52, Female
Appointed
November 2021
Nationality
Zimbabwean
Age 62, Male
Appointed April
2016
Current external appointments:
Fortune Brands Innovations (Chair);
Diageo plc (SID); NHS England (NED);
UK Takeover Panel.
Previous experience:
BHP plc (NED); L’Occitane International
(NED); Keurig Green Mountain (NED);
Coca-Cola HBC AG (NED); Goldman
Sachs International (NED); Shire plc
(Chair); Mergers and Acquisitions,
EMEA – Credit Suisse (Chair).
Current external appointments:
Uxin Limited (NED); Yum China
Holdings Inc. (NED).
Previous experience:
iKang Healthcare Group (NED); Blue
City Holdings Limited (NED).
Current external appointments:
Netflix Inc. (NED); International
Advisory Board of Bank of America
(Board member); Stanford University
Advisory Board (Board member);
National Geographic Society
(Board member).
Previous experience: Africa Against
Ebola Solidarity Trust (Co-Founder
and Chairman); Grow Africa (Co-
Chairman); Nutrition International
(Chairman); Rockefeller Foundation
(Trustee).
Professor Youngme Moon
Non-Executive Director
Nelson Peltz
Non-Executive Director
Hein Schumacher
Non-Executive Director
Nationality
American
Age 58, Female
Appointed April
2016
Nationality
American
Age 80, Male
Appointed July
2022
Nationality Dutch
Age 51, Male
Appointed
October 2022
Appointed CEO
effective 1 July
2023
Current external appointments:
Mastercard Inc. (Board member);
Sweetgreen Inc. (Board member); Jand
Inc. (Warby Parker) (Board member);
Harvard Business School (Professor).
Current external appointments:
Trian Fund Management LP (CEO &
Founding Partner); The Wendy's
Company (Chairman); Janus
Henderson Group (NED).
Previous experience: Harvard
Business School (Chair and Senior
Associate Dean for the MBA Program);
Massachusetts Institute of Technology
(Professor); Avid Technology (NED);
Rakuten Inc. (NED).
Previous experience: Invesco Ltd
(NED); Procter & Gamble (NED); Sysco
Corp. (NED); Ingersoll Rand plc (NED);
Heinz Company (NED); Triarc
Companies (CEO & Chairman).
Current external appointments:
Royal FrieslandCampina (CEO); Global
Dairy Platform (Chair).
Previous experience: Royal
FrieslandCampina (CFO); C&A AG
(Board member); Heinz China (CEO);
Kraft Heinz Company (senior
management positions); Ahold NV
(Corporate Controller Asia & Central
America).
Feike Sijbesma
Non-Executive Director
Nationality Dutch
Age 63, Male
Appointed
November 2014
Current external appointments:
Royal Philips (Chairman); Royal DSM
NV (Honorary Chairman); De
Nederlandsche Bank NV (Member
of the Supervisory Board); Trustees
of the World Economic Forum (Board
member); Board of the Global Center
on Adaptation (Co-Chair); Africa
Improved Foods (Advisor).
Previous experience: Royal DSM
NV (Former CEO); Utrecht University
(Supervisory Director); Stichting
Dutch Cancer Institute/Antoni van
Leeuwenhoek Hospital NKI/AVL
(Supervisory Director); CPLC WBG
(Chair).
Unilever Annual Report and Accounts 2022 | Governance
81
-
Unilever Leadership Executive (ULE)
Conny Braams Chief Digital &
Commercial Officer
Matt Close
President, Ice Cream
Reginaldo Ecclissato
Chief Business Operations & Supply
Chain Officer
Nationality Dutch
Age 57, Female
Appointed to ULE
January 2020
Joined Unilever
1990
Nationality British
Age 53, Male
Appointed to ULE
April 2022
Joined Unilever
1992
Current external appointments:
Kröller-Müller Museum (Advisory
Board member); Rotterdam School
of Management, Erasmus University
(Advisory Board member).
Previous experience: Unilever
Middle Europe (EVP); Unilever Benelux
(Chair and EVP); Home Care Europe
(EVP); Unilever Food Solutions Asia,
Africa and Middle East (EVP); various
Unilever marketing and general
management roles.
Previous experience: Various
Unilever roles including Global Ice
Cream (EVP); Ice Cream Europe (VP);
Marketing Foods and Ice Cream
Europe(VP); Marketing Home and
Personal Care UK & Ireland (VP);
Personal Care UK & Ireland (Category
Director); Magnum (European Brand
Development Director).
Nationality
Brazilian
Age 54, Male
Appointed to ULE
January 2022
Joined Unilever
1991
Previous experience: Mexico,
Caribbean, and Central America (EVP);
North America and Latin America (EVP
Supply Chain); Home Care for the
Americas (VP Supply Chain).
Hanneke Faber
President, Nutrition
Fernando Fernandez
President, Beauty & Wellbeing
Fabian Garcia
President, Personal Care
Nationality
Argentinian
Age 56, Male
Appointed to ULE
April 2022
Joined Unilever
1988
Previous experience: Latin America
(EVP); Brazil (EVP); Philippines (SVP);
Global Hair Care Europe (SVP); Hair
Care Latin America (VP); and Laundry
Argentina (Marketing Director).
Nationality Dutch
Age 53, Female
Appointed to ULE
January 2018
Joined Unilever
2018
Current external appointments:
Tapestry Inc. (NED); FoodDrinkEurope
(Board member); Leading Executives
Advancing Diversity (LEAD) (Advisory
Board member); Pepsi/Lipton JV
(Board member).
Previous experience: Bayer AG
(Supervisory Board member); Royal
Ahold Delhaize (CEIO & EC member);
Royal Ahold (CCO & EC member);
P&G (VP & GM).
Nationality
American
Age 63, Male
Appointed to ULE
January 2020
Joined Unilever
2020
Current external appointments:
Council on Foreign Relations in the US
(member); Arrow Electronics (Board
member).
Previous experience: Unilever North
America (President); Revlon (President
and CEO); Colgate- Palmolive (COO;
President of the Asia/Pacific Division,
EVP Latin America); P&G (President
of Asia Pacific, General Manager
of Venezuela).
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Unilever Annual Report and Accounts 2022 | Governance
Unilever Leadership Executive (ULE)
-
Sanjiv Mehta President, Unilever,
South Asia, and CEO & Managing
Director, Hindustan Unilever
Nitin Paranjpe Chief People and
Transformation Officer, and Chair of
Hindustan Unilever
Richard Slater
Chief R&D Officer
Nationality Indian
Age 62, Male
Appointed to ULE
May 2019
Joined Unilever
1992
Nationality Indian
Age 59, Male
Appointed to ULE
October 2013
Joined Unilever
1987
Nationality British
Age 45, Male
Appointed to ULE
April 2019
Joined Unilever
2019
Current external appointments:
Heineken N.V. (Member of the
Supervisory Board).
Previous experience: Foods &
Refreshment (President); Home Care
(President); Unilever South Asia (EVP)
and Hindustan Unilever Limited (CEO);
Home and Personal Care India (EVP);
Home Care India (VP); senior positions
in Laundry and Household Care.
Previous experience: GSK (Head of
R&D, Consumer Healthcare); Reckitt
Benckiser (Head of R&D, Consumer
Healthcare); Reckitt Benckiser (Global
Group Director/VP R&D Personal Care;
Global Director R&D Aircare,
Analgesics and New Brands); Boots
Healthcare (various roles).
Current external appointments:
Air India Limited (independent Board
Director); Board of Indian School of
Business (Director); Federation of
Indian Chambers of Commerce and
Industry (Senior Vice President); Breach
Candy Hospital Trust (member); South
Asia Advisory Board of Harvard
Business School (member); Xynteo’s
‘India 2022’ (Chair).
Previous experience: Advisory
Network to the High Level Panel for
a Sustainable Ocean Economy (Co-
Chair); Unilever North Africa and
Middle East (Chair and CEO); Unilever
Philippines Inc. (Chair and CEO);
Unilever Bangladesh Limited (Chair
and Managing Director).
Peter ter Kulve
President, Home Care
Maria Varsellona Chief Legal Officer
& Group Secretary
Nationality Dutch
Age 58, Male
Appointed to ULE
May 2019
Joined Unilever
1988
Nationality Italian
Age 52, Female
Appointed to ULE
April 2022
Joined Unilever
2022
Previous experience: Unilever South
East Asia & Australasia (President) and
Chief Digital Transformation & Growth
Officer; Corporate Transformation
(EVP); Unilever Benelux (Chair and
EVP); Unilever Ice Cream (Global Head
& EVP); various brand and channel
management roles.
Previous experience: Chief Legal
Officer and Company Secretary ABB;
Chief Legal Officer Nokia Group;
General Counsel Nokia Siemens;
General Counsel Tetra Laval Group;
variety of senior global legal roles
in General Electric Oil & Gas.
Unilever Annual Report and Accounts 2022 | Governance
83
I
Corporate Governance
Unilever's structure
Unilever PLC (Unilever), incorporated in England and Wales
in 1894, is the parent company of the Unilever Group.
Unilever’s shares are traded through its premium listing on
the London Stock Exchange and its listing on the Amsterdam
Exchange Index on Euronext. Unilever’s shares are also traded
on the New York Stock Exchange in the form of American
Depositary Receipts.
Unilever’s governance framework
To facilitate its oversight role, and to ensure that it retains
decision-making power over material matters, the Board has
put in place a governance framework to support the creation
of long-term value for stakeholders. The Board discharges
some of its responsibilities directly and others through four
principal Committees (Audit Committee, Compensation
Committee, Nominating and Corporate Governance
Committee, and the Corporate Responsibility Committee)
which it has established to provide dedicated focus on
particular areas. The Reports of each of these Committees
can be found on pages 100, 112, 95 and 105. The Report
of the Audit Committee includes a description of the risk
management and internal control arrangements for
the Group. In addition, there are two management
committees, the Unilever Leadership Executive (ULE)
and the Disclosure Committee.
Board
The Board's primary role is to ensure the long-term sustainable success
of Unilever for the mutual benefit of all our stakeholders.
Independent oversight and rigorous challenge
Audit
Committee (AC)
Corporate
Responsibility
Committee (CRC)
Responsible for
monitoring the integrity
of Unilever's financial
statements and for
ensuring the
effectiveness of the
internal audit function,
internal controls and risk
management processes,
and managing the
relationship with the
external auditor.
Oversees Unilever's
conduct as a responsible
and ethical global
business, reviews
sustainability-related
risks and reputational
matters and provides
guidance and
recommendations
to the Board on
sustainability and
reputational matters.
Nominating
and Corporate
Governance
Committee (NCGC)
Reviews the composition
of the Board and
Committees and makes
recommendations to
the Board on suitable
candidates for
appointment to the
Board and Committees.
Assists the Board on
Board and senior
management
succession planning,
conflicts of interest
and independence.
Compensation
Committee (CC)
Determines the
remuneration
framework/policy for
the Executive Directors
and ULE. Considers
alignment with
regulation, market
practice and principles
of good governance and
ensuring remuneration
is linked to corporate
and individual
performance. Also
reviews remuneration-
related workforce
policies and practices.
CEO & ULE
The CEO, supported by the ULE, is responsible for ensuring delivery of the Group's
strategy, business plans and financial performance.
Disclosure Committee
Responsible for overseeing the accuracy, materiality and timeliness of disclosure
of financial and other public announcements and evaluates and oversees
the adequacy of Unilever's disclosure controls and procedures.
-
-
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-
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-
B
o
a
r
d
o
v
e
r
s
i
g
h
t
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-
-
-
-
-
-
-
-
-
-
C
:
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-
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M
a
n
a
g
e
m
e
n
t
a
c
c
o
u
n
t
a
b
i
l
i
t
y
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84
Unilever Annual Report and Accounts 2022 | Governance
-
When there is a Board meeting, the Non-Executive Directors
usually also meet without the Executive Directors present.
The Chair, or in his absence the Senior Independent Director
(SID), chairs such meetings.
Attendance during the year at each of the Committees'
meetings is also set out below. Further information is provided
in the relevant Committee reports.
Site visits
In addition to the formal Board meetings, several
Non-Executive Directors visited Unilever sites in India,
Indonesia and Vietnam in order to better understand
the businesses in these countries. These site visits allow
the Non-Executive Directors to observe the Group's
operations in action, they reinforce their knowledge
and enable them to experience first-hand the culture
of the Group.
The site visits involve intensive itineraries. The Non-
Executive Directors receive presentations on a variety
of topics, including strategy, business and financial
performance, distribution and marketing. The Non-
Executive Directors meet with local management
teams, they visit markets and stores where Unilever
products are sold and meet, where possible, with
external stakeholders. Local workforce engagement
sessions are also organised wherever possible. Such
sessions took place in the US, Indonesia, Vietnam and
Singapore in 2022.
Corporate Governance
The Board has ultimate responsibility for the development
of strategy, material acquisitions and divestments, material
capital expenditure, the Company’s capital structure and
other financing matters, oversight of policies, procedures
and internal controls, setting and monitoring the Group’s
culture and promoting ethical behaviour.
A summary of the activities of the Board during the year is
provided in later pages of this Annual Report and Accounts
together with reports from each of the Committees. In
addition, the schedule of matters reserved for the Board, a
comprehensive summary of how the Board operates and the
terms of reference for the four principal Committees and the
Disclosure Committee are available on the Company’s website
in the Governance of Unilever. (www.unilever.com/board-and-
management-committees)
The Chair leads the Board and is responsible for its overall
effectiveness in directing the Unilever Group. The Chair sets the
Board’s agenda, ensures the Directors receive accurate, timely
and clear information, promotes and facilitates constructive
relationships and effective contribution of all the Executive
and Non-Executive Directors, and promotes a culture of
openness and debate. The Non-Executive Directors provide
constructive challenge, strategic guidance, specialist advice
and hold management to account. The Group Secretary
supports the Board to ensure that it has the policies,
processes, information, time and resources it needs to
function effectively and efficiently.
Board and Committee meetings
There were six scheduled Board meetings in 2022 and an
additional five meetings were convened to discuss strategic
and transactional matters. Two scheduled Board meetings
were held outside the UK in the US and Singapore, at which
time the Board visited local operations and met with the local
management teams and the workforce. The remainder of the
meetings were held in the UK.
Board and Committee attendance
Position
Chair
Nils Andersen
Non-Executive Directors
Judith Hartmann
Adrian Hennah
Andrea Jung
Susan Kilsby
Ruby Lu
Strive Masiyiwa
Youngme Moon
Nelson Peltz1
Hein Schumacher2
Feike Sijbesma
Executive Directors
Alan Jope
Graeme Pitkethly
Former Directors
Laura Cha3
John Rishton3
Board
NCGC
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
3/3
2/2
6/6
6/6
6/6
3/3
3/3
4/4
–
–
4/4
–
4/4
–
–
–
–
4/4
–
–
1/2
–
AC
–
8/8
8/8
–
8/8
–
–
–
–
2/2
–
–
–
–
4/4
CRC
–
–
–
–
–
–
3/4
4/4
–
–
4/4
–
–
–
–
1. Appointed as Non-Executive Director 20 July 2022
2. Appointed as Non-Executive Director 4 October 2022
3. Stepped down as Non-Executive Director 4 May 2022
Unilever Annual Report and Accounts 2022 | Governance
CC
8/8
–
–
8/8
–
8/8
–
–
3/3
–
–
–
–
3/4
–
85
- Corporate Governance
Board focus
During the year, the Board considered a comprehensive
programme of regular matters drawn from the schedule
of matters reserved for the Board and the immediate and
prospective operating environment. The schedule below is
not exhaustive and demonstrates the breadth of oversight
provided by the Board. Some of the Board's key decisions in
2022 are discussed in more detail on page 87.
Strategy and business plan
■
implemented and monitored the transition to the Compass
Organisation resulting in a category-led and market-
focused business model;
■ approved the acquisition of Nutraceutical Wellness Inc;
■ discussed the proposed acquisition of the consumer
healthcare business of GSK and Pfizer with the ultimate
decision not to continue with its proposed offer;
■ reviewed the Unilever strategy at Business Group level; and
■ reviewed the R&D strategy including the Group's
innovation pipeline.
