Unilever PLC (ULVR) Earnings Call Transcript & Summary

Welcome to the Annual General Meeting of Unilever PLC for 2024. I'm Ian Meakins, Chairman of the Board, and we welcome those who are watching the meeting via the webcast. Thank you for joining us online. And thank you to everyone here in the room at the Hilton London Bankside for making the time to be with us today. Before we begin, I would ask that those in the room to make yourself familiar with today's security and safety information, which is to be found at the back of your lanyard. Please ensure that your mobile phones are turned off or on silent. And I would also note that to protect the privacy of everyone participating and attending today, private photography or recording of the AGM is not permitted and we will ask anyone not abiding by this to stop doing so or they may be asked to leave the room. Let me briefly go through today's agenda. The formal elements of today's proceedings are set out on pages 5 and 6 of the notice of the meeting. We will open the poll for those resolutions after you've heard from myself and Hein. Now let me make some introductions. On my right, we have Hein Schumacher, our Chief Executive Officer; and Fernando Fernandez, our Chief Financial Officer. On my left, we have Maria Varsellona, our Chief Legal Officer and Group Secretary; and Andre Young, Vice President, Senior Independent Director and also Chair of the Compensation Committee. Adrian Hennah, Susan Kilsby, Ruby Lu and Judith McKenna, all nonexecutive directors are also in the audience. And I'm delighted to welcome Judith McKenna, who some of you will have met over refreshments before the AGM started, and is standing for election for the first time. For my part, I am delighted to be speaking to you for the first time as your Chair, but also to be here as part of a new team. I took over as chair on the 1st of December 2023. Hein, who I will hand over to in a moment, was appointed CEO from the 1st of July last year and Fernando took over as CFO on the 1st of January. There have also been a number of other changes to the Board and the executive team, which we will touch on later. So a largely new team at the top of the business. But we all start with the same understanding, namely that Unilever's performance over a number of years has not lived up to its potential. We see this reflected in the market's view of the company and also the disappointing share performance over the past 5 years. We are determined to improve our poor performance. And over the next 25 minutes or so, Hein and I will outline for you the measures that we've already set in train and while we are confident we will turn around our performance. But first, let me provide a few reflections on last year's results. Overall, performance was variable. Underlying sales growth was up 7%. And although this was driven largely by price increases, in response to inflation, the year did see a small but welcome uptick in volume growth. Turnover for the year was just short of EUR 60 billion, operating profit margin was up 60 basis points to 16.7% and cash generation was strong at EUR 7.1 billion, enabling us to return EUR 5.9 billion to shareholders in a combination of dividends and share buybacks. Unfortunately, our results were not as good as our peer group and during 2023, we lost competitiveness. We lost market share in some key brands and geographies. This is not acceptable, and we are taking urgent steps to address it. However, our results have started to improve with improved volume growth in quarter 1, 2024. We introduced the 10-point Growth Action Plan or GAP last October, focused on improving the quality of our execution. Hein will take you through the key elements of the plan in a moment. To accelerate the GAP, we have also announced plans now to simplify our portfolio through the separation of the ice cream business. This is a significant move and one we are convinced is in the best long-term interest for shareholders of both Ice Cream and Unilever. Ice Cream is a strong business with a turnover last year of nearly EUR 8 billion. It operates in attractive category and with 5 of the top 10 global brands. However, its business model in terms of supply chain, capital intensity, seasonality and route to market is very different to other parts of Unilever. Separation will give it the freedom to act in support of its own distinct needs and interests. For Unilever, separation will leave us with a simpler business. In the future, we will operate across 4 business groups, all having similar business models, beauty and well-being, personal care, home care and nutrition. We expect the separation of ice cream to be complete by the end of 2025. While a demerger is the most likely route in the interest of meeting stakeholders' expectations and maximizing shareholder returns, we will, of course, consider other options. At the same time, we have identified a need and seen an opportunity to accelerate the GAP program through a major efficiency drive. As well as simplifying the organization further, this will yield savings of around EUR 800 million, more than enough to offset the operational costs of separating Ice Cream. Taken together, we are confident our plans will be well executed and will deliver faster growth, market share improvement and higher margins. They will build on Unilever's existing strengths and create value for all stakeholders. It is important to note that in the midst of all the changes, we remain steadfast in our commitment to becoming a more sustainable business. An important part of the GAP program is to accelerate our sustainability agenda by sharpening the focus and improving the execution of our plans in 4 critical areas that of nature, plastics, livelihoods and of course, climate. We believe our commitments are right for our business. On climate, we are committed to significant improvements across Scope 1, 2 and 3 over the coming years. And to that end, we are asking for your support today for our latest Climate Transition Action Plan, or CTAP, published at the beginning of March. You will recall that Unilever was one of the first companies to put a plan for cutting emissions to a shareholder vote that was in 2021. We said then that we would update the CTAP every 3 years. The plan we are putting forward today sets out clearer goals for cutting emissions as well as providing further detail on how we plan to get there. The reaction to the plan so far from our shareholders has been positive. We believe we have made good progress on sustainability issues over the recent years relative to our peer group, and we are fully committed to making further progress in the years ahead. Hein will say more about our plans in a moment. Finally, let me say a word about the Board. We are all very committed to providing the right level of support and challenge to Hein and his executive team to help ensure a significant step-up in Unilever's long-term performance starting in 2024. We are also committed to maintaining a very high level of corporate governance in everything we do [Audio Gap].

[Audio Gap] of where this is working in practice. So for example, Vaseline Gluta-Hya and this is a skincare product that uses patented technology GlutaGlow, clinically proven to be 10x more powerful than vitamin C in boosting skin brightness or just launched last week here in the U.K., a personal 15-minute Wonder Wash, our first detergent to excel in very short washing cycles, thanks to fast-acting technology-enabled formulas, obviously also good for lower energy use and lower water use by the consumer, or Hellmann's Vegan mayo, a 100% plant-based product, which allows the growing number of vegan consumers to enjoy the great taste of mayonnaise or Hellmann's mayonnaise, or Liquid I.V. a hydration enhancer that uses a breakthrough technology to restore electrolytes that are lost to the body through heat or exercise. And this has been a very big success in the United States, and it has just been launched here in the U.K. You've probably seen the statistics that 80% of the people in the U.K. do not drink enough water. Well, with Liquid I.V., you do get that hydration. So there are some samples here today, and I recommend you to take them home and use. And these are just some of the technology-driven innovation successes that we want to replicate across our brands and across the portfolio. Now take a look at some of the strong advertising that's being used to support these and some of our other brands. [Presentation]

Good. I also want to show you a short film from our Dove team. And that's the latest in a very long-running Dove Self-Esteem Project which, for 20 years now, has been supporting changes in social attitudes towards beauty. And I think it's also a great example, by the way, where purpose which, for the right brands, is actually super important and something that we are fully committed to. So therefore, take a look at the film. [Presentation]

