Rathbone Greenbank and Schroders devise investor expectations on sugar

Fund managers link up to tackle an emerging investment issue

Fund managers Rathbone Greenbank and Schroders are creating a set of investor expectations to support engagement on the risks and opportunities posed by food companies’ use of sugar following joint engagement with five companies in the food retail and production sectors on the issue.

Attention on the risks of sugar consumption to global health are increasing with sugar taxes being proposed in the UK, Denmark, France Mexico, Norway and South Africa.

The issue was highlighted by Schroders last year in report ‘Is sugar turning Big Food into the next Big Tobacco’ — where ESG analyst Elly Irving argued that increased awareness of the health implications of sugar, rises in healthcare costs and scientific research into the health risks of consuming excessive sugar should be a concern for investors. She said these factors could trigger lower sales growth, higher costs and litigation.

In early 2016, Rathbone Greenbank joined with Schroders to engage with the UK’s leading food and beverage producers and retailers on the issue, in light of the government developing a strategy to tackle childhood obesity.Their work will be developed into a formal set of investor expectations on the risks and opportunities of sugar use. The document will be sent to academics and relevant companies for review before being made public.

The fund managers hope that by building a framework for gathering information and setting baseline expectations for companies to follow, it can raise the profile of sugar-related health concerns and seek to identify leaders and laggards in relevant sectors.

Speaking to RI, Matt Crossman, Head of Corporate Engagement at Rathbone Greenbank, also said it is aiming to encourage more consistent reporting of sugar-related risks by companies.

Another issue it will address is public policy and lobbying. “It’s not clear whether a company’s messaging in this area is reflected to trade bodies. Many kicked back against a sugar drink tax. There is an inconsistency there,” he said.

Rathbone Greenbank and Schroders will continue their engagement on the issue as their guidance is drafted and refined. Its next phase will be direct engagement with companies identified as being most at risk. Link