Operational performance and financial management
■ regularly reviewed Unilever Group operational and financial
performance and delivery against strategic objectives,
business plans including budget and forecast, financial and
non-financial KPIs and against analysts’ consensus and
market guidance;
■ considered and approved quarterly dividends;
■ significant shareholders of PLC considered and approved
a share buyback programme of up to €3bn over 2022 and
2023; and
■ considered and approved the issuance of new shares to
be used to settle the vesting of share awards granted to
employees under various employee share plans.
Governance and external reporting
■ considered feedback from the Audit Committee in relation to
significant judgements, fair, balanced and understandable
assessment, going concern basis of preparation and
viability statement;
■ approved half- and full-year results and annual report
and accounts;
■ approved the notice of meeting for the AGM;
■ approved the Governance of Unilever and Committee terms
of reference; and
■ considered the work of the Nominating and Corporate
Governance Committee on Board composition and
succession planning and approved the appointments
of Nelson Peltz and Hein Schumacher as independent
Non-Executive Directors.
Society and sustainability
■ considered and approved the Modern Slavery Act Statement;
■ considered and supported commitments by management
on Nutrition to report the performance of our foods products
against nutrition standards; and
■ reviewed the sustainability strategy and performance,
including review of the regulatory development of
sustainability reporting requirements and the Group's
sustainability KPIs.
Political and regulatory environment
■ received updates from various external speakers on the
macro environment from economic, social and political
perspectives and global security issues; and
■ received updates on emerging legislation and regulation.
Culture and stakeholders
■ reviewed the 2022 workforce engagement programme
covering both employees and employee representatives
and considered feedback from the sessions; and
■ regularly reviewed investor feedback reports and
analysts' reports.
Risk and internal controls
■ considered feedback from the Audit Committee on its
assessment of the ongoing effectiveness of the Group’s
internal controls; and
■ reviewed the findings from the assessment of the Group’s
register of principal risks and focus risks and approved the
related risk management plans.
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Unilever Annual Report and Accounts 2022 | Governance
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Corporate Governance
Key decisions by the Board including Section 172 considerations
The table below shows some of the key decisions of the Board in 2022. The Directors confirm that the deliberations of the Board
incorporated appropriate consideration of the matters detailed in Section 172 of the Companies Act 2006. As stewards of the
Company, the Board recognises that having regard to the needs and expectations of stakeholders is crucial, as it ensures that
Unilever is well positioned to deliver long-term sustainable growth for the benefit of all its stakeholders.
Strategy and business plan
Background
The Compass Organisation, announced in January 2022, created a simpler organisation with five category-focused business
groups. Business plans are designed to unlock value from operational efficiency and predicated on resources being prioritised
towards higher growth categories and markets that have the greatest long-term potential for Unilever. Unilever’s acquisition
and disposal activity is driven by this same strategic objective.
In January 2022, the Board decided not to continue with its proposed offer to acquire the consumer healthcare business of GSK
and Pfizer. In May 2022, the Board approved the acquisition of an increased equity interest of up to a total of 80% in
Nutraceutical Wellness Inc. (Nutrafol brand). Nutrafol is a premium brand that has developed a range of clinically tested hair
products aimed at consumers experiencing hair loss and other hair wellness issues.
Stakeholder considerations
The Compass Organisation takes into account the interests of shareholders in its aims to create value for shareholders. It
takes into account customers and consumers and the additional focus that the new organisational structure can bring to
those groups. Suppliers will also continue to benefit from the scale of requirements that the Group can bring and overall
covenant of the Group.
Following the proposed offer for the consumer health business of GSK and Pfizer becoming public, the Board took into account
investor attitudes to the proposal in its decision not to continue with its proposed offer. The Board concluded that Unilever’s
ongoing strategy of organic growth and bolt-on acquisitions in relevant, higher value Business Group categories would
continue to deliver long-term sustainable value for Unilever’s shareholders and wider stakeholders.
In evaluating the acquisition of Nutrafol, the Board considered the alignment of the acquisition with Unilever’s strategy,
the potential financial returns on investment, and whether the commercial terms of the acquisition were in the interests of
shareholders as a whole. The Board agreed that Nutrafol was a good strategic fit for the Company. The Board also considered
the employees of Nutrafol in their deliberations, including how best to preserve the entrepreneurial culture and drive that the
founders of Nutrafol had created. In addition, the Board considered how best to minimise disruption during integration into
Unilever, as well as ways to support and retain Nutrafol employees.
Society and sustainability
Background
The Group’s vision is to deliver winning performance by being the global leader in sustainable business. During the year, the
Board supported the move to be the first global foods company to publicly report the performance of its product portfolio
against six different government-endorsed nutrient profile models as well as its own high nutrition standards. The Board
also reviewed the progress in respect of the Group’s progress under its Climate Transition Action Plan (CTAP), which remains
at the forefront of our thinking and activities. The regulatory environment continues to evolve in this area as well and the
Board continues to support the ULE and our management teams on the CTAP and in its ongoing review and response to
sustainability-related regulations together with the measurement of our progress in respect of these.
Stakeholder considerations
The Group’s vision supports stakeholders in all areas of the business as well as the environment. The commitment to nutritional
reporting arose as a result of dialogue and engagement with ShareAction, a non-governmental organisation who had been
engaging with Unilever's shareholders. The approach to sustainability assists suppliers in the development of sustainable
agriculture. Customers and consumers benefit from products that aim for the highest standards in sustainability.
Appointment of new directors
Background
In May 2022, the Board approved the appointment of Nelson Peltz as a Non-Executive Director of the Board. Nelson Peltz is the
chief executive and founding partner of Trian Fund Management, LP, an investment management firm that manages funds
which held interests in approximately 1.5% of Unilever’s issued share capital as at the date of his appointment. In addition, in
June 2022 the Board announced the appointment of Hein Schumacher as a Non-Executive Director of the Board, with effect
from 4 October 2022. It was announced on 30 January 2023 that Hein Schumacher would be appointed CEO of Unilever with
effect from 1 July 2023.
Stakeholder considerations
The Board considered Nelson’s and Hein's extensive experience in the global consumer goods industry and concluded that
their appointments to the Board would be beneficial to Unilever and its shareholders and wider stakeholders.
Unilever Annual Report and Accounts 2022 | Governance
87
Corporate Governance
Board commitment
All Directors are expected to attend each Board meeting
and each Committee meeting of which they are members,
unless there are exceptional reasons preventing them from
participating. Only members of the Committees are entitled
to attend Committee meetings, but others may attend at
the Committee Chair’s discretion. Executive Directors attend
Committee meetings by invitation only.
If Directors are unable to attend a Board or Committee
meeting, they have the opportunity beforehand to discuss
any agenda items with the Chair or the Committee Chair.
Board appointment
The report of the Nominating and Corporate Governance
Committee on pages 96 and 97 describes the work of the
Committee including in relation to Board appointments
and recommendations for re-election. The procedure for the
nomination and appointment of Directors is also contained
within the document entitled ‘Appointment procedure for
PLC Directors' which is available on our website. Directors
may be appointed by a simple majority vote of shareholders
at a general meeting, or on an interim basis by the Board
(in which case they will offer themselves for election
at the next AGM).
Composition, balance and independence
of the Board
As at 31 December 2022, the Unilever Board comprised
13 Directors: the Chair, two Executive Directors and ten
independent Non-Executive Directors. Alan Jope informed
the Board of his intention to retire from the Company at the
end of 2023. The appointment of Hein Schumacher as CEO
with effect from 1 July 2023 was announced in January 2023.
The balance of Directors on the Board ensures that no
individual or small group of Directors can dominate the
decision-making process. The biographies on pages 80 to 81
and the table on page 98 in the Nominating and Corporate
Governance Committee Report demonstrate a diverse Board
with a broad range of sector experience, skills and knowledge.
The Board carries out an annual review of the performance
of the Directors in addition to a thorough review of the Non-
Executive Directors’ and their related or connected persons’
relevant relationships in line with the best practice guidelines
in the UK and US. The criteria chosen by the Board to assess the
independence of the Non-Executive Directors, which is set out
in detail in the Governance of Unilever, includes in summary:
■ no additional remuneration or other benefits from any
Group company;
■ no material business relationships within the last three
years, including shareholder, customer, adviser and supplier
relationships, with any Group company;
■ no cross-directorships or significant links with other Directors
through involvement in other companies or bodies;
■ not more than nine years of service on the Board in normal
circumstances;
■ not a former employee of any Group company within the last
five years;
■ no close family ties with any of Unilever’s advisers, Directors
or senior management; and
■ no significant shareholdings in Unilever or any Group
company.
All the Non-Executive Directors are considered to have the
appropriate skills, knowledge, experience and character to
bring objective and constructive judgement and valuable
insights to the Board’s deliberations. The Board has concluded
that all the Non-Executive Directors were independent during
the period covered by this report.
The Chair was considered to be independent on appointment
and is committed to ensuring that the Board continues to
comprise a majority of independent Non-Executive Directors.
Conflicts of interest
Directors have a statutory duty to avoid actual or potential
conflicts of interest. The Board ensures that there are effective
procedures in place to avoid conflicts of interest by Directors.
A Director must without delay report any conflict of interest
or potential conflict of interest to the Chair and to the other
Directors and the Company Secretary, or, in case any conflict
of interest or potential conflict of interest of the Chair, to the
SID, the other Directors and the Company Secretary. The
Director in question must provide all relevant information to
the Board, so that the Board can decide whether a reported
(potential) conflict of interest of a Director qualifies as a
conflict of interest within the meaning of the relevant laws.
Unless authorised by the Board, together with compliance with
any restrictions that have been required of such a Director,
a Director may not take part in the decision-taking process
of the Board in respect of any situation in which he or she has
a conflict of interest. The Board consider the procedures that
have been put in place to deal with conflicts of interest
operate effectively.
The interests of new Directors are reviewed during the
recruitment process and authorised (if appropriate) by the
Board at the time of their appointment. Directors have a
continuing duty to update the Board on any changes to their
external appointments which are also reviewed by the Board
on a regular basis.
Unilever recognises that the Executive Directors acting as
directors of other companies is beneficial from a personal
development perspective and therefore also beneficial to the
Group. The number of external directorships of listed
companies is generally limited to one per Executive Director to
reduce the risk of excessive commitment and prior approval is
required from the Chair.
Board evaluation
Each year, the Board formally assesses its own performance,
including with respect to its composition, diversity and how
effectively its members work together to achieve objectives.
The last external evaluation was performed in 2019. In
December 2022 and January 2023, an independent third-party
consultant, No 4, facilitated a self-evaluation of the Board’s
effectiveness.
The evaluation consisted of individual interviews with each of
the Directors followed by a Board discussion in February 2023,
covering both the outcome of the evaluation and the proposed
actions to enhance the effectiveness of the Board. The
outcome of such discussions is taken into account in the
assessment of Directors when proposals for the re-election of
Directors is considered. The Chairman’s statement on pages 78
and 79 describes the key actions agreed by the Board
following the evaluation. The evaluation of the Board’s
principal Committees was performed under the supervision of
the respective Chairs and the Chief Legal Officer & Group
Secretary, taking into account the views of respective
Committee members and the Board members. The key actions
arising from these Committee evaluations can be found in
each of the Committee Reports.
88
Unilever Annual Report and Accounts 2022 | Governance
Corporate Governance
Some of the key actions agreed by the Board following
the evaluation of the Board relate to succession planning.
Board succession and executive leadership succession with
a continued focus on driving diversity, especially gender,
and inclusion remain key. In addition, the Board will continue
to work with the executive leadership team to focus on
the retention of skilled, high potential individuals across
the Group.
Board induction and training
All new Directors participate in a comprehensive induction
programme when they join the Board. The induction
programme typically includes visits to the Group’s businesses,
meetings with other Board Directors, senior executives and
managers, advisers and the Group's internal and external
auditors. This is supplemented with a wide range of
information including historical Board and Committee papers,
internal and external reports and presentations covering the
key commercial, operational, financial and functional areas of
the Group and relevant policies and governance procedures.
The Chair ensures that ongoing training is provided for
Directors by way of site visits, presentations and circulated
updates at and between Board and Committee meetings.
The training covers, among other things, Unilever’s business,
environmental, social, corporate governance, regulatory
developments and investor relations matters. For example, in
2022 the Directors received presentations on directors' duties
and Unilever's Code of Business Principles. In addition, outside
of the scheduled Board meetings, several Directors visited
Unilever businesses and met with local management in India,
Indonesia and Vietnam.
Workforce engagement
The Board believes that taking into account feedback from
the workforce widens the diversity of its views when making
business decisions. In view of Unilever’s global footprint and
scope of operations, the Board decided that the most effective
way of organising its engagement with employees was to
share the responsibility among all Non-Executive Directors.
Unilever’s Workforce Engagement Policy provides for workforce
engagement in a variety of ways such as face-to-face
engagement sessions with Non-Executive Directors, engaging
with employee representatives, townhall meetings, site visits,
employee engagement surveys such as UniVoice (see page 27
for further information) and regular 'Your Call' sessions with
the CEO. These engagement activities cover the entire
workforce demographic in terms of geography, all business
groups, length of service, work level/seniority and supply chain
and office staff.
In 2022, Non-Executive Directors participated in ten workforce
engagement events, both virtually and in person, in the UK
as well as in Singapore, Vietnam and North America. A wide
range of topics were discussed including those that are
personal to the workforce and those of a more business and
strategic nature. Topics included agile working; reward and
performance culture; hybrid working; equality, diversity and
inclusion; safety; growth businesses; innovation in marketing;
consumer data; and the Compass Organisation
transformation.
Perspectives from the workforce have been taken into
consideration in decision making. For example, UniVoice
results from 2021 indicated challenges around operational
effectiveness within a matrix structure. The design of the
Compass Organisation in 2022 looked to address some of
these issues. Another such example of taking into account
feedback through these workforce engagement processes
resulted in the introduction of enhanced onboarding
procedures of third party service providers in factories,
in relation to aligning safety culture and enhanced risk
analysis and incident classification.
The Board evaluates the effectiveness of workforce
engagement on an annual basis and feedback is also sought
from employees who take part in the workforce engagement
sessions, thereby creating a feedback loop between the
Board and employees.
Unilever Annual Report and Accounts 2022 | Governance
89
Corporate Governance
Shareholder engagement
General meetings
The Board values open and meaningful discussions with our
shareholders on all matters.
The CFO has lead responsibility for shareholder engagement,
with the active involvement of the CEO and supported by the
Investor Relations department.
In 2022, a total of 550 meetings were held with institutional
shareholders based across the world involving the Chair,
the CEO, the CFO, the SID and the Investor Relations team.
Members of the ULE and the Investor Relations team also
met with investors at various industry conferences.
In December 2022, Unilever hosted a Capital Markets Day
at its London site, the first such event since 2019. There
was significant participation with over 70 investors and sell-
side analysts present in person, 700+ live webcast views and
circa 1,400 recorded webcast views. The CEO, CFO, our five
Business Group Presidents, the Chief Business Operations
Officer and the Chief Digital & Commercial Officer were
amongst the presenters at the event.
The Board receives regular briefings on investor reactions
to Unilever’s quarterly, half- and full-year results
announcements and on any issues raised by shareholders
that are relevant to their responsibilities. We maintain a
frequent dialogue with our principal institutional shareholders
and regularly collect feedback.
Private shareholders are encouraged to give feedback via
shareholder.services@unilever.com. Our shareholders are
also welcome to raise any issues directly with the Chair or
the SID, and the Chair, Executive Directors and Chairs of
the Committees are also available to answer questions
from the shareholders at the AGM each year.
At the AGM, the Chair and CEO give their thoughts on
governance aspects of the preceding year, the Group’s
strategy together with a review of the performance of the
Group over the last year. Shareholders are encouraged to
attend the meeting and to ask questions at or in advance of
the meeting. The external auditors attend the AGM and are
entitled to address the meeting on any part of the business
of the meeting which concerns them as auditors.
Following the lifting of Covid-related restrictions on
gatherings, Unilever’s AGM in 2022 was a physical meeting
and the proceedings were also streamed via a live webcast
for shareholders. The SID, Committee Chairs and Directors
appointed at the last AGM were also present and following the
statements from the Chair and CEO, the questions submitted
by shareholders prior to the meeting and received during the
meeting were addressed.
All 21 resolutions were put to a poll at the 2022 AGM to ensure
an exact and definitive result and to facilitate maximum
participation by Unilever’s geographically spread
shareholders. All 21 resolutions were passed with in excess
of 90% votes cast in favour.
