Nestle faces shareholder vote over sale of foods high in salt, sugar and fat
Shareholder activists are calling on Nestle to stop relying so much on selling unhealthy food containing high levels of salt, sugar, and fat.
A group of shareholders wants Nestle to improve the food it offers to consumers so that it impacts postively on their health. they have put forward a resolution calling for this which will be put to a vote at the annual general meeting on April 18.
More than half of what Nestle sold in 2023 was unhealthy, according to the group. They say these food products got less than 3.5 out of 5 on the Health Star Rating. The activisits, led by responsible investment charity ShareAction, said they are concerned over regulatory, reputational and legal risks as well as public health impacts.
The resolution calls for the board to prepare a report each financial year on how the company performed in areas such as sustainable development and social issues.
They also want Nestle to follow internationally accepted standards that define healthy food. Catherine Howarth, who is chief executive at ShareAction, said: "Nestle is the biggest food company in the world and has an enormous influence on billions of people's diets and lives through the products it makes, advertises and sells to us."
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"While 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. As Nestle has consistently failed to set out how it will shift the balance of its sales towards healthier food options, concerned investors have been left with no option but to bring forward a resolution at the company's AGM in April."
"Any move away from sales of unhealthy products by Nestle will inevitably support healthier communities all over the world and in the long-term help economies too."
Investors with £1.31 trillion in assets under management, including big names like Legal and General Investment Management (LGIM), Candriam, and La Francaise Asset Management, are backing the resolution. In September, Nestle set a new goal to boost sales from nutritious products by 50% by 2030.
However, the resolution points out that this target is "simply in line with its overall growth guidance" of 4-6% per year, which means sales of less healthy products might also go up. The resolution also mentions that Nestle counts some products as "nutritious" even when the Health Star Rating (HSR) doesn't apply to them. It gives the example of coffee and infant food and milk formula for children older than 12 months, which health experts often do not recommend.
"This enables the company to meet its healthier food sales target solely by increasing the sales of these products and prevents shareholders from correctly assessing the applicable risks," the resolution stated.
Maria Larsson Ortino, LGIM's senior global ESG manager, said: "There is a clear link between a poor diet and chronic health conditions, such as obesity, heart disease and diabetes. As a long-term investor, LGIM believes that healthcare costs and decreased productivity have significant negative consequences on our clients' assets across multiple sectors."
"Following Nestle's health target announced last year, we publicly noted that we were disappointed that the Company had not taken the opportunity to set a specific, measurable and proportional target to increase sales from products that meet healthy thresholds."
"Since the publication of the target, we have had additional engagements with Nestle but consider the dialogue to have come to an impasse. We therefore deemed the next appropriate step to be to co-file this shareholder proposal. We want to press home to the Company, and to the food and beverage sector as a whole, the importance we place on nutrition."
A Nestle spokesperson responded: "We appreciate the constructive dialogue with ShareAction and the investor coalition over recent years, so this resolution is disappointing and counterproductive. ShareAction are targeting the wrong company. We are already moving and more would be accomplished by asking other firms to level up."
Nestle stated that the claim that three-quarters of its sales are from unhealthy products is "wrong", highlighting that healthier and specialised nutrition items have gone up from 57% to 59% in global sales.
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"The numbers are going in the right direction," it declared. "While we take note of ShareAction's viewpoint, we disagree with the idea that we should limit growth in certain parts of our portfolio. A proportional goal counters our value creation model."
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