A very impact film, I think, and again, continuing that so important campaign that made the brand what it is today, the most important and actually the biggest brand in our portfolio. Hey, to deliver faster growth, we also need to continue to sharpen that portfolio of brands. And that means divesting businesses that no longer fit our portfolio. And we did that last year with the Elida Beauty brands and with the Suave brand in North America. But it also means strengthening our portfolio through bolt-on acquisitions. And a great example of this was our decision last year to acquire K18, which we completed in February of this year. And K18 is a premium hair care brand that harnesses advances in biotechnology to repair or restore damaged hair. And as such, it's strategically aligned to our business and a very good addition to our beauty and well-being portfolio. The second part of the GAP, or the Growth Action Plan, supports our growth agenda by making Unilever a simpler and a more productive organization, better able to focus on the things that really matter. Hence, and you heard Ian say this, when it comes to our sustainability agenda, we are focusing our efforts globally on 4 critical areas: climate, nature, plastics and improvement of livelihoods. And to be clear, we are not diluting our plans. In fact, we're doubling down in those areas that we deem of most critical and most material importance. On climate, for example, the goals that we are putting forward today as part of the Climate Transition Action Plan represent strengthening of our Scope 3 emissions value chain target. And we've made huge progress over the last year to understand and measure our Scope 3 footprint. And that is a complex and a thorough exercise that we've gone through across the breadth of our portfolio. But we now have detailed plans in place for an absolute reduction in energy and industrial emissions of 42% by 2030. We also aim for a 30% reduction in forest land and agriculture-related emissions. Those are different than the CO2 ones. So if you combine all of that, a 39% reduction overall in our Scope 3 emissions with 2021 as a base year. For Scope 1 and 2 emissions, we are continuing to set an ambitious goal of 100% reduction by 2030, and that is versus the baseline of 2015. And we have already, to date, achieved a 70% improvement. I'm very happy to say that the rigor that we have applied to this has led to our targets being externally validated by the independent SBTI, the Science-Based Targets Initiative. And the targets have therefore been welcomed by many of our stakeholders. Now under the Growth Action Plan, we have set out clear and long-term ambitions across all 4 of our priority areas, climate, but also nature, plastics and livelihoods. And importantly, we have underpinned these ambitions with stretching, measurable, but intentionally realistic goals. And I say this because on plastics, for example, I concluded that after taking a fresh look with the whole team at Unilever, that our previous 2025 virgin plastic reduction target was simply not possible in the time available. And there are too many factors that are beyond our direct control, that it includes working with governments or extended producer responsibility schemes or with retailers on refill and reuse programs, regulations around food safety and so forth. And for me, an important part of leadership is that you also acknowledge when targets are not going to be met, but then making sure that we apply the learnings and come back with realistic but still highly ambitious plans, and that is exactly what we're doing. On plastics, for example, we are aiming for a 30% reduction in virgin plastic in 2026, and 40% in 2028. We are aiming for 100% of our plastic to be reusable, recyclable or compostable by 2030 for rigid plastics and by 2035 for flexible plastic packaging. For 25% of our packaging, it will be made of recycled plastic. We're currently at 22%, 23% in 2025. And finally, we are aiming to collect more plastic than we use or sell. And this is something -- it's a practice that we have started a while ago, but we've reached that target already in one of our more important geographies, in India, for example. And by any standards, these are ambitious and aggressive targets and achieving them will require very hard work and ongoing investments. But it will also take others. As I said, it takes a whole village, governments, retailers, suppliers, NGOs and all other business partners. And of course, from our side, it requires breakthrough innovations to solve some complex issues and all this has to come together. Advocacy to drive systemic change is important. And that is why I was in Ottawa last week as part of the United Nations intergovernmental process on plastic pollution. And our company, and I'm proud of that, is one of the co-chairs of the Business Coalition of 200 companies globally pushing for a legally binding treaty to tackle this issue, including through expansion of the extended producer responsibility scheme. And we will go on arguing for the conditions in which progress can be accelerated. And in fact, this is becoming an increasingly important part of our entire sustainability strategy. And we will also go on continuously improving on our own performance, as I said, recognizing that in many areas, we do lead the industry. For example, on virgin plastic reduction, which is down by 18% since 2019, and I'm determined that we stay a leader in this area. There is no question that sustainability remains at the very heart of Unilever. Another key part of being a more focused and productive organization is that we manage our cost base more tightly and that we ensure we generate the funds that are needed to support our brands and thereby drive our growth. That is why under the Growth Action Plan, we are putting such emphasis on rebuilding our important gross margin. We've been a bit slower than others to recover from the effects of the pandemic and the post-pandemic inflation era, and that has constrained our top line as well as our bottom line performance. We now put a lot of actions in place to address this, including shifting our focus from the gross savings methodology to actually driving net productivity, so you can see it in the profit and loss account. And this will ensure that we have a much better understanding of the true impact of our costs and where these costs fall. Now there is some way to go. But as I indicated earlier, we are accelerating that gross margin progress in 2024. And certainly, the whole company is fully focused on what really needs to be done. The final set of actions under the Growth Action Plan are to sharpen our performance edge. Sharpen our performance edge in a unique Unilever culture and something that we don't want to let go of. But we did have -- we made some changes. And the first change was by putting a refreshed team in place. Nine members of the executive leadership, for example, are either new to the company or new to their roles. Secondly, we set more stretching targets for 2024. We clarified accountabilities in the organization where that was needed. And we implemented a new rewards framework across the organization, including metrics that are more closely aligned to value creation for shareholders. And together, these changes represent an important shift, I think, in the way that we think about driving performance, and they've also been widely welcomed within the business. Indeed, since arriving, I found a huge appetite among our own people to see Unilever deliver on our potential. Look, these are just some of the measures we are taking part of the Growth Action Plan, and we expect, of course, progress to build as we go through the year. That brings me finally to the very short-term performance that we announced last week, quarter 1. Although some of the benefits are already coming through, and that's a good thing. Our underlying sales growth was 4.4%, and that represented an encouraging start of the year and was somewhat ahead of market expectations. Like I said before, the power brands, the top 30 power brands were driving our growth. The growth of that set was 6.1%. Volume growth was up for the second consecutive quarter after quarter 4, now 2.2% and that is important as we see a return towards more normalized levels of inflation. It's, of course, it's early days, and it's just one quarter. But the performance in the first quarter does give us some confidence in our ability to deliver sustained volume growth as well as meet our guidance for the full year 2024, including rebuilding that gross margin. Under the Growth Action Plan, as you heard me say earlier, we are committed to doing fewer things, better and with greater impact. And we now see an opportunity to accelerate progress by applying the same principles to our portfolio and to the overall efficiency of the company. And that was very much what was behind the announcement in March, and that Ian already talked about, which was to separate our ice cream business and to launch simultaneously a major productivity program. And let me be clear, neither of these were easy decisions, and we have not gone lightly. But let me talk first about the portfolio, and there's some repetition in what you just heard earlier this morning. But we have, in fact, a great ice cream business. And it has been part of our company for a long time, rising to become the world leader in its category. However, it's a distinct business model relative to other parts of Unilever. And it's a model that relies on a supply chain and a channel structure that is geared to frozen products. It's obviously much more seasonal, and it is more capital intense in the way of operating. And therefore, we believe that as a stand-alone company, Ice Cream will have more operational and financial flexibility to do what is really right for them and to grow their own business. For Unilever, it means that we can scale and grow our brands faster by applying innovation, technology, go-to-market expertise across businesses that have more complementary operating models. And this is a significant simplification of our portfolio and one that we are convinced is in the best interest of Ice Cream as well as Unilever. In parallel to the separation of Ice Cream, we also announced the launch of a wide-ranging productivity program. And part of this is about embracing rapid advances in technology that are really reshaping whole industries. And in fact, that we believe will help us as a company to become faster and to become more efficient. But by doing that, we also have to acknowledge that we don't benchmark well when it comes to simplicity and to the speed of our decision-making. There's still quite a bit of complexity in our company and in the way that we operate, which slows us down and frankly, sometimes frustrates people. That is what we, as management, get back. So we need to get on this and implement changes. But we also need to make sure they are done in the right and in the most respectful way. And therefore, we're obviously very conscious that these proposals are likely to impact around 7,500 colleagues around the world, mostly in office-based roles. Clearly, treating these colleagues with the utmost respect and dignity, as I am sure that you would expect from Unilever, is a top priority for us. And taken together, the separation of Ice Cream and a company-wide productivity program represents a major change for us. Equally, they are vital though, if we are to accelerate progress under the Growth Action Plan and deliver that higher level of performance that you expect from us. And I believe that we can. It was a mark of confidence that, in announcing these proposals, we guided the market to a faster level of growth and to structurally higher margin once all the changes are complete. So let me come to a conclusion. Our results last year put us in the middle of the pack. This is something that we're not satisfied with and we need to improve. And we know that we can do better. To that end, we have a big agenda in front of us. No one at Unilever is in any doubt about what needs to be done. But we have a clear plan of action. We are taking difficult but also necessary decisions now to ensure that we improve the quality of our performance on a long-term and a more consistent basis. And of course, it's early days with much to do. But we believe that there are some signs of progress, including recent quarter results. We intend now to build on that progress and to do everything that we can to unlock Unilever's potential. Again, the word, I believe, is on the chart here behind you, and that should benefit all stakeholders. And in all this, we are determined -- I am determined that sustainability will remain at the heart of Unilever. Finally, I want to thank Ian and the other members of the Board, obviously, for your support. And I want to thank you, shareholders of the company, for your continuing faith in Unilever. And above all, I want to thank everyone at Unilever and the many people that we work with in our entire value chain for their incredibly hard work and their commitment and for embracing the ambitious plan that we have, embracing it with such a level of energy and conviction that I'm seeing every day. Thank you very much for listening, and back to you, Ian.