The 2023 AGM will be held on 3 May 2023 at Unilever House,
Springfield Drive, Leatherhead, KT22 7GR. The Notice of AGM
and other documentation are enclosed with this Annual Report
and Accounts or are available on the Company’s website at
www.unilever.com for those shareholders who have opted for
electronic communication.
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Additional disclosures
Results and dividends
Unilever PLC publishes financial information on a quarterly
basis and these reports can be found at www.unilever.com.
Details of the quarterly dividends for the financial year ended
31 December 2022 are provided on page 225.
Articles of Association
The current Articles of Association (Articles) were approved by
shareholders at the 2021 AGM and adopted with effect from
5 May 2021. The Articles may only be amended by a special
resolution of the shareholders. The Articles can be found on
the Company's website at www.unilever.com.
Disclosure of information to the external auditor
Each of the Directors who held office at the date of approval
of this report confirm that, so far as they are aware, there is
no relevant audit information (being information needed by
the auditor in connection with preparing their audit report),
of which the Company’s auditor is unaware, and each of the
Directors has taken all the steps that they ought reasonably
to have taken as a Director in order to make themselves
aware of any relevant audit information and to establish
that the Company’s auditor is aware of that information. This
confirmation is given and should be interpreted in accordance
with the provisions of Section 418 of the Companies Act 2006.
Directors
The Company’s Directors who served during the financial year
ending 31 December 2022 are provided on pages 80 to 81.
Alan Jope informed the Board of his intention to retire from
the Company at the end of 2023. Laura Cha and John Rishton
decided not to seek re-election at the 2022 AGM. The Board
approved the appointments of Nelson Peltz and Hein
Schumacher as Non-Executive Directors with effect from
20 July 2022 and 4 October 2022 respectively. In January 2023,
Unilever announced the appointment of Hein Schumacher
as CEO with effect from 1 July 2023 at which time Alan Jope
will step down as CEO and as a Director.
Appointment of Directors
The rules governing the appointment and retirement of
Directors are set out in the appointment procedure for PLC
Directors available on the Company’s website and are
summarised in the report of the Nominating and Corporate
Governance Committee.
All Directors must submit themselves for election or re-election
as the case may be each year at the AGM. At the 2023 AGM,
all Directors will offer themselves for election or re-election.
Details of the Directors standing for election or re-election
are set out in the 2023 Notice of AGM. Information on the
service agreements of Executive Directors can be found in
the Directors’ Remuneration Report on pages 109 to 131. The
letters of appointment of the Non-Executive Directors are
available for inspection at the Company’s registered office.
Directors’ share interests
Details of the Directors’ interests in shares can be found in the
Directors’ Remuneration Report on page 121.
Contracts of significance
During the year, no Director had any interest in any shares
or debentures in the Company’s subsidiaries, or any material
interest in any contract with the Company or a subsidiary
being a contract of significance in relation to the Company’s
business. No member of the Group is party to any significant
agreement that takes effect, alters or terminates upon a
change of control or following a takeover of Unilever PLC. In
addition, there are no agreements providing for compensation
for loss of office or employment as the result of a takeover of
Unilever PLC. There are no controlling shareholders of Unilever
PLC.
Powers of the Directors
The Board of Directors is responsible for the management of
the business of the Company and may exercise all powers of
the Company subject to applicable legislation and regulation
and the Company’s Articles.
The Board has delegated certain of its powers, authorities and
discretions to the CEO, CFO and to the Board Committees.
Detailed information on the responsibilities and authorities
of each of these is available in the Governance of Unilever on
the Company's website. In addition, information on the Board's
and the Committee's responsibilities and activities in the year
to 31 December 2022 are available on pages 86, 96, 101, 106
and 112.
Directors’ indemnities and Directors’ and
Officers' insurance
The power to indemnify Directors, together with former
Directors, the Company Secretary and the directors of
subsidiary companies, is provided for in the Company's Articles
of Association.
Unilever maintains appropriate D&O insurance to the extent
permitted by law. In addition, Unilever has granted indemnities
to each Director and the Company Secretary, together with
former Directors and Company Secretaries of Unilever and
the directors of subsidiary companies, whereby the Company
indemnifies these individuals in respect of any proceedings
brought by third parties against them personally in their
capacity as Directors or Officers of the Company or any Group
company. The Company would also fund ongoing costs in
defending a legal action as they are incurred rather than after
judgement has been given. In the event of an unsuccessful
defence in an action against them, individual Directors would
be liable to repay the Company for any damages and to repay
defence costs to the extent funded by the Company. Neither
the indemnity, nor the D&O insurance cover provides cover
in the event a Director or Officer is proved to have acted
fraudulently or dishonestly.
In addition, the Company provides indemnities (including,
where applicable, a qualifying pension scheme indemnity
provision) to the Directors of three subsidiaries, each of
which acts or acted as trustee of a Unilever UK pension fund.
Appropriate trustee liability insurance is also in place.
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Corporate Governance
Political donations
Right to receive dividends
At the 2022 AGM, shareholders passed a resolution to
authorise the Company and its subsidiaries to make political
donations to political parties or independent election
candidates, to other political organisations, or to incur
political expenditure (in each case as defined in the
Companies Act 2006). As the authority granted at the 2022
AGM will expire, renewal of this authority will be sought at
this year’s AGM. Further details are available in the Notice
of AGM, available on the Company’s website.
It is the policy of the Company not to make such political
donations or to incur political expenditure (within the ordinary
meaning of those words) and the Directors have no intention
of changing that policy. However, as the definitions used in
the Companies Act 2006 are broad, it is possible that normal
business activities, which might not be thought to be political
donations or expenditure in the usual sense, could be caught.
On that basis, the authority is sought purely as a precaution.
Shares
Share capital
Unilever’s issued share capital on 31 December 2022 was
made up of £81,798,695 split into 2,629,243,772 ordinary
shares of 31/9p each and each carrying one vote. A total of
97,193,750 Unilever ordinary shares were held in treasury as
at 31 December 2022.
Share issues and purchase of shares
At the 2022 AGM held on 4 May 2022, Unilever’s Directors were
authorised to:
■
issue new shares, up to a maximum of £26,559,400 nominal
value (which at the time represented approximately 33%
of Unilever’s issued ordinary share capital);
■ disapply pre-emption rights up to a maximum of £3,984,879
nominal value (which at the time represented approximately
5% of Unilever’s issued ordinary share capital) for general
corporate purposes and an additional 5% authority in
connection with an acquisition or specified capital
investment; and
■ make market purchases of its ordinary shares, up to a
maximum of 256,262,000 ordinary shares (which at the time
represented just under 10% of PLC’s issued ordinary share
capital) and within the price limits prescribed in the
resolution.
Unilever commenced a share buyback programme in 2022. The
aggregate market value of the share buyback programme is
up to €3 billion to be completed in 2022 and 2023. The purpose
of the share buyback programme is to reduce the capital of
Unilever. In 2022, Unilever bought back 34,217,605 Unilever
ordinary shares of 31/9p each in two tranches, the total
consideration for which was €1.5bn. These shares were held
in treasury as at 31 December 2022, representing 1.30% of
Unilever’s issued share capital. Outside of this share buyback
programme, no other company within the Group purchased
any Unilever ordinary shares or American Depositary Shares
during 2022.
Right to hold and transfer ordinary shares
Unilever’s constitutional documents place no limitations on
the right to hold or transfer Unilever ordinary shares. There
are no limitations on the right to hold or exercise voting rights
on the ordinary shares of Unilever imposed by English law.
Unilever is not aware of any agreements between holders
of securities which may result in restrictions on transfer or
voting rights.
The employee benefit trust, established by the Company to
facilitate the settlement of various share plan awards, waives
its entitlement to receive dividends in respect of shares that
are the beneficial property of the trust.
Listings
Unilever has ordinary shares listed on the London Stock
Exchange (ULVR), on Euronext Amsterdam (UNA) and,
as American Depositary Receipts1 (UL), on the New York
Stock Exchange.
1. One American Depositary Receipt represents one PLC ordinary share with
a nominal value of 31/9p.
Significant shareholders of Unilever
As far as Unilever is aware, the only holders of more than 3%
of, or 3% of voting rights attributable to, Unilever’s ordinary
share capital (‘Disclosable Interests’) on 31 December 2022,
was BlackRock, Inc. with a shareholding of 8.9% and Vanguard
Holding with a shareholding of 4.6%.
No Disclosable Interests have been notified to Unilever
between 1 January 2023 and 21 February 2023 (the latest
practicable date for inclusion in this report). As far as Unilever
is aware, between 1 January 2020 and 21 February 2023,
(i) BlackRock, Inc.,(ii) Vanguard Holding, and (iii) the
aggregated holdings of the trustees of the Leverhulme Trust
and the Leverhulme Trade Charities Trust, have held more
than 3% of, or 3% of voting rights attributable to, Unilever’s
ordinary shares.
Accounting policies, financial instruments
and risk
Details of the Group’s accounting policies, together with
details of financial instruments and risk, are provided in note 1,
16 and 18 to the Financial Statements.
Branch offices
Details of the Unilever Group's branches are listed on page
214.
Employment of disabled people
Disability inclusion is deeply important to Unilever. Unilever
has made a commitment to have 5% of our workforce to be
made up of people with disabilities by 2025. It is critical that
our brands live up to our values by understanding the lives,
experiences and stereotypes facing persons with disabilities
and reflecting their stories in our brand communications. In
addition, Unilever has a range of employment policies which
clearly detail the standards, processes, expectations and
responsibilities of its people and the organisation. These
policies are designed to ensure that everyone – including those
with existing or new disabilities and people of all backgrounds
– is dealt with in an inclusive and fair way from the recruiting
process and ongoing through their career at Unilever. This
includes access to appropriate training, development
opportunities or job progression. Further details can be
found on pages 27 and 28.
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Employee share plans
Risk Management and Control:
The Company operates a number of employee share plans,
details of which are set out in note 4C and in the Directors’
Remuneration Report on pages 113 to 114.
Stakeholder engagement
The Group’s stakeholders are our shareholders, our workforce,
consumers, customers, our suppliers and business partners,
and the planet and society as a whole. The Board is aware that
its actions and decisions impact our stakeholders. Effective
engagement with stakeholders is important to the Board as it
strengthens the business and helps to deliver a positive result
for all our stakeholders. In order to comply with Section 172
of the Companies Act, the Board is required to take into
consideration the interests of stakeholders and it must also
include a statement setting out the way in which Directors
have discharged this duty during the year. The Group’s
stakeholders are identified on pages 62 to 63 and information
on how the Directors have had regard to the matters set out
in Section 172 can be found on page 87. Further information
on workforce engagement can also be found on page 89.
Related party transactions
Transactions with related parties are conducted in accordance
with agreed transfer pricing policies and include sales to joint
ventures and associates. Other than those disclosed in note 23
to the consolidated financial statements (and incorporated
herein as above), there were no related party transactions that
were material to the Group or to the related parties concerned
that are required to be reported in 2022 up to 21 February 2023
(the latest practicable date for inclusion in this report).
Corporate governance compliance
We conduct our operations in accordance with internationally
accepted principles of good governance and best practice,
while ensuring compliance with the corporate governance
requirements applicable in the countries in which we operate.
Unilever is subject to corporate governance requirements
(legislation, codes and/or standards) in the UK and the US and
in this section, we report on our compliance against these.
United Kingdom
In 2022, Unilever has applied the principles and complied with
the provisions of the UK Corporate Governance Code. Further
information on how Unilever has applied the five overarching
categories of principles can be found on the following pages –
(i) Board Leadership and Company Purpose: pages 27, 78, 85,
88, 87, 90 and 102; (ii) Division of Responsibilities: pages 85 and
88; (iii) Composition, Succession and Evaluation: pages 88, 89,
96 to 99; (iv) Audit, Risk and Internal Controls: pages 101 to 103;
and (v) Remuneration: pages 109 to 131. The UK Corporate
Governance Code is available on the Financial Reporting
Council’s (FRC) website.
Our approach to risk management and systems of internal
control is in line with the recommendations in the FRC’s revised
guidance ‘Risk management, internal control and related
financial and business reporting’ (the Risk Guidance). It is
Unilever’s practice to review acquired companies’ governance
procedures and to align them to the Group’s governance
procedures as soon as is practicable.
Greenhouse Gas (GHG) Emissions:
Information on GHG emissions can be found on pages 39
and 41.
Employee Involvement and Communication:
Unilever’s UK companies maintain formal processes to inform,
consult and involve employees and their representatives.
A National Consultative Forum comprising employees and
management representatives from key locations meets
regularly to discuss issues relating to Unilever sites in the
UK. We recognise collective bargaining on a number of sites
and engage with employees via the Sourcing Unit Forum,
which includes national officer representation from the
three recognised trade unions. A European Works Council,
embracing employee and management representatives from
countries within Europe, has been in existence for several years
and provides a forum for discussing issues that extend across
national boundaries. Further details on how the Board has
engaged with the workforce can be found on pages 89 to 90.
Equal Opportunities and Diversity:
Consistent with our Code of Business Principles, Unilever aims
to ensure that applications for employment from everyone are
given full and fair consideration and that everyone is given
access to training, development and career opportunities.
Every effort is made to reskill and support employees who
become disabled while working within the Group.
United States
Unilever is listed on the New York Stock Exchange (NYSE).
As such, Unilever must comply with the requirements of US
legislation, regulations enacted under US securities laws
and the Listing Standards of the NYSE, that are applicable
to foreign private issuers, copies of which are available on
their websites.
We comply with the Listing Standards of the NYSE applicable
to foreign private issuers.
We are required to disclose any significant ways in which our
corporate governance practices differ from those required
of US domestic companies listed on the NYSE. Our corporate
governance practices are primarily based on the requirements
of the UK Listing Rules and the UK Corporate Governance Code
but substantially conform to those required of US domestic
companies listed on the NYSE. The only significant way in which
our corporate governance practices differ from those required
of US domestic companies under Section 303A Corporate
Governance Standards of the NYSE is that the NYSE rules
require that shareholders must be given the opportunity to
vote on all equity-compensation plans and material revisions
thereto, with certain limited exemptions. The UK Listing Rules
Unilever Annual Report and Accounts 2022 | Governance
93
Corporate Governance
require shareholder approval of equity compensation plans
only if new or treasury shares are issued for the purpose of
satisfying obligations under the plan or if the plan is a long-
term incentive plan in which a director may participate.
Amendments to plans approved by shareholders generally
only require approval if they are to the advantage of the plan
participants.
Attention is drawn to the Report of the Audit Committee
on pages 100 to 104. In addition, further details about our
corporate governance are provided in the document entitled
'The Governance of Unilever’ which can be found on our
website.
All senior executives and senior financial officers have
declared their understanding of and compliance with
Unilever’s Code of Business Principles and the related Code
Policies. No waiver from any provision of the Code of Business
Principles or Code Policies was granted in 2022 to any of the
persons falling within the scope of the SEC requirements.
The Code of Business Principles and related Code Policies
are published on our website.
Risk Management and Control:
Following a review by the Disclosure Committee, Audit
Committee and Board, the CEO and the CFO concluded that
the design and operation of the Group’s disclosure controls
and procedures, including those defined in the US Securities
Exchange Act of 1934 – Rule 13a – 15(e), as at 31 December
2022 were effective. Unilever is required by Section 404 of the
US Sarbanes-Oxley Act of 2002 to report on the effectiveness of
its internal control over financial reporting. This requirement is
reported on within the section entitled ‘Management’s Report
on Internal Control over Financial Reporting’ on page 234.
Pages 77 to 108 of the Annual Report and Accounts also form
part of this Directors' Report.
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Report of the Nominating and
Corporate Governance Committee
Nils Andersen
Chair of the Nominating and Corporate
Governance Committee
On behalf of the Board, I am pleased to present the Report
of the Nominating and Corporate Governance Committee for
the year ended 31 December 2022.
The role of the Committee is vitally important in ensuring
that Unilever has a strong, diverse and high-performing Board
and executive leadership team, now and in the future. An
integral part of the Committee’s work this year has been on
succession planning, at both Board and senior management
level. In addition, the Committee has continued to monitor
the changes brought about by the Compass Organisation,
including related succession plans and initiatives to develop
the talent pipeline.
