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We’ve coordinated the filing of a resolution at Unilever – Here’s why

We’ve joined over 100 institutional and individual investors to co-file a health-focused shareholder resolution at one of the world’s largest food manufacturers: Unilever.

We have big news!

We’ve joined over 100 institutional and individual investors to co-file a resolution at one of the world’s largest food manufacturers: Unilever.

The resolution – to be voted on at the company’s AGM in the Spring – would see Unilever significantly grow the proportion of its sales from healthier products.

Not only that but we’re calling on it to use government-endorsed standards to measure this growth, ensuring consistency with its peers. And we’re asking the company to disclose the percentage of food sales that are defined as healthier.

Poor diets have a big impact on people’s health and the economy

Why have we taken this step? Unilever is one of the biggest food producers in the world. As such it has a huge influence over what we eat. And what we eat has a huge impact on both our weight and our health.

Obesity rates have tripled globally since 1975 – a direct consequence of poor diets. This has resulted in declining health.

The impact of this costs an estimated US$2 trillion every year – or 2.8 per cent of global GDP.

That is similar to the impact of smoking.

Covid-19 has added another layer of awareness to this impact. Obesity was the second major risk factor for complications to the virus. In fact, nine in ten deaths from Covid-19 worldwide have occurred in countries where over half of adults are overweight.

What’s more, like many other social challenges, it is often the most vulnerable who are at greatest risk of obesity.

Recent data in the UK found that 20 per cent children living in the most deprived areas were obese. This compares to just eight per cent in the least deprived areas.

Why is this the case? It comes down to the accessibility of affordable healthy food.

Unhealthy food environments are at the core of poor diets

When you look at supermarket shelves it would easy to think we have innumerable options when it comes to our food.

Yet the vast majority of these options are high in fat, sugar and salt. These products flood the market.

The Access to Nutrition Initiative (ATNI) – the leading benchmarking organisation for food companies – reports that more than 70 per cent of products from top packaged food and drink manufacturers sold in the UK and US are less healthy.

These less healthy products are also more heavily marketed. 80 per cent of all advertising spend by food companies in the US each year promotes fast food, sugary drinks, confectionary and unhealthy snacks.

In the UK, advertising spend on fruit and vegetables accounted for just 2.5 per cent of the total in 2020. Sugary drinks, confectionery and sweet and savoury snacks, meanwhile, made up 45.9 per cent of this spend.

This challenge has been identified in the UK’s recent National Food Strategy (NFS).

It recommends the introduction of hefty taxes on sugar and salt used in processed foods by 2024, as well as mandatory reporting requirements for food companies, including of data on sales generated from products high in fat, sugar and salt (HFSS) by 2023.

Whilst we wait to see if these recommendations will become legislation, companies cannot ignore the fact that consumption of HFSS products in the UK needs to be reduced by 25 per cent by 2032 to deliver required public health outcomes.

Tackling the production of healthy foods is vital – but why Unilever?

Food manufactures have a huge role to play in defining food environments. They ultimately determine the foods we eat.

These companies therefore have the ability to greatly influence, and ultimately improve, public health on a global scale.

Unilever is a key player here. It's one of the largest food and drink manufacturers in the world. It has a global turnover of €51 billion and the company’s Foods and Refreshment Division generates €19.1 billion annually. That’s approximately 40 per cent of its overall sales.

Many of the company’s products – Hellman's mayonnaise, Marmite, Magnum and Ben & Jerry’s – are stalwarts in consumers' cupboards, fridges and freezers. It's therefore in a prime position to have a positive impact on people’s health.

In 2010, as part of its Sustainable Living Plan, Unilever declared it would decouple growth from its environmental impact, whilst increasing its positive social impact.

Yet the company continues to grow its business from the sale of its least healthy products – primarily ice cream and condiments.

In 2020, Unilever reported that 61 per cent of its food and drink sales were derived from products with “High Nutritional Standards” according to its own classification.

But, an independent review by ATNI found that just 17 per cent of the food manufacturer’s food and beverage sales were derived from healthier products. This puts Unilever behind many of its competitors including Danone, Nestle, Kraft-Heinz, General Mills and Kellogg’s.

It seems there is still a long way to go for Unilever to decouple its growth from the sale of its least healthy products.

Unilever’s current levels of disclosure on this topic – and the metrics used – do not provide investors with the information they need to fully understand the company’s position relative to its peers, or how it is adapting to rapidly changing regulation.

We’re urging Unilever grow its sales of healthier food

That’s why we’ve co-ordinated a global coalition of institutional investors – with combined assets under management (AUM) of $215 billion – and over 100 individual shareholders to co-file this health resolution at Unilever.

Support for the resolution comes from some of Europe’s leading asset managers such as Candriam Investment Management and ACTIAM; one of the largest UK charity fund managers, CCLA; healthcare providers Trinity Health in the US; and Guy's & St Thomas’ Foundation in the UK.

Together, these investors have asked Unilever to disclose the proportion of total food and drink sales made up of healthier products, and to publish targets to significantly increase those sales by 2030. They urge the company to use government-defined metrics to measure these goals and calls on it to report on progress annually.

If agreed, these commitments will allow investors and the public to better understand the impact of Unilever’s policies on the health of its customers.

The commitments will also enable investors to benchmark Unilever clearly against its competitors and understand the risk profile of the company against upcoming risks and regulation in this space.

Action on health is vital to manage risk – but acting early will also bring opportunities

Health is increasingly seen as an asset. Poor health, left unchecked, will bear significant risk to companies, investors and, not least, the public.

Similar to companies with high carbon emissions, food businesses reliant on selling unhealthy food and drink products are becoming a risk to investors' portfolios.

Rising rates of obesity are driving regulators across the world to fast-track anti-obesity policies. Sugar and calorie taxes are already in place in more than 50 jurisdictions worldwide – that’s more than global carbon taxes.

With upcoming regulation in the UK, food retailers will soon need to understand the healthiness of all the products they sell. Therefore, there is increasing pressure on manufacturers to collect and disclose this data.

Consumers are also demanding healthier products. A survey from The Grocer found that 64 per cent of UK consumers want to reduce their sugar and calorie intake and 40 per cent want to increase the amount of fruit and vegetables in their diet.

Manufacturers who fail to make progress ahead of these measures or capitalise on opportunities will face out-sized risks both to the sustainability of their businesses, and their reputations.

Unilever has an opportunity to lead – and fulfil its ambition to be “the global leader in sustainable business”

Unilever is well regarded in the industry as a business that is innovative.

It's also a leader when it comes to its awareness of the vital role of sustainability and ESG issues. It has been a long-standing advocate of corporate action on climate change, and is one of the largest companies to have committed to a living wage for all its direct providers of goods and services.

But the healthiness of its products remains a blind spot for the company.

By agreeing to the resolution asks, Unilever has the opportunity to address this gap and become a global leader on health and nutrition.

We hope the Board will recognise this opportunity and support the resolution.

Meanwhile, as investor focus on health grows, the company’s wider investor base can showcase their support, and illustrate the importance of health, by voting in favour of the resolution this spring.

Such a move would send ripples through the entire food industry, bringing wider benefits not only to the company’s shareholders and customers but to society as a whole.

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