Thank you, Hein. We now move to the formal business of the meeting. The notice of meeting was sent out to shareholders and made available on our website on the 18th of March 2024. I propose that the notice convening the meeting being taken as read. The resolutions today are shown on Pages 5 and 6 of the Notice of Meeting. The notice also contains further explanations of each resolution. Resolutions 1 to 17 inclusive are proposed as ordinary resolutions and resolutions 18 to 22 inclusive are proposed as special resolutions. The resolutions cover the usual business carried out at Annual General Meetings. There are additional resolutions this year dealing with the proposed directors' remuneration policy, the updated Unilever Climate Transition Action Plan and the adoption of new Articles of Association. All of the directors before you have offered themselves for reelection or election this year as have Adrian Hennah, Susan Kilsby, Ruby Lu, Judith McKenna and Nelson Peltz. I would ask you to vote on the resolutions by way of a poll. Accordingly, let me now ask our Company Secretary, Maria Varsellona, to explain how the voting will work.

Thank you, Ian. In line with best practice, a poll will be taken on each of the resolutions set out in the notice of meeting. The poll will be administered by our registrar, Computershare. On the poll, each ordinary shareholder present at the meeting is entitled to 1 vote for every ordinary share registered in his or her name, and each proxy holder or individual representing a corporate shareholder is entitled to 1 vote for each ordinary share, which he or she represents. If you have previously launched a completed proxy form nominating Ian Meakins as the chair to vote on your behalf, and you do not wish to change your vote, then you do not need to complete a poll card. For those of you who either wish to change your proxy vote or who have not previously cast a proxy vote and wish to take part in the vote, please complete the poll card taking these steps. On the front of the poll card you were given when registering earlier today, please print and block capitals, your full name or the name of the shareholder you are representing. Please record your vote by entering a cross in either the for or against box next to each resolution on the poll card. If you want to split your vote, enter the relevant number of votes you wish to cast in the respective boxes. You can also withhold your vote by entering a cross in the withheld box. Please note that the vote withheld is not a vote in law and will not be counted in the calculation of the proportion of the votes either for or against the resolution. Please ensure that you sign the poll card at the bottom. If you are a proxy, please write the word proxy next to your signature. Any cards that are not signed will be treated as invalid. If you're voting on behalf of more than one shareholder, please complete separate poll cards for each shareholder. Should you require any assistance in completing the poll card, please let one of the stewards know, and they can direct you to a representative from Computershare, our registers, who will be pleased to help you. The poll count for the resolutions put to the meeting today will be conducted by Computershare and will be combined with the proxy vote already submitted. And now I hand back to Ian.

Thank you, Maria. I should take this opportunity to remind you that the Board is unanimously recommending that you vote in favor of the resolutions. With that, in accordance with Article 69 of the company's Articles of Association, I demand that a poll be taken in respect of each of the resolutions contained in the notice of meeting. I now propose that each of the resolutions set out in the notice of meeting and listed on the poll card is put to the meeting. You may complete your poll cards at any time. And once completed, they may be placed in either of the ballot boxes by the exit. The ballot boxes are open now and will remain in place for 15 minutes only after the close of the meeting. After those 15 minutes, the ballot box and the poll will be closed and the poll count will commence. The Computershare team will not be authorized to accept any poll card after the poll is closed. Any poll card that is not placed in the ballot box will not be valid and will not be counted. So please do not leave them on your seat unless your intention to abstain from voting on all resolutions.

