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Are There Any UK PLCs Demonstrating Social Responsibility

Dec 27, 2023 | Investors

To be socially responsible is to operate transparently, treat employees fairly, support local communities, and minimize their environmental footprint. This holistic approach seeks to strike a balance between economic success and contributing to the overall advancement of society, reflecting a commitment to ethical principles, sustainability, and a positive societal impact. No company does this to perfection. However, there are some that demonstrate social responsibility more than others.

Why should Public Limited Companies care about social responsibility? The answer is Gen Z and Millennial investors. These investors are increasingly drawn to companies that not only deliver financial gains but also demonstrate a clear commitment to tackling global injustices. Here in the United Kingdom, some public limited companies (PLCs) are demonstrating corporate social responsibility to a decent standard, setting an example for others to follow.

The pessimist will say companies are making this ethical shift purely out of self-interest, as it makes them attractive investment opportunities for Millennials and Gen Z investors. The optimist, on the other hand, will say if PLCs grow and continue this trajectory, we can save the planet and alleviate global poverty. 

In this article, we explore three companies trending in the right direction, not perfect as we will see but are making positive steps.

Unilever PLC

Unilever is a multinational consumer goods company which sells well-known brands such as Dove, Vaseline, and Hellman’s Mayonnaise. Unilever has consistently been at the forefront of sustainable and ethical business practices. In 2010, when former CEO Paul Polman introduced its now-defunct Sustainable Living Plan, it was a pioneering strategy, the first of its kind, to recognise environmental issues as an indicator for business performance. Unilever has ambitious aims to improve the health and well-being of more than a billion people, reduce environmental impact, and enhance livelihoods across its value chain. Unilever has embedded sustainability into how it evaluates performance and although they have done great work so far, CEO Hein Schumacher is not satisfied. ‘We have too many long-term commitments that failed to make sufficient short-term impact, and the latter is what the world really needs right now’ Schumacher says.

However, despite the positive steps, Unilever need to ensure they stick to their pledges. Unilever has now positioned itself as a global leader on sustainability. A recent Greenpeace report has found that Unilever is on track to sell 53bn non-reusable sachets containing anything from sauces to shampoo in 2023, breaking its commitment to switch away from single-use plastic and that Unilever’s pledge to halve its use of virgin plastic by 2025 is off tack by nearly a decade.

National Grid PLC

National Grid is the UK’s electricity and gas utility company. Although the company runs energy networks in the UK, it generates a significant part of its revenue from activities in the US. National Grid have demonstrated a clear commitment to ethical and sustainable business practices. As the company plays a pivotal role in providing essential energy services, it has embraced the responsibility of leading the way towards a cleaner and greener energy future. 

Earlier this year, National Grid set out priority areas to drive their net zero transition and urged the Government to act swiftly in passing legislation to speed the energy transition; CEO John Pettigrew said the Government must act with ‘boldness and pace.’ The National Grid has set ambitious targets for reducing carbon emissions, investing in renewable energy infrastructure, and promoting energy efficiency. For investors looking for a company with environmental stewardship and sustainable energy goals, National Grid is well-positioned to capitalize on the global shift towards cleaner and more responsible energy solutions.

Despite the positive work of the National Grid to decarbonize, there remains huge questions. National Grid has been accused of decade long delays in connecting low-carbon projects to the electricity grid. Ofgem’s chief executive Jonathan Brearley described this as ‘unacceptable’ as statistics showed more than half of green power projects in the queue for transmission face waits of more than five years to be connected to the grid.

Diageo PLC

Diageo is a global leader in alcoholic beverages with some of the world’s oldest and loved brands such as Guinness, Captain Morgan Rum, and Tequila Don Julio. With over 2,800 employees and 132 sites, Diageo is a global giant. Diageo has made significant strides in embedding ethical and sustainable practices into its business operations. The company’s commitment to responsible drinking, environmental sustainability, and social impact sets it apart in the beverage industry.

For Diageo, long-term success and stewardship of the environment go hand in hand, with an integrated approach to sustainability focusing on supporting the climate, vulnerable biodiversity and reducing water waste. Diageo actively promotes responsible marketing practices, supports community development initiatives, emphasizes water efficiency, waste reduction and drinking alcohol responsibly. Investors looking for a company that has a strong commitment to social and environmental responsibility can find an appealing opportunity in Diageo.

Yet despite this optimism, it was only in 2015 when Diageo’s own annual report revealed that it failed seven of its eight main environmental goals. Diageo’s failure was an example of why people distrust corporate targets. If Diageo is to gain credibility on its targets and for people to see them as meaningful substantive targets, they need to ensure they meet them.

Conclusion

Unilever, National Grid and Diageo have all been ambitious in their efforts to decarbonize and sustainability targets and attempts to demonstrate social responsibility. This is a breath of fresh air and sets an example for many to follow. However, it is important to hold these companies accountable to their own targets and ensure they are on track to deliver. 

Investing in companies with strong ethical practices is not just a choice for investors who prioritize values, it is a strategic decision that aligns with the growing trend towards sustainable and responsible investing. Recent research underscores a significant shift in the landscape of individual investors in the United Kingdom. The data reveals a noteworthy trend: most individual retail investors are now millennials and Gen Z. Having grown up in the age of digital connectivity which has bred a greater sense of responsibility for global injustices, this demographic prioritises not only financial gains but also social impact. As ethical investing gains momentum, these companies are leaders, illustrating that ethical practices and financial success can go hand in hand.

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