Schroders: Food giants face risks similar to Big Tobacco


Schroders is calling on fund managers to push food and drinks companies to cut sugar as it threatens to turn the sector into the next Big Tobacco, facing regulatory and consumer pressure.

The asset manager has joined with Rathbone Greenbank to create a guide for challenging companies on governance, strategy, implementation, public policy and demonstrating progress.

The Royal College of Surgeons reports that there has been a 24 per cent increase in the number of teeth being removed from children aged under four years old and Public Health England has challenged the food and drinks industry to cut sugar by 20 per cent by 2020.

The UK last year joined a number of countries that are introducing sugar taxes in order to address obesity and other health issues associated with excessive sugar consumption.

Schroders warns raising consumer and public health awareness, scientific consensus on links between sugar on non-communicable diseases and the healthcare burden could trigger lower sales, put pressure on margins and potentially expose companies to expensive legal disputes.

Schroders ESG analyst Elly Irving says the asset manager reckons sugar is a “material investment issue” for fund managers.

“The rise of global obesity, diabetes and diet-related disease is well known but we think the scale of the issue now makes this an investment concern. As this trend continues, we think companies will have to invest more in R&D, innovation and product reformulation.”