We now come to the question-and-answer session. We would like to thank those who submitted questions in advance and answers to those questions have been posted on our company website. I'd now like to give shareholders here in the room the opportunity to ask questions. So let me explain the procedure we will follow for this part of the Q&A session. You will be aware that only shareholders, persons who have been appointed as proxies and individuals appointed to represent corporate shareholders are permitted to speak at this meeting. Your questions can be on the annual report and accounts or any matters relating to the business being dealt with at this meeting. A microphone will be brought to you for you to ask your question. Please speak clearly and slowly, state your name and indicator -- indicate if you are a shareholder or if you are representing a shareholder before you ask your question. As a matter of courtesy to other shareholders, please be concise and limit your questions to no more than two to give all shareholders who wish to speak the opportunity to do so. When you've asked your question, please return the microphone. We will try to answer as many questions as possible, but if we receive a number of questions on a single or related topic, then we may choose to group the questions and provide a single answer. If anyone with a disability wishes to ask a question and would like assistance, please make yourself known to the stewards and appropriate arrangements will be made. Firstly, I would like to address 3 matters, three questions that we know are important to our shareholders and have been raised in the questions submitted ahead of the AGM. The first of these is the decision to separate our Ice Cream division. Let me share with you what I can at this time, building on what Hein talked about earlier. As I said earlier, we are determined to unlock Unilever's full potential and transform it into a higher-growth, higher-margin business that will consistently deliver for all of our stakeholders through effective and accelerated implementation of the GAP. As part of this, we announced the separation of ice cream business with the aim of creating a simpler, more focused, higher-performing Unilever. As I mentioned earlier, our ice cream business is world leading with 5 of the top 10 global brands and a turnover of EUR 8 billion, but it's also a very distinct part of our portfolio, characterized by amongst other things, a frozen supply chain, a very different channel landscape, and inherently more seasonal pattern of sales and a far more capital-intensive business, we have over 3 million refrigerators in operation. This is unique to Ice Cream. Given these distinct operating characteristics, we believe that Ice Cream is more likely to thrive as a focused stand-alone business, which will be better placed to respond to the specific dynamics of its market. While a demerger of Ice Cream is the most likely separation route, all options will be considered to meet the needs of our stakeholders, including maximizing returns for our shareholders. To be clear, we have not made a decision yet as the means to which we will separate Ice Cream. And each option comes with its own implications, including impacts on the business structure, operations and the financials. The costs and operational dyssynergies relating to the separation of Ice Cream will be determined by the precise transaction structure chosen. The means of separation and capital structure for Ice Cream will be determined and enhanced in due course. And given we have not made a decision about the means of separation, we will not speculate at this stage about where the business will be listed and headquartered. With regards to the timing, as you will recognize, the work has started, but it's early days. So again, we will share further details in due course. However, I can confirm the separation is expected to be complete by the end of 2025. On shareholder returns, as I just mentioned, we will review all options to ensure we maximize returns for shareholders. And in summary, we are determined to unlock Unilever's full potential and the decision to separate the ice cream business is one that we believe will help Unilever and Ice Cream to realize their full potential. The second question is about the decisions we've taken in updating our Climate Transition Action Plan and ensuring that sustainability remains at the heart of the Unilever business strategy. Hein, could you have an attempt at this?

Thanks, Ian. And of course, I talked about it already in my speech a few minutes ago. But I mentioned that our revised sustainability strategy and the goals that we have set ourselves are building on the achievements of the Unilever Sustainable Living Plan that was commenced in 2012 or '13, I believe, and Compass strategy. Let me just give you some examples on that. Today, 1.3 billion people are reached through health and hygiene programs around the world. And we also reported 97.5% deforestation-free sourcing this year, and that is across our important commodities such as palm oil, paper, tea, soy and cocoa. And this doesn't come overnight. It's been something, as you know, that Unilever has been working on for over many years. But as I acknowledged, there are also areas that we're behind on. Such as, for example, on virgin plastic reduction. But that said, we are still leading the industry with an 18% reduction since 2019. However, as well as making great progress, I think that we have learned a lot about this topic over the years. For example, to make progress on the most material areas to our business, we also need to prioritize for transformational change. And we have identified the 4 key areas; so again, nature, climate, plastics and livelihoods with 15 important time-bound and costed goals. On climate, the new CTAP, you vote on, gives greater granularity on where our emissions exist, and I think that's important, also plans to mitigate them. For example, through reducing the greenhouse gas intensity of our chemicals. And that means finding nonfossil fuel-based feedstocks for our laundry business is important, leading to an exciting prospect of biotech alternative innovations. As I said, in sustainability work, systemic change is essential. And therefore, we will continue to work on efficacy in those areas that matter most to us. And I gave us, I think, as a good example, the work that we did last weekend with the team, I was there, but we're the team on the global plastics treaty that was being negotiated in Canada. Importantly, our revised sustainability strategy is also fully integrated in our strategic planning cycles, and that guarantees that resources are allocated with time-bound road maps to track the progress. So summing up, I can assure you that, as I said before, sustainability will always be at the heart of this company.

Thank you, Hein. The third of these questions is the measurement of market share and the move away from percentage business winning as the primary measure of competitiveness. Fernando, could you answer that?

Yes. Evolution of market share is a key performance indicator for Unilever. We measure this for around 2/3 of our portfolio globally. This business has been growing at around 6.5% for us. We don't measure or we don't communicate publicly our evolution of market share in 1/3 of the portfolio that comprises some of our fastest-growing businesses like Prestige Beauty, health and well being or food service because there are no reliable measures to really make public this kind of information. This 1/3 of the business has been growing 8%. It has been growing above the average of the company. We measure competitiveness in this 2/3 of the business at a granular level on a brand category basis at a geographical unit. And for several years, we have used the percentage of our revenue growing share as a single data to communicate publicly is a number in which we aggregate the performance of all our units. In consultation with shareholders, we concluded that these metrics have several flaws. It didn't provide the clarity that the shareholders who are expecting from us. The main shortcomings were related to the fact that it's a metric that was binary. It didn't take into account the size of the share gains and the share losses, and it didn't provide any color of performance versus market growth. We decided to change this metric from January onwards. We will measure our competitiveness evolution now through what we call turnover weighted market share change with a coverage again of around 70% of our revenue. Turnover weighted market share is the true measure of our competitiveness within the category and geographical footprint in which we operate. By the end of last year, when you look at moving annual total data for the last 12 months versus the previous 12 months, our turnover weighted share was declining around 75 basis points. 60% of this shortfall is attributable to Europe and 20% to the shift in the market in the personal care super premium market. Fixing competitiveness will take time. Our level of competitiveness is really unacceptable, and we are really improving execution to turn this around. We expect to see progress from the second half of this year onwards. And of course, the Growth Action Plan and the different metrics of the Gross Action Plan, the different measures that we are taking inside the Growth Action Plan, we believe it will be a key driver for this kind of turnaround.

Thank you, Fernando. As I mentioned, we're going to take questions on a topic by topic basis, starting with matters covered by our 2023 annual report and accounts, including questions about our performance and our strategy, followed then by remuneration matters; thirdly, climate and sustainability matters, including our climate transition action plan; election -- reelection of directors and our auditors; then share capital and any other matters. I would therefore first like to invite those with a question relating to matters covering our 2023 annual report and accounts, our performance and strategy. Are there any questions? Go down to one -- that's it.

