Lauren Compere: the Access to Nutrition Foundation launches its 2016 Global Index

The Global Access to Nutrition Index (ATNI) ranks 22 largest companies on contributions to tackling obesity and undernutrition; Unilever leads 2016 ranking.

• By 2030 close to 50% of the world’s population is projected to be overweight or obese.
• Almost 800m people do not have enough to eat and another 2 billion people suffer from micronutrient deficiencies or ´hidden hunger.’
• Obesity costs the global economy approximately US$2trn annually, nearly 3% of global GDP

This month, the Access to Nutrition Foundation launched its 2016 Global Access to Nutrition Index (ATNI), ranking the 22 largest food and beverage companies on their nutrition practices. The Index was first published in 2013 for use as an independent benchmarking tool by investors, health advocates, and companies. ATNI is supported by a group of over 50 investors with assets under management close to $3 trillion. The Index evaluates companies on corporate strategy, management and governance related to nutrition, formulation and delivery of appropriate affordable and accessible products, and positive influence on consumer choice and behavior, through nutrition information, food marketing, and labeling.

The Index concludes that while some companies have taken positive steps since the last ranking in 2013, the food and beverage industry as a whole is moving far too slowly. Scored on their nutrition-related commitments, practices, and levels of disclosure, no company achieved a score of more than 6.4 out of 10 possible points.

Leading companies, Unilever, Nestlé, and Danone, have done more than their peers to integrate nutrition into their business models and produce healthier products. They aim for lower levels of sugar, salt, and fats, and higher levels of healthier ingredients. They also ensure affordable pricing and wider distribution of healthier products in emerging markets.

Global food and beverage companies continue to face significant headwind risks to their business models:

• Increasing global obesity rates, especially in children, lead investors to question marketing practices to children and low-income and minority communities in places like the US.
• NGO campaigns have increasingly targeted companies with cereal and soft drink product offerings.
• Rising global health care costs linked to obesity have led to the adoption of sugar and fat taxes in 10 countries—signifying the beginning of a trend. In middle-income countries such as Mexico, the rising double burden of undernutrition and obesity put pressure on the government to adopt a sugar tax.
• Changing consumer preferences towards healthier foods is decreasing sales of sugary drinks and snacks. The top 25 global food and beverage players have lost $18 billion in sales since 2009.

As reflected in the 2016 ATNI results, there is significant room for improvement. We believe companies that are applying strong nutrition policies globally are in a better position to reduce the risk of increasing regulation and to take full advantage of changing consumer trends towards healthier living.Increasing the diversity and quality of healthy foods and setting growth targets aligned with marketing budgets will further support their success.

There are significant opportunities for the Food and Beverage industry to play into these changing trends:

• Product Design & Reformulation: Companies can further reduce or eliminate negative ingredients (sugar, salt, saturated fats, and trans fats), increase the use of positive ingredients (vegetables, fruits, and grains) and reduce the calorie count per package. Companies must start by implementing a nutritional profiling system that is applied to its entire food portfolio, such as Unilever. Only 13 out of the 22 companies ranked by ATNI currently have nutritional profiling systems to guide their product reformulation and marketing practices.
• Clearer Labelling: Providing clearer nutritional information on both the front and back of packaging in all markets helps consumers make informed decisions on healthier eating habits. 55% of consumers select foods based on the ingredients list, while 54% select foods based on the nutritional facts. However, only 60% of consumers mostly understand nutritional information on food packaging, according to a 2014 Natural Marketing Institute Survey.
• Improving Access to Healthier Foods & Responsible Marketing in Emerging Markets: With rising income levels, packaged foods sales are growing ten times faster in emerging and low-income countries than in high-income countries. Companies have a responsibility to apply the same standards they use in their home country—such as nutritional profiling, product reformulation, marketing practices, and labelling—to global markets.
• Increase Sales of Healthier Foods: In developed countries, sales of packaged products with organic label claims have grown at over 5 times the rate of all other categories.i Investors need more transparency on the proportion of revenues generated by healthier products and the link to marketing dollars spent.

The 2016 ANTI findings provide a much-needed roadmap for companies and industry groups to accelerate improved performance on nutrition practices globally. Investors hope U.S. companies learn from the global practices of some of their European peers, who have ranked high on the Index. Industry associations should take note of rising investor expectations to better inform their public policy positions and voluntary nutrition and marketing guidelines. Overall, we must see food and beverage companies embed better nutrition into their core business practices across all markets at a much faster rate.

We encourage investors to use the ATNI to inform their investment decisions and engagement strategies. We invite additional investors to sign the investor statement and join the working group focused on engaging companies in 2016. Link

Lauren Compere is Managing Director at Boston Common Asset Management and a Board Member at the Access to Nutrition Foundation.