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Tesco faces shareholder challenge over its role in UK obesity crisis

Tesco PLC is the first UK listed company to be challenged with a shareholder resolution on health grounds.

(Wednesday 10 February, London) A coalition of institutional and retail investors have filed the first health-based shareholder resolution at a FTSE100 company, calling on the UK’s largest food retailer to set targets to increase the proportion of healthy products in its sales.

The resolution, co-ordinated by responsible investment NGO ShareAction, is being co-filed by seven institutional investors managing over £140bn in assets, along with 101 retail investors. It reflects rapidly rising investor concerns with companies’ health impacts, seen until recently as a fringe issue even by many advocates of ESG investing.

But with severely obese people three times more likely to be admitted to intensive care with Covid-19, the pandemic has highlighted the urgency of tackling mounting obesity levels to build a healthier and more resilient society.

The investors filing the resolution argue that Tesco, as the market leader with 27% of Britain’s grocery market, plays a central role in shaping the nation’s diets and must reduce its reliance on unhealthy products for sales growth. They also highlight that Tesco’s healthy eating metrics - or 'health performance' - lags behind some of its peers, while new health regulations and consumer trends pose a risk to the business.

The resolution will be put to a vote at Tesco’s AGM. If passed, it will require the company to:

  • Disclose the share of total food and non-alcoholic drink annual sales by volume made up of healthier products (as defined by the UK Department of Health) and develop a strategy to significantly increase that share by 2030;
  • Publish a review of its progress each year in its annual report from 2022 onwards.

Investors co-ordinated by ShareAction made similar requests at Tesco’s 2020 AGM, but the company has not made any significant commitments or progress to date. The resolution represents a marked escalation in the investors’ engagement with Tesco on this issue and is the first time a UK listed company has been challenged with a shareholder resolution on health grounds.

Covid-19 puts obesity in the spotlight

The UK government estimates that at least half of all grocery sales come from products that are high in fat, sugar or salt. This is a key factor in rising levels of obesity in the UK, which accounts for almost 10% of national health expenditure.

Covid-19 has thrust the issue further into the spotlight. The government’s National Food Strategy says, “In the age of Covid-19, a poor diet is almost as great a threat to life as cancer or old age.”

Tesco’s health performance lags behind M&S and Sainsbury’s

A recent review by the Access to Nutrition Initiative found that Tesco reported on just 30% of indicators of good health practice. Similarly, an October 2020 report from The Food Foundation found that ‘encouraging healthy diets’ was Tesco’s weakest area of performance across 10 environmental and social topics.

According to Tesco, the company monitors the health profile of its sales via its ‘Healthy Little Differences’ tracker, but it does not disclose this information publicly or set targets to increase the share of healthy products.

By contrast, Marks & Spencer’s “Plan A” includes annual progress updates since 2017 towards a target of 50% of sales (own-brand only) from healthier products by 2022. It reached 40% in 2019. Sainsbury’s has a target to increase the percentage of healthier products sold from 41% in 2015 to 45% in 2020 (it reached 43% in 2019/20). Sainsbury’s has also committed to set targets to 2040 and report biannually from 2021 onwards.

Regulation and consumer demands make strong business case for healthier product offerings

An October 2020 report from ShareAction noted that 85% of UK shoppers now report actively trying to improve their diet when shopping, while the UK government’s new Better Health campaign includes bold new policy measures to restrict marketing of high fat, salt and sugar foods. These add to existing measures such as the Soft Drinks Industry Levy (SDIL) on soft drinks and Public Health England’s sugar, salt and calorie reduction programmes for processed foods.

Tesco has already conducted small-scale trials of health-based interventions, which found that price promotions of fruit and vegetables resulted in a 13% increase in sales, while moving chocolate products out of prominent displays reduced sales by 22%. But Tesco has not yet implemented these on a broader scale.

Ignacio Vazquez, Senior Manager at ShareAction, said:

“Supermarkets, and in particular their keyworker staff, deserve credit for working tirelessly throughout the pandemic to keep food on the shelves. However the companies also have a responsibility for the health impacts of their product ranges and marketing efforts.

As the UK’s largest food retailer, Tesco’s actions are of systemic importance in tackling obesity. But its prime market position has not yet translated into leadership on this critical issue. We hope that Tesco’s board will endorse the resolution and grasp the opportunity to help build a healthier UK post-Covid, while also improving its financial sustainability in the long-term.”

Harry Evans, Associate Fund Manager at Epworth Investment Management/Central Finance Board of the Methodist Church, said:

Childhood obesity is a more pressing issue than ever, and the Central Finance Board of the Methodist Church holds healthy and adequate nutrition for children as an area of ethical importance within its investments.

