Nestle faces investor challenge over healthy food targets – The Straits Times

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Nestle is facing a formal demand from some shareholders, including Legal & General Investment Management (LGIM), to significantly improve the amount of healthy food the Swiss consumer group sells.

A coalition of investors, led by ShareAction, has filed a resolution asking the maker of KitKat chocolate to set targets to increase sales of healthier foods, at a time of surging ill health related to poor nutrition worldwide.

It also wants Nestle to implement internationally accepted standards that define healthy food. 

For the measure to pass, at least 50 per cent plus one vote of the registered share capital represented at the annual meeting in April would need to be cast in favour of the resolution.

Pressure is growing on food companies to make their range of products healthier, especially with obesity becoming a global health crisis in much of the developed world and on the rise in emerging markets.

Unhealthy diets are a driving factor behind the global growth rates of obesity, increasing the risk of diabetes, heart disease, stroke and some cancers, according to the World Health Organisation.

The health agency estimates that obesity will cost the global economy US$4.3 trillion (S$5.73 trillion) a year by 2035. 

The move by ShareAction comes about six months after the responsible investing charity criticised the world’s biggest food maker for relying too “heavily on sales of less healthy foods” and not doing enough to drive sales of more nutritious products. 

While there have been discussions with Nestle since then, they have reached “an impasse”, according to LGIM senior global environmental, social and corporate governance manager Maria Larsson Ortino. 

“The company claims in its mission statement that its products have ‘the power to enhance lives’, in reality three-quarters of Nestle’s global sales are unhealthy products containing high levels of salt, sugar and fats,” said Ms Catherine Howarth, chief executive of ShareAction. 

She added that as Nestle has “consistently failed” to set out how it will shift the balance of its sales towards healthier food options, investors have had to bring forward a resolution at the company’s annual meeting. 

Nestle said ShareAction is targeting the wrong company, and it would “have to agree to disagree” with the investor coalition.

The assertion that 75 per cent of the company’s sales are unhealthy is wrong, said a spokesperson, adding that Nestle was the first food company to measure the nutritional value of its entire portfolio against a government endorsed rating system. 

“Our goal is to achieve success across all segments of our portfolio, ensuring that we address responsibly the diverse needs and preferences of all our consumers,” the spokesperson added. BLOOMBERG

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