SWITZERLAND – A prominent group of shareholders has criticized Nestlé for its recent commitment to increase the sales of healthier products, labeling the approach as “flawed.”
The investors, organized by the investment lobby group ShareAction, argued that Nestlé’s new healthy food target may undermine the company’s promise to lead the food industry in promoting balanced diets globally.
Nestlé unveiled its goal to boost the sales of “more nutritious” products by 50% by the year 2030.
This ambitious plan involved substantial investments in product renovation and innovation to support the initiative.
The Swiss conglomerate aimed to achieve sales growth of healthier products in the range of CHF 20 billion to CHF 25 billion (US$21.77 billion to US$27.21 billion) by 2030, constituting approximately 50% growth compared to 2022 sales.
However, in response to Nestlé’s announcement, Simon Rawson, ShareAction’s director of corporate engagement, expressed concerns about the company’s approach.
He emphasized the need for Nestlé to set targets that increase the proportion of food sales categorized as healthier, employing a government-backed nutrient profiling model to ensure credibility.
“This flawed approach to designing targets calls into question how committed Nestlé is to driving healthier outcomes for society and the economy,” Rawson stated.
The statement issued by ShareAction and influential Nestlé shareholders, including Legal and General Investment Management (LGIM) and pension provider Nest, outlined two primary concerns.
Firstly, it argued that Nestlé’s target to increase sales of more nutritious products by 50% by 2030 is closely aligned with its existing overall growth guidance of 4-6% per year.
The shareholders contended that if sales of less healthy products increase at a similar rate, there will be no net improvement in the health impact of the food the company sells.
Secondly, the investors and ShareAction criticized Nestlé for categorizing certain products as nutritious that are not subject to government-endorsed nutrient profile models.
This included items like coffee and commercial baby foods. This classification could enable Nestlé to meet its target by selling more of these products, potentially without a positive impact on public health.
Maria Larsson Ortino, senior global ESG manager at LGIM, expressed appreciation for Nestlé’s use of an independent internationally recognized nutrient profile model, the Health Star Rating (HSR), across its global portfolio.
However, Ortino noted that the announced target did not go far enough in setting specific, measurable, and ambitious goals to ensure that at least 50% of sales would come from products meeting healthy thresholds by 2030.
When asked for a response to the latest criticism, a Nestlé spokesperson defended the company’s position, stating, “We have set an ambitious target that is at the upper end of the growth guidance we have provided for the company.”
Nestlé reiterated its belief that its entire portfolio can contribute to a healthy and balanced diet and pledged to grow the more nutritious segment accompanied by robust measures to enhance responsible marketing and support nutritious choices.
