This study identified a range of challenges and associated opportunities for increased consideration of issues related to nutrition and obesity prevention within institutional investment decision making. These included challenges and opportunities at the investor employee level (e.g., experience and training, internal pressure/buy in), investment organisation level (e.g., competing duties and issues, extent of topic-specific knowledge, investment ethos and approach, exposure to food companies, member/client demand, brand reputation, demonstration of financial risks), investment sector level (e.g., quality and availability of ESG data, focus on systemic issues/crises, exercising voice through collective action), government level (e.g., regulatory measures and legal constraints, resourcing and leadership) and non-government level (e.g., media attention and public opinion, advocacy).

These findings are similar to recent research by the group ShareAction (a UK based charity that promotes responsible investment and improvements to corporate ESG practices) involving institutional investors in the UK, which showed that investor stewardship on health issues is lacking [53]. ShareAction reported that in order to support the integration of health within investment practices, there was a need to further demonstrate the ‘business case’ for prioritising health, develop evidence-informed guidance on topics and sectors to focus on, as well as high quality data on company performance [53]. Below, we discuss key recommendations for action identified from this study, with a focus on what is needed to help embed considerations related to nutrition and obesity prevention within institutional investment decision-making in Australia.

Improve the quality and availability of nutrition related ESG data and benchmarking criteria

One of the main challenges identified through this study for investors to consider issues related to nutrition and obesity prevention, and for responsible investment decision-making in Australia more broadly, were limitations in available ESG data and associated benchmarking criteria. Participants from a range of organisations reported using different data sources to inform their decision making, including in-house data analytics, third-party ESG data, benchmarks and corporate reporting. Inconsistencies in the methodologies across ESG data providers and in-house data analytics was seen as diminishing the comparability of ESG performance across companies. Heterogenous ESG data is a commonly cited problem across the global investment sector [54, 55]. In 2019, State Street Global Advisors assessed the extent of ESG rating variation across major ESG ratings providers (including Sustainalytics, MSCI, RobecoSAM, Bloomberg ESG) and found that there was substantial differences in research, data sources and scoring methodologies [54]. An academic study comparing the ESG rating approaches of MSCI, Bloomberg and Thomson Reuters datasets found that, while dimensions of ESG were similar, the composition and weightings of indicators led to substantial differences in overall ESG scores assigned to particular companies, particularly in the case of the ‘social’ domain [56]. Thus, a key driver of investor action on issues related to nutrition and obesity prevention in Australia is likely to be comprehensive and consistently applied ESG ratings for food companies that include nutrition-related metrics.

Corporate sustainability reporting is one of the primary data sources used by ESG data providers and investors to assess companies on their ESG performance. There is a lack of globally agreed reported metrics regarding ESG issues, and international frameworks and guidelines differ markedly [57]. Five prominent framework- and standard-setting institutions have recently committed to work together towards implementing a comprehensive corporate reporting system, which is an important step towards consolidation of sustainability reporting standards [58]. However, previous research suggests that the incorporation of nutrition and obesity-related indicators within global ESG reporting standards and frameworks is limited in scope, with inconsistent application [47, 59]. Moreover, disclosure of nutrition- and obesity-related policies and practices as part of corporate reporting has been shown to be limited and highly variable across the food industry [60,61,62,63,64]. Assessment of 350 influential food and agricultural companies as part of the 2021 Food and Agricultural Benchmark, conducted by the World Benchmarking Alliance (WBA), found that, out of ‘nutrition’, ‘environment’ and ‘social inclusion’ domains, nutrition had the smallest number of publicly disclosed commitments [60]. Until corporate sustainability reporting standards explicitly include nutrition-related criteria for food companies, there is unlikely to be widespread uptake of nutrition-related performance metrics by investors.

One of the key opportunities to support investor action on issues related to nutrition and obesity prevention, identified through this study, is to increase understanding of ‘best practice’ investment practices with respect to food companies. Study participants described benchmarking tools as useful for understanding how companies could be assessed against food systems-related issues. Prominent nutrition benchmarking tools include the Access to Nutrition Initiative (ATNI) [38], which benchmarks global food and beverage manufacturers on their nutrition-related practices and on the healthiness of their product portfolios, and the WBA Food and Agricultural Benchmark, which assesses food and agricultural companies on their performance against nutrition, social inclusion and environmental criteria [60]. While these initiatives do not include data and benchmarks for all regions and food companies, increased uptake of benchmarking and accountability initiatives, like the WBA Food and Agricultural Benchmark and the ATNI, is likely to help identify food industry leaders and laggards and address some of the literacy issues surrounding the application of nutrition- and obesity-related issues to an investment portfolio.

