1 June 2023
Good nutrition is fundamental to good health, yet humankind is experiencing a growing epidemic of diet-related ill health. According to the Access to Nutrition Foundation, poor nutrition – and resulting illness – cost an estimated $3.5 trillion annually, or 5% of global income.1 Through engaging with companies on nutrition, investors can play a crucial role in addressing this issue.
Diet-related ill health places an extraordinary burden on health care systems, governments and insurers around the world. To tackle the problem, governments are beginning to adjust the regulatory landscape, for example the introduction of sugar and calorie taxes that have been introduced in 50 jurisdictions in the world. This indicates that there are increasing financial repercussions for companies that fail to transition their business models towards healthier products and sales.
Addressing the nutritional standards of the products sold by the companies we invest in is a key part of our engagement programme. Recent engagement with Unilever, PepsiCo, Nestlé and Coca-Cola aims to persuade these companies to commit to producing healthier products and to make these products more accessible, more affordable and more available. Our specific asks relate to disclosure, target setting, and reporting on progress against those targets.
What did we do?
On the back of prolonged engagement, Unilever pledged last year to set a new industry-leading standard on transparency around sales of healthy foods. It has now disclosed the ‘healthiness’ of its global portfolio against six government-endorsed nutrient profiling models, in both sales volume and revenue.
We have had similar discussions with Nestlé over the past two years as part of our support for ShareAction’s Healthy Markets Coalition and the Access to Nutrition Foundation.
What were the outcomes?
There was notable success in 2022. On increased shareholder pressure, Nestlé agreed a set of new nutritional commitments. These require the company to (among other things):
- benchmark and disclose the nutritional information of its products in 14 countries (now published).
- raise the target age of marketing of unhealthy foods.
- cease marketing on gaming platforms where the user base is significantly comprised of under 16s.
- cease the marketing of infant formula milk from 1 January 2023.
After an initial reluctance to set targets on sales of healthy foods, we escalated the engagement and considered co-filing a shareholder resolution. The company eventually agreed to set targets on absolute sales of healthy products. While these falls short of the proportional targets we were seeking, we will continue to ask for further commitments in 2023.
1 https://accesstonutrition.org/index/global-index-2021/context/
