More collaboration between companies, their investors and other stakeholders would help to achieve better outcomes in the food and beverage sector.
Food and beverage (F&B) companies and their investors can’t go at it alone when it comes to tackling sustainability in the sector, an expert has told ESG Investor.
The global food system is considered as the primary cause of biodiversity loss by the World Wide Fund for Nature, with agriculture accounting for nearly 70% of the projected loss of terrestrial biodiversity. Being able to feed the eight billion people that populate the Earth while keeping sustainability targets at heart also remains a key challenge – particularly in light of the many issues posed by climate change, including increased land-use competition.
With such challenges in mind, an industry group focused on engaging with F&B firms and investors to improve health and nutrition outcomes has been increasingly working with other stakeholders to try to tackle the sector’s slow pace of change.
Launched over 10 years ago, the Access to Nutrition Initiative (ATNI) represents 85 institutional investors representing roughly US$20 trillion in assets under management, and seeks to align collaborative engagement activities more closely with parties of influence outside the investment community.
“There’s been a recognition after several cycles of collaborative engagement over the last several years that ESG investors by themselves have not been able to get real systemic change to happen within the F&B industry,” said Christopher Board, Responsible Investor Engagement Manager at the ATNI. “As we talk about regulation and the growing role that ESG investors can play, we’re increasingly of the view that these things need to be working in concert.”
Moving the dial
In July 2020, the ATNI released its Investor Expectations on Nutrition, Diets and Health, created in consultation with institutional investors. The initiative aims to foster greater engagement from investors with F&B companies, with the overall goal to address global nutrition challenges more closely and deliver on the UN Sustainable Development Goals.
“Although businesses are very good at measuring and mapping business and financial risks, there is a need for management to include biodiversity on the risk register,” said Sasja Beslik, Senior Adviser for Data Analytics at consultancy Rimm Sustainability. “The misalignment of financial capital to natural resources shows very little signs of abating. The Task Force on Nature-related Financial Disclosures (TNFD) is a significant step towards addressing these issues, but we need to do more to ensure that natural assets are valued and managed in a sustainable manner.”
As part of a five-year plan, the ATNI recently developed a new strategy focused on ramping up engagement work and understanding how different stakeholder groups within the F&B sector can be mobilised – including investors, policymakers and consumer groups.
“The idea is for them to jointly, or at least in some collaborative way, align their asks and demands of the F&B sector and companies,” said Board. “The roll-out of this ‘theory of change’ started in earnest with the launch of our US index, where we started talking about the stewardship role that investors should be playing.”
The second pillar of the new strategy references the creation of partnerships and alliances across the sector globally to add substance and urgency to its case.
“This is a framework that investors can use within their own structures, and which helps them understand the data that we create,” Board added.
The ATNI regularly publishes datasets assessing industry progress across various criteria, including analysis reports on investor engagement with global F&B manufacturers. The latest one, which covered the period from 2021 to 2023, showed that 53 of ATNI’s 81 investors in nutrition and health – representing US$15 trillion of a total US$19.9 trillion in AUM – took part in its engagement initiative, representing a 275% increase compared to 2018-19.
“As shareholders and bondholders in most of the companies rated on our indices, institutional investors have the potential to drive substantial changes in companies’ commitments, practices and disclosures on nutrition,” Board explained. “Systemic change takes time and requires a collaborative effort – which is why our approach is based on collaborative engagement.”
Of the 20 companies targeted by the ATNI index over the 2021-23 period, investors engaged with 19, through 34 meetings over a 20-month period. Investors made a total 351 asks, the majority of which related to products (27%) and lobbying (21%). Topics most commonly addressed during meetings included transparency (100%) and products (94%).
The report also showed that companies made 80 statements to investors, of which 56 were confirmed updates – a 211% increase from the previous period.
Despite these positive results, Board said industry engagement remained too limited, and rated overall levels of progress over the past two to three years as “dissatisfactory”, adding that considerations of the long-term health of people and the planet largely failed to be built into business strategies.
“On the strategic level, when somebody inside a F&B company or their investment firms makes those decisions, they fail to see the bigger picture,” he said. “There’s a relatively abstract big macro-economic case, yet those investment and strategic decisions are just not being taken inside of the F&B community right now.”
Much like climate change and the collapse of biodiversity, issues related to nutrition and public health are a “slow-moving socio-economic crisis”, Board explained.
“The way we – the general public, the media and the investment sector as a whole – talk about these issues has not caught up to reality at all,” he added. “Our thinking is still fundamentally short-termist, and as a result, we are no closer to getting to grips with something that’s going to come back and bite us in the next ten, 20 or even 50 years.”
According to Board, executives at major F&B companies or their investment firms typically only stay in their roles for a limited number of years, and as such, may not feel the pressure to tackle sustainability issues with a long-term view – or to tackle them at all.
“The incentives that they work with continue to be fundamentally short-term, so they’re not really tackling this,” he said. “The challenge is how to shift that dynamic, which is why we’re working with institutional investors in nutrition and health.”
As well as pressure from investors and other stakeholders, the F&B industry is facing mounting regulatory scrutiny. In a number of major markets, legislation is being introduced to increase transparency and nutritional values. More fundamental shifts to food systems are also being required to comply with policy shifts relating to nature preservation and climate change action.
At COP28, the UN Food and Agriculture Organisation published the first iteration of a roadmap designed to enable the food system to meet food security, sustainability and emissions reduction targets.
Looking ahead, the 2025 Nutrition for Growth summit, which will take place in Paris, is set to be a major stock-taking moment for the public and the private sector alike on global food systems and nutrition.
“We are in the early stages of thinking about what the summit should seek to achieve,” Board added. “Our hope is that what we’re doing now will feed directly into that, and lead to some substantive change.”