Food retailers failing to tackle obesity risk disinvestment, report warns

By Oliver Morrison

- Last updated on GMT

Image: Getty/gorodenkoff
Image: Getty/gorodenkoff

Related tags Obesity Supermarket

UK supermarkets that fail to take action to improve the nation’s diet are in danger of losing investor confidence, a report claims. But what responsibility, if any, do supermarkets have in bettering the health of their customers?

Food retailers urgently need to improve their efforts in helping British consumers to eat more healthily, according to the charity ShareAction in its Healthy Markets​ campaign.

The group – a coalition of global institutional investors (including Nest, M&G Investments, BMO Global Asset Management, Jupiter Asset Management, and Newton Investment Management) managing around $1 trillion (€900 billion) – analysed the public commitments and actions of the UK’s 10 largest supermarkets (Tesco, Sainsbury’s, Asda, Morrisons, The Co-op, Lidl, ALDI UK, Waitrose, Marks & Spencer and Iceland) towards helping their customers eat a balanced diet and maintain a healthy weight.

It concluded that major gaps exist in the supermarkets’ public commitments to support healthy eating and fight obesity.

The report noted that supermarkets seem to be most active in reducing sugar and salt content of their products, moving towards healthier checkout areas and using recommended front-of-pack traffic light labelling.

But it added the sector has the overall scope to do substantially more. According to the analysis, there was very little clear information available about whether supermarkets have genuinely adopted policies on responsible marketing to children and also whether they are following international guidelines on the marketing and composition of foods aimed at infants and young children: two key areas highlighted by the World Health Organisation. For example, ALDI UK, Waitrose, Asda, and Iceland showed no policy on responsible marketing to children – an issue, according to ShareAction, of growing concern to government and the public.

Other areas where reporting was particularly poor included supermarkets’ disclosure on their pricing and promotional strategies for healthy products and how they determine the healthiness of a product. 

According to the report, Sainsbury’s and Marks & Spencer were the most transparent on their plans, though information was only found on just over a third of all possible criteria. The least evidence was found in Asda and Iceland’s efforts.

‘Supermarkets need to integrate health considerations across their business operations’

ShareAction now wants supermarkets to define and publish comprehensive nutrition and health strategies, and to set out clear plans, policies and data on their efforts to drive healthier food and drink consumption. Furthermore, supermarkets need to ensure that these are rolled out nationwide across all their retail operations and store formats.

Failure to do this, it said, would ultimately be bad for business. Tesco and Co-op were the only retailers in the report to cite health and obesity as a ‘business risk’.

Ellie Chapman, Head of Food and Health at ShareAction, said: “Given that two in three adults and one in three children in the UK are already overweight or obese, supermarkets need to integrate health considerations across their business operations and rapidly abandon the most harmful practices. However, we have very little confidence they’ve got a plan for this, given the fact there’s such little disclosure. With scrutiny from regulators, consumers, and investors increasing, failure to act is not only likely to have reputational consequences but financial ones too, as companies fail to capitalise on growing consumer demand for healthier food and pre-empt further regulatory changes.”

‘Investors want to see how supermarkets are anticipating regulatory trends’

Ignacio Vazquez, ShareAction’s food and health company engagement and research manager, told FoodNavigator that food retailers that fail to tackle health and obesity ultimately risk disinvestment.

“If, within a certain timeline, investors consider companies have not made sufficient progress – for example, companies do not meet investors’ expectations for disclosure or they do not fulfil their expectations for taking action in certain areas – investors should look into possible methods of escalation,”​ he said.

“This could include voting against companies at their annual general meetings (AGMs), tabling related shareholder resolutions, or making any new debt issuance conditional on action being taken. Should everything else fail, disinvestment might be considered as a last resort.”

Vazquez added that “investors want to see how supermarkets are anticipating regulatory trends​”. (The UK introduced a sugar tax on soft drinks in April 2018 and will ban the sale of energy drinks to under-16s.) He also questioned whether supermarkets are responding adequately to the potential consumer demand for healthier foods.

"Supermarkets are really important players in supporting people to eat better. There has been a lot of focus on educating consumers in what type of foods they should be eating, but in reality we also know that the food environments are quite important. For example, if we go to a shop and most of the products we are presented with are unhealthy we're not giving a real choice for consumers. Equally, if supermarkets' actions don't help us make healthier products more affordable, or all the marketing is done on unhealthy foods, we are kind of swimming against the current.” 

‘Supermarkets should not be held responsible for the free choices of their customers’

Daniel Pryor, Head of Programmes at the Adam Smith Institute, a neoliberal think tank and lobbying group, told FoodNavigator that ‘paternalistic’ regulation on the food industry was not the solution to the nation’s obesity crisis.

“Supermarkets should not be held responsible for the free choices of their customers. Wider access to healthy food and more information is welcome, but the assumption that consumers are wrong to sometimes opt for less healthy options is infantilising​,” he said.

“Retailers already have a very good reason to respond to expanding demand for healthy products – the profit motive. Much of the business risk stems from thinly veiled threats of yet more paternalistic regulation on the food sector, despite mounting evidence that measures like the sugar tax and advertising crackdowns do little to change the UK’s obesity rate.”

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