Rathbone Greenbank Review Summer 2017

The topic of healthy and sustainable food has been an area of interest to the Greenbank team for many years, but the problems caused by the increasing amounts of sugar in our diets have made it a more pressing concern.

In addition to the clear societal impacts of an unhealthy diet, this is an issue that is beginning to impact investors through the imposition of sugar taxes on producers and shifts in consumer behaviour.

Our 20th Investor Day sought to identify how healthcare professionals, government departments, food and beverage producers, investors and consumers can all work towards creating a healthier society.

For this year’s event, we were delighted to welcome Professor Graham MacGregor, chairman of Action on Sugar, as our keynote speaker. Graham opened his address by affirming that an unhealthy diet is now the foremost cause of premature death and disability — not only in developed countries, but in all regions of the world. Medical research continues to find connections between obesity and non-communicable diseases, ranging from heart disease to cancer. Together with the costs of treating dental decay in children caused by sugary food and drink, this represents a major and unnecessary burden on our health services.

Using the model of product reformulation that has gradually reduced the amount of salt in our food, Professor MacGregor advocated a similar approach as a way of halving our daily sugar consumption over a five-year period.

Claire Hughes, head of nutrition and science at Marks & Spencer, outlined how helping consumers eat a balanced diet is driving the company’s ambition to become recognised as the leading retailer for healthy eating. In response to consumer-led priorities, M&S has responded by controlling portion sizes and providing clear calorie indicators on labelling. Independent nutrition consultant Fiona Watson observed how the enduring attraction of sugar as an ingredient lies in its taste, relative cheapness and preserving qualities. The difficulties in altering its usage are based on its utility, as food and drink manufacturers’ reluctance to change is largely rooted in fears that their competitors will fail to comply with voluntary codes.

As always, our Investor Day is an important focus for the team’s work, but is not an end in itself, comprising only one part of our broader research and engagement activity. In this, our aim is to bring about positive outcomes, as we remain firm in our belief that our analysis can help to protect clients from the financial risks of poor corporate performance.

Kate Elliot, our senior ethical researcher, accordingly highlighted how the team assesses risks and opportunities presented by regulation, consumer habits, sugar usage and consumption. With mainly lower-income groups facing the twin threats of over- and undernutrition, the impact on health also raises the question of dietary wellbeing within the context of social inequality.

As part of our work in the area of health and nutrition, Rathbone Greenbank has partnered with Schroders over the past year in order to conduct roundtables with food industry representatives and create an investor policy framework. This work culminated with the publication of a set of expectations designed to help investors make more informed decisions when investing in the food and beverage industries, highlighting the issue to the wider investment community.

Through our understanding of issues that go beyond the financial mainstream and our engagement with companies, policymakers and the wider investment community, we will continue to seek to enhance long-term investor returns while endeavouring to play a leading role in the responsible deployment of capital.

John David, Head of Rathbone Greenbank Investments