I represent corporate shareholders. My name is Claire Ahlborn. I work for Robeco. And today, I speak on behalf of a couple of Dutch institutional investors, including Van Lanschot Kempen Investment Management and Aegon Investment Management, [indiscernible] Investment Management and APG, who are representing their clients, ABP, bpfBOUW, SPW and PPF. So first of all, I wanted to thank you, Unilever, for the open dialogue with minority shareholders over the last year, having provided us with an opportunity to share concerns and suggestions in a very constructive discussion, especially through the company's leadership step changes and strategy changes. We welcome the added focus the new leadership has brought to the company and believe that this enhanced attention to execution will help Unilever to deliver on its strategic priorities. However, while thus far, the narrative has been that performance will go hand in hand with sustainability, we are concerned that instead, it might come at the cost of it. For instance, we noted across the 4 areas of sustainability that you just mentioned, where you promised an enhanced approach, climate, nature, plastics, livelihoods, ambition levels have decreased rather than increased. The target on virgin plastics reduction has nearly halved from reducing 50% to 30%, while the long-term target on living wages covering 100% of suppliers have been -- has simply been removed. Meanwhile, the overall weighting of sustainability across the executive remuneration also has decreased significantly. If the company decides to apply an enhanced focus, we expect that ambition in these focus areas is enhanced rather than lowered. And therefore, I wanted to ask you how we should interpret the, on the one hand, enhanced focus on sustainability performance and on the other hand, the lowered executive pay and ambition around sustainability. Thank you very much.

Thank you for your question. We appreciate your support as well. And I think we don't see that there is a trade-off between performance and doing the right things in terms of sustainability. But Hein, let me pass over to you to give a bit more color.

Yes. No, thank you for the question and also for your introductory words. As I said before, we are absolutely steadfast in our commitment to sustainability. And indeed, you are rightly so addressing a few of our commitments that we are no longer including in our set, the set of 15 targets in the 4 main platforms. And for example, not including some of those is also very much a result of us not being able to track or to calculate such measures. I'll give you an example on climate. We had as a target included that we would also, for Scope 3, include consumer use of our chemicals of our products. That is very hard for us to track. And I believe that in an era whereby transparency is so important, whereby new nonfinancial disclosure guidelines are coming into effect, whereby rightly so, we are, by the way, one of the parties who are driving that type of work to provide that disclosure and transparency, it is absolutely critical that therefore, we are able to be held to account on things that we can track, validate and report with integrity on. So that has been a very important driver for excluding some of the metrics that includes, for example, the metric that you called out on living income and living wages. Living wage is a concept that we are driving, that we're leading on, and we're very proud of that. Therefore, we included it still in livelihoods as an important factor. But at the same time, having living income or living wages across the whole value chain, including living income from smallholder farmers, is a very hard definition to form. It's a -- and it's even more hard to track. And therefore, we have brought it back to something that we believe we can actually follow through on with our major suppliers and can still make a difference on. Your second question relates to why has it changed in our long-term incentive framework, and we are proposing at this AGM to reduce the weighting of SPI to 15%. Look, we are focusing on fewer goals. And at the same time, we believe that, that weighting, which we did in the preparation of the total rewards policy, is the right weighting if you compare with peers. It's still very much there. I also would like to let know that the Board's discretion on rewards for Fernando, for myself is very much based on the goals that we have set around in-year performance on sustainability. And therefore, there will always be a check back and say, yes, you may have made your financial goals, but you -- you're very short on sustainability goals, and therefore, we will adjust pay and performance-based pay, something, by the way, that discretion which was applied last year as well.

I think just building on Hein's point, I think also, a lot of the sustainability goals are now embedded in the performance of the 5 business groups, and therefore, for Hein and the team to achieve their maximum rewards, they're going to have to deliver on those sustainability targets within the business group. So then again, that's the reason why we think a move from 25% to 15% on the LTIP is the right thing to do. Thanks for the question. More questions. There's one at the back over there with -- yes?

My name is [ Peter Cole ]. I'm hoping I'm asking these 2 questions in the right section. The first one is in a magazine called GlobalData, in there, it says Just Food brief, and it's dated the 22nd of April. And it says -- I'll read it out, "Unilever's ESG rollback causes dismay. The changes to some of Unilever's ESG targets have attracted NGO criticism but are another sign of the new era under CEO Hein Schumacher. I have to -- I hope I'm asking this in the right -- in this right area. I haven't got a clue what it's about. Can you -- layman -- give me the -- tell me what it's all about, please?

We were going to do your question under ESG, but suggestion, why don't we answer that one now? Is that okay, Hein?

I'm very fine with that.

Yes.

Yes. Thank you for your -- oh, go ahead.

Hang on. Go on, [ Peter ], let's have your second question, and then we can...

Right. Okay. Last year's AGM, my daughter and I attended, we were very disappointed that we weren't able to go to what you will call the shop, i.e., it was closed off for shareholders, but only staff members only. I'm hoping that with the new setup that there is in place now, where there's a will there's a way, I'm hoping that, i.e., the shop will be open to shareholders at the AGM, if it's going to be held there next year, and to be paid for with the use of their own debit card. That's all I'm saying, Mr. Chairman. Don't have to answer that, I'll just leave it with you. Okay.

Yes. Thank you. Thanks for that one. Do you want to give just a quick answer [ for one ], Hein, and we'll come back to those later. Yes.

Yes, sure. I mean on your first question, and thank you for your question. I've read the article as well. It had to do with the fact that we have announced 2 weeks ago our new ESG targets for the company. And as I said before, we have focused these ESG targets in 4 critical areas, climate, nature, plastics and livelihoods. And we have focused our targets more to be able to make a bigger impact on those areas that really matter. Some of the media have picked that up as a rollback. Fortunately though, I'm seeing also the right level of nuance coming through, whereby people would say, yes, that level of impact and realism is actually indeed the next era of leadership in this field. So you have read that article, and again, it had to do with a reset of our ESG framework that we have announced a couple of weeks ago. And I talked about the targets before and they're in the CTAP, or the Climate Transition Action Plan, today for voting. On the shop, actually, we're in a hotel right now. And the shop is, of course, at our [indiscernible], not too far from here, but we will take your clear recommendation that was supported by some applause, and we'll take that for next time. Thank you.

Thank you. Other question. One down here. Yes?

My name is Nick Rau. I'm from Friends of the Earth, and I'm a proxy shareholder, thanks to the Fair Share Education Foundation. Mr. Chairman, you noted in your opening address that Unilever performance has not lived up to its potential. I would say that's certainly the case for improving the lives of affected people in your supply chains. I've got next to me Mrs. [indiscernible] and Mr. [indiscernible], who've traveled from Indonesia to speak to you today, and I'd like to hand the microphone over to them for them to address you directly.

[Foreign Language]

[Interpreted] Her name is [indiscernible] from Central Sulawesi. So her question is whether Unilever would like to stop buying CPO from Wilmar until the land is returned by Astra Agro Lestari, which provides or sells CPO to Wilmar, in which you buy CPO from Wilmar.

