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New Nestlé nutrition target falls short of shareholder expectations

(Monday 2nd October) Nestlé shareholders, including the UK’s largest asset manager Legal and General Investment Management (LGIM) and the largest workplace pension scheme Nest, say the food giant’s new nutrition target falls short of the role they expect it to play in improving public health.

The investors, co-ordinated by responsible investment NGO ShareAction, are concerned that the target Nestlé announced last Thursday undermines the company’s pledge to lead the food industry in ensuring balanced diets are within reach for people around the world.

ShareAction is highlighting two main concerns:

  • Nestlé aims to increase sales from ‘more nutritious’ products by 2030 by 50 per cent, but this target is broadly in line with its current overall growth guidance of 4-6 per cent per year. If its sales of unhealthier products also increase at a similar rate, there will be no improvement in the impact of the food it sells on consumer diets and public health.
  • Nestlé has chosen to count as ‘nutritious’ some products to which government-endorsed nutrient profile models do not apply, such as coffee and commercial baby foods. This means that Nestlé could meet its target by selling more of these foods with no positive impact on public health.

ShareAction and the investors had called for a proportional target that would see a shift away from sales of less healthy products that are high in salt, fat and sugar. This is an important next step following Nestlé’s move to start disclosing the proportion of its global sales defined as healthier, which was welcomed by ShareAction and investors.

Simon Rawson, ShareAction’s Director of Corporate Engagement said: “This flawed approach to designing targets calls into question how committed Nestlé is to driving healthier outcomes for society and the economy.

“If Nestlé is serious about doing its bit to help people enjoy healthier diets it needs to set targets to increase the proportion of food sales classed as healthier using a government-backed nutrient profiling model.”

Maria Larsson Ortino, Senior Global ESG Manager at LGIM: “Poor diet represents an urgent public health challenge. As the world’s biggest food and beverage company, Nestlé has a significant impact on public health, and can raise market standards across the sector by demonstrating leadership. Focussing in on a healthier diet, through a healthy food system will also have many knock-on effects including those on climate, nature as well as on the economy.

“There are aspects we applaud, including Nestlé’s use of an independent internationally recognized nutrient profile model, Health Star Rating (HSR), across its entire global portfolio, and the Company’s announcement on Thursday of a public target on increasing the sale of their healthier products.

"However, the announced target did not go far enough, the Company did not take the opportunity to take a bolder step and set a specific, measurable and ambitious target whereby at least 50% of their sales would come from products that meet healthy thresholds by 2030.

“The continued inclusion of specialized nutrition products, including baby foods, vitamin and mineral supplements and medical nutrition in Nestle’s current target remains a concern. LGIM will continue to engage with Nestlé to encourage more meaningful change.”

Tom Sanders, ESG analyst at NEST, commented: “Unhealthy food options, and the heavy reliance of companies on the sales of products high in fat, sugar and salt, generates financial risks, compromises the wellbeing of communities and creates risks for the economy.

"Setting a proportional target to increase healthy food sales is a crucial step to addressing the systemic risks of a less healthy product portfolio.

“Nestlé’s target has fallen short of adequately addressing its over-reliance on the sales of unhealthy products. We hope Nestle’s desire to move the needle on health and be a leader in the industry is reflected through creating a more ambitious target.”

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Notes to editors

Nestlé announced its new nutrition target on 28 September 2023. It has previously committed to lead the food industry in ensuring balanced diets are within reach for people around the world.

In April 2023 a group of 26 Nestlé shareholders managing over $3 trillion in assets called on the company to set a target to rebalance its sales towards healthier products, based on government-endorsed nutrient profiling models.

In March 2023 Nestlé disclosed the proportion of its global sales defined as healthier according to the Health Star Rating, following escalated engagement with shareholders co-ordinated by ShareAction.

The full list of investor quote can be found below:

Amy Brown, Stewardship Lead at CCLA, said: “Nestlé’s announcement fails to evidence its stated commitment to nutrition, health, and wellness. While we welcome the company’s move to disclose the nutritional value of its entire global portfolio, disclosure means nothing without meaningful objectives and targets. In setting absolute as opposed to proportional sales targets, we believe Nestlé has missed a golden opportunity to set itself apart from the competition.”

Matt Lomas, Engagement Director for Investment at Guy’s and St. Thomas’ Foundation, said: “It is unclear if Nestle’s healthy sales target will lead to the meaningful shift away from its reliance on less healthy foods that is needed. Without a proportional target, we cannot be confident that Nestlé will be able to play its part in addressing the rising risks to people’s health from less healthy food. As a long-term investor focused on investing in a healthier society, we will continue to engage Nestle to encourage higher ambition that we know can make a positive impact on people’s health.”

Deepshikha Singh, Head of Stewardship and Deputy Head of Sustainable Investment Research at La Française Asset Management, said: “Diet related ill-health is of global significance – the ramifications of which can harm communities, widen health inequalities, and create economic risks. It is unclear how Nestlé’s current target to increase sales from ‘healthy’ products will improve population health, given the inclusion of black coffee and infant products. We cannot be confident that this target will ensure a move away from an over-reliance on the sale of unhealthy products or that sales from healthy products will increase at a greater rate than those from less healthy products. From our perspective, Nestlé have missed an opportunity to demonstrate leadership on nutrition and should have been more ambitious.”

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