2022 was a year of considerable change around the Board
table for Unilever. Laura Cha and John Rishton stepped
down from the Board at the Company’s AGM in May 2022,
each having served nine years on the Board. On behalf of
the Committee, I would like to thank Laura and John for their
service to Unilever. We welcomed two new independent Non-
Executive Directors to the Board: Nelson Peltz in July 2022 and
Hein Schumacher in October 2022. Nelson brings extensive
sector experience, which I am certain will provide additional
rigour and challenge, thereby enhancing the effectiveness
of the Board.
In September 2022, Alan Jope informed the Board of his
decision to retire from Unilever at the end of 2023. Following
this news, the Committee oversaw an extensive global search
process for Alan’s successor, further details of which are set
out on page 97.
Upon conclusion of this process, I am delighted that the
Committee was able to recommend to the Board the
appointment of Hein Schumacher as CEO, effective from
1 July 2023. We believe that Hein is a dynamic, values-driven
business leader with a diverse background of experiences and
an excellent track record of delivery in the global consumer
goods industry. He has exceptional strategic capabilities,
proven operational effectiveness, and strong experience
in both developed and developing markets.
On behalf of the Committee, I would like to thank all members
of the Board for their active engagement in and contribution
to the process to appoint Hein as Alan's successor.
An integral part of
the Committee’s work
this year has been on
succession planning.
A further focus of the Committee in 2022 was on diversity and
inclusion, both at Board level and in senior management.
A diverse and inclusive workplace is a priority for the Board
and Committee, and it underpins appointment and
recruitment processes at all levels in Unilever.
As at 31 December 2022, the Board was 38% female, exceeding
the FTSE Women Leaders Review target of 33%. The Committee
is pleased that the Board has exceeded the Financial Conduct
Authority’s (the 'FCA') diversity targets published in April 2022
in respect of a) at least one of the senior board positions
(Chair, CEO, CFO or Senior Independent Director) being a
woman; and b) at least one member of the board being from
an ethnic minority background (excluding white ethnic groups
and as set out in the categories used by the Office for National
Statistics). Andrea Jung was appointed as the Company’s
Senior Independent Director on 5 May 2021, and the Board
has continued to exceed ethnicity targets set by the FCA and
Parker Review for several years.
We have a similarly diverse Unilever Leadership Executive as
shown on pages 82 – 83.
The Committee will continue its work to reach the FCA target
of at least 40% of the Board to be female and is committed
to making further progress on gender diversity at all levels
of the organisation.
As regards the Committee's other priorities for 2023, we will
continue to focus on Board succession planning, especially
as a number of independent Non-Executive Directors are
approaching nine years of service on the Board. The
Committee will also continue to monitor the implementation
and effectiveness of the Compass Organisation, and consider
succession planning for the Unilever Leadership Executive.
I would like to thank the members of the Committee for their
continued commitment and contribution throughout the year.
Nils Andersen
Chair of the Nominating and Corporate
Governance Committee
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95
Report of the Nominating and Corporate Governance Committee
Committee members and attendance
Nils Andersen Chair
Andrea Jung
Ruby Lu
Feike Sijbesma
Laura Cha (stepped down as Non-Executive
Director 4 May 2022)
Attendance
4/4
4/4
4/4
4/4
1/2
The Chair of the Board, Nils Andersen, chairs the Nominating
and Corporate Governance Committee and independent Non-
Executive Directors, Andrea Jung, Ruby Lu and Feike Sijbesma
are members of the Committee. The Group Secretary is
secretary to the Committee. Other attendees, including the
CEO and the Chief Transformation Officer & Chief People
Officer, attend the meetings when invited to do so.
The table above shows attendance at meetings of the
Committee in 2022. Attendance is expressed as the number of
meetings attended out of the number eligible to be attended.
If Directors are unable to attend a meeting, they have the
opportunity beforehand to discuss any agenda items with the
Committee Chair.
Role of the Committee
The Nominating and Corporate Governance Committee is
primarily responsible for:
■ periodically assessing the structure, size and composition
of the Board;
■ evaluating the balance of skills, experience, independence,
diversity and knowledge on the Board;
■ ongoing succession planning (including the development
of a diverse pipeline for succession);
■ drawing up selection criteria and appointment procedures
for Directors;
■ reviewing the feedback in respect of the role and functioning
of the Board Committees arising from Board and Board
Committee evaluations;
■ periodically reviewing and assessing Unilever’s practices
and procedures in relation to workforce engagement; and
■ considering current and developing corporate governance
matters, which it brings to the attention of the Board where
deemed necessary.
The Committee’s terms of reference are set out in the
Governance of Unilever, which can be found on the Company’s
website.
Activities of the Committee
During the year, the Committee met on four occasions and its
key areas of focus included:
■ review of the composition of the Board and its Committees
taking into account the experience, skills, knowledge,
diversity and attributes of the Directors and the length of
tenure of the Non-Executive Directors resulting in a refreshed
view of the Board succession plan.
■ appointed Russell Reynolds to support the Committee in the
search for an additional Non-Executive Director, culminating
in the appointment of Hein Schumacher, and to identify
suitable candidates for the role of CEO.
■ recommended to the Board that Nelson Peltz be appointed
to the Board as a Non-Executive Director.
■ following a review of the performance of the Directors and,
where relevant their independence, the Committee
recommended the election and re-election of all Directors.
■ assessed best practice guidelines and preferences of certain
institutional investors in relation to overboarding.
■ reviewed the ULE succession plan and talent pipeline.
■ considered the impact of the Compass reorganisation and
the resultant change management issues.
■ conducted annual reviews of the diversity policy applicable
to the Board and more widely, workforce engagement
activities in the year and the plan for the following year,
terms of reference for the Committee and the annual
workplan for the Committee.
■ considered the process and timetable for the externally
facilitated Board evaluation and maintained oversight
of the process (see page 88 and 89 for further information
on the Board evaluation).
■ received updates on current and emerging corporate
governance legislation, regulation and best practice
guidelines including in relation to directors’ duties.
■ considered the Committee’s draft report for inclusion
in the 2021 Annual Report and Accounts.
Appointment and reappointment of Directors
to the Board
All Directors (unless they are retiring) are nominated by the
Board for election or re-election at the AGM each year on the
recommendation of the Committee. The Committee takes into
consideration the outcomes of the Chair's discussions with
each Director on individual performance and the evaluation
of the Board and its Committees. Non-Executive Directors
normally serve for a period of up to nine years. The schedule
the Committee uses for orderly succession planning of Non-
Executive Directors can be found on the Company’s website.
On 4 May 2022, Laura Cha and John Rishton stepped down as
Non-Executive Directors of the Company, each having served
almost nine years on the Board. The Committee proposed the
reappointment of all other Directors and the Directors were
appointed by shareholders by a simple majority vote at the
2022 AGM. During the year, the Committee considered and
recommended to the Board that Nelson Peltz and Hein
Schumacher be appointed to the Board as independent
Non-Executive Directors. These appointments were effective
20 July 2022 and 4 October 2022 respectively and both will be
nominated for election at the Company’s AGM in May 2023.
When considering the appointment of Mr Peltz, the Committee
paid particular focus to his position as chief executive and
founding partner of Trian Fund Management, LP, an
investment management firm that manages funds which hold
interests in approximately 1.5% of Unilever’s issued share
capital. The Committee and subsequently the Board concluded
that Mr Peltz’s existing relationship with Trian was not an
impediment to determining his independence on appointment
to the Board.
The Committee also reviews the composition of the Board
Committees. During the year, the Committee recommended
that Adrian Hennah be appointed Chair of the Audit
Committee and Nelson Peltz be appointed a member of the
Compensation Committee.
During the year, Alan Jope confirmed he intended to step
down from the Board as Director and CEO by the end of 2023.
The Committee appointed Russell Reynolds to assist it to
identify suitable candidates for the position of CEO. Russell
Reynolds is an independent executive search firm which
has undertaken several executive, non-executive and
management searches for the Group. Russell Reynolds do not
have any connection to or provide any other services to the
Directors or the Group except for normal course recruitment
processes. In January 2023, Unilever announced the
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Report of the Nominating and Corporate Governance Committee
appointment of Hein Schumacher as CEO with effect from
1 July 2023. Alan Jope will step down from the Board on
1 July 2023.
Succession planning
Board
The Committee reviews the adequacy and effectiveness of
succession planning processes and the Board reviews the
succession plan in conjunction with the Committee.
The succession plan is based on merit and objective criteria
and is designed to promote diversity. The Board should
comprise a majority of Non-Executive Directors who are
independent of Unilever, free from any conflicts of interest
and able to allocate sufficient time to carry out their
responsibilities effectively. With respect to composition and
capabilities, the Board should be in keeping with the size
of Unilever, its strategy, portfolio, consumer base, culture,
geographical spread and its status as a listed company and
have sufficient understanding of the markets and business
where Unilever is active in order to understand the key trends
and developments relevant for Unilever. The Board believes
that a diverse Board with a range of views enhances decision-
making which is beneficial to the company’s long-term success
and is in the interests of Unilever’s stakeholders.
The Board seeks to enhance its diversity by objectively
considering candidates on the basis of their experience, skills,
knowledge, expertise, gender, race, ethnicity, cultural and
geographical background and age. As can be seen in the
biographies on pages 80 and 81 and the tables on page 98,
the Board meets this profile.
ULE
In conjunction with the Committee, the Board reviews the
succession plan for the ULE. In line with the approach to the
Board succession plan, the succession plan for the ULE is
also based on merit and objective criteria and is designed to
promote diversity. Developing an internal talent pipeline for
leadership roles is critical for Unilever. The succession plan
identifies potential successors who are considered able to
fulfil the roles in the short term and those in the longer term.
Development initiatives for senior executives are put in place
and usually include executive mentoring and coaching.
Senior managers and executives are encouraged to take on
a non-executive directorship role as part of their personal
development.
The process to search for and appoint a new CEO was
managed by the Committee, as summarised below:
■ the Committee agreed the appointment of a search firm
who would be best placed to deliver a comprehensive
candidate list;
■ a detailed candidate specification was agreed, setting out
key responsibilities, experience and personal attributes
together with a clearly defined search strategy;
■ a candidate longlist was mapped against the candidate
specification taking into account Unilever's Board Diversity
Policy; and
■ candidates with the strongest fit were reviewed by the
Committee and met with the Chair and SID and preferred
candidates were nominated to meet with members of
the Board.
Overboarding
As part of the annual evaluation process for each Director, full
consideration was given to the number of external positions
held to ensure that the time commitment required did not
compromise the Director’s commitment to Unilever. The
Committee took into account the views of various investor
bodies and certain institutional investors to anticipate any
perception of overboarding.
The Committee did not identify any instances of overboarding
and concluded that all individual Directors had sufficient time
to commit to their appointment as a Director of Unilever.
The full list of external appointments held by our Directors can
be found in their biographies on pages 80 and 81.
Board Diversity Policy
Unilever has long understood and actively promoted the
importance of diversity and inclusion within our workforce.
This commitment forms part of Unilever’s Code of Business
Principles and is embedded in the way we do business and
conduct ourselves at all levels in the organisation.
Unilever’s Board Diversity Policy applies to the entire Board,
including committees. The policy is reviewed by the Committee
each year and is available on the Company’s website in
Investors. The policy supports accelerating diverse
representation of all levels of leadership under Unilever’s
Compass strategy. The policy was considered by the
Committee when making appointments to the Board in 2022.
The Board supports the recommendations of the FTSE Women
Leaders Review on gender diversity and the Parker Review on
ethnic diversity. We are proud to have a female SID and we
achieved 54% women in management. We are well on our
way to achieving the targets set out by the FTSE Women
Leaders Review of 40% women on the Board, ULE and senior
management. We have exceeded the target set out by the
Parker Review with 31% ethnic minority Board membership,
see page 98. We also have 46% ethnic minority membership
of the ULE, see page 98.
Further information on our approach to diversity and inclusion
as well as the gender balance of our workforce can be found
on pages 28 and 63.
Unilever Annual Report and Accounts 2022 | Governance
97
Report of the Nominating and Corporate Governance Committee
Skills and experience matrix
Nils
Andersen
Judith
Hartmann
Adrian
Hennah
Alan
Jope
Andrea
Jung
Susan
Kilsby
Ruby
Lu
Strive
Masiyiwa
Youngme
Moon
Nelson
Peltz
Graeme
Pitkethly
Hein
Schumacher
Feike
Sijbesma
Leadership
of complex
global entities
Broad Board
experience
Geo-political
exposure
Financial
expertise
FMCG/
consumer
insights
Emerging
markets
Digital
insights
Marketing
and sales
Investment
banking and
transactions
-
Science, tech
nology and
innovation
Purposeful
business and
sustainability
-
HR and remu
neration in
international
firms
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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•
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•
•
•
•
•
Unilever has taken the decision to comply with the FCA Listing
Rules and Disclosure Guidance and Transparency Rules
(Diversity and Inclusion) Instrument 2022 ahead of April 2022.
As shown in the tables set out below, as at 31 December 2022,
we have 38% female Board members against the target of 40%.
We continue to review this following the retirement of a female
Board member at the 2022 AGM. However, the position of
Senior Independent Director is held by a female and at least
one Board member is from a minority ethnic background.
We collect both gender and ethnicity data direct from
Board members annually on a self-identifying basis in a
questionnaire. This data is used for statistical reporting
purposes and provided with consent. Board members are
asked to identify their gender and ethnicity based on the
categories set out in the tables below.
Gender representation on the Board and ULE as at 31 December 2022
Men
Women
Other
Not specified/prefer not to say
Number of
Board members
8
5
–
–
Percentage of the
Board
62
38
–
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
3
1
–
–
–
Number of ULE
members
10
3
–
–
Percentage
of the ULE
77
23
–
–
Ethnicity representation on the Board and ULE as at 31 December 2022
White British or other White (including
minority-white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified/prefer not to say
Number of
Board members
Percentage of the
Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number of ULE
members
Percentage
of the ULE
9
–
3
1
–
–
69
–
23
8
–
–
3
–
1
–
–
–
7
1
2
–
3
–
54
8
15
–
23
–
98
Unilever Annual Report and Accounts 2022 | Governance
Report of the Nominating and Corporate Governance Committee
Board tenure as at 31 December 2022
Board independence as at 31 December 2022
Committee evaluation
A self-assessment was carried out, overseen by the Chief Legal
Officer and Company Secretary, which involved completion of
a questionnaire.
The Committee considered the output from that process at its
meeting in January 2023. In addition, the feedback from all the
individual Committee self-assessments was consolidated into
a single report and reviewed by the Board in conjunction with
the feedback from the externally facilitated Board evaluation
in order to facilitate a holistic view of the Board’s performance
and effectiveness.
The Committee concluded it was performing effectively.
The evaluation confirmed that succession planning was
a key focus area for 2023, both at Board level as well as at
executive management level. In addition, the identification,
development and retention of skilled, high potential
individuals is a priority. These focus areas were included
in the Committee’s annual workplan for 2023.
Nils Andersen
Chair of the Nominating and Corporate
Governance Committee
Andrea Jung
Ruby Lu
Feike Sijbesma
Unilever Annual Report and Accounts 2022 | Governance
99
Report of the Audit Committee
In addition to our reporting
and control responsibilities,
we focused this year on risks
relating to organisational
change, cyber security and
supply chain resilience.
One of our priorities this year was to undertake an audit tender
process to identify the most appropriate external audit firm
post 2024. We ran a thorough and competitive process in the
first half of 2022 and propose to retain KPMG as Group
Auditors subject to AGM approval.
In addition to the formal meetings the Committee members
have been engaging with the business through market visits
and during the year visited USA, India, Indonesia and Vietnam.
For 2023, we will continue to focus on the work that is being
undertaken to mitigate our cyber security risks and will be
reviewing our cyber security controls against the National
Institute of Standards and Technology (NIST) framework.
We will also continue to engage on non-financial reporting
matters especially in the area of sustainability. Other areas
of focus will include deep dives on data privacy, supply chain
resilience and implementation of future regulatory changes
such as the Audit & Assurance Policy.
Adrian Hennah
Chair of the Audit Committee
Adrian Hennah
Chair of the Audit Committee
On behalf of the Audit Committee, I am pleased to present
the Committee’s report for the year ended 31 December 2022.
In 2022, the previous Chair of the Committee, John Rishton
retired from the Board at the AGM on 4 May 2022. We also
welcomed Hein Schumacher to the Committee. His insights
and experiences, especially in the global consumer goods
industry, are valuable additions to our Committee.