[Foreign Language]

[Interpreted] He's also from Central Sulawesi, from the same village. His name is Mr. [indiscernible]. And he would like their community land to be returned as well by Astra Agro Lestari, and this land is about 72 hectares. So please stop buying from Wilmar because Wilmar buys from Astra Agro Lestari, and the company grabbed this community's land, 72 hectares of land. And Mrs. [indiscernible] would like to tell some personal stories about how the company impacts her life.

[Foreign Language]

[Interpreted] So what happened at that time was that Astra Agro Lestari came to the community land in Central Sulawesi, and she was there with her husband at that time on that day. And at that time, they had orange and cocoa trees on that land. But then on that day, Astra company came with a figure of the community and also with several staff, and they asked the people to give their land to Astra Agro Lestari. And her husband tried to prevent that from happening, but instead her husband was beaten. And even in 2 days, Astra Agro Lestari cut down the whole orange and cocoa trees on that 72 hectares of land, and they also burned their field hut as well. And now they do not have livelihood anymore. And in the past, Mrs. [indiscernible] had to work for the company, for Astra Agro Lestari, who took away her land. And -- but the salary was not that good. Before that, from the producers from her garden plot, he could -- she could get around 500 pound or 550 pound per month. But the salary from the company is much, much lesser than that. And now she has to scavenge fruits, which are fallen fruits from the trees from the land of the company. And she has been imprisoned twice because of scavenging fruits from the company. So her life is so difficult, and there's no more sufficient livelihood anymore. So they would like to ask Unilever to stop buying from Wilmar and to also return their 72 hectares of land.

Thank you. Terribly sorry to hear the difficulties that the couple have been through. Must be very terrible. It's very tough to expect us to be able to answer on a specific issue, but we're happy to take it up with the couple after the meeting. But Hein, maybe you could just comment on the overall approach that we take, yes?

Yes, absolutely. [Foreign Language]. So thank you for your questions, but also for telling us your story, and indeed, we take these grievances more than serious. But let me first talk about the specific cases that you mentioned. Astra Agro, so AAL in short, is not a direct supplier of Unilever. So I want to be very clear about that. It is not a direct supplier. However, at the same time, we -- our approach is not to stop with the supplier and say, this is it, because then, that supplier may very well start to supply to other companies. And therefore, our approach has always been to enter into dialogue, not between Unilever and AAL only, but with the help of actually Friends of the Earth or with other independent organizations. We have also conducted -- including other parties, we have conducted several investigations in the past. And of course, we have taken on board the conclusions or we will take on board these conclusions. And given the engagement that has been going on, at this point, we don't see a reason for them to become a direct supplier with us again. But once again, we continue to remain in dialogue because we seek to improve the industry as a whole, and we do that not on our own, but with the help of many -- with many others. When it comes to Wilmar, so the company that you're calling out, that is a company that is indeed supplying to Unilever, and if there are grievances and if there are issues at stake, then we will investigate those because that is part of what we do. When it comes to deforestation, we don't only lean on an externally provided certificate, but in fact, we do conduct our own investigations. We work with independent companies to validate those. It's a topic that we take extremely serious. And once again, we will -- in this case, we will have to dive deeper in this. So we are not aware of your specific case, but I did want to highlight our approach. And once again, that approach is to lift the total sector up and have dialogues with multiple parties involved to seek improvement.

Nick, will you make sure somebody picks up with the couple here after the meeting and finds out the specifics of what's been going on? Is that okay? All right. Thank you. Other questions. Could I keep the questions at the moment to do with the annual report and this business strategy? We will come back to talk more about ESG as well, but if any more questions on -- yes, one there, and then we'll come to those ones. One over there. Yes?

Mr. Chairman, I've come to these meetings and I've had all this spill, not about the oil, but about what Unilever are going to do. Brands -- oh, Mr. Fernandez, don't worry about the dumb share price because it's only the stock exchange gambling. May affect it any time. Anyway, that's another one [ of many ] things. I'm [ Alan Rolston ]. I'm a small shareholder. Unilever, for some 50-odd years of giving up some money in, it's gone up, and I've had reasonable income from Unilever. The gentleman, Mr. Schumacher, talked about brands on the full. If you looked at that chart, it's when we saw a start to sell of things like stock, the tea, [ there are 2 -- the one ] -- a couple that I can think of. We went to a supermarket, look around, stock still on the shelf. The other people can make it, we couldn't. He's now talking about the Ice Cream. Well, we bought Ben & Jerry's. We were going to make great fun out of that stuff. Now we can't do it. And I'm not sitting at home, listening to radio for, and the word Unilever comes out on a [ picky top ], and we're now checking out another set of [ rounds ]. And don't forget Unilever is an international company. The gentleman spoke about New York [indiscernible]. That's America. What we're doing down there? I'm interested in what Unilever's doing in the U.K. We're getting out. And I am particularly bothered and worried about Unilever in the U.K. Don't forget, some of the overseas stuff is Unilever N.V. And we're looking upstairs. We're bringing out something to dip in water to make it into whatever it is. There's 3 samples upstairs, trial, but I tried it. I still think [indiscernible] in the water, that was exactly the same. But again, costs, we're gradually cutting out. Unilever in the U.K., I appreciate we've got long supply chains and all that. And you know what I'm seriously thinking, that the Board are gradually [indiscernible] out Unilever in Britain. So the only thing we'll have in Britain is the head office. And when we borrow the money on the stock exchange to extend our plantations on the wall listing with sustainable oil, it will be loaded onto Unilever U.K., and we're [ slammed ] up like a mafia plot, we're [ slammed ] up with a head office and nothing in the U.K. Gentlemen, I don't trust you. What are you doing?

Okay. Thanks for the question. Let's be very, very clear. We are not withdrawing from the U.K., absolutely not, point one. Point two, look, as you would expect, the Board has the right and the duty to constantly look at which of the brands we think are the right ones for us in the future in terms of growth and opportunity. That does mean that there will be some changes in the portfolio. We've already talked this morning about the Ice Cream announcement, but Hein also talked about 2 acquisitions we've done, Yasso and K18. There should be turn in the portfolio over time. By definition, some brands, some categories become less relevant. Other brands and other categories become more relevant. Where I think -- sorry, if I can just complete, where I think we have a lot of sympathy with, and we've made this point very clear this morning, the overall business performance of Unilever across the whole of the globe has not been good enough. And that's absolutely what Hein, Fernando and the team are very committed to do. It's very early days, and therefore, I don't want to claim any sense of victory yet, but the last 2 quarters, the business has got back into volume growth. And certainly, in Q1 of this year, it is significantly better. But Hein, Fernando and the Board, we all know we've got a hell of a long way to go. But thanks for your question. Can I take any more questions on -- yes, there's one here, gentleman holding up a white paper.

