Unilever partners with PwC for consulting, M&A, sustainability, HR and cyber

16 April 2018 Consultancy.uk

British-Dutch transnational consumer goods company Unilever hired the consulting and corporate finance arm of PwC on several occasions for several projects, last year. The two firms have a long history of working together, stretching across more than three decades.

Unilever is one of the world’s largest players in the fast moving consumer goods (FMCG) market, with revenues of €53.72 billion in 2017. However, while the firm recorded a solid all-round financial performance last year, anxiety surrounding the approaching culmination of Brexit negotiations in 2019 means that the transnational organisation is keen to plan for a future on mainland Europe.

In the first quarter of 2018, Unilever consequently announced that the branch of its headquarters in the UK would be moving to the Netherlands. As a British-Dutch operation, the entity had previously split its headquarters between Rotterdam and London – an arrangement maintained since Unilever’s founding in 1930. Now, however, with the potential tightening of borders making talent acquisition more of a challenge for its UK-based office, Unilever has opted to unify its bases into a single headquarters unit in the Netherlands, and announced that it will move its second base in the UK to the Zuidas business district of Dutch capital, Amsterdam.

Unilever consulting partner PwC looks to benefit from headquarters move

PwC, who have a long-standing business relationship with Unilever will surely hope to be among the beneficiaries of the move. According to a recent statement by PwC’s Chief Economist in the Netherlands, Jan Willem Velthuijsen, the set-up of any headquarters operation in the country sparked extra business for the financial services industry.

Velthuijsen also said personal contacts and networking were major factors in building up consultancy services. He added, “People know one another from university or meet at networking events. Companies needing a lawyer usually select one near their own headquarters.  And the decision-makers  are found at headquarters. They hire the consultants and lawyers.”

PwC initially became one of Unilever’s preferred suppliers for consulting work in 2014. The move came one year after Unilever had opted to end a 26-year relationship with PwC as auditor, after Britain’s Financial Reporting Council (FRC) prompted corporations to change their auditor at least every decade, following the 2008 financial crisis, which was to some extent blamed on cosy long-term auditing relationships. The Big Four’s grip on auditing gigs with FTSE 350 companies currently stands at 98%, and while EY did not bid for the contract, as they were already a strategic supplier to Unilever, the tender was eventually won by KPMG.

PwC may have lost out on a long-term auditing contract, meanwhile, but the firm benefitted from a new-found freedom to take up a larger consulting role with its client, demonstrating how losing an audit contract can actually be good news for other side of Big Four business. In 2017, this strong relationship continued with PwC providing support in general consultancy, such as management consulting and organisational advice.

2017 work

While the total bill on consulting spent by Unilever is likely to sit in the order of millions, suggesting there was plenty of work to be had for PwC last year, it is unclear precisely how much Unilever spent on PwC consulting services, or on which service lines Unilever most sought PwC’s assistance. For example, while Unilever likely leveraged PwC for some executive remuneration work, the FMCG company only disclosed its total spend on that area, £59,400 – approximately €67,000 – in its 2017 financial reports.

Another area that is likely to have seen action on behalf of Unilever is the corporate finance arm of PwC, which likely supported the client with M&A work. Unilever has a busy year for acquisitions in 2017, hovering up nine firms including American tea-makers Tazo, Australian firm Weis Frozen foods, and Bristol-based Pukka Herbs.

Beyond this, the hot-topic of cybersecurity is likely to have figured heavily, with PwC’s global cybersecurity revenue sitting at around $2 billion. Unilever is also working to make itself more sustainable in future – with sustainability being a line of work that many consulting firms are heavily engaged in. Launched in 2010, the group is continuing to push to meet new targets of the Unilever Sustainable Living Plan, a blueprint for achieving growth, whilst negating Unilever’s environmental footprint and increasing positive social impact. The Plan consists of wide-stretching goals, including everything from the sourcing of raw materials, to how consumers use their brands.



Private equity firms ramp up sustainability focus

19 April 2019 Consultancy.uk

In line with business leaders across the industrial gamut, private equity firms are increasingly on board with sustainability projects. According to a new study, the investment arms for major funds are implementing a number of strategies aimed at supporting sustainable economic development in line with global goals.

While the business world has finally begun to acknowledge the danger of climate change, effective action plans remain difficult to achieve. The Paris Agreement has stipulated a clear target for the decades leading up to 2100, although massively reducing emissions while not crashing the economy could be a tall order.

Businesses that are able to acquire capital can use it to boost productivity and output, thereby creating a virtuous cycle of development. However, some businesses are better able to utilise resources than others, both in terms of their relative productivity, as well as the value of the respective outcomes relative to costs (including environmental harms). Financing can therefore provide an avenue to select businesses that are aligned with various global sustainability goals, while shunning those that drive little or unsustainable social value creation.

Top moves made by investment arms towards responsible investment

Profit has for the longest time been the central criterion for investment decisions. Yet profit at any cost is increasingly seen as creating considerable social harms, while often delivering only marginal value. As a result, the private equity sector, which was initially sluggish to change its ways with regards to sustainability, has started to see the topic as an opportunity as much as a challenge.

A new study from PwC has explored how far sustainability goals have become part of the wider investment strategy for private equity (PE) firms. The report is based on analysis of a survey of 162 firms and includes responses from 145 general partners and 38 limited partners.

Maturing sustainability

Top-line results show that responsible investment has become an issue for 91% of respondents. For 81% of respondents, ESG (environmental, social, and corporate governance) was a board matter at least once a year, while 60% said that they already have implemented measures to address human rights issues. Two-thirds have identified and prioritised Sustainable Development goals that are relevant to their investment segments.

Change in concern and action on climate-related topics over time

While there is increasing concern around key issues, from human rights protections to environmental and biodiversity protection, the study finds there are mismatches between concern and action. For instance, concern among investment vehicles around climate change has increased since 2016.

In terms of risks to the PE firm itself, concern has increased from 46% of respondents in 2016 to 58% in the latest survey. However, the number who have taken action remains far below those concerned, at 9% in 2016 and 20% in 2019. Given the relatively broader scope of investment opportunities, portfolio companies face higher risks – and more concern – from PE professionals, at 83% in the latest survey. However, action is less than half of those concerned, at 31%.

Changing climate

In terms of the climate footprint of the portfolio companies, 77% of respondents state concern in the latest survey. 28% of respondents are taking action through the implementation of measures to mitigate their concerns.

Concern and action taken on ESG issues

In terms of the more pressing issues for emerging responsible investment or ESG issues, governance concern of portfolio companies comes in at number one (92% of respondents), while 60% have taken action on it. Firms have focused on improving awareness – setting up policies and a range of training modules for their professionals around responsible investment decision making. Cybersecurity takes the number two spot, with 89% concerned and 41% implementing strategies to mitigate risks.

Climate risks take the number three spot in terms of concern for portfolio companies (83%), but falls behind in terms of action (31%). Health and safety track records are a key concern at 80% of businesses, with 49% implementing action. Gender imbalance within PE firms themselves ranks at 78%, which is being dealt with by 31%. A recent survey from Oliver Wyman showed that there is gender balance at 13% of GP teams in developed countries.

Biodiversity is also an increasingly pertinent topic, with risks from pollution and chemical use increasingly driving wider systematic risks around environmental outcomes. It featured at number eight on the ranking of most likely global risks for the coming decade, with its impact at number six. As it stands, biodiversity is noted as an issue at 57% of firms, with 15% implementing action.