Sustainability governance

Sustainability is at the heart of our business

Our commitment to sustainability is embedded through our purpose, vision, business model and strategy – the Unilever Compass (PDF 501.03 KB) – which outlines our five strategic choices for growth and the important role that our sustainability agenda plays in this.

The Compass sets out a range of sustainability commitments against three strategic choices: improve the health of the planet, improve people’s health, confidence and wellbeing, and contribute to a fairer, more socially inclusive world. We believe strong governance is vital if we are to deliver our commitments. We’ve built robust governance mechanisms at all levels of the business to ensure we hold ourselves accountable to them.

This page summarises how we govern sustainability and highlights where more detailed information can be found.

The Board of Unilever

Our Board comprises independent, Non-Executive Directors plus two Executive Directors who are members of the Unilever Leadership Executive – our CEO and our Chief Finance Officer.

Our Board is a diverse one in terms of gender, ethnicity and nationality. Members have experience that includes wide-ranging board and leadership expertise as well as specific skills such as understanding of geopolitics, purposeful business, sustainability, finance, the consumer goods industry, science and technology and digital.

The Board has ultimate responsibility for reviewing, monitoring and guiding the strategy of Unilever, as well as its conduct. Our Board members provide constructive challenge, strategic guidance and specialist advice, bringing their diverse experience to our discussions and decision-making. The Chair leads the Board and is responsible for its effectiveness in directing Unilever, and for ensuring the Directors are equipped with the training needed for their roles.

The Board has overall accountability for the management and guidance of risks and opportunities, including those associated with aspects of our Compass strategy, such as climate change, plastic packaging and ethical behaviour. Our CEO and Executive Board member, Hein Schumacher, is ultimately responsible for oversight of our sustainability agenda and for delivery of the Unilever Compass sustainability goals, supported by individual Unilever Leadership Executive members and guided by the Board.

Board meetings

The Board attend six scheduled meetings per year. Our Chief Legal Officer & Group Secretary (who is also a ULE member) attends each meeting to support the Board. In 2022, there were an additional five meetings convened to discuss strategic and transactional matters.

Across 2022, the Board reviewed and discussed a number of topics in relation to sustainability, including the Compass strategy and performance, evolving sustainability regulatory reporting requirements and performance against other non-financial sustainability KPIs.

It approved the Modern Slavery Act Statement and 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.

The Board, supported by the Audit Committee, review the assessment of risks, internal controls and disclosure controls and procedures in operation within Unilever annually. They also consider the effectiveness of any remedial actions taken. In 2022, the scenarios modelled looked at the potential impact of a contamination issue with one brand, resulting in temporary closure of three of our largest factories; geopolitical tensions leading to a major global incident, affecting key materials sourcing; climate change-related flooding and significant water shortages; and a cyber attack which causes a temporary shutdown of systems.

Another important focus in 2022 was climate. Our Climate Transition Action Plan (CTAP) was reviewed by the Board’s Corporate Responsibility Committee at the end of 2020, prior to endorsement by the Board in March 2021. In May 2021, the CTAP was put to shareholders for an advisory vote at our AGM, with over 99% of shareholders voting in favour and so providing a clear mandate to progress our ambitious climate agenda. We published our second report of progress on the CTAP in our 2022 Annual Report, alongside our fifth Task Force on Climate-related Financial Disclosures statement.

Board engagement with stakeholders

Under Section 172 of the UK Companies Act 2006, our Board of Directors must act in the way that they consider, in good faith, would be most likely to promote the success of Unilever. In doing so, they must have regard to stakeholders.

Engagement with employees is one of the ways we ensure our Board is in touch with our business. The Board has agreed that all Non-Executive Directors should take part in this engagement, thereby creating a collective responsibility for bringing employee views into Board discussions.

Board training

The Board Chair is responsible for ensuring members are equipped with the training needed to carry out their duties and all Directors receive a detailed induction on joining the Board. The Chair makes sure 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.

Find out more

More detail on the role of the Board is included in the Governance of Unilever (PDF 770.39 KB). The Board’s role in risk management is covered in our Annual Report. The corporate governance section of our Annual Report and website also provide additional detail on our governance, including biographies of Board members.

Board Committees

The Board is supported by four Board Committees which play a critical role in the governance and oversight of our sustainability commitments.

Each of the Committees is chaired by one of our Non-Executive Directors and has a clear remit, as set out in The Governance of Unilever (PDF 770.39 KB). We publish details of the Committees’ discussions during the year in our Annual Report. After each meeting, Committee Chairs provide feedback on their discussions to the full Board, thereby keeping all Directors informed of progress. Find out more about the role of each Committee in relation to sustainability below.

