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Tesco's health commitments send ripples through the food industry

The UK’s largest supermarkets sets targets to increase the sale of healthier food and drinks. Tesco’s health commitments represent a huge step for health and shareholder activism.

By Louisa Hodge, Food & Health Engagement Manager, ShareAction Tesco, the UK’s largest retailer, has, today, set leading targets to increase the sale of healthier food and drinks across its operations. This represents a huge win for customer health. Tesco's new health commitments also represent a huge win for shareholder activism. The move comes as a direct response to our shareholder resolution filed back in February – backed by seven institutional investors and over 100 individuals.

As the UK’s largest retailer, Tesco has a significant role to play in shaping our diets

Tesco is the UK’s largest supermarket. It has over a quarter (27 per cent) of the grocery market. Its actions to support health are of systemic importance to tackle poor diets and reduce obesity levels. Yet, Tesco’s prime market position had not translated to leadership on this critical issue. For two years we’ve engaged with the company on the topic of health, asking them to disclose the percentage of their sales from healthier food. We put this question to them at their AGM last year, and our Healthy Markets investor coalition posed the same question in a letter in September, but the company still failed to set commitment regarding their work on health. That’s why we bought together a group of investors to file a resolution calling on Tesco to do better. We called for it to set and report on a target for growing the proportion of its sales from healthier products.

Tesco has become a market leader as it looks to increase healthier food options

In March, the retail giant took an important step forward. It announced a commitment to increase its sales of healthier products, as a proportion of total sales, from 58% to 65% by 2025. But questions remained. The target only included Tesco-branded stores in the UK. This left out other stores owned by Tesco (through Booker), such as Budgens and Londis-branded convenience stories. It also excluded its international operations. With this in mind, we kept the pressure on. And today, Tesco has responded to this investor pressure. It has now expanded this commitment to its entire retail group. The company has announced it will commit to similar measures across its central European operations – and formulate specific targets by the end of 2022. It has also committed to encourage Booker consumers to choose healthier options by increasing ranges of healthier products available, and nutritional information provided via labelling and online.

Tesco's health commitments will send ripples through the industry

In recognition of the important steps Tesco have taken to address our outstanding concerns, we have decided to withdraw our shareholder resolution. However, the work doesn’t end here. Tesco has agreed to a two-year process of collaborative engagement with investors and ShareAction, as it moves to implement its new commitments. We’ll be working closely with the retailer to ensure these ambitious commitments translate into positive steps to build a healthier society. Meanwhile, today’s announcement should make other food retailers and manufacturers take note. The food sector shapes the way we eat. It has a pivotal role to play in population health. Investors are increasingly taking interest in this topic, and are demanding the food industry takes positive steps to put people’s health first. Our Healthy Markets investor coalition will continue its work to engage with supermarkets and food manufacturers on the risks and opportunities they face from increasing regulation and shifting consumer preferences. To join our coalition contact Louisa.

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