The Committee believes it has carried out its duties effectively
throughout the year and to a high standard, providing
independent oversight. It has had good support from
management and the internal audit team.
The core of the work of the Committee has been to ensure the
integrity of Unilever’s financial reporting, and the adequacy of
its internal control and to oversee how the company manages
its principal and emerging risks and its approach to risk
appetite and mitigation.
In the area of risk management, we focused this year on cyber
security, supply chain resilience, business transformation
and data privacy. We also met with management to discuss
emerging developments in international taxation, pensions,
sustainability reporting and the changes in reporting arising
from the Compass reorganisation.
We also spent considerable time keeping ourselves updated
on the changing regulatory requirements on sustainability and
as part of this we reviewed the Annual Progress Report against
the Climate Transition Action Plan and the Task Force on
Climate-related Financial Disclosures. The Committee also
reviewed all significant ethical and compliance matters.
100
Unilever Annual Report and Accounts 2022 | Governance
Report of the Audit Committee
Committee membership and attendance
Adrian Hennah Chair
Judith Hartmann
Susan Kilsby
Hein Schumacher
Attendance
8/8
8/8
8/8
2/2
The Audit Committee is comprised only of independent Non-
Executive Directors with a minimum requirement of three such
members. The Audit Committee was chaired by John Rishton
until the AGM on 4 May 2022 at which time he was succeeded
by Adrian Hennah. The other Committee members are Judith
Hartmann, Susan Kilsby and Hein Schumacher, the latter
having been appointed to the Board and the Audit Committee
on 4 October 2022.
The Board is satisfied that the members of the Audit
Committee are competent in financial matters and have
recent and relevant experience. For the purposes of the US
Sarbanes-Oxley Act of 2002, Adrian Hennah is the Audit
Committee’s financial expert.
Other attendees at Committee meetings included the Chief
Financial Officer (CFO), Chief Auditor, Deputy CFO & Controller,
Chief Legal Officer & Group Secretary, Head of Secretariat,
EVP Sustainable Business Performance and Reporting and
the external auditors. Throughout the year, the Committee
members met periodically without others present and also
held separate private sessions with the Chief Financial Officer,
Chief Auditor and the external auditors, allowing the
Committee to discuss issues in more detail.
There were eight scheduled meetings of the Committee during
the year and one additional ad hoc meeting was convened.
Attendance at the scheduled meetings is shown above.
Role of the Committee
The role and responsibilities of the Audit Committee are set
out in written terms of reference which are reviewed annually
by the Committee, taking into account relevant legislation,
and recommended good practice. The terms of reference
are contained within ‘The Governance of Unilever’ which is
available on our website.
The Committee’s responsibilities include, but are not limited
to, the following matters:
■ oversight of the integrity of Unilever’s financial statements;
■ review of Unilever’s half-yearly and annual financial
statements (including clarity and completeness of
disclosure) and of the quarterly trading statements for
quarter 1 and quarter 3;
■ oversight of risk management and internal control
arrangements;
■ oversight of compliance with legal and regulatory
requirements;
■ oversight of the external auditors’ performance, objectivity,
qualifications, and independence; the approval process
of non-audit services; recommendation to the Board of
the nomination of the external auditors for shareholder
approval; and approval of their fees, refer to note 25 on
page 204; and
■ performance of the internal audit function.
All relevant matters arising are brought to the attention
of the Board.
In order to help the Committee meet its oversight
responsibilities, each year management organise knowledge
sessions for the Committee on subject areas within its remit.
In 2022, sessions were held to review the impact of cost
inflation, sustainability reporting and M&A plans. In addition,
Committee members visited the local businesses in the US,
India, Indonesia and Vietnam providing them with an insight
into local market challenges and local risk and control
management.
The Committee also received presentations from management
and discussions on the business's risk management activities,
the preparation of the financial statements, the overall control
environment, and the operation of the financial reporting
controls. Special focus has been given to critical IT systems and
cyber security, data privacy, major transformation projects,
management of manufacturing third parties as well as
management of third-party service providers. In addition, the
Committee has had engagements with management with
regard to their assurance work on sustainability as well as the
work done in the areas of tax, treasury and pension matters.
Reporting and Financial Statements
The Committee reviewed, prior to publication, the quarterly
financial press releases together with the associated internal
quarterly reports from the Chief Financial Officer and the
Disclosure Committee and, with respect to the full-year results,
the external auditor’s report. It also reviewed the Annual
Report and Accounts and the Annual Report on Form 20-F 2022.
These reviews incorporated the accounting policies and
significant judgements and estimates underpinning the
financial statements as disclosed within note 1 on page 154.
Particular attention was paid to the following significant
matters in relation to the financial statements:
■
indirect tax provisions and contingent liabilities, refer to
notes 19 and 20 on page 197. The Committee agreed that
the tax provisions and judgements around the likelihood as
well as the disclosures are appropriate in the Annual Report
and Accounts;
■ revenue recognition – the Committee reviewed the
adequacy of the policy around the cut off and
appropriateness of discounts and incentives accruals;
■ accounting implications arising from the implementation of
the new Compass Organisation, including the determination
of cash generating units. Refer to notes 1 and 9 on pages 154
and 172.
These matters were also highlighted by our external auditors
as being important in their audit.
For each of the above areas, the Committee considered the
key facts and judgements outlined by management. Members
of management attended the section of the meeting of the
Committee where their item was discussed to answer any
questions or challenges posed by the Committee. The
Committee's feedback has been incorporated into the final
approach. The matters were also discussed with the external
auditors and further information can be found on pages 135 to
149.
Unilever Annual Report and Accounts 2022 | Governance
101
Report of the Audit Committee
The Committee specifically discussed with the external
auditor how management’s judgement and assertions
were challenged and how professional scepticism was
demonstrated during their audit of these areas; this included
the disclosures for each matter noted above. The Committee
is satisfied that there are relevant accounting policies in place
in relation to these significant matters and management has
correctly applied these policies.
In addition to the matters noted above our external auditors,
as required by auditing standards, also consider the risk
of management override of controls. Nothing has come to
our attention or their attention to suggest any material
misstatement with respect to suspected or actual fraud
relating to management override of controls.
At the request of the Board, the Committee undertook to:
■ review the appropriateness of adopting the going concern
basis of accounting in preparing the annual and half-yearly
financial statements;
■ assess whether the business was viable in accordance with
the requirement of the UK Corporate Governance Code. The
assessment included a review of the principal and emerging
risks facing Unilever, their potential impact, how they were
being managed, together with a discussion as to the
appropriate period for the assessment. The Committee
recommended to the Board that there is a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the
three-year period (consistent with the period of the strategic
plan) of the assessment; and
■ consider whether the Unilever Annual Report and Accounts
2022 was fair, balanced, and understandable, and whether
it provided the necessary information for shareholders to
assess the Group’s year-end position and performance,
business model and strategy. To make this assessment,
the Committee received copies of the Annual Report and
financial statements to review during the drafting process
to ensure that the key messages were aligned with the
Company’s position, performance, and strategy. The
Committee also reviewed the processes and controls that
are the basis for its preparation. The Committee was
satisfied that, taken as a whole, the Unilever Annual Report
and Accounts 2022 is fair, balanced, and understandable.
During the year, the US SEC reviewed the Unilever Annual
Report on Form 20-F 2021 and the UK Financial Reporting
Council (FRC) reviewed the climate disclosures, including
the TCFD disclosures, contained within that same report. The
SEC had one question with reference to a specific disclosure.
Unilever responded to this query and the Committee reviewed
the response letters. No changes to the disclosures were
needed and this enquiry has been formally closed by the
SEC. The FRC did not have any questions that required a
response but made a few observations. We have taken these
observations into consideration in determining this year’s
climate disclosures.
Sustainability
The Committee continued to oversee the reporting of
sustainability performance, keeping itself updated on the
changing regulatory requirements in this area by having
separate knowledge sessions with management and PwC
during the year.
The Committee, at the request of the Board, reviewed the
CTAP Annual Progress Report on pages 35 to 41 and the TCFD
disclosures on page 42 to 51. The Committee is satisfied that
the assumptions used in preparing the year-end financial
statements are consistent with the disclosures in these
sections.
During 2022, the Committee reviewed the limited assurance
work performed by PwC on certain sustainability metrics
and they also reviewed the 2023 to 2026 sustainability
assurance plan.
Risk Management & Internal Controls
(Assurance)
The Committee reviewed Unilever’s overall approach to risk
management and control, and its processes, outcomes,
and disclosure. The assessment was undertaken through
a review of:
■ the yearly report detailing the risk identification and
assessment process, together with any emerging risks
identified by management;
■ reports from senior management on risk areas for which
the Committee had oversight responsibility: treasury, tax
and pensions, information security, data privacy, legal and
regulatory compliance, supply chain and key suppliers and
business transformation;
■ the proposed risk areas identified by the ULE;
■ the Quarterly Risk and Control Status Reports, including
Code of Business Principles cases relating to frauds and
financial crimes;
■ a summary of control deficiencies identified through controls
testing activities together with action plans to address
underlying causes;
■ management’s improvements to reporting through further
automation and centralisation; and
■ the annual financial plan and Unilever’s dividend policy and
dividend proposals.
The Committee reviewed the application of the requirements
under Section 404 of the US Sarbanes-Oxley Act of 2002 with
respect to internal controls over financial reporting.
In fulfilling its oversight responsibilities in relation to risk
management and internal control, the Committee met
regularly with senior members of management and is satisfied
with the key judgements taken.
The Committee has completed its review for 2022 on both risk
management and internal control and was satisfied that the
process had worked effectively and where specific areas for
improvement were identified, there was adequate mitigation
or alternative controls and that processes were under way
to ensure sustainable improvements. An area of focus
has been to ensure that the controls impacted by the
transformation programmes are appropriately designed
and are being implemented effectively. Through its review,
it also ensured that appropriate procedures are in place for
the detection and prevention of fraud.
102
Unilever Annual Report and Accounts 2022 | Governance
Report of the Audit Committee
The Committee continued to prepare for legislative or
regulatory changes and noted that the Department for
Business, Energy and Industrial Strategy (BEIS) published its
response to reform corporate governance and audit in the UK.
The Audit and Assurance Policy and Fraud Risk Assessment
requirements will be a focus for the Committee in 2023.
Internal Audit
The Committee reviewed internal audit’s plan which is focused
on Unilever’s risk areas including sustainability, cyber security,
data privacy, financial control processes, product safety and
supply chain resilience. The Committee ensured the necessary
resources were in place to perform the audits effectively. The
plan was adjusted in consultation with the Committee to
reflect the changes in the risk profile of the organisation post
the Compass Organisation announcement.
The Committee reviewed quarterly and year-end summary
reports which included the results of audit activities and
completion status of agreed actions. During the year, the
Chief Auditor and his team undertook business visits in person,
in particular in a number of the Group's more volatile markets.
Most audits have been conducted as hybrid (combination of
virtual and physical).
An independent effectiveness review of the function was
performed by Deloitte LLP in accordance with the Global
Institute of Internal Auditors’ International Professional
Practices framework (IPPF) at the request of the Committee.
The review concluded that the function operated in
accordance with the IPPF framework. The function was seen
as ‘matured’ and as having demonstrated consistent leading
practice.
The Committee also evaluated the effectiveness and
performance of the internal audit function by way of a
questionnaire. The feedback was reviewed and the Committee
was satisfied with the effectiveness of the internal audit
function. During the year, the Committee also met
independently with the Chief Auditor and discussed the
results of the audits performed and any additional insights
obtained from the Chief Auditor.
Audit of the annual accounts
KPMG, Unilever’s external auditors and an independent
registered public accounting firm, reported in depth to the
Committee on the scope and outcome of the annual audit,
including their audit of internal controls over financial
reporting as required by Section 404 of the US Sarbanes-Oxley
Act of 2002. Their reports included audit and accounting
matters, governance and control, and accounting
developments.
The Committee held independent meetings with the external
auditors during the year and reviewed, agreed, discussed, and
challenged their audit plan, including the materiality applied,
scope and assessment of the financial reporting risk profile of
the Group.
The Committee discussed the views and conclusions of KPMG
regarding management’s treatment of significant transactions
and areas of judgement during the year. The Committee
considered these and is satisfied with the treatment in the
financial statements.
External Auditors
KPMG has been the Group’s auditors since 2014 and
shareholders approved their reappointment as the Group’s
external auditors at the 2022 AGM. On the recommendation
of the Committee, the Directors will be proposing the
reappointment of KPMG at the AGM in May 2023.
The Committee confirms that the Group is in compliance with
The Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender Processes
and Audit Committee Responsibilities) Order 2014, which
requires Unilever to tender the audit every ten years. During
2022, we ran an extensive, competitive audit tender process
with respect to the audit for the financial year ending
31 December 2024. In our Q2 2022 Results Announcement, the
Board of Unilever announced its intention to reappoint KPMG
as the Group’s external auditor for the financial year ending
31 December 2024, subject to shareholder approval at the
2024 AGM.
The decision to reappoint KPMG was unanimously
recommended by the Committee and was approved by the
Board of Unilever. Our decision to reappoint KPMG was based
on their performance during the tender process across a
comprehensive set of criteria and our satisfaction with their
effectiveness as our current auditor.
Both Unilever and KPMG have safeguards in place to avoid
the possibility that the external auditors’ objectivity and
independence could be compromised, such as audit partner
rotation and the restriction on non-audit services that the
external auditors can perform as described below. KPMG has
issued a formal letter to the Committee outlining the general
procedures to safeguard independence and objectivity,
disclosing the relationship with the Company, and confirming
their audit independence.
Each year, the Committee assesses the effectiveness of the
external audit process which includes discussing feedback
from the members of the Committee and stakeholders at all
levels across Unilever. Interviews are also held with key senior
management within both Unilever and KPMG.
Unilever Annual Report and Accounts 2022 | Governance
103
Report of the Audit Committee
The Committee also reviewed the statutory audit, other audit
and non-audit services provided by KPMG and compliance with
Unilever’s documented approach, which prescribes in detail
the types of engagements, listed below, for which the external
auditors can be used:
■ statutory audit services, including audit of subsidiaries;
■ other audit services – audits that are not required by law
or regulation; and
■ non-audit services – work that our external auditors are best
placed to undertake, which may include:
■ services required by law or regulation to be performed by
the audit firm; and
■ services where knowledge obtained during the audit is
relevant to the service such as bond issue comfort letters.
Unilever has for many years maintained a policy which
prescribes in detail the types of engagements for which the
external auditors can be used with all other engagements
being prohibited. The policy is aligned with both UK and SEC
regulations and is updated in line with these regulations.
All engagements over €250,000 require specific advance
approval by the Audit Committee Chair. The Committee further
approve all engagements which have been authorised by
the Deputy CFO & Controller. These authorities are reviewed
regularly and, where necessary, updated in the light of internal
and external developments. Since the appointment of KPMG
in 2014, the level of non-audit fees has been below 7% of
the annual statutory audit fee, this is also the case for the
year 2022.
The level of other audit fees has been below 6% of the annual
statutory audit fee except for 2017 (41%), 2018 (24%), 2020
(32%) and 2021 (21%) due to assurance work relating to
the disposal of our Spreads business (2017 and 2018)
and assurance work relating to the separation of our
Tea business (2020 and 2021).
Evaluation of the Committee
The Committee carried out an assessment of its effectiveness
and performance in the year. The process was overseen by the
Chief Legal Officer & Group Secretary.
The Committee considered the output from that process at its
meeting in January 2023. Feedback was also provided to the
Board as part of its evaluation of the overall effectiveness of
the Board. The Committee concluded that it is performing
effectively and will remain focused on internal control and
external reporting. The area of evolving ESG reporting
requirements will continue to receive attention by the
Committee.
Adrian Hennah
Chair of the Audit Committee
Judith Hartmann
Susan Kilsby
Hein Schumacher
104
Unilever Annual Report and Accounts 2022 | Governance
Report of the Corporate
Responsibility Committee
As a Committee, we
guide Unilever’s strategy
on sustainability,
from climate change
and plastics, to living
wage and human rights.
Strive Masiyiwa
Chair of the Corporate Responsibility Committee
2022 was a year with unprecedented challenges for both
the world and Unilever. For the Corporate Responsibility
Committee (CRC), it has been a tough but fulfilling year,
supporting the Board and Unilever to navigate continued
Covid lockdowns in parts of the world, the war in Ukraine,
and gridlock in the global commodity supply chain, to name
just a few challenges.
