Good morning.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
In the last decade, Paul Polman, CEO of Unilever, has become the poster boy for responsible capitalism. The soft-spoken Dutchman is the most adamant of any big company CEO I know in insisting he runs his company for the good of society, not just shareholders. The company got its start 130 years ago, peddling soap as an answer to the rampant epidemics and deadly infections of Victorian England. Today, he is fighting global warming and ending childhood malnutrition. The company’s “Sustainable Living Plan” includes a dizzying array of 50 goals, ranging from stopping nonhazardous waste going to landfills to halving water waste in its factories.
The question is: Can he run his business and save the world at the same time? When Fortune’s Vivienne Walt asked him a version of that question, he responded: “To me it is the same. I don’t separate that. I think it is an integral part of the way we run our business.”
Polman’s approach may be an extreme among big companies, but I find more and more CEOs are moving in his direction. The hundred who joined Fortune at the Vatican last year were certainly struggling with how to increase their contributions to solving social problems. So, too, were the 30 who came to our similarly-themed dinner in Davos. And Fortune’s annual Change the World list highlights companies that have taken this approach, and made measurable progress in the process. Their efforts may reflect a complex mix of motivations—an inherent desire to do good, a need to inspire millennial employees, an effort to win socially-conscious consumers, or fear of an existential threat heading their way from an angry populace. But whatever the reason, the desire of corporate leaders to demonstrate their ability to do good in the world seems clearly on the rise.
What’s not clear, however, is whether shareholders have caught up. Unilever’s were willing to tolerate Polman’s missionary zeal when the company was doing well. But in the last two years, the company’s stock has slipped while the S&P has soared, and they are now talking about his successor. “A minority of investors I speak to give two hoots about Unilever’s Sustainable Living Plan,” says Jefferies analyst Martin Deboo.
Walt’s fascinating Polman profile is featured in our March issue, but you can read it online now, here.
Meanwhile, count Accenture among the companies vowing to increase U.S. jobs in the age of Trump. U.S. CEO Julie Sweet visited the Fortune offices yesterday and told me the company is creating 10 new “innovation hubs” in cities around the U.S., adding 15,000 jobs in the process. It’s also investing $1.4 billion in training to ensure its people have “leading-edge capabilities.” Accenture has been a leader in business outsourcing, but says the new hubs will enable it to work with clients to create business models that take advantage of the latest technologies, and also keep workers closer to home. You can read more here, and see a video of Sweet here.
More news below. Enjoy the weekend.
Top News
• When More Than Just the Battery Explodes
The heir apparent to the CEO’s seat at Samsung Electronics, vice-chairman Lee Jae-yong, has been arrested for bribery, embezzlement, and perjury. It was the second bite at the chaebol for Korean prosecutors, who suspect him of bribing Choi Soon-sil, the friend of now-impeached President Park Geun-hye. The alleged bribes were to secure approval for a controversial merger of two Samsung units in 2015 (one that activist investor Elliott Management argued destroyed value in order to defend the Lee family’s control). A court rejected a request for an arrest warrant for a second Samsung executive.
• AT&T Responds in Price War
AT&T dropped its requirement that customers subscribe to its DirecTV service to qualify for its unlimited data plan. The move is a response to T-Mobile and Verizon’s actions over the last week, and reflects how the carriers have come to terms with exploding demand for network capacity since the streaming phenomenon overwhelmed them five years ago. However, demand growth doesn’t look to be slowing down any time soon, so network constraints may reappear before too long. When they do, the carriers’ response will be the key issue for an FCC reconstituted under a more hands-off administration and Congress. Fortune
• Candidate Trump Rails and Rallies
President Donald Trump returned to the incendiary style of his successful campaign in an 80-minute press conference. The impromptu event was an effort to wrest back control of the narrative of his presidency from media he repeatedly taunted as dishonest and biased. He appeared unconcerned at undercutting his credibility with a needless falsehood about the margin of his victory in November. Trump said he would issue a new, tailored executive order on immigration to replace his initial one, and insisted that National Security Adviser Michael Flynn had had no improper contacts with Russian officials before inauguration day. Separately Thursday, Vice Admiral Robert Harward declined Trump’s offer to replace Flynn. Fortune
• GM’s Withdrawal From Europe Stokes Political Fires
“It’s your problem now. We’re putting America first,” seems to be the main takeaway that governments have from Mary Barra’s decision to talk to Peugeot about selling its European division. Rightly so—Europe still makes too many cars, and too many unwanted compacts and sedans in particular. As a result, the governments of Germany and the U.K. are urgently lobbying PSA (and its co-biggest shareholder, the French government) to spare them the pain of the likely job cuts. The U.K. plants look particularly vulnerable, given the acute, supply-chain driven uncertainty that Brexit is causing, and given that looser labor laws make cutting jobs in England the path of least resistance in any case. Fortune
Around the Water Cooler
• No Quick IPO for Uber
Uber seems as far as ever from an initial public offering. However, it is offering to buy back stock from a couple of hundred company veterans who have grown tired of waiting for their cash-out, Bloomberg reported. The plan is neither entirely new nor entirely unique among startups that are, by and large, waiting longer to go public than they did in the past. The report suggests the company still has more than enough balance sheet strength to keep complete control over who owns its equity, without losing key talent. That balance may change with the outlook for the stock, of course. Snap Inc’s IPO is an example of valuations flattening out over the last year, one that may find echoes elsewhere in the sector in due course. Fortune
• Zuckerberg Defends Globalization, Needs Editor
Facebook CEO Mark Zuckerberg issued a manifesto defending globalization—the phenomenon that, after all, underpins the business model of his company. Zuckerberg advocated a role for his company in creating communities that are safe, informed, civically-engaged, and inclusive, acknowledging that it was still a work in progress whose shortcomings can sometimes work against those goals. He dwelt at length on what it is doing to address the fake news phenomenon in particular. Zuckerberg cited Abraham Lincoln, but didn't exactly internalize that the power of the Gettysburg Address comes from its brevity. All told, the chances are that if you read all 5,700 words of it, you probably weren’t the audience he really needs to convince. Fortune
• DoJ Weighs in on Whistleblower Suit vs UnitedHealth
The U.S. Justice Department has joined a whistleblower lawsuit against UnitedHealth Group that claims the country's largest health insurer and its units and affiliates overcharged Medicare hundreds of millions of dollars. The lawsuit, filed in 2011 and unsealed Thursday, alleges UnitedHealth overcharged Medicare by claiming the federal health insurance program's members nationwide were sicker than they were, according to the law firm Constantine Cannon. The lawsuit was first brought by whistleblower Benjamin Phoeling, a former UnitedHealth executive. UH said it would defend the claims “vigorously”. Fortune
• Blair Tries to Rally U.K. Remainers
Former Prime Minister Tony Blair took up the standard for the dwindling band of Britons still trying to keep their country in the EU. He’ll have a hard time: Parliament has already given Theresa May the go-ahead to start the Brexit divorce talks (probably within three weeks), not least because Blair’s Labour Party has been reduced by internal divisions to a dysfunctional shambles incapable of effective opposition. The gambit surely revolves around keeping alive the notion that the notorious “Article 50” exit clause, once invoked, can be reversed. With the cost of living starting to rise as a result of the sterling’s fall, there is a chance that the political mood may shift against Brexit over the next year. But legally, that’s a point that only the EU Court of Justice can settle. Reuters
Summaries by Geoffrey Smith Geoffrey.smith@fortune.com;
@geoffreytsmith
