Lauren Compere, Head of Stewardship & Engagement, Boston Common Asset Management
Over the last several years, I have watched the Access to Nutrition Foundation evolve from its first Indexes in 2013 to see support for ATNI grow today to over 80 investors with close to $20 trillion in AUM. I helped initiate the first investor engagements using the Index’s findings in 2016, and I served on its board from 2016 until the end of 2021. Over that time, investors, including Boston Common, have broadened the approach to addressing nutrition beyond the Food & Beverage (F&B) sector, engaging players across the value chain including retailers and suppliers. We have supported robust government regulations related to labeling requirements, marketing claims, and definitions of healthy products. On October 20th, 2022 I joined the Access to Nutrition Initiative (ATNI) US Index Multi-Stakeholder Launch event to discuss our work in the past and investor strategies for the present to persuade F&B companies to prioritize the production and marketing of healthier products.
As an investor who has been engaging on this topic globally since 2008 with partners like the Interfaith Center on Corporate Responsibility (ICCR), I can say that the tone and tenure of the conversations we have had with companies have evolved significantly. Companies have become more strategic and are investing more in R&D for product reformulation and new product development. Companies included in the ATNI Index have also made progress over the past four years in the areas of governance and nutrition strategy. Unfortunately, this has yet to lead to the transformative change we are seeking in the F&B sector, namely, a significant improvement in nutritional performance aligned with WHO targets and SDGs 2 and 3 (Zero Hunger and Good Health & Well-being).
All companies must explicitly link nutrition strategy and goals to executive and board-level remuneration and seek more nutrition expertise on the board. It is particularly disappointing, therefore, that only four of the companies in the index currently link the remuneration of the person accountable for nutrition strategy to nutrition-related objectives. Investors must respond by more actively engaging boards – especially independent chairs – on this issue and urge them to also address performance on accessibility and affordability, key areas assessed under ATNI that continue to be lackluster at best. Among the 11,000 food products from major producers evaluated, (25-30% of US packaged food market), 70% failed to meet definitions of healthy, illustrating the lack of alignment and incentive across the board.
As investors, we assess how companies in the US Index are integrating nutrition performance as a core strategic objective with explicit and ambitious targets and metrics. We assess how this is supported across the value chain from R&D on product reformulation, new product development, pricing & distribution, M&A, marketing spending, and lobbying practices. We demand robust accountability and alignment across the value chain.
Partnership, while important, is just one of many vehicles necessary to effectively implement a nutrition strategy. And transparency is essential. We need external assessment of product portfolios using independent nutrition profiling models in addition to using internal Nutrition Profiling Systems (NPS). We need a better understanding of the incentive structures in place to support the development, distribution, and marketing of healthier products. And we need more detailed disclosure of marketing spending dedicated to healthier products versus the rest of the product portfolio – a key metric we have thus far been unsuccessful in advocating for.
Considering the 2022 US Index results, we have three company calls to action:
- Report annually on the percentage of sales generated by healthy products, and the percentage of the product portfolio that comprises healthy products.
- Use the Health Star Rating System (HSR) or equivalent nutritional profiling model to define healthy products.
- Use the Investor Statement framework to deliver better outcomes on nutrition, adopting the commitments within each of the four pillars of governance, strategy, lobbying, and transparency.
Food & Beverage companies must step up and adhere to the highest standards and definitions of healthy, establish robust and ambitious targets and metrics to accelerate progress on nutrition, and assess and address the real-world health-related risks, opportunities, and impacts of their business models. Responding to our investor calls to action and working in partnership with other players in the food ecosystem, including governments, will enable them to do just that.