And, as I have come to expect from Unilever, I have continually
been impressed with the support of Unilever’s people – from
the work to support Ukrainian colleagues, to continuous Covid
management and the deployment of new digital health and
wellbeing tools. As a Committee, we guide Unilever’s strategy
on sustainability, from climate change to plastics to living
wage and human rights.
As Chair of the CRC, I continue to be impressed with the
perseverance of Unilever’s leadership to be a global leader
in sustainable business and demonstrate that a purpose-led,
future-fit business model can deliver consistent, superior
performance.
The new Compass Organisation has shown us how the
Business Groups, with the support from Unilever’s Business
Operations and Corporate Centre, are now best positioned to
deliver the stretching Compass sustainability commitments
and respond to consumer demands, whilst retaining the
utmost commitment to business integrity and minimising risk.
With the Unilever Compass remaining as the leading principle,
the business is building a stronger and more resilient future.
The CRC has responsibility for the oversight of Unilever’s
conduct regarding its corporate and societal obligations, its
reputation as a responsible corporate citizen and its culture.
Accordingly, this year we reviewed several positive and
progressive policies, such as updates to the Responsible
Partner Policy (RPP) – a policy which outlines the commitment
to responsible business with respect for human rights as its
foundation. We worked closely with the ULE to ensure that the
dispute with the Ben & Jerry's independent board was amicably
resolved in a manner that reflects our ongoing commitment to
this iconic Unilever brand. We reviewed Unilever's performance
against the Sustainability Progress Index, one of the
performance measures for our long-term incentive plans.
2023 is critical for the delivery of the Unilever Compass
sustainability commitments, especially as some of them have
reached or are approaching their target date. The CRC is
looking forward to reviewing the Business Group and Compass
pillar strategies and how Unilever will deliver sustainability
while also growing the business. Furthermore, the CRC will
continue its oversight of Unilever’s reputation and review
developments in external sustainability reporting regulations.
I am confident that Unilever’s leadership and clear governance
framework will ensure the business is well equipped to
respond accordingly.
The Committee thanks our people for their continued
hard work and dedication to Unilever and the delivery of
sustainable growth. I look forward to further candid and
constructive meetings with my fellow Committee members
in 2023.
Strive Masiyiwa
Chair of the Corporate Responsibility Committee
Unilever Annual Report and Accounts 2022 | Governance
105
Report of the Corporate Responsibility Committee
Committee members and attendance
Strive Masiyiwa Chair
Youngme Moon
Feike Sijbesma
Attendance
3/4
4/4
4/4
This table shows the membership of the Committee together
with their attendance at meetings during 2022. If Directors
are unable to attend a meeting, they have the opportunity
beforehand to discuss any agenda items with the Committee
Chair. Attendance is expressed as the number of meetings
attended out of the number eligible to be attended.
The Corporate Responsibility Committee comprises three Non-
Executive Directors: Strive Masiyiwa (Chair), Youngme Moon
and Feike Sijbesma.
The Chair was unable to attend one of the meetings of the
Committee due to an existing commitment. On this occasion,
Youngme Moon chaired the meeting.
The Chief Research & Development Officer, the Chief
Sustainability Officer and the Chief Business Integrity Officer
attend the Committee’s meetings. The Chief Legal Officer and
Group Secretary may also join the Committee’s discussions.
Role of the Committee
The Corporate Responsibility Committee oversees Unilever’s
conduct as a responsible global business. Core to this remit is
its governance of progress on Unilever’s sustainability agenda,
as set out in the Company’s integrated business strategy,
the Unilever Compass, see page 4 and 5. Part of this
responsibility is reviewing and managing sustainability-
related risks, opportunities and trends material to Unilever.
The Committee also provides reviews and recommendations
to the Board in relation to the Climate Transition Action Plan
(CTAP) which sets out the actions we will take to decarbonise
our business and deliver our net zero goal.
The Committee is charged with ensuring that Unilever’s
reputation is protected and enhanced, so it must consider the
Company’s influence and impact on stakeholders. Central to
this is the need to identify any external developments that are
likely to impact Unilever’s corporate reputation, and to ensure
that appropriate and effective communication policies are
in place to support this. The Committee also oversees safety,
security and wellbeing alongside Unilever’s Code of Business
Principles and third-party compliance, ensuring that both
Unilever’s direct employees and those working within the
Company’s value chain comply with the expected standards
of conduct.
The Committee’s discussions are informed by the experience
of the Unilever Leadership Executive which is accountable for
driving responsible and sustainable growth through Unilever’s
operations, value chain and brands. Senior leaders are invited
to the Committee to share their perspectives and insights on
key issues and external developments. These are then used for
formal feedback to the Board.
Complementing the Committee’s role, the Audit Committee
is responsible for reviewing the independent assurance
programme of Unilever’s sustainability commitments within
the Unilever Compass, and significant breaches of the Code
of Business Principles.
During 2022, the Committee reviewed its terms of reference
and agreed that minor modifications were required to reflect
the new Compass Organisation.
The Committee’s terms of reference are set out at:
www.unilever.com/corporategovernance
During the year, the Committee also addressed a range
of other strategic and current issues, including the war in
Ukraine, occupational health, Unilever's Global Domestic
Violence and Abuse Policy, and human rights.
How the Committee has discharged its
responsibilities
In 2022, the Committee’s principal activities were as follows:
Code of Business Principles
The Code and associated Code Policies set out the standards
of conduct expected of all Unilever employees in their business
endeavours. Compliance with these standards is an essential
element in ensuring Unilever’s continued business success, as
any breach is identified as an ethical, legal, and regulatory risk
to the business, see page 74.
The Corporate Responsibility Committee is also responsible
for oversight of the Code and Code Policies, ensuring that
they remain fit for purpose and are appropriately applied.
It maintains scrutiny of the mechanisms for implementing the
Code and Code Policies. This is vital as compliance is essential
to promote and protect Unilever’s values and standards, and
hence the good reputation of the Group.
At each meeting, the Committee reviews an analysis of
investigations into non-compliance with the Code and Code
Policies and discusses any trends arising from these
investigations.
The Committee also considers litigation and regulatory
matters which may have a reputational impact and reviews
a summary of any significant developments at each meeting.
These matters include increasing anti-bribery and corruption
measures, and competition law compliance.
In 2022, human rights continued to be a focus for the
Committee’s Code oversight. Members noted that regular
dialogue at Board level on human rights and due diligence
is critical.
Principles and standards for third parties
Extending Unilever’s values to third parties is essential if
Unilever is to generate responsible growth and a positive
social impact on the industry and wider society.
A lack of third-party compliance can pose a risk to the
business, so the Committee rigorously examines Unilever’s
compliance programmes to minimise risks.
At each meeting, the Committee tracks compliance with
Unilever’s Responsible Sourcing Policy (RSP) for suppliers and
its Responsible Business Partner Policy (RBPP) for customers
and distributors. Together they set out Unilever’s requirements
that third parties conduct business with integrity and respect
for human rights and core labour principles. In December 2022,
the Responsible Partner Policy (RPP) came into effect, replacing
both the RSP and RBPP, and this recognises the evolving
demands of society and our planet, while simplifying our
approach with one policy. The Committee's focus will therefore
be on the RPP going forward.
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Safety and security
Safety, Health and Environment (SHE) are key priorities at
Unilever.
This year, despite the reduced level of global infections, the
pandemic has continued to cause disruption. The Committee
remained focused on the resilience of our people and
business, which required continued modernisation of
Unilever’s health services delivery. The Committee commended
the actions taken by the business to support employees’
health and wellbeing. In addition, the Committee oversaw
Unilever’s digital transformation which included the move
to the Cority electronic medical record (EMR) platform for
Unilever clinical staff caring for our people and the continued
roll out of digital health and wellbeing solutions that provide
24/7 tools and resources for improving the physical and
mental health of our people.
Unilever remained focused on promoting a safety-first culture.
Our employee-only TRFR was 0.66 accidents per million hours
worked (1 October 2021 to 30 September 2022) versus 0.55
in 2021, returning to pre-pandemic levels as more normal
operations have resumed. In November 2021, we very sadly
lost one employee at one of our tea estates in Kenya.
The Committee also examined Unilever’s approach to security.
As a global business, Unilever operates in many countries,
some of which suffer from limited rule of law, or social and
political unrest. In addition, cyber threats continue to increase.
The Committee recognised volatility in global politics as a
cause for concern with the increasing risk of individuals or
groups targeting Unilever. Members stayed abreast of growing
global insecurity as Unilever experienced the operational
impact of a rise in fragile states, with diminished capacity for
external shocks or internal challenges. Increased insecurity
also stretches national policing and impacts local economic
confidence, encouraging local criminality to expand their
illegal operations. The business continues to upgrade its
resilience programmes to protect its people and assets.
In 2022, the war in Ukraine and its impact on colleagues and
operations has been a key focal point. Unilever’s response was
to firstly prioritise the safety of our people in Ukraine, secondly
to ensure the continuity of business operations and thirdly to
protect the Company’s reputation. The Committee monitored
Unilever’s response from the perspective of employee
wellbeing as well as reputational and operational aspects,
and commended Unilever’s approach in placing the safety
of our people first.
Improving the health of the planet
The effects of climate change and nature loss are becoming
ever more apparent and increasingly urgent. In May 2021,
Unilever put a non-binding advisory vote to its shareholders
on its Climate Transition Action Plan (CTAP), see page 35 to 41.
The CTAP sets out Unilever’s climate targets and the actions
required to reduce emissions in the business. The Corporate
Responsibility Committee is responsible for overseeing CTAP
progress. In 2022, the Committee reviewed and approved the
plan to include the annual CTAP progress report within the
Annual Report and Accounts each year.
Our raw materials and packaging materials are the biggest
source of Unilever emissions. Tackling packaging waste and
eliminating single-use plastic, including sachets, continue to
be high priorities for the business and society. Unilever’s goals
include using more recycled and less virgin plastic, improving
the recyclability of plastic and exploring alternative materials
for our packaging.
Whilst sachets can ensure essential products reach low-
income households, the Committee highlighted that they
create a significant environmental and regulatory risk. The
Committee also acknowledged progress on the issue but
recognised the considerable challenges involved in
abandoning the use of sachets.
Commercialising sustainability
Over the past decade, we have witnessed demands for
corporate and brand action to preserve our planet and
improve livelihoods for the people we touch as a business. The
Unilever Compass is founded on the belief that sustainable
business is a core driver for superior financial performance.
Each Business Group has set out a strategy to deliver superior
results through sustainable operations. In 2022, the
Committee conducted deep dives of Home Care’s Clean
Future and Nutrition’s Future Foods strategies.
Clean Future, Home Care’s innovation programme, seeks to
pioneer superior cleaning products that are also kinder to the
planet. We seek to address our carbon footprint both in the
manufacture of products and in the usage by consumers. We
also make our formulations biodegradable, minimise the use
of virgin plastics, and avoid animal testing. The Committee
supported Clean Future’s strategic focus on innovation and
recommended the team continues to focus on new ways to
engage consumers.
Boldly Healthier is Nutrition’s plan for people and planet which
is supported by quantitative ‘Future Foods’ commitments. This
includes more plant-based, more positive nutrition, less salt,
sugar and calories, as well as less food waste. Members were
briefed on constructive engagements with ShareAction, and
in addition to overall support for the Future Foods strategy,
the Committee encouraged Unilever to consider technology
and portfolio changes to move not just to 'healthier' but also
to 'healthy'.
Diversity and inclusion
Domestic abuse can have a significant impact on victims’ and
survivors’ working lives. Supporting victims of domestic abuse
in the workplace is a social justice, equality and health and
safety issue. When victims are supported, it will improve
workplace relations, enhance wellbeing at work, retain
workers, reduce absence, and increase motivation and
performance.
Unilever launched its Global Domestic Violence and Abuse
Policy in March 2021. Since then, further enhancements
have been made to the policy to reflect the feedback from
employees. These include both those who have accessed
the policy or have been impacted personally by domestic
violence and abuse. The Corporate Responsibility Committee
requested notification of the work carried out in this area and
recommended action to promote the visibility of the policy.
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Protecting and enhancing Unilever’s reputation
Ensuring its good reputation is vital to Unilever’s ongoing
success. As activism rises, commentary on issues such as
single-use plastic and nutrition profiles becomes more rapidly
widespread than ever before, whilst social media continues to
amplify and accelerate issues.
As the Committee charged with overseeing Unilever’s
reputation, it has scrutinised the processes for managing and
advising on salient issues that present material risks to the
perception of the business. These processes are defined within
a clear governance framework and have been enhanced with
more sophisticated forecasting techniques. Furthermore,
tracking and measurement tools evaluate potential issues
and enhance training.
Management Co-Investment Plan
Unilever’s Reward Framework includes the Management
Co-Investment Plan (MCIP) and Performance Share Plan (PSP).
These are long-term incentive plans that are linked to financial
performance, as well as performance against sustainability
targets in the Unilever Compass, (see page118).
To come to a view on Unilever’s performance on its
sustainability commitments for the purposes of reward, the
Corporate Responsibility Committee and the Compensation
Committee jointly evaluate performance against a
Sustainability Progress Index (SPI). This has a selection of eight
targets representative of the breadth of the Unilever Compass.
The SPI is measured a year in arrears, and therefore 2022 is the
first year of using SPI targets aligned to the Unilever Compass
for the 2021 assessment. The Committees base their SPI
assessment on information already in the public domain
and available to investors.
Eight equally weighted KPIs comprise the 2021 SPI evaluation,
with one target from each of the pillars which underpin the
strategic actions of the Unilever Compass representing the
business’s wider progress across the Compass pillars. In
making their rounded assessment, the Committees review
both qualitative and quantitative progress across multiple
elements of the respective Compass pillar ambition, and
delivery against the respective anchor KPI.
Following an in-depth discussion of the SPI, the Corporate
Responsibility Committee agreed on a performance rating
which was endorsed by the Compensation Committee. This
joint assessment forms part of the Compensation Committee’s
overall recommendation on the SPI outcome (see page 117).
Evaluation of the Corporate Responsibility
Committee
As part of the internal Board evaluation carried out in 2022,
the Board evaluated the performance of the Committee.
The Committee also carried out an assessment of its own
performance in 2022 and concluded that it was working
effectively.
Strive Masiyiwa
Chair of the Corporate Responsibility Committee
Youngme Moon
Feike Sijbesma
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Directors' Remuneration Report
Andrea Jung
Vice Chair/Senior Independent Director
On behalf of the Compensation Committee, I am pleased to
present Unilever’s Directors’ Remuneration Report (DRR) 2022.
In the sections below, I set out the Compensation Committee’s
activities in 2022, including a summary of Unilever’s business
performance in 2022 and how it links to key remuneration
outcomes for the year.
Business performance and remuneration
Unilever delivered a year of strong growth in challenging
macroeconomic conditions.
Underlying sales growth (USG) stepped up to 9.0% in 2022, led
by pricing, in the face of significant input cost inflation across
our markets. Full year underlying price growth was 11.3%,
which had, as expected, some negative impact on volumes,
which declined by 2.1%.
Underlying operating margin (UOM) declined by 230bps
to 16.1%, slightly ahead of target of 16.0%.
Free cash flow (FCF) delivery was €5.5bn (€5.2bn including
€0.3bn tax paid on the separation of the global Tea business).
It was down from 2021 due to increases in capital expenditure
and working capital, notably inventory.
Underlying earnings per share (EPS) decreased by 2.1% to
€2.57.
Underlying return on invested capital (ROIC) was 16.0%,
compared to 17.2% in the prior year. This was mainly due to
increased goodwill and intangibles, driven by Paula's Choice
and Nutrafol acquisitions and a currency impact.
We are making good progress against our Compass
sustainability commitments. As a result, we achieved an
outcome of 126% for the Sustainability Progress Index (SPI),
as detailed on page 118.
The Remuneration Policy
is due for renewal in
2024 and I look forward
to liaising with investors
and other stakeholders
on this topic.
Incentive outcomes and wider stakeholder
considerations
2022 annual bonus
Under the formulaic outcomes, a bonus of 133% of target
opportunity was determined for both the CEO Alan Jope
(resulting in a bonus of 200% of fixed pay against a target
of 150%), and the CFO Graeme Pitkethly (resulting in a bonus
of 160% of fixed pay against a target of 120%), as detailed in
the chart on page 116.
