Are financial markets missing the value of healthy food?
Access to Nutrition Initiative (ATNI) and Planet Tracker, in association with The Global Alliance for Improved Nutrition, have published a seminal Materiality of Nutrition Report. The first collaboration between ATNI and Planet Tracker sets the scene for a new conversation how can healthier foods drive healthy profits, people and planet?
The report compares the healthiness of food product portfolios from 20 of the largest global food manufacturers with their profits and market valuations. The findings reveal a link between healthier food product portfolios and higher profitability but this is obscured by poor company disclosures.
Key Findings
NB: The sample size is only 20 companies. Neither ATNI nor Planet Tracker wish to suggest this report is more than a discussion paper to stimulate further debate.
Health Profitability: Analysis shows that companies with broader, healthier food portfolios have higher average profit margins (15.2%) compared to those with unhealthy portfolios (13.4%). However, a subset specializing in unhealthy products, like soft drinks, shows even higher margins (16.7%), highlighting the complexity of the market.
Health Star Rating (HSR) and EBIT:Understanding the relationship between HSR and EBIT is key to drive investments towards health and wealth. Our findings suggest there is not a strong negative association, in the companies assessed, between HSR and EBIT. What's more, our results suggest there are positive associations between HSR and EBIT among smaller companies with broad portfolios.
Investment Opportunities: In addition to the obvious benefits to society, investors would benefit from a switch to healthier foods. In a scenario where companies with unhealthy portfolios switch to healthier products and achieved similar margins, profits would also rise by nearly USD 350 million and valuations by USD 60 billion.
Investment risks: Most companies fail to provide sufficient information, making it difficult for investors to assess the impact of nutrition on their valuations. This lack of transparency is a missed opportunity for companies and a risk for investors, particularly with potential regulations on the horizon.
Social Economic Impact: Unhealthy food products reduce productivity, increase costs for employers, and impose a significant burden on society, potentially reducing GDP by 3.3% and life expectancy by three years by 2050.
Policy Regulation: Effective policy actions in various countries signal rising pressure for broader regulation, posing risks (and opportunities) or companies relying on unhealthy products and the financial institutions that support them.
Greg S Garrett, Executive Director, Access to Nutrition Initiative,
This report is part of a small but critical and growing body of evidence showing that food companies should improve the healthiness of their portfolios and disclosures. By not doing so, they increase their own risk and miss the opportunity to improve societal outcomes.
Peter Elwin, Head of the Food and Land Use programme at Planet Tracker,
Unhealthy food products are costing society and employers, but the issue is being overlooked by financial institutions. Regulation presents an increasing threat to companies profiting from producing unhealthy foods, but poor disclosure is hiding the risks. Our analysis shows that there could be investment opportunities associated with producing healthy food so there's an incentive for investors to ask for change.
Read the report here
About ATNI
ATNI is a global non-profit founded in 2013 that exists for the sole purpose of transforming markets for nutrition. ATNI believes the private sector has an important role to play in fighting malnutrition. ATNI's mission is to improve (financial) market performance by challenging key actors in the food system notably industry and investors to accelerate access to affordable, sustainable, and nutritious food for all, especially for society's most vulnerable. ATNI does this through the development and publication of accountability tools and strategies in close collaboration with industry, investors, policymakers, consumers organizations and other nutrition stakeholders.
About Planet Tracker
Planet Tracker is an award-winning non-profit financial think tank aligning capital markets with planetary boundaries. Created with the vision of a financial system that is fully aligned with a net-zero, resilient, nature positive and just economy well before 2050, Planet Tracker generates break-through analytics that reveal both the role of capital markets in the degradation of our ecosystem and show the opportunities of transitioning to a zero-carbon, nature positive economy.
About GAIN
The Global Alliance for Improved Nutrition (GAIN) is a Swiss-based foundation launched at the United Nations in 2002 to tackle the human suffering caused by malnutrition. Working with governments, businesses and civil society, GAIN aims to transform food systems so that they deliver more nutritious foods for all people, especially the most vulnerable.
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Contacts:
Philip Eisenhart +44 7894 66 33 01
