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Tesco faces investor backlash over healthy foods

Investors are calling on Britain’s largest supermarket to set targets to increase the proportion of healthy products it sells.

Tesco is under pressure from a coalition of institutional and retail investors to disclose the share of total food and non-alcoholic drink annual sales by volume made up of healthier products, and publish a review of its progress each year in its annual report from 2022 onwards. The resolution will be put to a vote at Tesco’s AGM.

The coalition has been coordinated by NGO ShareAction. It marks the first health-based shareholder resolution at a FTSE100 company.

Investors co-ordinated by ShareAction made similar requests at Tesco’s 2020 AGM, but say the company has not made any significant commitments or progress to date.

Tesco has been singled out on account of its market leading role in shaping the nation’s diet with a 27% share of Britain’s grocery market. The investors also claim that Tesco’s performance on health issues lags behind some of its supermarket rivals.

Marks & Spencer’s ‘Plan A’ has included annual progress updates since 2017 towards a target of 50% of sales (own-brand only) from healthier products by 2022. It reached 40% in 2019.

Sainsbury’s has a target to increase the percentage of healthier products sold from 41% in 2015 to 45% in 2020 (it reached 43% in 2019/20). Sainsbury’s has also committed to set targets to 2040 and report biannually from 2021 onwards.

While Tesco does monitor the health profile of its sales via its ‘Healthy Little Differences’ tracker, the investors say it does not disclose this information publicly nor set targets to increase the share of healthy products.

Last year, the retailer committed to a 300% increase in sales of meat alternatives by 2025 but has not set a corresponding target for a reduction in sales of processed meat products.

An October 2020 report from The Food Foundation found that “encouraging healthy diets” was Tesco’s weakest area of performance across 10 environmental and social topics.

Ignacio Vazquez, senior manager at ShareAction, said: “As the UK’s largest food retailer, Tesco’s actions are of systemic importance in tackling obesity. But its prime market position has not yet translated into leadership on this critical issue. We hope that Tesco’s board will endorse the resolution and grasp the opportunity to help build a healthier UK post-Covid, while also improving its financial sustainability in the long-term.”