Demonstrate the financial argument for addressing unhealthy diets and obesity

Another commonly cited challenge (and associated opportunity) to the incorporation of issues related to nutrition and obesity prevention within investment decision-making was the perception that the financial argument for investors to address these issues has not been clearly demonstrated. Nevertheless, study participants did highlight several material financial risks for investors, including those associated with reputational, regulatory and systemic risks for investee companies. In regards to reputational risks, a 2013 report by Credit Suisse on investment risks associated with sugar highlighted that a major risk for investors was negative public opinion and consumer awareness of the ‘sugar debate’ [65]. Such public sentiment and associated reputational scrutiny on food companies is likely to be a driver of increased action from institutional investors. Of note, participants reported that regulatory risks (such as those linked to the introduction of sugar taxes) were likely to be the most relevant source of financial risks for food sector companies and their investors. Estimates from a 2017 report by Schroders and Rathbone Greenbank Investments suggested that regulatory and consumer pressure on sugar could lead to an ‘earnings per share’ reduction of 3–25%, depending on a company’s exposure to unhealthy products [39]. A number of economic modelling studies have estimated costs to industry associated with implementing obesity-related regulation, for example, the UK Food Standard Agency’s Impact Assessment for voluntary reformulation estimated a cost to industry of £25,000 per product reformulated [66,67,68].

The regulatory context for obesity prevention in Australia has typically preferenced voluntary and industry-guided approaches [69]. Unlike many other countries, the Australian government has not committed to implement globally recommended policies such as a sugar sweetened beverage tax, mandatory interpretive front-of-pack labelling and restrictions on the marketing of unhealthy foods and beverages to children [70,71,72]. This may explain, in part, current investor approaches which do not treat nutrition and obesity prevention-related issues as material financial risks. The recent (2022) change of government in Australia [73] to a political party with more progressive values may influence the regulatory environment for obesity prevention in Australia, and, coupled with growing regulatory action and consumer pressure on food companies globally, could provide increased impetus for Australian investors to respond.

One of the key areas to mobilise investment for nutrition- and obesity-related issues suggested by participants was demonstrating the impact these issues can have on investments, for example through real-world impact assessments and scenario analyses that assess policy options or consumer trends. Further research into what this would look like in practice and how it could be presented in a useful way for investors is likely to be valuable. Whilst regulation for improved nutrition and obesity prevention was generally viewed by participants in this study as a financial risk in relation to food companies, such regulation may also be viewed as an opportunity, e.g., for companies with healthier product portfolios or through increasing potential earnings indirectly via a more productive workforce and healthier communities. Economic modelling of obesity prevention legislation in Australia and internationally, such as sugar taxation, mandatory reformulation and restrictions on marketing to children, overwhelmingly show that these are cost-saving interventions from a societal perspective, with enormous public benefits to health systems, governments and society over the long term [74,75,76,77].

Moreover, universal owners (with highly diversified investment portfolios), by their nature, are not able to diversify away from systemic risks (i.e. risks that effect the entire market or system) [78, 79]. Diet-related ill health is an issue that impacts companies across different sectors through loss in productivity and ill health-related absence from work (e.g., as evidenced through the COVID-19 pandemic) which has the potential to affect investors portfolios across the board [80]. Whilst some participants from institutional investment organisations in this study reported that they were actively thinking about ESG issues in a systemic way, many other participants reported that the financial sector in Australia is still considering ESG in simplistic and superficial terms, which is likely to affect the extent to which nutrition issues are viewed as material to various industries and sectors. Outside of productivity losses, there is evidence that tackling unhealthy diets and obesity can help to mitigate environmental sustainability risks and harness associated sustainability opportunities [1]. Climate change is widely considered one of the most pressing systemic risks facing the economy, and there is growing recognition amongst the financial sector that climate-related risks and opportunities apply to all sectors of the economy [79]. There is a substantial amount of research demonstrating the interconnectedness of unhealthy diets and climate change, with a recent Lancet report noting that “alongside curbing air pollution, greater adoption of healthy and sustainable diets is potentially the greatest synergy between human and planetary health” [8]. The current study showed that, while climate change was front-of-mind for investors, there appeared to be limited recognition among investors about the ways in which healthy and sustainable diets were correlated with climate change. Increased communication with the investment sector around the links between unhealthy and unsustainable diets may, therefore, be helpful in framing unhealthy diets and obesity in financial risk terms. Overall, increased understanding of the financial implications that unhealthy diets and obesity could have on an investment portfolio, and what this means for investors with shares in food companies, represents a real opportunity to drive further consideration of these issues.

