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March 27, 2013

Investors Support Launch of Access to Nutrition Index
    by Robert Kropp

Representing $2.6 trillion in assets under management, 39 investors call for widespread support of the Access to Nutrition Index, which ranks the performance of food and beverage companies in the areas of obesity and undernutrition.

SocialFunds.com -- After a multi-stakeholder initiative that spanned three years, the Access to Nutrition Index (ATNI) was launched this week, training a spotlight on the practices of 25 of the world's largest food and beverage manufacturers.

The Index, which will be updated every two years, focuses on how companies in the sector provide consumers with nutritional choices and how their marketing practices influence consumer behavior.

"Obesity and undernutrition affect billions of people and threaten a global health catastrophe," Inge Kauer, Executive Director of ATNI, said. "The Access to Nutrition Index is an urgent call to action for food and beverage manufacturers to integrate improved nutrition into their business strategies."

The business risks to companies in the industry sector include increased regulation, reputational factors, litigation, and market share.

The first ATNI evaluated companies on their corporate governance and strategy relating to nutrition; the development of appropriate nutritional products; and their influence on consumer choice and behavior.

Danone, Unilever, and Nestlé ranked highest among companies in the food and beverage sector, "receiving the highest scores on both the obesity and undernutrition rankings," according to ATNI. But even the three top performers demonstrate considerable room for improvement, as the highest score was only 6.3 out of a possible 10. And both Danone and Nestlé have been reported to be in violation of the International Code of Marketing of Breast-milk Substitutes, which was adopted by the World Health Assembly in 1981 to protect and promote breastfeeding.

Overall, the Index reports, companies are not living up to their commitments. "Companies' scores on nutrition strategy and governance were higher than their scores on product formulation, accessibility, and marketing," the Index states. "Many companies have made commitments and some have set quantitative targets. However, fewer demonstrate substantial progress against these targets."

Furthermore, "lack of disclosure limits the ability to understand the full scope of companies' nutrition-related efforts."

The Index recommends that companies:
• Develop clear and measurable objectives and targets to improve nutrition. This is critical to ensuring that nutrition considerations become central to companies' core business activities such as product development, pricing, distribution, and marketing.
• Translate commitments to improve nutrition into action and develop mechanisms to track and monitor progress.
• Increase public disclosure of nutrition activities. Such disclosure underpins credibility, strengthens any evaluation of their nutrition practices, and heightens accountability.
• For companies that manufacture breast-milk substitutes, ensure full compliance with the International Code of Marketing of Breast-milk Substitutes in all countries.

Thirty-nine investment firms with more than $2.6 trillion in assets under management have signed an Investor Statement committing them to support the Index by factoring the nutritional practices of food and beverage companies into their investment decision-making.

The investors call for transparent public reporting of nutrition policies, practices, and performance on an ongoing basis, as well as benchmarking performance against industry best practices.

One of the signatories to the Statement is Boston Common Asset Management. At a webinar held this week to announce the launch of the Index, Lauren Compere of Boston Common referred to New York Mayor Bloomberg's recent efforts to ban super-sized soft drinks, and said, "Obesity is increasing in cities like New York. It costs New York City $2 billion a year in increased health care costs and other infrastructure costs."

PepsiCo was the highest ranking US-based company in the Index, finishing fourth but with a score of only 4.4.

"US companies are at least seven years behind most of the European players," Compere observed. "Compared to Europe, the regulatory environment is somewhat lax in many areas."

"We have to reset the market dynamics around investing in nutrition," Compere continued. "Aligning marketing dollars and nutrition is extremely important."

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