Corporate Responsibility Committee

Compensation Committee

Our Sustainability Progress Index

We’ve built sustainability into our long-term share incentive plan - our Performance Share Plan (PSP). Our global management population is eligible for the PSP: this group spans people from the first rung of management (which we call Work Level 2) up to our most senior work levels, including our CEO. The PSP is a key part of our Remuneration Policy as it aligns our employees’ interests with those of shareholders by focusing on the sustained delivery of high-performance results over the long-term.

PSP performance measures are strategically aligned with our business: 75% of the PSP focuses on financial performance measures while 25% is assessed on our progress on sustainability via the Sustainability Progress Index. We’ve integrated sustainability KPIs into our long-term incentive plan since 2017.

The Sustainability Progress Index is reviewed by two of our Board Committees each year.

Assessing the Sustainability Progress Index

Below is a summary of how we assess our Sustainability Progress Index each year. See our Annual Report for an explanation of the Performance Share Plan.

• Eight sustainability KPIs

  As of 2022, the Sustainability Progress Index comprises eight key performance indicators (KPIs), representing the sustainability pillars of the Unilever Compass.

  Each of the KPIs is equally weighted. They have specific annual KPIs that are fixed for three years. These enable the meaningful evaluation of progress against the overarching mid- to long-term Unilever Compass KPI.

• Assessed by our Board committees

  To determine the Sustainability Progress Index, the Corporate Responsibility Committee and the Compensation Committee annually review a detailed quantitative and qualitative update on performance against each KPI.

  They also consider our overall sustainability performance across the strategic actions of the Unilever Compass.

• Shares awarded based on performance

  This information is then used to recommend an annual performance outcome in the range of 0–200%.

  Annual Sustainability Progress Index outcomes are averaged over a three-year period, with the award – in the form of conditional shares – vesting at the end of the three-year cycle. Executive Directors are required to hold these shares for an additional period of two years after vesting.

Audit Committee

Nominating and Corporate Governance Committee

Executive management

We have defined clear roles and responsibilities for the executive management team of Unilever – called the Unilever Leadership Executive (ULE) – as set out in The Governance of Unilever (PDF 770.39 KB).

The Unilever Leadership Executive is responsible for driving our Unilever Compass strategy, working in tandem with our Board to promote the success of the business.

The role of the Unilever Leadership Executive

The Board delegate responsibility for the day-to-day operational leadership of the business including strategy, monitoring of performance and policy to our CEO, while financial strategy is delegated to the CEO and Chief Financial Officer (CFO).

Meetings

ULE meetings are held regularly, with other leaders from across the business attending as required. Progress on the Unilever Compass overall is tracked in quarterly meetings, with specific Compass topics discussed throughout the year, particularly when new strategies need to be agreed or resources allocated.

The ULE takes active responsibility for focusing on the principal areas of risk to Unilever, including any emerging areas of risk, and feeding findings into the Board. These risk areas include environmental, social and governance matters, as identified in our Principal Risks reporting in our Annual Report.

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 the Business Operations Sustainability Steering Committee and the Climate and Nature Investment Committee.

Embedding sustainability into every part of our business

We rely on experts across our business to help us drive better sustainability practices across our operations and value chain. In many cases we have specialist teams within functions whose role it is to promote good practice. For instance, we have dedicated sustainability teams in Finance, R&D, Customer Development, Supply Chain and Business Operations. Many more people have sustainability as a key part of their job.

Our Global Sustainability Team, led by our Chief Sustainability Officer, supports our Unilever-wide sustainability agenda to deliver our Unilever Compass goals. They also drive systemic change across markets through advocacy and partnerships and define innovative social business models for sustainable growth. The team is responsible for co-ordinating quarterly progress reporting on the sustainability commitments in the Unilever Compass to the ULE.

We also have a number of specialist groups who work in tandem with our Global Sustainability Team and provide input on the sustainability elements of the Unilever Compass to support the ULE, our Business Groups and the markets who put our strategy into action.

For example, our Global Diversity Board drives our agenda on equity, diversity and inclusion. Our Procurement Business Integrity Committee provides guidance and direction on difficult and complex situations where remediation, escalation and sanctions are required with respect to sourcing in line with our Responsible Partner Policy. And our Metrics Team defines the scope of our Unilever Compass metrics and the ensures that the methodologies that underpin our metrics are robust.

Using external stakeholder insights

We operate a multi-stakeholder business model, so building relationships with our stakeholders is crucial to our success. We draw on insights from external stakeholders as an integral part of running our business ̶ from our interactions with industry groups, policymakers or NGOs to understand how the world is changing to our consumer engagement platforms and traditional consumer research to track changing consumer sentiment, including on sustainability issues.

We’ve also put in place formal mechanisms to provide independent insights and counsel on sustainability matters.