A group of Nestlé institutional investors have increased pressure on the world’s largest food company to become less dependent on unhealthy products and warned that consumers’ overconsumption of packaged goods with limited nutritional value poses “risks systems” for financial returns.
Shareholders who manage more than $3 billion in combined assets are asking the Swiss-based group to set a goal of increasing the proportion of its revenue coming from healthier food and beverages. Ahead of Nestlé’s annual general meeting in Lausanne on Thursday, they said they were prepared to “escalate” the matter unless directors address their concerns.
The public statement, coordinated by responsible investment charity ShareAction and signed by institutions including Legal & General Investment Management and several public pension funds, is the latest move in a long-running campaign among affected shareholders to pushing food companies to make their products more nutritious.
Several governments have introduced taxes on high-sugar products and restrictions on advertising as the industry comes under increased scrutiny over the extent to which it contributes to global obesity.
The investor intervention comes even as Nestle, whose confectionery brands include KitKat, Milkybar and Smarties, has recently become more open about the nutritional value of its product range.
The statement – whose signatories include EOS at Federated Hermes, which acts on behalf of clients on environmental, social and governance issues and advises them on voting at general meetings – is also despite the company’s commitment to publish a goal of increasing sales of healthier meals.
The group said it was asking Nestlé – whose portfolio also includes Cheerios cereal, Maggi noodles and Buitoni pasta – to specify a target for the proportion of its revenue coming from healthier foods, as the company has stated that the goal would be to increase sales of these products. In absolute terms.
Nestlé, which said it had “set a new standard for corporate transparency” across the industry, revealed last month that less than half of its consumer product portfolio could be considered “sound”, according to a commonly accepted definition.
Chief Executive Mark Schneider said Nestlé had made progress in reducing sodium, sugar and saturated fat. However, he also said there were limits to how far the company could push healthier alternatives and that treats such as chocolate were not meant to be healthy.
While the investor coalition said it welcomed Nestlé’s increased disclosure, it added that supermarkets were “flooded with less healthy food, causing significant damage to people’s health”, and that this created “systemic risks to investors’ returns”.
The investors said they wanted to work “constructively” with the board, but added they were ready to “step up our engagement” if the company did not provide the necessary assurances.
“They failed to set a goal like we wanted,” said Jessica Attard, program director at ShareAction. “Nestlé’s responses to many of our questions have been quite poor.”
She added that a shareholder resolution to increase pressure on Nestlé had been “on the table” for the AGM year, but “we agreed to delay, on the basis that Nestlé agreed to continue to engage with us”.
Nestlé said: “We are the first company to report the nutritional value of our entire global portfolio against a single externally recognized nutrient profiling system.
“We are committed to maintaining our leadership in the nutrition sector: Nestlé topped the Global Access to Nutrition Index in 2021 and 2018 and ranked first in the area of nutrition metrics in the World Benchmarking Alliance.