Creating a food system that is good for the health of people and planet is a prerequisite for a healthy financial future. Enabling that future should be a priority for all long-term investors.
Why is this an issue for investors?
Good nutrition is fundamental to good health, yet humankind is facing a growing epidemic of diet related ill-health. Poor nutrition – and resulting illnesses – cost an estimated $3.5 trillion annually, or 5% of global income (ATNI, 2021). This places an extraordinary burden on health care systems, governments, and insurers around the world.
To tackle the problem, governments are beginning to adjust the regulatory landscape, meaning that there are now increasing financial repercussions for companies that fail to transition their business models towards healthier products and sales. Through engaging with companies on nutrition, we can make business models more resilient and play a role in improving public health.
In December last year, in response to the publication of the National Food Strategy review, CCLA signed a letter to the Prime Minister, along with 17 other institutional investors, urging the Government to act on the Strategy’s recommendations. Against the backdrop of a worsening obesity crisis in the UK, we called for new legislation on mandatory reporting of sales of food and drink high in fat, sugar, salt; sales of protein by type; sales of fruit and vegetables; and food waste. We also asked for fiscal interventions and enhanced regulation to promote sustainability in the food system.
The letter led to a meeting with DEFRA and the Department for Health & Social Care in February. A select group, including CCLA, met again with DEFRA in May, with five members of DEFRA’s Food Data Transparency Partnership team. We pushed for investors to have a role as a driving force in raising the ambition for mandatory nutrition reporting and holding the industry to account.
The UK Government has now published its long-awaited Food Strategy White Paper, outlining priorities for food system policy changes on the biggest scale in a decade. The purpose of the proposed policy changes will be to address the biggest systemic challenges across the food value chain, including rising food costs, childhood hunger, public health and environmental sustainability.
Some positive progress
Encouragingly, mandatory reporting is included in the Government’s white paper and we welcome the commitment to improving food industry reporting standards, but argue that the proposals do not go quite far enough. We would like to see more detail regarding the extension of free school meals in England, a salt and/or sugar tax and measures to scale up plant-based protein production and consumption.
Large food companies have a clear role to play in creating a healthy and sustainable food system, but voluntary action alone is not enough. Businesses require equal rights and opportunities if they’re going to thrive and remain competitive. Mandatory reporting – as recommended in the National Food Strategy review – would create a level playing field and represent the first step away from a future defined by the diet-related ill health that is destroying our planet and populations.
We believe that healthy markets require healthy people and communities. We remain committed to being a catalyst for change in this area.
Amy Browne is stewardship lead at CCLA Investment Management