Build momentum around issues related to nutrition and obesity prevention in Australia through investor coalitions

This study highlighted the perceived importance of investor coalitions that use their collective voice to engage with companies on a particular issue, rather than relying on individual investor activism. Alongside corporate engagement, a recent report by the Food Foundation (a UK policy advocacy and research organisation) highlighted the largely untapped power of investor coalitions in influencing government action on food systems issues and engaging with policy decision-making [81]. Groups like the Food Foundation, ATNI and ShareAction are making progress in building investor coalitions that engage on food systems-related issues [44, 81,82,83]. ATNI has at least 74 investment organisations representing over USD$16.5 trillion assets under management that have signed on to the ATNI Investor Expectations on Diets, Nutrition and Health which outlines four investor expectations related to corporate governance, strategy, lobbying and transparency for food and beverage manufacturers and retailers [38, 84]. Importantly, because these types of initiatives frame their findings for an investor audience and encourage uptake by investors, they can mobilize multiple investors to engage with food companies on their obesity policies and practices. A recent example of this is an investor coalition organised by ShareAction, who filed shareholder resolutions at two major UK food retailers (Tesco and Morrison’s) asking them to increase sales of healthy products whilst publicly reporting on targets and progress [43]. Advocacy was highlighted by participants in this study as one of the key factors that contributed to the success of other investor targeted initiatives related to food systems, for example those focused on animal welfare and intensive animal agriculture. In particular, advocacy and engagement conducted by the Farm Animal Investment Risk and Return (FAIRR) initiative was seen as successful in building investor momentum on ESG risks and opportunities related to intensive livestock production [85].

There are, however, only a small number of Australian based investors (AMP Capital, Apostle Funds Management, Christian Super, Ethical Partners Funds Management, Local Government Super) who are signatories to the ATNI Investor Expectation on Diets, Nutrition and Health [83]. This could be due to the type of companies included in the flagship ATNI benchmark, none of which are Australian-listed companies. Additionally, unlike in the UK where ShareAction and the Food Foundation are active, there is no investor coalition that is targeted towards addressing nutrition, obesity or food systems issues in Australia. The creation of such a coalition in Australia may help to generate interest in addressing issues related to nutrition and obesity prevention amongst the Australian institutional investment sector, particularly where there is low awareness or engagement with the activities of internationally-based nutrition initiatives. There may also be substantial opportunity for advocacy organisations operating in the public health space (e.g., Obesity Policy Coalition, Cancer Council, Public Health Association of Australia) to scale up engagements with the institutional investment sector as a stakeholder in efforts to improve population diets and prevent obesity, including as part of advocacy efforts that aim to influence government policy decision-making.

Provide guidance on ways that institutional investors in Australia can address unhealthy diets and obesity

A number of participants reported that one of the primary impediments to increased attention to issues related to nutrition and obesity prevention was the lack of opportunities to invest in food companies on the Australian Securities Exchange (ASX). Interviewees whose organisations invested in predominantly Australian equities therefore perceived obesity as a less relevant ESG issue for their portfolios. These findings echo commentary from EIRIS (now Vigeo-EIRIS), an international provider of ESG research and services, that noted in 2016 that “in the Australian S&P/ASX 300 index there are only three companies that have been categorised with high obesity exposure” [86]. Moreover, the focus on ‘obesity’ by investors was perceived to be centred around large multinational food and beverage companies. Whilst many of the investors in this study invest in these multinational food companies, engagement efforts were predominantly concentrated on local companies due to a range of practical reasons. Investor coalitions could a play a key role here in driving engagement with internationally-listed companies on the issue of obesity and nutrition. In particular, multinational investor coalitions, such as those coordinated by ATNI and ShareAction, may help to facilitate Australian investor participation in collaborative ESG engagements with internationally-listed food companies. Furthermore, multinational investor coalitions may provide an opportunity for Australian investors to co-sign health-related shareholder resolutions filed at these companies. Increasing Australian investment sector awareness of, and participation in, these types of coalitions is likely to provide investors with more international corporate engagement opportunities.

