8 October 2018

Scott Reid

8 October 2018

Good morning,

The boardroom crisis at consumer goods giant Unilever reached a head over the weekend, with several knives now out for chairman Marijn Dekkers and his chief executive Paul Polman. The duo were forced into a U-turn on Friday by announcing that the company wouldn’t be moving its legal HQ from the UK after all.

The commentariat are very much convinced that this was a failure all of Dekkers’ and Polman’s making. Phrases like “extraordinary arrogance”, “messiah complex” and “Dutch dis-courage” scattered liberally over the weekend’s business pages provide plenty evidence of that.

And it is perhaps not hard to see why, given the merits of the proposed move weren’t entirely obvious. Moving to Rotterdam would have pulled Unilever out of the FTSE 100 index where the majority of its investors are based, and forced many British institutional shareholders to sell their holdings. People have questioned the real motivation behind the mooted move, with some concluding that the company’s leadership was running to the refuge of relatively stricter Dutch takeover rules following a near-death experience with Kraft last year.

If a plan needs selling then it pays to spend time in front of the cameras selling it. ‘Persil Paul’, whose critics say is never shy of hobnobbing with world leaders to big-up his company’s commitment to sustainability, had been conspicuously absent from the leadership’s summer-long campaign to persuade investors ahead of a vote scheduled for the end of this month.

Still, the affair shows there are lessons the company’s leadership might learn as they look to rebuild relations with their investors. Firstly, some will question that if the logic in streamlining a dual-structure corporation into one unit holds fast, why not consider moving some of its Dutch holdings to London?

Secondly, if hostile takeovers are a concern, it may make sense to work with lawmakers on potential solutions to that risk. Chair of the BEIS committee, Rachel Reeves MP, has already suggested a major review could be on the cards that may include “additional safeguards” for companies wishing to fend off any threats. You would imagine that a company as important as Unilever, which is third largest on the LSE, would be offered an open ear.

So, yes, Persil Paul and co will need to clean up Unilever’s act when it comes to playing it straight with investors, but with retirement beckoning for the 62-year-old Polman, that might realistically be a job for the top of his successor’s to-do list.


A landmark study by the United Nations has suggested there is a huge risk to the global ecosystem if temperature increases exceed 1.5c by 2040. The report, by the UN Intergovernmental Panel on Climate Change, which is released today, suggests the target range could also be met with affordable and feasible solutions set out by the Paris climate change agreement.

Nicola Sturgeon has confirmed that she expects SNP MPs to vote in favour of a second Brexit referendum if a vote was forced in the House of Commons. Speaking to the BBC’s Andrew Marr as the SNP conference got underway in Glasgow yesterday, Scotland’s first minister said that she thinks SNP MPs would “undoubtedly” vote for the proposition. Polling released on the eve of conference also indicated a 50:50 split of Scottish voters in favour of independence, and that nine out of 10 SNP members are in favour of a “people’s vote”. (£)

Sandwich chain Pret A Manger is said to be investigating the death of a second customer suspected to have had an allergic reaction to its food, The Times reports. The customer is said to have died in December 2017 after eating a vegan sandwich contaminated with milk protein bought from a Pret store in Bath.

Business & Economy 

Lloyds Banking Group is to fold its £13 billion wealth management division into a new joint venture with Schroders. Ahead of an announcement later this month, Sky News reports that Lloyds will own 50.1% of the new joint venture with Schroders owning the rest. According to sources close to the companies, the transaction is intended to marry Lloyds’ distribution network with Schroders’ capabilities in technology and investment management to satisfy strategic goals set by both companies. 

Royal Bank of Scotland could drop its corporate brand name, RBS, in order to distance itself from the reputational damage it suffered from the financial crash. Its chairman, Sir Howard Davies, told The Times that the RBS name was “under review”, whilst the bank was also shifting investment into its other brands, including Natwest, Coutts and Ulster Bank.