Unilever Board, my name is [ Dominic Waters ]. I speak at a time when manufacturers of food continue to play a critical role in shaping the food environment and where food prices have risen at their fastest rate in 45 years, a [ wise ] that is not reflected in the amount of welfare/benefits awarded to vulnerable families hardest hit by the cost of living crisis. I'm a single dad. I come from the most deprived blocks of my council estate. Me and my daughter survive of Universal Credit, free school meal vouchers, and we've always had pay-as-you-go gas and electric meters. I have used my lived or living experience of the daily realities of poverty as a single dad to speak up on both media and policy platforms for those that are often unheard. The insights I've provided have gone on to shape discussions around fuel and food insecurity in the U.K. On our estate, the shop only stocks the lowest quality of unhealthy, processed produce, making it a food desert in the garden of England. ShareAction, through a recent challenge to Nestlé, has highlighted the deeply -- no, sorry, has highlighted how deeply the food industry is relying on sales of unhealthy food to the poor. I would only add to this that it is vital that the voices who have lived the experience of poverty are included in these discussions to inform the next steps manufacturing giants like yourselves take as if we are not included, these health inequalities connected with poverty are only going to multiply. With this in mind and noting your company's focused -- sorry, your company's focus on serving society, my question to you today is as one of the largest global food and drink companies, what steps are Unilever taking to include voices who have lived the experience of poverty in achieving your sustainability agenda in line with the systemic change that Hein just noted?

Thank you. Hein, do you want to...

Yes. Sure. I mean, first of all, I think it's a very important topic that you raised. And particularly after the pandemic and the very intense inflation period, we have decided as a company that we did not want to pass on the full cost and full inflation in our prices. We obviously -- and we talked about that. That was -- that did lead to a drop in our margins and so forth. But it was a very conscious decision hearing and understanding what the affordability issues of consumers are. We are also -- of course, we're constantly in touch with different consumer organizations, with consumer research. We do that on a continuous basis to understand what are the affordability and what are the critical price points that consumers are prepared to pay, and can we adapt our offering in terms of packaging, in terms of what we can offer exactly on that price point for the consumer. And when it comes to the ESG framework or sustainability platforms, and we've talked about that already, part of what we call superiority on our brands means that we also seek input from consumers constantly when we innovate, hey, what would you require from a product like this in terms of sustainability credentials, in terms of packaging, in terms of pricing. So that dialogue between the company and the consumer is very intense and very much ongoing. I mean I can't comment on your particular situation, which is well heard by the way, but be assured that for us, that connection with the consumer is vital.

Thank you.

I just have one [indiscernible].

Quickly, yes. Yes?

Like you're talking about the affordability, which is vital, but it's also the access. So in deprived and poverty within environments like my council estate, we don't have an access to a supermarket. So it's just like a council estate shop. So I would kindly or politely suggest that it'd be great, and in terms of what that gentleman said about England or the U.K., that you [ look up for your ] deserts in this country and look at how they could be incorporated in advancing your sustainability goals.

Yes. I think that's -- look, we will take that. Obviously, we look a lot at where our distribution is taking place. We're obviously also working across Europe, by the way, with food banks to which we donate and which we help food banks to donate to people. But your point on -- particular point on the U.K. is well taken and is noted.

Thank you. There's one behind holding up a white piece of paper. Keep going back -- that's it. Yes, the lady there, sorry.

My name is [ Grace Smith ], and I'm an ordinary shareholder. I just wonder if I could preface my question by saying that I was here at this meeting last year, and I'm not a member of any organization, but I do remember the issue of land grab being mentioned, and the same company. And we were assured that, that would be looked into as a matter of urgency. It's been mentioned again this year. And I wonder if next year, we could have a proper report on the activities of subcontractors and what Unilever is doing to bring things into some proper way of dealing with things, particularly with local communities. My question is rather more selfish one. Touching on the separation of the Ice Cream division, you did list the factors that you would be taking into account when making up your mind. Could I just add that some consideration be given to any possible tax effects on private shareholders? I say this because some of us that have portfolios in other companies have experienced having a generous return of money to us on which we've paid tax, only then to be asked for more investment and buying more shares because they want the money back again.

Thanks for the question. Look, I can't guarantee that we'll answer to an exact or give you exactly what you want, but those sorts of issues are exactly the problems that we're going to look through and work out the detail as we get into the Ice Cream separation. Any more questions on -- yes, there's some down here, gentleman down here.

Very pleased to see that you've got a very young group of people who are going to be taking over. My whole question is on sustainability. And I think with the present atmosphere and climate change -- I mean, there is suffering all over the world, but you are going in the right direction. And I think that is what we should commend you and not criticize you. Thank you.

Thank you. Thank you very much. Well said. Any more questions on -- if I can -- again, try and keep them on strategy and the annual report, that would be great. One down here and then we'll come to the lady over there. Is that okay?

[ Roger Veets ], private shareholder. On Page 67, I noticed that you're now using 716,000 kilowatt hours of fuel oil, and you haven't done that in the past. It seems a strange thing to happen. Why are you suddenly using fuel oil so much?

Actually, I haven't got the detail on that. Can we come back to you on that question? Maria, can we pick up with the gentleman after the meeting?

Page 67.

Page 67, we'll look into that and get back to you. Thank you. The lady over there, yes.

My name is [ Lauren O'Leary ], and I'm here on behalf of ShareAction and the Healthy Markets Initiative. As you are aware, the Healthy Markets Initiative is a group of over 40 investors with more than $5 trillion of assets, who are committed to encouraging the food industry to help shape a healthier society. I'm here to ask a question on your Nutrition target, which was set as a result of a shareholder proposal filed by our coalition in 2022. At present, diet-related ill health is the main course of death worldwide. Forecasts show that the situation is worsening. This, paired with increasing inequalities, food insecurity and the cost of living crisis, represents an urgent public health challenge. All stakeholders need to play their part in helping people stay well and live healthier lives. Food manufacturers play a critical role in shaping food environments. They have strong influence on the availability, accessibility and affordability of healthier food options. Yet research from the U.K.-based NGO Bite Back has found that 7 out of 10 of the largest food and drink manufacturers are reliant on selling less healthier products in the U.K. During your meeting with your shareholders in March 2024, we were encouraged to hear that Unilever is on track to meet its 2022 target to ensure that 85% of its nutrition and ice cream servings meet the Science-based Nutrition Criteria by 2028. We also welcomed the company's commitment to report on its sales against 6 government-approved nutrition profiling models in 2021, 2022 and 2023 and continue to do so year-on-year. We'd like to thank the company for its continued engagement with the Healthy Markets Initiative. We recognize Unilever's ambition to be a leader in this space and appreciate your recent progress to improve transparency and grow the proportion of your sales from healthier products. However, following your meeting with shareholders in March, we heard that Unilever has separated from its Ice Cream business, which, as I understand, accounted for 13% of group revenue in 2023. My question for you today is how will this recent split from the company's -- how this recent split impact the company's nutrition disclosures and targets. We look forward to a follow-up meeting with you in due course to discuss the implications of this further. Thank you.

