In 2010, Korteweg opened The Vegetarian Butcher (TVB), a single storefront in the Dutch capital of The Hague, where he says the only thing being slaughtered was prejudice. Since then, his veggie bratwurst, no-chicken chunks, meatless burgers and fish-free eel pies have spread across Europe, winning numerous best-food awards. TVB even finished third in a Dutch newspaper contest to find the “Golden Meatball,” despite being the only veggie company in the competition.

But Korteweg’s biggest win came in 2018, when his fast-growing company was acquired by U.K. food giant Unilever. It’s now the key brand – in partnership with Knorr, Hellman’s mayonnaise and Ben & Jerry’s ice cream – that Unilever is counting on to lead its new push into veggie products. In November, Unilever unveiled a plan to boost its sales of plant-based foods over the next few years to €1 billion a year – a fivefold increase. It’s part of the company’s Future Foods initiative, to provide consumers with healthier foods while also reducing their environmental impact.

Hanneke Faber, president of Unilever’s foods division, said her company has “a critical role to play in helping to transform the global food system. It’s not up to us to decide for people what they want to eat, but it is up to us to make healthier and plant-based options accessible to all.”

Unilever’s optimism is well placed. Research from U.K. investment bank Barclays last year forecast that the value of the global plant-based food and drink market could soar by more than 1,000% over the next 10 years. It also found that 40% of consumers are willing to pay premiums of up to 50% for more “natural” foods.

The market for veggie vittles goes far beyond vegans and vegetarians. According to Barclays, 92% of plant-based meals in the U.K. are consumed by “flexitarians,” semi-vegetarians who eat meat on occasion.

Still, food producers have to get their act together. “Alternative meat producers have plenty to do to make their products mainstream,” Barclays noted. “This should include research and development to improve nutrition and taste while keeping prices competitive, and a marketing campaign that emphasizes the health, animal welfare and environmental benefits.” If these issues are addressed, the researchers say, “these substitutes may capture a significant share of the market from traditional meat products.”

Rick Spence is a business writer, speaker and consultant in Toronto specializing in entrepreneurship, innovation and growth. He is also a senior editor at Corporate Knights.

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Financial markets seem to have found a comfortable trading zone, oscillating between the hope of a quick recovery and the fear of a second pandemic wave.

Federal Reserve Chairman Jerome Powell suggested in an interview that GDP could fall by as much as 20–30%, with unemployment hitting Depression-era levels. However, the Chairman also expects a quick recovery by the end of this year and noted the unprecedented response from central banks and governments to keep markets liquid and provide emergency benefits to struggling people and businesses. This mixed message has the bulls and bears of the market duking it out day-to-day, keeping prices relatively flat over the past month.

With uncertainty remaining, investors should hope for the best and plan for the worst. We examine two sustainability leaders that are positioned to grow if the economy reopens quickly and will continue to earn profits during a longer period of pandemic-induced economic pain.

Note: These are investment ideas, not recommendations. Speak to a financial professional before investing and ensure that any holdings are part of a more diversified investment strategy.

Unilever

Who hasn’t indulged in comfort food a little more often since the pandemic started? Well, if you think people are more likely to drown their sorrows in a pint of Ben & Jerry’s ice cream, then you might consider taking a closer look at Unilever. Unilever owns a whole bunch of well-known brands from soaps (Dove) and cleaners (Seventh Generation) to soups (Knorr) and ice cream (Ben & Jerry’s). Consumer behaviour has changed drastically since the pandemic and consumer staples companies like Unilever are quickly trying to figure out what changes will persist.

Unilever released its 2020 Q1 trading statement last month and reported that overall sales were flat. Hidden in this boring top line figure is a much more nuanced story. Sales of packaged foods, cleaning supplies and beauty products were up due to households ‘stocking up’ but Unilever’s food service business and restaurant sales were way down. Moreover, management noted that the use of beauty products like deodorant was down about 25%. Yes, we’re getting stinky working from home. Unilever seems like the perfect company for investors caught in the hope and fear dichotomy. The company is positioned to weather an ongoing storm but will also get a boost if the economy reopens quickly.

Unilever has set ambitious environmental, social and governance targets in its Sustainable Living Plan, like halving the environmental footprint of its products by 2030. The company’s sustainability reporting is top-notch and measures progress on issues like gender diversity, the health and hygiene of consumers and carbon emissions. Forty-sixth on the 2020 Corporate Knights’ Global 100 list of the world’s most sustainable corporations, I’m confident positioning Unilever as a global sustainability leader.

Unilever’s share price fell by 27% during the crash and is currently down about 11% since the start of the year. The stock is expected to pay a 3.39% annual dividend.

Cisco

Cisco is an American tech company that earns most of its revenue from selling infrastructure platforms made up of networking hardware like routers, switches and data centres. As more business happens online, Cisco has diversified to offer applications, security and technical support services. Cisco’s customers are mainly large corporations, and its revenues declined in March as hardware supply chains were impacted and companies cut back on major investments due to market uncertainty. However, security revenues grew and the use of Cisco’s WebEx video conferencing software tripled.

