Investors including Legal and General Investment Management, Pictet Asset Management, Greenbank, Nest and CCLA have called on food and drink giants to be more transparent about their impact on public health.
In a move coordinated by ShareAction, investors collectively managing over £2.3trn in assets have written to the chief executives of PepsiCo, Coca-Cola, Mondelez, Kraft Heinz, Kellanova and General Mills to ask them to follow food companies such as Unilever and Danone in adopting internationally-accepted nutrition standards for publicly reporting the healthiness of their sales.
The investors said they were concerned that an over-reliance on sales of less healthy products leads to poor diets and sicker societies, which, in turn, harms economic productivity and threatens long-term business success and financial returns. A lack of transparency, they argue, hinders their ability to fully assess risks and opportunities.
Tom Sanders, senior ESG analyst at Nest, said: “Health is a systemic risk that affects the whole economy. The increased consumption of unhealthy products harms public health and could reduce worker productivity, creating externalities that can impact our long-term investment returns as a globally diversified investor. Food and drink companies must take responsibility in helping manage these risks by being more transparent, using internationally recognised nutrition standards as an important first step.”
In 2023, the World Obesity Federation said the economic impact of overweight and obesity on the world is set to reach $4.32tn – nearly 3% of global gross domestic product – annually by 2035.
Meanwhile, last week, the Food Foundation’s State of the Nation Food Industry report identified only one in four major UK food businesses has a healthy sales target and discloses data on the healthiness of their sales.
Therefore, ShareAction and the investors asked the food and drink companies to commit to adopting one or more of the internationally accepted Nutrient Profiling Models, used to define healthy food, rather than their in-house versions. They were also encouraged to enhance transparency through regular reporting of metrics on the healthiness of sales and products, so that shareholders and customers can hold them to account for their impact on public health
Most of the investor signatories are part of ShareAction’s Long-Term Investors in People’s Health initiative, which encourages the integration of health as a responsible investment theme to help build healthier, fairer societies.
“Diet-related ill health poses risks on many levels, including material financial risks for companies, investors and the wider economy,” Sophie Lawrence, stewardship and engagement lead at Greenbank, commented.
“As investors, we need access to good quality, comparable data on company health-related impacts to understand this risk. Where companies are reporting, they are often disclosing different metrics and using varying definitions of what constitutes a ‘healthy’ product.
“This hinders the ability of investors and other stakeholders to compare performance across the sector, hold businesses to account and accurately understand what progress is being made as well as importantly analyse the risks and opportunities facing companies. It is vital that reporting requirements are introduced on a mandatory basis, as voluntary initiatives have failed to drive the necessary scale of change required.”
