“A focus on ESG and sustainability doesn’t necessarily result in better returns but when you look at the portfolio of Unilever’s refreshment business, sales of healthy products are growing faster,” Browne said in an interview.

Unilever has spent the first weeks of 2022 angering investors, wiping almost 7% off its share price, equivalent to $9.4 billion in lost market value. Its 50 billion-pound ($68 billion) offer for GlaxoSmithKline’s consumer health unit was judged a blatant misstep by the market, which was still digesting the public dressing down the company got from Terry Smith. The outspoken 68-year-old shareholder accused Unilever of having “lost the plot” by focusing too much on positioning itself as a champion of sustainability.

Sugar, Calories

The investor group behind the campaign to force Unilever to step up its focus on healthy food said regulatory scrutiny and government policy targeting products high in sugar and calories posed a risk to the company’s business.

Any regulatory scrutiny of unhealthy products would materially impact Unilever’s profit-making ability, said Ignacio Vazquez, a senior manager at ShareAction, the U.K. nonprofit that helped coordinate the filing. He said the company’s failure to take steps to ensure its products are healthy would leave it exposed to environmental, social and governance investing risks.

“The rapid growth of regulation means that health is a critical ESG issue presenting a real financial threat to its business,” Vazquez said.

Unilever’s Foods and Refreshments’ unit, which includes high-sugar products like Magnum ice-cream and Ben & Jerry’s, is a key driver of revenue at the company. It currently generates 19.1 billion pounds in sales annually, or roughly 40% of the group’s total sales, a statement released by the investor group said.

Unilever said it is committed to reducing sugar, salt and calories in its products. “We welcome the constructive dialogue we’ve had with ShareAction and share their belief in the importance of having a long-term strategy for nutrition and health, and publishing targets,” the company said in a statement to Bloomberg. Unilever also said it had a “different perspective” on the metrics used by ShareAction.

The Access to Nutrition Initiative, a benchmarking organization for food companies, found last year that less than a fifth of Unilever’s sales of food and drinks were derived from healthy products. By comparison, such products made up 60% of sales at Danone SA and 40% at Nestle SA, it said.

After taking the helm in 2019, Unilever’s Chief Executive Officer Alan Jope said he wanted every brand that the company owned to do more than just deliver profits. He said he also wanted its brands to have a broader positive impact on society, and that he was prepared to sell off any that didn’t.