Investors push six major F&B leaders to address financial and social burden of unhealthy foods

Key investors have written to the CEOs of PepsiCo, The Coca-Cola Company, Mondelēz International, Kraft Heinz, Kellanova and General Mills, calling for greater transparency around the nutritional value of product sales and the adoption of internationally accepted nutrient profiling models to accompany these public disclosures.

The investors — collectively managing over US$3 trillion in assets — are coordinated by ShareAction and include Legal and General Investment Management, Pictet Asset Management, Nest and CCLA.

Their open letter underscores mounting regulatory, fiscal and reputational pressure against unhealthy food sales. It flags a general lack of transparency around product’s healthiness against a growing consumer preference for nutritious options.

“More transparency and better disclosures from the food and drink sector are a crucial first step for these companies to be accountable for their influence on diets worldwide. Without these, investors and the public are in the dark on just how reliant these companies are on selling unhealthy products,” Thomas Abrams, co-head of Health at ShareAction, tells Nutrition Insight.

“Poor diets and sicker societies impact economic productivity and threaten long-term business success and financial returns and without this information, we can’t fully assess the risks being created by an over-reliance on the sales of less healthy products.”

Financial and social weight

Most of the open letter signatories are part of ShareAction’s Long-Term Investors in People’s Health (LIPH) initiative, which encourages the “integration of health as a responsible investment theme.”

“While we have highlighted six companies that the Healthy Markets Association has engaged with for a couple of years — without success — this is an ask of the entire sector,” Abrams stresses. “Without better disclosure across the sector, investors will not be able to properly gauge and compare risks.”

The signatories say that despite repeated requests from investors from LIPH and other investor coalitions, the six companies have left investors to rely on less frequent third-party research to gauge this risk exposure.

“It’s worth noting that these six industry giants do have an outsized influence on what the world eats. With diet-related health issues now causing 11 million deaths each year and obesity rates skyrocketing, the time for action is now. If these companies can step up and do better, by reporting clearly and transparently around health, it would set a new standard across the sector.”

“This is a vital first step to protecting public health, reducing healthcare costs and building healthier communities, while also helping to create long-term financial value for businesses and investors.”

Absence of standardization

The signatories stress that an over-reliance on the sale of less healthy products exposes companies and their investors. In contrast, it advocates that prioritizing healthier products supports long-term financial and social value for businesses, investors and consumers.

ShareAction underscores that the obesity epidemic alone is projected to cost the global economy US$4.32 trillion annually by 2035 — around 3% of GDP, similar to the impact of COVID-19 in 2020.

The Access to Nutrition Initiative’s 2024 global index reveals that just 34% of sales of the biggest food and beverage manufacturers in the world can be considered healthy. 

Moreover, ShareAction flags that when considering their entire portfolios, the overall healthiness of products sold by these major manufacturers appears not to have improved since the 2021 index.

While some companies use their own Nutrient Profiling Models (NPMs) to report on the healthiness of products, doing so raises concerns about validity, the signatories argue.

“The absence of standardization also hinders investors’ ability to compare health metrics across companies, complicating risk assessments both at the enterprise and portfolio levels. Reporting consistently would allow those of you who are taking productive steps to sell more healthy products to better illustrate that progress,” they write.

Consensus on international standards

The signatories cite Unilever and Danone as examples of cases where a consensus was reached on internationally recognized NPMs and definitions of healthier products. Disclosing this type of information may soon be required under materiality assessments and international frameworks like the EU’s Corporate Sustainability Reporting Directive. 

The letter signatories say companies that disclose ahead of the implementation of these international requirements will place themselves at an advantage. They propose adopting one or more of the internationally recognized NPMs: Health Star Rating (Australia and New Zealand), Nutri-Score (EU) and the National Preventive Mechanism (UK).

“Following a shareholder resolution co-filed by ShareAction, 11 institutional investors and 100 individual shareholders, Unilever committed to publish information about the healthiness of its products against six government-endorsed nutrient profiling models,” Abrams explains.

“Meanwhile, Danone is among a growing number of food companies using internationally recognized methods, such as the Health Star Rating and Nutri-Score, to report on the healthiness of their sales globally, including their entire portfolio in the assessment.”

Public disclosures warranted

The signatories call for enhancing transparency through regular public disclosures of healthiness metrics.

This could be in the form of an annual report outlining an average NPM score, broken down by product category for the company’s global packaged product portfolio. This report would specify the total sales revenue and the percentage of sales from “healthier” and “less healthy” products.

Earlier this year, a ShareAction-coordinated resolution from Nestlé shareholders also called on improving the healthiness of the company’s portfolio, criticism that Nestlé later rejected.

“The resolution filed at Nestlé this year was responsible investors concerned that Nestlé is overly reliant on the sales of unhealthy foods, which exposes them to material risks — and trying to get them to shift their sales,” Abrams tells Nutrition Insight.

“This letter makes a more basic ask that all investors should be onboard with increased disclosure and transparency. This is necessary for all investors to understand the extent to which these risks are priced into valuations, whether or not they want to engage with the companies on the topic or have a judgment on the preparation for incoming risks.”

“While this letter is not addressed to Nestlé, we hope it results in movement across the sector, and companies, including Nestlé, becoming more transparent about the healthiness of their sales.”

With additional reporting by Jolanda van Hal