After careful consideration, the Committee decided neither to
change the targets in response to volatile business conditions
nor to exercise discretion on the formulaic outcome, which will
set the global bonus pool for all eligible Unilever employees.
Our growth priority was recognised by upweighting USG to 50%
within the 2022 annual bonus performance measures. The
Committee considered the formulaic outcome was justified in
2022. Strong sales growth was delivered in challenging
macroeconomic conditions as we navigated through a high
cost inflation environment, and successfully balanced price
growth, and volume only modestly down by 2.1%. USG was
driven by disciplined pricing action and was broad-based
across each of our five Business Groups, led by strong
performances from our billion+ Euro brands.
Under the Remuneration Policy, 50% of the net bonus award
will be deferred in shares for three years.
2019-2022 Management Co-Investment Plan (MCIP)
The formulaic outcome for the 2019-2022 MCIP was 70% of
target. This outcome is detailed in the chart on page 117,
and corresponds to a vesting of 35% of maximum for our
two Executive Directors.
Similarly to the annual bonus, based on overall financial
performance as well as a holistic review of performance over
the four-year vesting period, no discretion was applied to the
MCIP vesting in 2022 for the Executive Directors and members
of the Unilever Leadership Executive (ULE).
When considering outcomes for the wider workforce, the
Committee decided to exercise discretion to the MCIP
2019-2022 payout outcome to all eligible employees below
ULE due to the impact of Covid and input cost inflation.
The discretion was an adjustment of +10% to the formulaic
outcome, resulting in an adjustment of +7% of payout, to 77%.
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Wider stakeholder considerations
When considering the annual bonus and MCIP outcomes,
the Committee carefully took into account the experiences
of our wider stakeholders in order to ensure that outcomes
were aligned.
In particular, our decision not to amend targets mid-year
despite extreme volatility and uncertainty was taken to
ensure that employees and Executive Directors are treated
commensurately with the interests of our shareholders.
The outcome of 133% of target for annual bonus is above
expectations, but the outcome of 70% of target for MCIP is
below our expectations. However, the Committee believes
these outcomes represent the performance delivered to
shareholders in challenging trading circumstances.
Our Remuneration Policy for 2022
The Remuneration Policy was approved at the AGM on 5 May
2021 and is available on our website ('the Remuneration
Policy').
Unilever's remuneration arrangements are aligned to its
culture of rewarding performance through annual bonus and
long-term incentive performance measures and remuneration
is determined throughout Unilever based on the same
principles as for the Executive Directors, as set out in the
Remuneration Policy.
Executive Director changes
Alan Jope will step down as CEO and Executive Director with
effect from 1 July 2023 and will retire from employment on
31 December 2023. He will continue to be paid in line
with the Remuneration Policy until his retirement. On this basis,
Alan remains eligible to receive a bonus in respect of 2023,
payable in March 2024 based on Company performance and
will participate in the PSP 2023-2025 on a pro-rated basis.
Further details of Alan’s leaving arrangements are set out
on page 124.
As announced on 30 January 2023, Hein Schumacher will begin
employment with Unilever on 1 June 2023 as CEO Designate
and Executive Director and become CEO effective 1 July 2023.
Hein's fixed pay has been set at €1,850,000 with annual bonus
and PSP opportunity in line with our Remuneration Policy
each of which for 2023 will be pro-rated to reflect his period
of employment. The Committee believes that the current
positioning of the package given Unilever’s global scale,
complexity and market capitalisation represents an
acceptable balance in view of various considerations, such
as competitive external market pay rates across Unilever’s
peer group and Hein's skills and experience.
In line with Unilever’s International Mobility policies, Hein
will receive a relocation allowance to support his move to
the UK (including housing costs) for a period of 24 months.
Hein will also be granted share awards to compensate him for
cash incentives from his previous employer that he will forfeit
due to commencing employment with Unilever. Further details
of Hein's joining arrangements are set out on page 123.
Executive Director fixed pay increases
As set out in last year’s DRR, we did not conduct a fixed pay
review for the Executive Directors in the first half of 2022, and
we planned to undertake such a review in the second half of
2022. Given the announcement of the CEO to retire at the end
of 2023, the Committee decided not to further review his fixed
pay for 2022 or 2023. Therefore, the fixed pay review was
limited to the CFO and took into account salary increases
awarded to the wider workforce.
As part of the fixed pay review, the Committee conducted an
evaluation of the CFO package against external market data(a)
in the second half of 2022, which shows the CFO is currently
positioned lower than the Committee consider to be
appropriate given the individual’s skills, experience and
performance.
Following the fixed pay review and taking into account
Company performance as well as the importance of retaining
the CFO during the transition to a new CEO, the Board
approved the Committee’s recommendation of a fixed pay
increase for the CFO of 6% to €1,246,262, effective from
1 January 2023. This is in line with the average increase
awarded to the wider Unilever workforce in 2022.
(a) Our benchmarking peer group consists of other global companies of a similar
financial size and complexity to Unilever and is set out in full in the
Remuneration Policy.
Non-Executive Director fees
Non-Executive Director fees have not been increased for
three years despite increasing complexity, time commitment
and required skills related to the role. As set out in last year’s
DRR, the Committee therefore reviewed the Non-Executive
Director fees in 2022 which shows that the fee levels for some
roles are below the benchmark of market median rates for UK
FTSE 30 companies. Therefore, the Board approved increases
to the Non-Executive Director fees for 2023, as outlined on
page 124.
Engaging with shareholders
I continued my dialogue with investors in 2022, including
discussions on the topic of remuneration. In particular,
investors have been interested to understand how
Environmental, Social and Governance factors are taken into
account in Unilever's remuneration arrangements. I was able
to reiterate that the SPI has been an established feature of
our long-term incentive (LTI) scheme since it was introduced
in 2017 and continues to support our vision to be the global
leader in sustainable business and the importance of
sustainability KPIs in driving business performance. See
page 85 of the 2021 Annual Report and Accounts and the
remuneration topics section of our website for further
information on the SPI.
I look forward to further engagement with shareholders in
2023 as Unilever prepares to renew its Remuneration Policy.
The Committee is committed to ensuring that remuneration
performance measures for Executive Directors align with the
interests of investors.
Engaging with employees
As previously reported, the Board shares the responsibility for
workforce engagement among all Non-Executive Directors
to ensure that all Directors have a collective responsibility
for bringing employee views into relevant Board discussion.
We continued these engagements in 2022, see page 89 for
a summary of the discussions that took place.
In November 2022, the Chair of the Board, along with the CEO,
attended a virtual town hall meeting open to all employees
globally. This was an opportunity for employees to ask
questions, including in relation to Unilever’s approach to
remuneration. The Chair and the CEO shared that Unilever's
intention is to provide competitive pay and reward high
performance. Unilever's approach to remuneration is intended
to foster a healthy culture and incentivise employees to take
action and be judged by their performance. This means the
better Unilever performs, the higher the opportunity for
employee reward.
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One of the Committee members attended an engagement
session with employees on the subject of compensation
and benefits in November 2022. Employees shared feedback
on competitiveness of fixed pay for current employees,
the opportunity to choose benefits and management
differentiation between team members.
Employees are able to give real-time feedback on their pay
and benefits through Unilever's reward system. The average
satisfaction score for all employees globally for all elements
of reward was 63% as at 31 December 2022. Satisfaction with
long-term incentives was particularly high at 71%, which
reflects Unilever's aim to drive performance with incentives
in the upper quartile.
The Committee is periodically updated on matters impacting
the workforce, including inflation and the new Compass
Organisation.
As such, the Committee believes the implementation
of remuneration in 2022 is a fair reflection of employee
experience. In particular, Executive Director pay increases
are limited to the CFO and in line with that of the wider
workforce, as explained above. In addition, the same
Company performance measures for annual bonus and MCIP
apply to all eligible employees, including Executive Directors.
Inflation and employee remuneration
This year saw unprecedented levels of inflation and we have
extended our support to employees in a number of countries
through various targeted financial wellbeing interventions.
These have been specific to each country’s context and range
from providing access to financial advice to monetary
compensation or other forms of support.
Implementation report
The annual report on remuneration in this report describes
2022 remuneration in detail as well as the planned
implementation of the Remuneration Policy in 2023.
On behalf of the Committee and the entire Board, I thank all
shareholders and their representatives for their constructive
engagement in 2022. Shareholders will have an advisory vote
on the DRR at the 2023 AGM. I look forward to engaging with
shareholders and their representatives in 2023 in respect of
renewing the Remuneration Policy.
Andrea Jung
Chair of the Compensation Committee
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Committee members and attendance
Andrea Jung Chair
Nils Andersen
Laura Cha (member until 4 May 2022)
Ruby Lu
Nelson Peltz (member since 20 July 2022)
Attendance
8/8
8/8
3/4
8/8
3/3
This table shows the membership of the Compensation
Committee together with their attendance at meetings during
2022. Attendance is expressed as the number of meetings
attended out of the number eligible to be attended.
The Committee is comprised of four Non-Executive Directors,
including Andrea Jung as the Chair. Laura Cha retired as a
Non-Executive Director at the AGM in May 2022. Nelson Peltz
became a Non-Executive Director and joined the Committee
in July 2022. Other attendees at Committee meetings in 2022
were the CEO, Chief Legal Officer & Group Secretary, the Chief
Counsel Executive Compensation & Employment, the Chief
Human Resources Officer, the Chief People & Transformation
Officer, the VP Global Head of Reward, the Head of Expertise &
Innovation, and the Deputy Chief Financial Officer & Controller.
No individual Executive Director was present when their own
remuneration was being determined to ensure there was no
conflict of interest, although the Committee has separately
sought and obtained Executive Directors’ own views when
determining the amount and structure of their remuneration
before recommending individual packages to the Board
for approval.
Role of the Committee
The Committee reviews the remuneration of the Executive and
Non-Executive Directors and ULE. It also has responsibility for
the design and terms of executive and all employee share-
based incentive plans and the remuneration policy for the
ULE and senior managers. The Committee is also involved in
the performance evaluation of the ULE.
The Committee's terms of reference are contained within
'The Governance of Unilever' which is available on our website.
As part of the Board evaluation carried out in 2022, the Board
evaluated the performance of the Committee. The Committee
also carried out an assessment of its own performance in
2022. Overall, the Committee members concluded that the
Committee is performing effectively. The Committee has
agreed to review trends on executive remuneration and
performance measures for long-term incentives, in particular
in view of the upcoming Remuneration Policy renewal
due in 2024.
Activities of the Committee
During 2022, the Committee met eight times and its activities
included:
■ determining the 2021 annual bonus outcome;
■ determining the vesting of the MCIP awards for the CEO,
CFO and the ULE;
■ setting the 2022 annual bonus and Performance Share Plan
(PSP) 2022-2024 performance measures and targets;
■ reviewing fixed pay for the CEO and CFO and fees for the
Non-Executive Directors;
■ tracking external developments and assessing their impact
on Unilever’s Remuneration Policy and its implementation,
in particular in the context of geopolitical tensions, inflation,
and rising interest rates;
■ reviewing underlying reward principles, workforce pay,
including pay philosophy and pay positioning;
■ reviewing updates to Unilever's annual bonus policy to align
with the Compass Organisation transformation;
■ retirement of CEO and CEO succession planning;
■ reviewing gender pay gap data;
■ considering progress on the living wage commitment that
is now extended to the wider supply chain; and
■ assessing performance against 2022 SPI targets and setting
2023 SPI targets along with the Corporate Responsibility
Committee (CRC).
Advisers
While it is the Committee’s responsibility to exercise
independent judgement, the Committee requests advice from
management and professional advisers, as appropriate, to
ensure that its decisions are fully informed given the internal
and external environment.
Fiona Camenzuli of PricewaterhouseCoopers LLP (PwC)
provided the Committee with independent advice on
various matters it considered. During 2022, the wider
PricewaterhouseCoopers network firms have also provided tax
and consultancy services to Unilever including tax compliance,
transfer pricing, other tax-related services, managed legal
services, internal audit advice and secondees, third-party risk
and compliance advice, cyber security advice, sustainability
assurance and consulting, merger and acquisition support,
and media assurance support. PwC is a member of the
Remuneration Consultants Group and, as such, voluntarily
operates under the code of conduct in relation to executive
remuneration consulting in the UK, which is available online at
www.remunerationconsultantsgroup.com (Code of Conduct:
Executive Remuneration Consulting).
The Committee is satisfied that the advice of the PwC
engagement partner and team, which provide remuneration
advice to the Committee, was objective and independent. They
do not have connections with Unilever that might impair their
independence. The Committee reviewed the potential for
conflicts of interest and judged that there were appropriate
safeguards against such conflicts. The fees paid to PwC in
relation to advice provided to the Committee in the year to
31 December 2022 were £188,250. This figure is calculated
based on time spent and expenses incurred for the majority of
advice provided, but on occasion, for specific projects, a fixed
fee may be agreed.
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Annual report on remuneration
This section sets out how the Remuneration Policy (which
was approved by shareholders at the AGM on 5 May 2021 and
is available on our website) was implemented in 2022 and how
it will be implemented in 2023. See the remuneration topics
section of our website for a copy of the Remuneration Policy.
Remuneration Policy
The Remuneration Policy is operating as intended and no
material changes are proposed in relation to how we
implement the Remuneration Policy in 2023.
Unilever's remuneration arrangements are aligned to its
culture of rewarding performance through annual bonus and
long-term incentive performance measures and remuneration
is determined throughout Unilever based on the same
principles as for the Executive Directors, as set out in the
Remuneration Policy. Remuneration is controlled with pay at
risk determined according to pre-determined performance
measures with a maximum outcome. This results in
predictability in the management of risks and costs. Executive
Elements of remuneration
Remuneration is proportionate given the financial size and
complexity of Unilever as determined through benchmarking
with our peers. Unilever's remuneration arrangements
provide for clarity and simplicity by constituting of fixed pay,
benefits, annual bonus and long-term incentives, which are
transparently detailed in the Remuneration Policy and DRR.
The Remuneration Policy is due for renewal in 2024 and I look
forward to liaising with investors and other stakeholders on
this topic.
Implementation of the Remuneration Policy for
Executive Directors
The Remuneration Policy was implemented with effect from
the May 2021 AGM as set out below.
Remuneration for 2022 and planned for 2023 for the CEO refers
to Alan Jope. Please see page 123 for remuneration details for
Hein Schumacher as incoming CEO.
Fixed Pay
Purpose and link to strategy
At a glance
Implementation in 2022
Planned for 2023
Annual Bonus
Purpose and link to strategy
At a glance
Supports the recruitment and retention of Executive Directors of the calibre required to implement our strategy.
Reflects the individual’s skills, experience, performance and role within the Group. Provides a simple competitive
alternative to the separate provision of salary, fixed allowance and pension.
Details of the rationale for our Executive Directors’ fixed pay amounts can be found on page 110.
Effective from 1 January 2022:
■ CEO: €1,560,780
■ CFO: €1,175,719
Effective from 1 January 2023:
■ CEO: €1,560,780 (no change)
■ CFO: €1,246,262 (6% increase)
Incentivises year-on-year delivery of rigorous short-term financial, strategic and operational objectives selected
to support our annual business strategy and the ongoing enhancement of shareholder value.
In 2021, a new requirement was introduced to defer 50% of the net annual bonus into shares or share awards to
link to long term performance.
■ Target annual bonus of 150% of fixed pay for the CEO and 120% of fixed pay for the CFO.
■ Maximum annual bonus is 225% of fixed pay for the CEO and 180% for the CFO.
■ Business performance multiplier of between 0% and 150% based on achievement against business targets over
the year.
■ Performance target ranges are considered commercially sensitive and will be disclosed in full with the
corresponding performance outcomes retrospectively following the end of the relevant performance year.
■ Requirement to defer 50% net annual bonus into shares.
■ Subject to ultimate remedy/malus and claw-back provisions, as set out in the Remuneration Policy.
Implementation in 2022
Planned for 2023
Implemented in line with the Remuneration Policy:
■ Underlying sales growth: 50%
■ Underlying operating margin improvement: 25%
■ Free cash flow: 25%
■ Underlying sales growth: 50%
■ Underlying operating margin improvement: 25%
■ Free cash flow: 25%
Long-Term Incentive: Performance Share Plan
Purpose and link to strategy
The PSP aligns senior management’s interests with shareholders by focusing on the sustained delivery of
high-performance results over the long-term.