Furthermore, while these findings would suggest that there are fewer opportunities to invest and engage with food companies in Australia, there is likely to be substantial room for improvement on nutrition- and obesity-related performance for those food companies that are listed on the ASX, particularly the largest Australian food retailers. EIRIS noted that no listed Australian companies scored well in regard to their efforts to address obesity [86]. Recent assessment of the nutrition and obesity prevention-related policies and commitments of major food retailers in Australia (Woolworths, Coles, Metcash/IGA and ALDI) found that they all performed relatively poorly on obesity prevention efforts [62]. Moreover, assessment of Woolworths and Coles in the WBA Food and Agricultural Benchmark found that neither company had “a comprehensive set of commitments to help consumers make healthier choices” [60]. These findings point to the need for increased accountability of Australian food retailers in addressing obesity and improving population diets, and indicate a number of areas for improvement in which Australian institutional investors could engage.

Difficulties in understanding the relevance of nutrition-related issues to companies outside of the food industry was identified by some participants as impeding the consideration of issues related to nutrition and obesity prevention within investment decision making in Australia. There are many companies outside the food industry that are likely to have the capacity to take action on nutrition through initiatives such as staff wellbeing programs, individual nutrition education and nutrition standards for food provision (e.g., through internal catering, food procurement and provision policies). Whilst these types of initiatives can contribute to obesity prevention efforts [87], investors are, arguably, likely to have the most influence on population diets where efforts are directed towards food and beverage industries and actions that alter the healthiness of food environments at the population level. This is evidenced by the demonstrated large population health benefits and cost-effectiveness of initiatives that impact food industry policies and practices, such as sugar sweetened beverage taxation, restrictions on marketing of unhealthy foods, and product reformulation [75], coupled with the relatively lower population health benefits from education-based initiatives [88]. Nevertheless, evidence of the impact of workplace-level nutrition-related actions on population health outcomes and productivity warrants increased attention. Outside of diets and nutrition, investors may be able to consider ‘obesity’ more broadly through their investment in healthcare, obesity treatment and management, and increasing attention to employee health and wellbeing [80]. Although this was not explored in the current study, broader strategies for investors to consider obesity-related issues may provide an additional avenue for nutrition and obesity prevention to gain traction as an ESG issue.

Strengths and limitations

This is the first study that we are aware of that qualitatively explores stakeholder perspectives on institutional investment related to obesity. This study builds on the findings from a previous desk-based study investigating the incorporation of nutrition within investment decision-making by leading institutional investors in Australia, to provide more in-depth understanding of challenges and opportunities for institutional investors in this area. The sample of participants included a number of stakeholders with extensive and diverse experience working within the investment sector. This study used an established theoretical framework to guide data analysis, which is likely to have enhanced the rigour of the findings and increased the likelihood that the findings are transferrable to other contexts.

This study has several limitations. Whilst a broad range of participants (with different areas of interest and expertise) were involved in the interviews, those willing to participate in the research may have had more of an interest in responsible investment or addressing obesity-related issues within investment decision-making than the broader investment community. Thus, some participation bias may have been introduced. This study focused on the perspectives of the Australian investment sector. It would also be valuable if future research encompassed food industry perspectives regarding the potential influence of investors on food company practices and performance. Another limitation of this study was its relatively small sample size (15 interviews). The characteristics of the participant sample may mean that some of the findings are less generalisable to investors who are not engaged in responsible investment. Nevertheless, the extensive industry expertise of the participants, and the wide-ranging discussion of challenges and opportunities, indicate that the findings are likely to be highly relevant to the institutional investment sector more broadly and represent an important contributin to the literature. The paper focused on concerns related to obesity prevention, with a focus on population nutrition and, particularly, investment in food companies. The paper did not consider in detail: company initiatives related to employee wellbeing (e.g., staff wellness programs); considerations related to physical activity; or obesity treatment and management. We also did not focus on broader nutrition aspects, such as efforts to address under-nutrition, food security, and the environmental sustainability of food systems. The potential for the investment community to consider each of these aspects warrants further investigation. Due to the qualitative nature of this study and the fact that the majority of stakeholders were based in Australia, the applicability of the findings to other countries where regulatory and financial market contexts differ from Australia may be limited. However, the global nature of financial systems and the obesity-related ESG issues examined, also suggest that our findings will be broadly relevant.