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Disclosure on healthier product sales is becoming the norm, but more work is needed

Our latest research shows more retailers are reporting on the healthiness of sales – but with notable exceptions, investors still have a role to play in driving up standards across the whole food sector.

Last week’s National Food Strategy put supermarkets on notice.

The government-commissioned review of the food we eat urged politicians to introduce mandatory reporting on the health profile of the food industry’s sales.

At ShareAction, we have long called for retailers to disclose information on the healthiness of their sales, as have investors signed up to our Healthy Markets initiative.

Now, our latest research shows more and more retailers are setting targets and reporting in this area.

But while disclosure is becoming a market norm, there are noticeable exceptions. Investors still have a role to play in levelling the playing field and driving up standards across the whole food sector.

Disclosure is on the rise – as more retailers grapple with defining healthier products

In 2020, just two retailers we analysed had commitments to increase the sales of healthier foods.

But the last 12 months have seen a noticeable shift, with five retailers – ALDI UK, Lidl, M&S, Sainsbury’s and Tesco – making such goals.

That represents 60 per cent of the UK grocery market.

We’ve also seen huge improvements in how retailers are defining healthier products, with four – Tesco, ALDI UK, Asda and Morrisons – using the government’s model for high in (saturated) fat, salt or sugar (HFSS) foods.

This model is increasingly used to regulate the marketing and advertising of less healthy products.

Greater transparency allows investors to see which retailers are most at risk

This means that investors are increasingly able to assess retailer performance against one another, as well as their risk from rising obesity regulation.

Retailers who commit to and report on increasing sales from healthier products signal to investors that they are preparing for upcoming regulation that may impact sales of less healthy products. By doing so, they reduce the risk of such regulation having a negative impact on their sales and their profits, in turn de-risking the company for investors.

Despite progress, some retailers are lagging behind

Yet, progress is not consistent across the industry.

There are still three retailers that lag behind – Iceland, Ocado Retail and Waitrose – failing to disclose any information on the healthiness of their sales or product portfolios.

On top of this, those retailers that do report still have variations in how they measure and define healthier products. This makes it harder for investors and others to compare performance across the sector.

Investor action can help drive action across the sector – and level the playing field

Investors have the leverage to drive more disclosure, and call for comparable metrics.

This was seen when investors came together earlier this year – coordinated by ShareAction – to file the first health-based resolution at retail giant Tesco.

The resolution called on the UK’s largest food retailer to set targets to increase healthier sales and to regularly disclose their progress against such targets.

This led to an ambitious industry-leading commitment from Tesco.

It set an example for others in the sector to replicate and proves that progress is possible.

With investor action leading to positive results, and reporting on healthier sales becoming the industry norm, investors now have the opportunity to encourage laggards to align with the majority and be more transparent.

Our briefing provides a number of asks that investors can put forward when engaging with retailers. These include:

  • Increasing the proportion of sales from healthier products and ensuring the scope includes all products (branded and own brand);
  • Aligning their definition of healthier products with the government’s HFSS model used for regulatory purposes;
  • Encouraging retailers who only report on improving the healthiness of their product portfolios to report and set targets on increasing the proportion of sales from healthier products;
  • Setting long-term SMART targets, with a comparable baseline, and report yearly on progress in annual reports.

Download the report >> Tracking for Health: 2021 update

Join our webinar to learn more

For additional insights into how the grocery retail sector is performing in this space, join our webinar on Thursday 22 July (BST) where we’ll present the findings from our latest “Tracking for Health – 2021 Update” briefing and the work of our investor coalition.

Reserve a webinar spot >> Tracking for Health: assessing retailers' progress on healthier sales

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