Large companies are quickly realizing just how important online infrastructure platforms are to continued profitability while everyone works from home, so I expect to see corporate investment in digital hardware pick back up whether or not the pandemic drags on. Even if the economy rebounds quickly, companies are noticing the benefits of an online workforce and many of the work from home and shop from home trends will persist. Cisco is heavily involved in the deployment of 5G networks throughout the world as it sells high-speed routers and switches that manage back-end data transfers. The company is hoping to build on its leadership in the Internet of Things space, and I expect this rollout to occur whether or not the pandemic persists in spite of the 5G COVID-19 conspiracy theories my uncle is posting on Facebook.

From a sustainability perspective, Cisco stands out as a leader in the tech sector. The company has assessed a wide range of environmental, social and governance issues based on both business and stakeholder importance, and has created concrete targets like impacting 1 billion people through social impact grants and programs by 2025 and cutting Scope 1 and 2 greenhouse gas emissions worldwide by 60% by 2022. Cisco publishes a thorough annual corporate social responsibility report to measure and track progress towards these goals. The company gets top marks from sustainability data providers Sustainalytics and MSCI, and is ranked fourth on the 2020 Corporate Knights’ Global 100 list of the world’s most sustainable corporations.

Cisco’s share price fell by 33% during the crash and is currently down about 11% since the start of the year. The stock is expected to pay a 3.2% annual dividend.

Tim Nash blogs as The Sustainable Economist and is the founder of Good Investing. This article was provided by Corporate Knights magazine.

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Last month, a California jury awarded a $29 million settlement to a woman who charged that her ovarian cancer was caused by the frequent use of J&J baby powder in the 1960s and ‘70s. Back in December, the company lost its bid to reverse a jury verdict that awarded a whopping US$4.69 billion to 22 women for similar reasons.

It turns out talc mines are often co-located with asbestos deposits, so carcinogenic asbestos contamination is hard to avoid. Even worse, a scathing report from Reuters alleges that J&J executives knew in the 1970s that talcum powder samples sometimes tested positive for asbestos. Said Reuters, “Other tests by J&J’s own contract labs and others periodically found small amounts of asbestos in talc from mines that supplied the mineral for Baby Powder and other cosmetic products into the early 2000s.” In cases like these, it’s always the coverup that makes it worse.

The New Jersey-headquartered company faces lawsuits from roughly 13,000 plaintiffs on this issue. Some of the lawsuits will probably fail (right after J&J settled three cancer suits, the company won a trial over a California man’s cancer case in early April). But even if only a small percentage of the verdicts go against J&J, the financial liabilities could add up quickly. Moreover, Johnson & Johnson’s reputation is in tatters as consumer trust in the brand has eroded. J&J’s stock (JNJ) plunged more than 10% in December with the failed appeal of the $4.69 billion settlement, although it has bounced back considerably since then. I’d expect future lawsuits to trigger similar stock volatility.

With a combination of ethical violations and financial risks stemming from these lawsuits, it’s no wonder ethically-minded investors are brushing the company off.

We struggled to choose an alternative company to J&J, since its revenues are split between pharmaceuticals, medical devices and consumer goods. Not all ethical investment clients are keen on investing in pharmaceutical companies, so in the end, we leaned towards the consumer goods side of the business and decided to go with Unilever.

Unilever (UL) is an Anglo-Dutch consumer conglomerate that owns a whole bunch of well-known brands from soaps and detergents to soups and ice cream. Unilever came a long way in the past decade under the leadership of former CEO Paul Polman. On his first day as CEO in 2009, Polman shifted Unilever’s reporting schedule from quarterly earnings reports to annual reports to reduce short-term pressures and let the company take a longer-term perspective with sustainability at the core of its business strategy.

Unilever has done a good job setting ambitious goals in its Sustainable Living Plan, including halving its environmental footprint across the life cycle of its products by 2030. Named #65 on Corporate Knights’ Global 100 list of the most sustainable corporations in the world, Unilever easily beats J&J on clean revenue, carbon footprint, gender diversity, tax responsibility and other indicators (see scorecard below).

Sadly, Polman announced his retirement late last year, raising questions about whether his enlightened leadership will be carried on by his successor. Only time will tell whether new CEO Alan Jope will continue this legacy. Unilever has lots of work remaining, so we’ll have to keep our eye on it.

J&J and Unilever are companies with very similar financial profiles, but, in my view, Unilever’s brand is thriving while Johnson and Johnson’s is deteriorating. There’s no doubt that Unilever is this week’s winner of the Sustainable Stock Showdown. Besides, since Unilever purchased Ben & Jerry’s in 2001, you’d also own shares of my favourite ice cream brand.

Have a company in your portfolio that you want to replace with a more sustainable option? Write us an email or send us a tweet!

Tim Nash blogs as The Sustainable Economist and is the founder of Good Investing. Tweet him at @timenash.

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