The US$850bn cost of malnutrition for businesses

08 Jul 2020 --- Chronic underinvestment in fighting malnutrition and obesity in the workforce costs businesses in low- and middle-income countries (LMIC) up to US$850 billion per year in productivity losses. This is the main finding of a new report entitled The Business Case for Investment in Nutrition, published by Chatham House and Vivid Economics. It highlights that it is in the interest of businesses to improve nutritional outcomes among their workers as an “investment in tomorrow’s workforce” – whether signs of malnutrition are visible throughout the workforce or not.

“We hope that this report will kick-start a conversation about why businesses should take action on nutrition and how they can do so. This report is a starting point – we now need companies, together with civil society organizations and governments, to start building the evidence base for effective private-sector interventions. The more companies engage in this space, monitor the impact of their programs and share best practices, the better understanding will be of how to move forward,” study author Laura Wellesley, Senior Research Fellow at Chatham House, tells NutritionInsight.

The research institutes modeled the number of underweight or obese workers in 13 business sectors across 19 LMIC and the impact it has on their productivity as well as the estimated cost to business. The report found that businesses in LMIC collectively lose between US$130 billion and US$850 billion a year through malnutrition-related productivity reductions, equivalent to between 0.4 percent and 2.9 percent of those economies’ combined GDP.

In terms of underweight workers, Ethiopia and India face the highest burden on business of the countries modeled, impacting 1.6 percent of GDP and 0.9 percent of GDP, respectively. On the other hand, Egypt (2.6 percent of GDP), Albania (1.5 percent) and Honduras (1.4 percent) face the highest burden on business from workers being obese.

A number of countries face a significant “double burden” of malnutrition in the form of high costs associated with both under- and overweight workers, including Ghana, Namibia, Tanzania and Zimbabwe. In Namibia, 12 percent of the workforce is obese and 10 percent underweight.

Wellesley details that reasons for lacking investment in nutrition and health ranges from companies’ poor visibility of malnutrition among their workforces to confidentiality issues when collecting and analyzing employee health data.

“More fundamentally, though, there seems to be an assumption that malnutrition is simply not relevant to companies employing skilled workers on a good wage. There’s a perception that malnutrition – largely understood as ‘undernutrition’ – is a problem among low-earning, low-skilled individuals only. Our model results show that this perception is misplaced,” she highlights.

The report details the costs and risks of malnutrition to businesses.Why should companies care?
The long-term risks of delaying or ignoring malnutrition treatment in the workforce are multifaceted and intersectional. “Malnutrition experienced in childhood limits an individual’s physical and cognitive capacity throughout their lifetime and so limits the pool of human capital from which employers can draw in the future,” says Wellesley.

Moreover, the impacts of malnutrition are long-lasting and can pass from generation to generation, the report details. “Childhood malnutrition has long-term negative impacts on physical and mental productive capacity in adulthood, resulting in reduced labor productivity. Stunting, wasting and overweight or obesity in childhood contribute to lifelong disability and undermine the development of the brain and the body, reducing children’s ability to access and progress within education.” 

Malnutrition not only affects the individual, but also the communities they live in. “[It] hinders progress in other areas of sustainable development, including education, gender equality and improved health,” Wellesley adds. Subsequent consequences also include the increased risk of social unrest and even armed conflict, which can destabilize the economies in which businesses operate.

The impacts of the longstanding consequences of malnutrition have received global attention. One in three children under the age of five is malnourished and not developing properly, according to a UNICEF report from last October. The Food Action Alliance founded in January aims to address the significant hurdles in the transformation of food systems. Specifically, the UN Food and Agriculture Organization (FAO) places a particular emphasis on the cultivation of pulses to malnutrition needs around the globe. 

The road ahead
Over 80 percent of the multinational companies Chatham House studied reported taking some form of action to tackle malnutrition, whether through workplace initiatives, support to local communities or partnerships with NGOs. However, most businesses’ approach to tackling malnutrition was “patchy and incomplete,” says Chatham House. 

“Many of the policies that can help to improve nutrition outcomes among employees should be very cheap to implement,” says Wellesley, for example including basic training on nutrition as part of company wellbeing programs. The report further details corporate modes of action as:

• Providing regular nutritional health checks and subsidized food at work.
• Ensuring support for breastfeeding mothers.
• Investing in corporate social responsibility (CSR) and workplace programs as an avenue of engagement.
• Paying workers’ wages in full so employees can afford nutritious food.
• Engaging in philanthropy partnerships that set targets and measure their impact.

Halfway through the UN’s Decade of Action on Nutrition, the Tokyo Nutrition for Growth Summit (currently due to take place in December 2020) provides a platform for governments, multilateral organizations, financiers, investors, civil society and businesses to fill the investment gap that persists around undernutrition.

“The summit offers a potential milestone moment for companies to set new and ambitious financial commitments toward positive nutrition outcomes. We have five years left to meet the nutrition targets under UN Sustainable Development Goal 2 – now is the time to ramp up engagement and investment in this space,” says Wellesley. 

She encourages further research to be conducted on cost-benefit analyses, considering the burden of malnutrition and diet-related ill-health is a significant concern in all countries, not just LMIC. “It is therefore safe to assume that to some degree businesses operating in countries like the US and UK will be facing the same productivity losses as we outline in the report,” she warns.

By Anni Schleicher