A global coalition of investors managing circa $3 trillion have written to Nestlé, Danone, Kellogg’s and Kraft Heinz on the occasion of their annual general meetings, calling for greater disclosure and ambition on the health profile of their sales portfolios. The investors signing all four letters include large asset managers such as Legal & General Investment Management and BMO Global Asset Management, smaller ethical funds like Castlefield Investment Partners and Rathbone Greenbank Investments, pension funds including the Local Authority Pension Fund Forum and Northern LGPS, and retail sustainable investing platforms like Grünfin.
The investor action follows a shareholder resolution filed at Unilever in January. Investors withdrew the resolution after Unilever agreed to disclose the share of food and drink sales made up of ‘healthier’ products, as defined by government-endorsed nutrient profiling models, and to set a long-term target and a strategy to significantly increase that share.
Now investors are calling for similar disclosures, targets and strategies to be published in the 2023 annual reports of four of Unilever’s competitors.
ShareAction, which co-ordinated the letters, has been facilitating private engagement between its Healthy Markets investor coalition and major food and drink manufacturers for several years, with the aim to improve the health of their consumers. It said the public action represented a “marked escalation” of this engagement with these four companies, in line with their ambition to be leaders in nutrition.
The letters contrasted the companies’ disclosure of the health profile of their products, using their own definitions, with an independent assessment by the Access to Nutrition Initiative (ATNI), the leading benchmarking organisation for food companies and their investors.
Nestlé claims that 80.5% of its sales are healthy (i.e. they meet the ‘Nestle Nutritional Foundation profiling criteria’), while the Access to Nutrition Initiative (ATNI) put the figure at 43%. Danone claims 90% of its sales are in healthy categories, but ATNI’s figure is 65%. Kraft Heinz argues that 76% of its sales are healthy (compliant with its Global Nutrition targets), in contrast with ATNI’s assessment of 39%. Kellogg’s does not report on the health profile of its sales, but ATNI says that just 27% of its sales meet government definitions of healthy.
The investors argue that ATNI’s data suggests that these four companies carry significant exposure to regulatory risk worldwide. This is because ATNI uses the Australian and New Zealand Health Star Rating to define “healthy”, which like Nutri-Score and other major government-endorsed models are derivatives of the UK Government’s nutrient profile model, all of which are being used by regulators to apply increasingly stringent restrictions on the promotion of unhealthy products worldwide.
New consumer data demonstrates business risks of falling behind on health
Poor health performance also risks falling behind consumer trends towards healthier diets, as demonstrated by polling conducted by Censuswide and published today by ShareAction.
The research assessed consumer attitudes towards regulatory and market trends supporting healthier diets in some of these companies’ largest markets. Polling a geographically representative sample of 1000 people or more in each of the UK, USA, Germany, France, Australia and Mexico, it found overwhelming support for these changes. For example:
- 40% do not trust that food manufacturers are doing what they say when it comes to promoting good health
- 51% would like to consume more healthy products
- 72% want manufacturers to reformulate less healthy foods to make them more healthy
- 73% of consumers say manufacturers play an important role in influencing their dietary choices
- 75% want manufacturers to produce healthy alternatives to less healthy foods
- 81% agree they are in favour of government regulation to make healthy foods cheaper and more available (combining respondents who said either ‘strongly agree’ or ‘somewhat agree’)
Ignacio Vazquez, Senior Manager, ShareAction, said:
“Regulatory trends, as well as consumer support for healthier products, mean that food businesses must consider health as an increasingly material risk factor. Investors need companies to use standardised health metrics to determine their exposure to regulatory risk and their position relative to competitors on this issue. In line with their ambition to be leaders in nutrition and health, we are calling on these food companies to follow Unilever in committing to greater disclosure around their sales of healthier products and to increase their ambitions in this area.”
Notes to editors
The dates of the AGMs are as follows: 7th April (Nestlé), 26th April (Danone), 29th April (Kellogg’s) & 5th May (Kraft Heinz).
Investors signatories common to all letters include Achmea Investment Management; Actiam; BMO Global Asset Management; Castlefield Investment Partners; EQ Investors; Grünfin; Legal & General Investment Management; Local Authority Pension Fund Forum (LAPFF); London CIV; Northern LGPS; Pension & Investment Research Consultants; Rathbone Greenbank Investment; The Health Foundation; Westminster City Council Pension Fund.
Copies of the investor letters are available on request.
The full consumer polling data is available on request.
