Unilever 2015 Annual Report Download - page 64

DESRIPTION OF RISK WHAT WE ARE DOIN TO MANAE THE RISK
TREASURY AND PENSIONS (ONTINUED)
We are also subect to the mposton of exchange controls by
ndvdual countres whch could lmt our ablty to mport materals
pad n foregn currency or to remt dvdends to the parent company
urrency rates, along wth demand cycles, can also result n
sgnfcant swngs n the prces of the raw materals needed
to produce our goods
Unlever may face lqudty rsk, e dffculty n meetng ts oblgatons,
assocated wth ts fnancal labltes A materal and sustaned
shortfall n our cash flow could undermne Unlever’s credt ratng,
mpar nvestor confdence and also restrct Unlever’s ablty to rase
funds
We are exposed to market nterest rate fluctuatons on our floatng
rate debt Increases n benchmark nterest rates could ncrease
the nterest cost of our floatng rate debt and ncrease the cost
of future borrowngs
In tmes of fnancal market volatlty, we are also potentally exposed
to counter-party rsks wth banks, supplers and customers
ertan busnesses have defned beneft penson plans, most now
closed to new employees, whch are exposed to movements n
nterest rates, fluctuatng values of underlyng nvestments and
ncreased lfe expectancy hanges n any or all of these nputs
could potentally ncrease the cost to Unlever of fundng the
schemes and therefore have an adverse mpact on proftablty
and cash flow
Our nterest rate management approach ams to acheve an optmal
balance between fxed and floatng rate nterest exposures on
expected net debt
We seek to manage our lqudty requrements by mantanng
accessto global debt markets through short-term and long-term
debt programmes In addton, we have hgh commtted credt
facltes for general corporate purposes
roup treasury regularly montors exposure to our banks, tghtenng
counter-party lmts where approprate Unlever actvely manages
ts bankng exposures on a daly bass
We regularly assess and montor counter-party rsk n our
customers and take approprate acton to manage our exposures
Our penson nvestment standards requre us to nvest across
a range of equtes, bonds, property, alternatve assets and cash
such that the falure of any sngle nvestment wll not have a
materal mpact on the overall value of assets
The maorty of our assets, ncludng those held n our ‘pooled’
nvestment vehcle, Unvest, are managed by external fund
managers and are regularly montored by penson trustees
and central pensons and nvestment teams
Further nformaton on fnancal nstruments and captal and
treasury rsk management s ncluded n note 16 on pages
120 to 125
ETHIAL
Actng n an ethcal manner, consstent wth the expectatons
of customers, consumers and other stakeholders, s essental
for the protecton of the reputaton of Unlever and ts brands
Unlever’s brands and reputaton are valuable assets and the
way n whch we operate, contrbute to socety and engage wth
the world around us s always under scrutny both nternally
and externally Despte the commtment of Unlever to ethcal
busness and the steps we take to adhere to ths commtment,
there remans a rsk that actvtes or events cause us to fall
short of our desred standard, resultng n damage to Unlever’s
corporate reputaton and busness results
Our ode of Busness Prncples and our ode Polces govern the
behavour of our employees, supplers, dstrbutors and other thrd
partes who work wth us
Our processes for dentfyng and resolvng breaches of our ode of
Busness Prncples and our ode Polces are clearly defned and
regularly communcated throughout Unlever Data relatng to such
breaches s revewed by the Unlever Leadershp Executve and by
relevant Board commttees and helps to determne the allocaton
of resources for future polcy development, process mprovement,
tranng and awareness ntatves
LEAL AND REULATORY
omplance wth laws and regulatons s an essental part
of Unlever’s busness operatons
Unlever s subect to natonal and regonal laws and regulatons n
such dverse areas as product safety, product clams, trademarks,
copyrght, patents, competton, employee health and safety, the
envronment, corporate governance, lstng and dsclosure,
employment and taxes
Falure to comply wth laws and regulatons could expose Unlever
to cvl and/or crmnal actons leadng to damages, fnes and
crmnal sanctons aganst us and/or our employees wth possble
consequences for our corporate reputaton
hanges to laws and regulatons could have a materal mpact on
the cost of dong busness Tax, n partcular, s a complex area
where laws and ther nterpretaton are changng regularly, leadng
to the rsk of unexpected tax exposures Internatonal tax reform
remans a key focus of attenton wth the OED’s Base Eroson &
Proft Shftng proect and the EU’s acton plan for far and effcent
corporaton taxaton
Unlever s commtted to complyng wth the laws and regulatons
of the countres n whch we operate In specalst areas the relevant
teams at global, regonal or local levels are responsble for settng
detaled standards and ensurng that all employees are aware of and
comply wth regulatons and laws specfc and relevant to ther roles
Our legal and regulatory specalsts are heavly nvolved n
montorng and revewng our practces to provde reasonable
assurance that we reman aware of and n lne wth all relevant
laws and legal oblgatons
Our lobal Tax Prncples provde overarchng governance and we
have a Tax Rsk Framework n place whch sets out the controls
establshed to assess and montor tax rsk for drect and ndrect
taxes We montor proposed changes n taxaton legslaton and
ensure these are taken nto account when we consder our future
busness plans
57Unilever Annual Report and Accounts 2015 Governance