Nestle investors ask company to make more healthy food items

Move comes after 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

A coalition of investors, led by ShareAction, has filed a resolution asking the maker of Kit Kat chocolate bars to set an internationally accepted target to increase the proportion of sales of healthier foods, at a time of surging ill health related to poor nutrition worldwide.

Nestle is facing a formal demand from some shareholders, including Legal & General, 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 Kit Kat chocolate bars to set an internationally accepted target to increase the proportion of sales of healthier foods, at a time of surging ill health related to poor nutrition worldwide.

For the measure to pass, at least 50% 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.

Nestle shares were little changed in the latest trading session. The shares are down about 10.5% in the past year.

Pressure is growing on food companies to make their range of products healthier. 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 Organization. The health agency estimates obesity will cost the global economy trillions of euro 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.

At the time, the charity said Nestle’s target of increasing sales of “more nutritious products” by 50% by 2030 was inadequate. This was, in part, because it said Nestle could potentially meet the target by including sales of coffee and baby food, which nutrient-profile models do not consider as nutritious.

While there have been discussions with Nestle since then, they have reached an impasse, according to Maria Larsson Ortino, senior global ESG manager at Legal & General Investment Management. 

“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 Catherine Howarth, chief executive of ShareAction.

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

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

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

The company also disagreed products such as plain coffee or vitamins and supplements should be excluded as they are part of its portfolio and consumed by people every day.

Nestle has disagreed with various arguments made by ShareAction, said Pascal Boll, an analyst at Stifel, most notably the claimed fraction of unhealthy food within the company’s portfolio.

The maker of Quality Street sweets also objects to “the general opposition against indulgence products, which are part of people’s lives and could be consumed in moderation”, he said. 

• Bloomberg