Sure. Thank you. Look, in the short term, there won't be any change in terms of the commitments that we've already made historically, and we would absolutely want and hope that the ice cream team will continue with those commitments. Knowing them, I'm sure they will do. That will change a little bit, I'm sure, over time. But I think again, if we can pick up with you after the meeting, that would be great. Okay. If I could ask everyone asking a question, if you could try and keep the introductions maybe a bit shorter and get to the question, that would be helpful so that we can get through the questions. Yes, there's somebody behind -- right-hand, I can't see if it's a lady or gentlemen, sorry, apologies. Sorry, yes?

I am [ Tessa Helman ]. I am a small shareholder of Unilever. Dear Board of Unilever, recognize me? I stood here last year, and I asked you whether you will reduce your CO2 emissions to be in line with the Paris Agreement, a very simple yes or no question and yet you refused to answer properly. Never a yes, never a no, just a really greenwashing story that wasn't even always factually correct. So this experience got me thinking, because Unilever is responsible for so much climate destruction and yet also made an enormous profit of EUR 45 billion since that same Paris Agreement, and instead of deciding to spend it on things that matter, like your sustainability plans, you decided to spend it all on your biggest shareholders. This is not only unfair, it is also incredibly dangerous. So I took action. I sent petitions. I went to demonstrations and went to other big shareholding meetings where I experienced the exact same ignorance, and I helped organize this action here today, our journey from the Netherlands to London, because I am not alone. And last year, the Board invited us to come back and come look at your big new climate plan. So we did, and here we are. And I must say we are disappointed. Time to stop dangerous climate change is running out. And since you apparently missed the memo last year, I will now, instead of asking you, demand that Unilever will reduce its CO2 emissions with at least 48% in absolute terms in the entire value chain, so Scope 1, 2 and your favorite, Scope 3, in 2030 compared to 2019.

Yes. I mean thank you for your -- I mean, for the demand, it wasn't necessarily a question. This is not the part of the strategy or the annual account part. So I just want to make sure, Chairman, that we are answering the question right now as it is part of the ESG part.

Yes.

Look, I mean, first and foremost, as I said, we are continuing to take action on climate change. And for our own emissions, which I stated, Scope 1 2, our 2030 targets significantly exceed 45% versus the 2015 baseline. For the emissions in the wider value chain, our Scope 3, we have set new, since last year, and more ambitious targets for absolute greenhouse gas emissions by 2030. And we did use SBTi as a standard for these targets. We also, therefore, with that validation, want to make sure that we stay within the framework of the Paris Agreement. As you know, and as I explained, our target on CO2 reductions from energy use and industrial emissions is to reduce by 42% in 2030, but from the 2021 baseline. On greenhouse gas emissions that you may not have included in your ask or demand, namely those from agriculture and forestry, we also included a reduction target, in our case, of 30%. And both targets have been confirmed by the independent validation of the science-based institute that I mentioned before. So the togetherness of these targets, we want to make sure that we stay within the framework of the Paris Agreement. We have substantiated them versus last year. We have made sure that they are validated, and that's where I would like to leave the answer for now.

Sure. Thank you, Hein. Again, sorry, if I could -- any more questions on strategy and the annual report, if I could hold it. I want to get this first one -- yes, gentleman down here.

Sorry, same, from Indonesia. I'm [indiscernible]. So I especially want to confirm that case, like [indiscernible] and [indiscernible], from the conflict by Wilmar and Astra Agro Lestari. But some, like one case, in Indonesia, have many case, like 5 subsidiary from Astra Agro Lestari from plantation palm oil to Astra Agro Lestari to sell to Wilmar and sell to you. And not only the conflict, but have many people, like 200 people get intimidation, get criminalization and 2,000 hectares, the land people, land grab from Astra Agro Lestari. So I want to ask you what your commitment because it's so long. That's have 2 decades in Indonesia have a conflict. So I advocacy the people start from 2015 until now, but not conclusion, not solution from Wilmar, from Unilever. So I want to ask you when you stop buying and when you have a commitment to finish the conflict or to make a solution with Wilmar because Wilmar -- you buy palm oil from Wilmar. So Wilmar buy palm oil from the Astra. That's the supply chain. So my question is when you can tell Wilmar or when you send letter to Wilmar and when you stop buying palm oil from Wilmar.

Thank you for the question. So as we said before, but also I think the question that was asked previously by the lady in the back -- look, on AAL, as was asked last year, let me confirm to you, they are not a direct supplier to us. In fact, what we have done, we are taking any of these grievances, obviously, very seriously, and that was the reason why we have convened several meetings with AAL, not just between Unilever and AAL, but also with independent parties such as [indiscernible] [ Nusantara ], to make sure that we have that independent view. These allegations were then investigated. And with the result of the investigations that I have today, we decided not to source directly from AAL. The point that you are bringing up on Wilmar and that was brought up earlier, we take very, very seriously. It's new to me here today, and that's something that we need to investigate going forward. And your point is, therefore, well heard.

Okay. Gentleman over there at the back. Yes?

[ Ian Williams ], ordinary shareholder. Could I ask a question more than giving a speech, Mr. Chairman?

Sure.

Could you explain the thinking of the Board behind the allocation of resources between buybacks and dividends? Buybacks tend to be very wasteful if they don't signal the Board's belief that shares are undervalued.

Thank you for the question. Fernando, do you want to...

Yes. We are really committed to continue returning capital to shareholders in a productive way. We have a clear policy of dividends, just with the kind of dividend payout, above 60%. We supplement this return of capital to shareholders with capital returns in the form of share buybacks when there is a surplus of cash that we will decide that we will not sit upon them. So dividend is our primary way of returning capital to shareholders. It parcels a very disciplined capital allocation strategy with very clear restrictions in terms of the debt level that we want to retain as multiple of EBITDA. And dividends is our primary way of returning capital to shareholders, but we will supplement with share buybacks when we believe it's a logical thing to do.

Thank you. This lady down here.

I'm a shareholder, and my name is [ Nikki ]. I'm a child psychologist, so I work a lot with children, and I try to help them navigate in this world as best as I can, and I give them knowledge about the world in which they are growing up. And in this world, Unilever is everywhere with products such as Knorr for dinner for the whole family, Ola for ice cream on hot summer days and, of course, Robijn for when they have rolled in the mud. A report from [indiscernible] showed that you made a profit of EUR 65.4 billion from 2015 to 2022, of which 101% went to the shareholders. I feel like I'm lying to the kids I take care of by saying eat less meat, shower a little shorter and then everything will be fine. Well, I know that large companies like Unilever continue to admit as if there is no climate crisis. I'm here today, not for myself, but for them. I asked the children what they would like to ask you, the big companies with a lot of money, and so a lot of responsibility. There are 7, 9 and 11 years old, and they want to ask you, if you have so much money, why don't you use it to be good instead of using it to damage our world even more? And so hereby, they also want to ask you, will Unilever reduce its CO2 emission by at least 48% in absolute terms in the entire value chain, so in Scope 1, 2 and 3, in 2030 comparing to 2019. And I would like to hear yes or no. Thank you.