At a glance
■ PSP awards normally vest after three years, to the extent performance conditions are achieved.
■ The normal maximum award for the CEO is 400% of fixed pay and for the CFO is 320% of fixed pay. At target,
50% of maximum vests, equating to 200% and 160% of fixed pay respectively.
■ Upon vesting, Executive Directors will have a further two-year retention period.
■ The PSP is subject to ultimate remedy, discretion, malus and claw-back provisions, as set out in the
Remuneration Policy.
Implementation in 2022
The PSP was implemented in line with the Remuneration Policy. Details of the performance measures for the 2022
PSP awards can be found on page 119.
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Elements of remuneration continued
Planned for 2023
The performance conditions and target ranges for 2023 awards under the PSP will be as follows:
PSP 2023 – 2025 awards
Competitiveness:
% business winning
Cumulative free cash flow (€bn)
(current rates ex cash tax on
disposal)
Underlying return on invested
capital (exit year %)
Sustainability progress index
(Committee assessment of SPI
progress)
Weighting
Threshold
Max
25%
25%
25%
25%
45%
0%
€15.5bn
0%
14%
0%
0%
0%
60%
200%
€21.5bn
200%
18%
200%
200%
200%
PSP awards (based on target performance) to be made on 10 March 2023 as follows:
■ CEO 33% Fixed Pay: €520,260 (this is a reduced award to reflect Alan's period of employment over the
performance period (6 out of 36 months) against a target of 200% Fixed Pay).
■ CFO 160% Fixed Pay: €1,994,019.
Cumulative FCF from operating activities in current currency ensures sufficient cash is available to fund a range
of strategic capital allocation choices. As such, the Committee believes that the target range of a threshold of
€15.5bn and a maximum of €21.5bn to be appropriate.
ROIC measures the return generated on capital invested by the Group and is calculated as underlying
operating profit after tax divided by the annual average of: goodwill, intangible assets, property, plant and
equipment, net assets held for sale, inventories, trade and other current receivables, and trade payables
and other current liabilities. The target range of a threshold of 14% and maximum of 18% expresses our
commitment to deliver ROIC at a level of mid to high teens, whilst continuing to reshape our portfolio through
acquisitions and disposals.
Competitiveness % Business Winning will be assessed each year as the aggregate turnover of the portfolio
components (country/category cells) gaining value market share as a % of the total turnover measured by
market data. As such, it assesses what percentage of our revenue is being generated in areas where we are
gaining market share. The outcome for the 2023-2025 PSP is the average of the three years % Business Winning
performance. With intense competition and changing shopper trends, winning share in each portfolio or
geography segment presents a challenge for all players; repeating these wins over successive years is even
more demanding. At consolidated Group level, delivering consistently in the range of 50% Business Winning will
enable us to grow with our markets, delivering above 50% Business Winning over successive years supports our
objective of growing ahead of our markets. Keeping this in mind, the Committee believes that a stretch goal
of 60% and threshold performance of 45% resulting in a zero payout for this performance measure to be
appropriate.
The SPI is an assessment made jointly by the CRC and the Committee. The 2023 SPI will be evaluated on
progress against selected sustainability targets in the Unilever Compass, based on in-year performance in 2022
(except Positive Nutrition and Health and Wellbeing that will be measured against performance in 2023). The
CRC and Committee will determine a numerical rating for the SPI in the range of 0–200%. Annual ratings are
tallied as an average SPI for each four-year MCIP and each three-year PSP performance period. Eight pillars,
with one target from each of the three Compass priority areas, will comprise the 2023 SPI evaluation as for 2022
(see page 118). In making their rounded assessment, the CRC and the Committee will also review both
qualitative and quantitative progress across the wider Compass targets as well as delivery against the
respective KPIs.
In addition to the three elements mentioned above, our Executive Directors are provided with non-monetary benefits.
These include medical insurance cover, actual tax return preparation costs and provision of death-in-service benefits
and administration.
Ultimate remedy/malus and claw-back
Grants under the PSP and the legacy MCIP are subject to ultimate remedy and discretion as explained in the Remuneration
Policy. Malus and claw-back apply to all performance-related payments, as explained in the Remuneration Policy.
In 2022, the Committee did not reclaim or claw-back any of the value of awards of performance-related payments to current
or former Executive Directors.
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Single figure of remuneration and implementation of the Remuneration Policy in 2022
for Executive Directors (Audited)
The table below shows a single figure of remuneration for each of our Executive Directors for the years 2021 and 2022.
(A) Fixed pay(a)
Total fixed pay
(B) Other benefits
Fixed pay & benefits subtotal
(C) Annual bonus(b)
(D) LTI: MCIP match shares
Variable Remuneration subtotal
Total Remuneration (A+B+C+D)
Alan Jope CEO (€’000)
Graeme Pitkethly CFO (€’000)
Proportion
of Fixed
and
Variable
Rem
30.8%
69.2%
2022
1,561
1,561
102
1,663
3,114
618
3,732
5,395
Proportion
of Fixed
and
Variable
Rem
32.9%
67.1%
2021
1,534
1,534
76
1,610
1,864
1,416
3,280
4,890
Proportion
of Fixed
and
Variable
Rem
32.1%
67.9%
2022
1,176
1,176
48
1,223
1,876
708
2,585
3,808
Proportion
of Fixed
and
Variable
Rem
35.0%
65.0%
2021
1,156
1,156
47
1,203
1,123
1,114
2,237
3,440
(a) Fixed pay increased by 3.5% to €1,560,780 for CEO and €1,175,719 for CFO from 1 July 2021 and pro-rated for annual bonus i.e. the maximum amount of 2021 bonus
increased by 1.75%.
In line with the Remuneration Policy, 50% of the 2022 net annual bonus will be deferred into Unilever shares that must be held for a period of three years.
(b)
Where relevant, amounts for 2022 have been translated into euros using the average exchange rate over 2022 (€1 = £0.8510),
excluding amounts in respect of MCIP, which have been translated into euros using the exchange rates at the vesting date at
9 February 2023 (€1 = £0.8879 and €1 = $1.0733).
Amounts for 2021 have been translated into euros using the average exchange rate over 2021 (€1 = £0.8605), excluding amounts
in respect of MCIP, which have been translated into euros using the exchange rates at the vesting date on 16 February 2022
(€1 = £0.8379 and €1 = $1.1354).
We do not grant our Executive Directors any personal loans or guarantees.
Elements of single figure remuneration 2022
(A) Fixed pay (Audited)
Fixed pay set in euros and paid in 2022: CEO – €1,560,780, CFO – €1,175,719.
(B) Other benefits (Audited)
For 2022 this comprises:
Medical insurance cover, actual tax return preparation costs and legal fees
Provision of death-in-service benefits and administration
Total
(a) The numbers in this table are translated where necessary using the average exchange rate over 2022 of €1 = £0.8510.
Alan Jope
CEO(€)(a)
Graeme Pitkethly
CFO(€)(a)
2022
86,439
16,000
102,439
2022
35,616
12,000
47,616
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(C) Annual bonus (Audited)
Annual bonus 2022 actual outcomes: CEO – €3,113,756 (which is 89% of maximum, 200% of fixed pay as at 31 December 2022).
CFO – €1,876,448 (which is 89% of maximum, 160% of fixed pay as at 31 December 2022).
Alan Jope
Graeme Pitkethly
Bonus @ target =
150% × fixed pay
(€2,341,170)
×
Business
performance
133%
=
€3,113,756
Bonus @ target =
120% × fixed pay
(€1,410,863)
×
Business
performance
133%
=
€1,876,448
50% of the net annual bonus earned is deferred into shares (€825,145 for Alan Jope and €497,259 for Graeme Pitkethly). Shares
are deferred for three years and not subject to performance or service conditions, in line with the Remuneration Policy.
The annual bonus measures and performance against targets are set out below. All performance ranges are straight-line
between threshold and maximum:
Performance: Annual Bonus
Performance metric (weighting)
Underlying sales growth (50%)
Underlying operating margin (25%)
Free cash flow (25%)
Overall performance
Threshold
0%
Target
100%
Maximum
150%
4.5%
-370bps
€4.3bn
0%
9.0%
7.5%
-230bps
-180bps
€5.5bn
€5.8bn
133%
150%
Result
vesting
(of target)
150%
111%
123%
133%
Further details of the annual bonus outcomes and the Committee's assessment of the appropriateness of the formulaic
outcomes are described in the Committee Chair's letter on page 109.
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(D) MCIP (Audited)
2022 Outcomes
This includes MCIP match shares (operated under the Unilever Share Plan 2017) granted to Alan Jope and Graeme Pitkethly
on 23 April 2019, based on performance in the four-year period to 31 December 2022, which vested on 9 February 2023.
The values included in the single figure table for 2022 are calculated by multiplying the number of shares granted (including
additional shares in respect of accrued dividends through to 31 December 2022) by the level of vesting (% of target award)
and the share price on the date of vesting (PLC £41.09 and PLC EUR €46.47), translated into euros using the exchange rate on
the date of vesting (€1 = £0.8879).
Performance against targets:
Performance: MCIP 2019-2022
Performance metric (weighting)
Threshold
0%
Target
100%
Underlying sales growth (CAGR) (25%)
Underlying earnings per share growth
(Current FX) (25%)(a)
Underlying return on invested capital
(Exit year %) (25%)
Sustainability progress index (Committee
assessment of compass progress) (25%)
Overall performance
1.5%
1.5%
2.0%
16.0%
16.0%
0%
0%
Maximum
200%
Result
vesting
(of target)
4.5%
5.5%
152%
10.0%
20.0%
0%
0%
126%
200%
126%
70%
200%
70%
(a) Earnings Per Share Growth excludes the benefit from share buyback of €3bn in 2021. 2022 share buyback of €1.5bn was executed to return ekaterra Tea Business
proceeds, hence considered.
Further details of the MCIP outcome and the Committee's assessment of the appropriateness of the formulaic outcomes are
described in the Committee Chair's letter on page 109. Further detail on the SPI outcome is set out below. On the basis of this
performance, the Committee determined that the MCIP awards at the end of 2022 will vest at 70% of initial target award levels
(i.e. 35% of maximum for MCIP), in line with the formulaic outcome.
Outcome of SPI for MCIP cycle 2019-2022 (not audited):
The SPI is an assessment of the business’s sustainability performance by the CRC and the Committee that captures quantitative
and qualitative elements. The CRC and the Committee agree on a SPI achievement level against the target taking into account
performance across all the targets in each Compass pillar (i.e. climate action, positive nutrition, and living wage).
The Unilever Compass sustainability target is our integrated sustainability and business strategy and includes 38 sustainability
KPIs under three Compass priority areas.
The 2022 SPI performance is set out on page 118. The SPI index for the four-year MCIP performance period is calculated by taking
a simple average and is set out at the bottom of the table for MCIP 2019-2022. From 2022, the SPI indicators are based on
progress made against the Unilever Compass, as 2021 marked the final year of reporting against the Unilever Sustainable Living
Plan (USLP). Therefore, for the MCIP cycle 2019-2022, the outcome for the first three years is based on the USLP and the outcome
for the final year is based on the Unilever Compass.
To 'improve the health of the planet', aligned to Home Care’s Clean Future strategy, we signed two major contracts with
suppliers to develop alternatives to surfactants: the most greenhouse gas-intensive class of ingredients. We also continue in our
journey to deforestation-free supply chains, where in 2021, 81% of our volumes of palm oil, paper and board, tea, soy and cocoa
were from areas with a low risk of deforestation. We have made further progress against all waste-free world targets, through
our 'less plastic, better plastic, no plastic' framework, and are firmly on track to deliver the goal of 25% recycled plastic by 2025.
Under our 'improve people's health, confidence and wellbeing' priority area, we reached 686 million people, helping to improve
their health, wellbeing and hygiene through programmes led by some of our biggest brands: Lifebuoy, Dove, Pepsodent and
Sunsilk. Further, plant-based eating is essential to reduce the burden on the planet, and it is good for people’s health. Despite
Covid-related supply issues and intensified competition completion, our plant-based products have reported growth. We have
a strategy to sustain the strong growth of meat replacement and vegan mayonnaise and to boost growth in plant-based
ice cream.
Finally, under the 'contribute to a fairer and more socially inclusive world' priority area, we enhanced the livelihoods of millions
of people by driving fairness and human rights in our operations and extended supply chain. We are supporting diverse
businesses through supplier development programmes and launched a supplier diversity pledge. Focusing on key collaborative
manufacturing suppliers and our largest markets, we are implementing the Living Wage. And, to prepare for changing core skills
required to perform their roles, we are ensuring our workforce is prepared for the future with an aim to reskill or upskill our
employees with future-fit skills by 2025.
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Directors' Remuneration Report
The average SPI outcome for MCIP 2019-2022 is set out at the bottom of the table and in note (b).
Compass pillar
Compass target
Compass priority area: Improve the health of the planet
Climate action
KPI
Replace fossil-fuel-derived carbon
with renewable or recycled carbon
in all our cleaning and laundry
product formations by 2030
The total number of suppliers with
whom we have signed agreements
to develop renewable or recycled
carbon surfactants from 1 January
to 31 December 2021
Protect and regenerate
nature
Deforestation-free supply chain in
palm oil, soy, paper and board, tea
and cocoa by 2023
Waste-free world
25% recycled plastic by 2025
The percentage of palm oil, soy,
paper and board, tea and cocoa
that are purchased or contracted
from low-risk sources of
deforestation by 31 December
2021, based on contracts in place
by 1 October 2021 for palm oil, and
purchases made from 1 October to
31 December 2021 for soy, paper
and board, tea and cocoa
Total tonnes of recycled plastic
purchased as a percentage of total
tonnes of plastic packaging used
in products sold from 1 January to
31 December 2021
Compass priority area: Improve people's health, confidence and wellbeing
Total sales (euros) of Unilever's
Positive nutrition
products containing plant-based
meat and dairy alternatives from
1 January to 31 December 2021
€1 billion annual sales from plant-
based meat and dairy alternatives
by 2025-2027
Health & wellbeing
Taking action through our brands
to improve health and wellbeing
and advance equity and inclusion,
reaching 1 billion people per year
by 2030
Number of people reached by
brand communications and
initiatives that help improve health
and wellbeing, and help advance
equity and inclusion from 1 January
to 31 December 2021
Compass priority area: Contribute to a fairer and more socially inclusive world
Equity, diversity & inclusion
Spend €2 billion annually with
diverse businesses worldwide
by 2025
Monetary value (euros) of all
invoices received from tier 1
suppliers that are either verified as
a diverse business by an approved
certification body or have self-
declared as a diverse business from
1 January to 31 December 2021
Raise living standards
Ensure that everyone who directly
provides goods and services to
Unilever will earn at least a living
wage or income by 2030
Future of work
Reskill or upskill our employees
with future-fit skills by 2025
Annual SPI outcome
Average SPI outcome for
MCIP 2019-2022(b)
The total monetary value of long-
term Dedicated Collaborative
Manufacturing contracts signed
with a requirement to pay a living
wage, expressed as a percentage
of the total monetary value of long-
term Dedicated Collaborative
Manufacturing contracts signed
from 1 January to 31 December
2021
% of employees with a future-fit
skills set from 1 January to 31
December 2021
2021 target Judgement(a)
2021 actuals
SPI 2022
2
Achieved
2
80%
Achieved
81%
20%
Under-
achieved
19%
€320m
Under-
achieved
€242m
500m people
Over-
achieved
686m
people
€374m
Over-
achieved
€445m
60%
Over-
achieved
78%
5%
Achieved
7%
125%
126%
(a) Judgement of the Committee and CRC.
(b) SPI outcomes for the years 2019-2021 were based on the USLP and are set out in detail on page 92 of the Annual Report and Accounts 2021. SPI 2019 outcome
(based on 2018 actuals) was 125%, SPI 2020 outcome (based on 2019 actuals) was 130%, SPI 2021 outcome (based on 2020 actuals) was 125% and SPI 2022 outcome
(based on 2021 actuals) was 125%, making an average SPI outcome for MCIP 2019-2022 of 126% (rounded).
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Share price growth MCIP 2019 – 2022
-
€874,570
-30%
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
9.8%
- - €6 18, 41 6
-9.1%
€9 78,8 20
-30%
9.8%
- - €708,467
-7.4%
Origina[(a)
Pe rformance
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