53 institutional investors representing $12.4 trillion in assets under management have pledged to support the achievement of World Health Organization (WHO) nutrition targets under SDG 2 to end hunger and SDG 3 to promote well-being. This action highlights the increasing recognition of the role and responsibilities of investors and corporations within the food system.
There is a strong connection to the climate challenge as well. Today the global food system is affecting climate change, while at the same time climate change is putting food production at risk as it leads to a decrease in food quantity and access, less dietary diversity and decreased nutritional. Inge Kauer, Executive Director of the Access to Nutrition Initiative (ANTI), says, “What the UN Food Systems Summit and the Nutrition for Growth Summit highlighted this year is that what we really need is a healthy AND sustainable food system, one that benefits both people and the planet.”
There are significant economic impacts of poor nutrition which are only really now entering the mainstream. The World Bank has estimated that the economic costs of undernutrition, in terms of lost national productivity and economic growth, range from 2-3% of GDP in some countries, up to 11% of GDP in Africa and Asia each year. More developed countries are also affected by malnutrition. The OECD predicts a 3.3% average reduction in GDP between 2020 and 2050 due to lower employment and reduced employee productivity caused by overweight. This includes Japan, which is witnessing rising rates of obesity as reported by the FAO.
Kauer adds, “Governments are now concerned with the economic burden they are facing and are starting to regulate and legislate the food industry – forcing food companies to improve the healthiness of their packaged food products and tackle malnutrition. As stricter regulations are rolled out, for instance with regards to food labelling and marketing, food manufacturers are forced to adapt by reformulating products, stricter marketing standards, and much more.”
The pledge follows the release of a report from the Access to Nutrition Initiative (ATNI), showing how eight different asset managers and investor coalitions adopt ESG integration, negative/exclusionary screening, corporate engagement and shareholder action, best-in-class/positive screening and sustainability themed/thematic investing to contribute to the realization of SDG2 ‘Zero Hunger’ and SDG3 ‘Health and Wellbeing’.
A key driver of the action is the recognition of the scale and impact of the packaged goods sector. In 2019 Euromonitor found that total worldwide retail sales of packaged food and non-alcoholic beverages amounted to approximately $3 trillion. Kauer says, “The sector’s revenue is exposed to both investment risks and opportunities associated with nutrition. On the one hand, malnutrition represents a clear and material risk to investors with holdings in food and beverage companies and on the other hand, growing consumer interest in healthy diets represents an opportunity for growth.” Companies will be called upon to use the ANTI’s independently developed system for defining what constitutes a healthy product, and adopt the commitments laid out by the ANTI.
Kauer said, “Institutional investors have a crucial role to play in tackling the global nutrition crisis. Firstly, as responsible businesses, all investors need to help combat the issue of poor nutrition, which drives high levels of death and preventable non-communicable diseases, while also putting individuals at greater risk from communicable diseases such as COVID-19. What’s more, the high individual, societal and economic costs of poor diets and nutrition impact on investor holdings, portfolios and asset values in the short, medium and long term – meaning that there is clear mutual benefit to investors, businesses and society of taking action on nutrition.”
The significance of the pledge is the recognition that many of the sustainability challenges we face are systemic in nature. Individual choice is based on a complex network of availability, opportunity, education, price and more. Governments are increasingly taking action on the quality and healthiness of food, intending to cut sugars, salt and fat content, especially in processed foods. Years of promotion of the idea of eating more fruit and vegetables have often been battling food desserts, pricing and more.
There are growing calls for marketing restrictions and guardrails are being introduced to protect children from unhealthy products. The prospect of fiscal measures like sugar taxes are a potential risk to investors – according to Kauer there are now more sugar taxes than carbon taxes. She adds, “These combined regulatory and fiscal measures pose a significant risk to returns and investments in the food sector, and companies that are addressing them and embedding healthy nutrition strategies are likely to continue to have access to capital and ultimately be the winners.”
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December 16, 2021 at 05:00PM
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Institutional Investors Target Food & Drink Companies To Drive Better Nutrition - Forbes
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