Major food and beverage companies are being pressured to reduce the amount of sugar they use to help cut rates of diabetes and obesity among Australians.
The push is part of a wider program from AMP Capital’s Responsible Investment Leaders funds that aim to deploy investors’ superannuation and savings to help improve the world we live in.
Sugar consumption is a global health problem, with the number of obese adults doubling in the past few decades.1 In the US, obesity accounts for 21 per cent of health care spending.2
AMP Capital fund managers have been meeting with the boards and management of Australia’s largest food and beverage manufacturers asking for reductions in sugar usage and changes to the way the companies advertise to children.
Ethical and financial issues
A growing trend towards healthier eating is starting to limit the growth of companies that make and sell high-sugar products, but there is a concern that some manufacturers may respond by political lobbying, more aggressive advertising strategies and funding research to undermine public health bodies.
“We’ve been tackling both ethical and financial issues when meeting with these companies’ management,” says Kristen Le Mesurier, the Portfolio Manager of AMP Capital’s Responsible Investment Leaders diversified funds.
This kind of responsible investing matters not only because it helps make a difference in the world, but also because ethical considerations can directly affect company valuations, especially over the long term.
“It can be tempting to focus only on short-term earnings drivers and share price performance on a daily basis,” says Ms Le Mesurier.
“But the research has found that the long-term is incredibly important to investment returns and performance. Understanding all the drivers that affect your investment will give you an advantage over purely focusing on the short-term earnings drivers.”
Getting information and results
AMP Capital has been asking food and beverage companies to report on their progress meeting sugar reduction targets, as well as for details of advertising policies and information about how they fund scientific research.
The efforts are seeing some success, with soft drink makers increasingly replacing sugar with artificial sweeteners and decreasing the size of cans and bottles.
1 The World Health Organisation, Fact sheet number 311, January 2015.
2 Cornell University, Obesity accounts for 21 percent of US health care costs, 2012.
This article has been prepared to provide general information and does not constitute 'financial advice' for the purposes of the Financial Advisors Act 2008 (Act). An individual investor should, before making any investment decisions, consider the information available in the relevant Product Disclosure Statement and seek professional advice. While every care has been taken in the preparation of this document, AMP Capital Investors (New Zealand) Limited and the AMP Group (together, 'AMP') make no guarantee that the information supplied is accurate, complete or timely and do not make any warranties or representations in respect of results gained from its use. The information is not intended to infer that current or past returns are indicative of future returns. The views expressed are those of the author and do not necessarily reflect those of AMP. These views are subject to change depending on market conditions and other factors.