Mandatory Disclosure on the Menu

Tackling the UK’s health challenges requires a whole-of-society response, including from investors, explains Anna Taylor, Executive Director at The Food Foundation.

Last week, a report by the Institute for Public Policy Research (IPPR) made it clear that the UK’s worsening health was affecting the workforce, worsening productivity, holding back pay, damaging public finances and adding to regional inequality.

Bolstering the findings from IPPR, a report from The Food Foundation also showed that obesity and overweight are the leading risk factor for years living with disability in the UK, with this number having increased by a third (32%) in the last decade and doubled since 1990. These reports highlight that tackling Britain’s growing ill-health crisis holds the key to increasing economic growth.

The challenges to people’s health are now so significant that it needs a whole-of-society response. As the impacts of the interlinked environmental and health crises become more apparent, there is an increasing awareness among investors of the mounting economic costs of diet-related disease, which are creating financial material risks for company bottom lines and, indirectly, for the investors in these companies.

Obesity and overweight were responsible for 39,872 deaths among adults aged 20+ in 2021, an increase of 13% in the last decade. The estimated annual cost to the UK is £98 billion, with around £16 billion of those costs attributable to lower productivity and 63% of the years lost to poor health in the working age population, meaning obesity has a significant impact on productivity and absence rates within UK companies.

The rising incidence of food related ill-health is also placing a significant burden on the UK’s already stretched health service: National Health Service costs attributable to overweight and obesity are £19 billion a year. These create system-wide risks for investors and the companies within our investment portfolios.

Investor risks and opportunities

Investors have a duty to properly and effectively recognise and act on longer-term risks such as those presented by population ill-health and environmental breakdown. A company’s impact on health should therefore be considered by investors in the same way that environmental impact is now monitored as part of the investment decision-making process. There is growing and strong evidence that companies managing these risks most effectively provide better long-term returns.

There are also significant opportunities to be had if we can effectively address these risks. Ultimately, creating a food system that is good for the health of our population as well as for the planet is a prerequisite for a healthy financial future. Good health is an asset, it is what enables us to thrive and contribute productively to the labour market and be active participants in the economy. The consultancy McKinsey has estimated that better health could add US$12 trillion to global GDP by 2040 – this is equivalent to 0.4% faster growth per year.

In the EU and other parts of the world reporting initiatives – such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and the global International Sustainability Standards Board (ISSB) standards – are being introduced, meaning companies will have to report formally on their sustainability credentials. Whilst these steps are positive, we also need to see due attention given to health and nutrition, which is currently a missing piece in the sustainability puzzle.

Lack of disclosure

To fully understand the risks and opportunities facing companies, investors need access to good quality and comparable double materiality data on the risks facing and being created by food and beverage companies. However, there is currently a lack of disclosure from these companies on how they are addressing diet-related health risks.

Voluntary reporting standards have proven inadequate at driving the necessary scale of change required. Mandatory reporting would help investors understand the risks to their portfolios, ascertain what progress is being made, and facilitate the movement of capital toward companies that are supporting the transition to a sustainable and healthy food system.

The Food Foundation is the Secretariat for the award-winning Investor Coalition on Food Policy, a group over 30 investors with over £6 trillion in AUM, who are working to engage with the UK government on food related issues and advocate for improved business accountability and transparency.

The coalition is calling on governments, starting with the UK, to implement mandatory reporting for food and business companies across a suite of well-designed health and sustainability metrics. This will level the playing field and lead to genuine change across the food industry as a whole.

Collective action

The UK government’s Food Data Transparency Partnership initiative has taken substantial strides since it was launched in terms of developing initial thinking on possible health metrics for large companies in the food sector. This is a real opportunity for the UK to lead the way on health and nutrition-related mandatory reporting and we hope that the new UK government will ensure the progress made to date is not lost and that the initiative will continue.

We have already seen investors taking collective action on the environment, for instance through the Climate Action 100+ initiative or the Institutional Investors Group on Climate Change. Responsible investors should now also add their voices to growing calls for policymakers to support positive dietary shifts to improve the health of the nation. Joining investor initiatives such as the Investor Coalition on Food Policy is a great first step.

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