The Sunday Times reported yesterday that Sir Douglas Flint is among two or three candidates being considered as the next chairman of Standard Life Aberdeen. Flint was chairman of HSBC until September 2017 and, if selected, would replace Sir Gerry Grimstone as chairman of SLA. Since his departure from HSBC, Flint has served as a Treasury special envoy for China’s Belt and Road initiative and currently chairs FTSE 250 intellectual property company, IP Group. (£)

Chief economist at the Bank of England, Andy Haldane, is to be made a senior government adviser on improving UK productivity. Today business secretary Greg Clark will name Haldane as the chair of a new industrial strategy council to oversee the government’s “flagship” economic policy, a group that will meet for the first time later this month. (£)


Global politics are back in the spotlight this week as Theresa May heads to Brussels for the next session of Brexit negotiations and G20 finance ministers and central bank governors gather in Bali for IMF and World Bank meetings.
May will be preceded by her Brexit secretary, Dominic Raab, and the leader of Northern Ireland’s Democratic Unionist party, Arlene Foster, who will meet with EU Brexit negotiator Michel Barnier on Tuesday. The DUP, on which May depends for her parliamentary majority, is staunchly opposed to any diversification for Northern Ireland in an eventual Brexit deal, so the meeting is seen as pivotal in softening the EU’s hard line on the Irish border to date.
On Thursday, the meeting of the IMF and World Bank is expected to focus on how the global economy can handle the increased threat of international trade frictions – the first such meeting to gauge international reaction to the US-China trade war. According to the FT, they will also consider financial stresses in emerging economies and the impact of monetary policy “normalisation” in leading economies.
In corporate news, Wall Street’s financial giants will report on third-quarter earnings including Citigroup, JPMorgan and Wells Fargo on Friday. Already Wall Street’s biggest bank by assets, JPMorgan is expected to post a 30% annual increase in profits. Lower tax charges introduced by the Trump administration earlier this year are largely behind the rise.

ICG Enterprise Trust

Intl. Economic Announcements
(07.00) Industrial Production (GER)

Dunedin Smaller Companies Inv Trust 

Trading Announcements   
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Columns of Note

Writing in yesterday’s Sunday Times, Kevin Pringle says that the SNP should focus on securing a parliamentary majority in 2021 as the surest means of delivering another referendum on Scottish independence. Contrary to the popular wisdom, which suggests that Nicola Sturgeon’s premature call for a second referendum following the Brexit vote led to the party’s loss of seats at 2017 UK General Election, Pringle argues that a campaign heavily focused on independence could lead to a higher turnout among SNP voters, who largely stayed at home in 2017.

Ben Marlow comments in the Telegraph that Paul Polman should have launched a much more high-profile defence of his leadership’s plans to relocate Unilever’s legal HQ from the UK. Instead of tweeting last week to broadcast his attendance at a UN annual general meeting in New York, Marlow suggests the chief executive should have shown he was tuned into his investors’ concerns. With Polman due to step down during this year, Marlow asks whether Unilever’s chairman might also be shown the door.

Did you know? 

In 2002, Steven Spielberg completed his college education when he received a bachelor's degree in film and electronic arts from California State University. To demonstrate "filmmaking proficiency", he submitted Schindler's List. 

Parliamentary highlights

House of Commons
In recess until 9 October.

House of Lords
In recess until 9 October.
Scottish Parliament
In recess until 23 October
House of Commons
Oral questions
Justice (including Topical Questions)
Ten Minute Rule Motion
Assaults on Retail Workers (Offences) – Alex Norris
Backbench Business
General debate on baby loss awareness week – Antoinette Sandbach
General debate on children’s social care in England – Tim Loughton
Reforming the business rates system for small retail businesses – Sir Geoffrey Clifton-Brown

House of Lords
Oral questions
Implementing the forthcoming National Accident Prevention Strategy - Lord Jordan
Government plans for the UK Voluntary National Review on the UN Global Goals for Sustainable Development - Lord McConnell of Glenscorrodale
Proportion of goods sorted for recycling by households in England eventually ending up in landfill - Baroness Neville-Rolfe
NHS funding for treatment of people with type 2 diabetes and management of their increased risk of developing cancer - Lord Morris of Aberavon
Counter-Terrorism and Border Security Bill - Second reading - Baroness Williams of Trafford