As the UK's largest supermarket, Tesco has a key responsibility to help tackle childhood obesity, and has shown itself to be one of the more progressive supermarkets on promoting healthy eating. Setting clear targets on its growth of sales from healthy products and reporting on its progress is one way Tesco can demonstrate leadership in this area. It will also increase accountability on its efforts to address childhood obesity.

Kieron Boyle, Chief Executive, Guy's and St Thomas' Charity, said:

”Evidence shows that families spend most of their food budget in supermarkets. We know that the products sold there, how they are priced, placed and promoted have a big impact on what families buy and, as a result, on children's diet. Supermarkets like Tesco have a significant opportunity to show real leadership by disclosing and, where needed, improving their efforts to help families to keep healthy. This would build on Tesco’s market-leading work chairing the Collaboration for Healthier Lives that trials what positive retail and manufacturing changes look like in practice. We look forward to engaging with them and others on this topic."

Stephen Power, who manages Jesuits in Britain's ethical investment strategy, said:

“Good health, especially of children, is essential for human flourishing, yet a handful of companies are continuing to fuel a deadly obesity crisis. Too often healthy alternatives are unaffordable or missing entirely.

Tesco has made progress on its non-meat options, a welcome step to limit its climate impact, but needs to step up on the health front. This is why the Jesuits in Britain, as shareholders in the company, are calling on Tesco to show transparency and report on its efforts to encourage healthier eating.”

The Trustees of the Marmot Trust, said:

"In light of the pandemic all companies should reflect on their role in society. For supermarket companies, that should include a commitment to promote healthier food for the benefit of their customers, the NHS and society as a whole, with clear publicly available metrics on their progress."

Sophie Lawrence, Senior Ethical, Sustainable and Impact Researcher at Rathbone Greenbank Investments, said:

We have supported a number of our clients to co-file this Tesco resolution. Greenbank clients believe that making healthy food accessible to all is a crucial part of building a sustainable food system and a healthy society. The growing consumer demand for healthy products, coupled with growing regulation, paints a strong business case for action in this area and we would like to see Tesco lead the way.”

Dr Honey Smith, an individual filer of the resolution, said:

"As a GP I see every day the effects of unhealthy diets on our patients. Levels of obesity in the UK are rising and causing untold harm in terms of heart disease, arthritis, cancers and many more conditions. Supermarkets have a responsibility to support healthy living as far as they are able, and I call on Tesco to play its part in supporting people to make healthier food choices."

Will Nicholson, Project Lead - Plating up Progress, Food Foundation, said:

“We fully support investor action on health and nutrition. Our Plating Up Progress report in 2020 looked at food industry targets for nutrition, environment and social inclusion and found that industry's ambition on nutrition lagged behind progress made in recent years on environmental issues.”

Anisah Rahman, Youth Board Member, Bite Back 2030, said:

“Many factors influence what consumers buy in a supermarket, including layout, in-store marketing activities and promotions. Tesco must use these tools as forces for good that make it easier for young people to choose healthier options.”

Notes to editors

For all enquiries and interview requests, please contact:

Conor Quinn, Media Communications Manager, ShareAction +44 (0)7444 696 214

  • The institutional co-filers are:

Robeco Institutional Asset Management B.V.

JO Hambro Capital Management’s UK Dynamic Fund

Epworth Investment Management, owned by the Central Finance Board of the Methodist Church

Jesuits in Britain

Guy's and St Thomas' Charity

The Marmot Charitable Trust

The 1970 Trust

  • 101 individual retail investors also co-filed the resolution.
  • The wording of the resolution is as follows:

To promote the long-term success of the Company, given the opportunities and risks associated with regulatory and consumer trends towards healthier diets, we as shareholders direct the Company to include in its Annual Report published from 2022 onwards, a description of its strategy in the area of nutrition and health, as well as:

  • Metrics and targets: disclose the share of total food and non-alcoholic drink annual sales by volume made up of healthier products* and publish a target to significantly increase that share by 2030;
  • Progress reporting: publish an annual review of progress on delivering the above-mentioned strategy, including the metrics and targets at (1) above

* Healthier products mean those food and non-alcoholic drink products not identified as “high in fat, sugar and salt (HFSS)” under existing guidance issued by the UK Department of Health.

About ShareAction

ShareAction is a research and campaigning organisation pushing the global investment system to take responsibility for its impacts on people and planet, and to use its power to create a green, fair, and healthy society.

We want a future where all finance powers social progress. For 15 years ShareAction has driven responsibility into the heart of mainstream investment through research, campaigning, policy advocacy and public mobilisation. Using our tools and expertise, we influence major investors and the companies they invest in to improve labour standards, tackle the climate crisis and address inequality and public health issues.


Any views and opinions expressed are those of the spokespeople, and coverage of any assets held must be taken in context of the engagement and in no way reflect an investment recommendation. Past performance should not be seen as an indication of future performance. The value of investments may go down as well as up and you may not get back your original investment.

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