Shareholders Aim To Force Tesco To Cut Junk Food Sales

(Alliance News) - Investors are trying to pressure Tesco PLC into boosting its sales of healthy food and drink amid growing evidence that the UK's obesity problem has worsened during the Covid-19 crisis.

A consortium of investors, led by responsible investment NGO ShareAction, has filed what is thought to be the first nutrition-based shareholder resolution at a FTSE 100 company.

There is growing concern among some investors about the long-term impact actions big retailers are having on public health, ShareAction said.

Tesco is the UK's biggest grocery retailer, with market share of just under 27%.

The shareholders are calling on the retailer to cut its reliance on junk food for sales growth, emphasising that new health regulations likely to be imposed following the pandemic pose a risk to profits.

If passed at its AGM this summer, it would force Tesco to disclose what proportion of its overall food and soft drink sales are made up of healthy products.

It would also require the chain to develop a strategy to significantly increase the ratio of healthy to junk food sales by 2030, and publish a review of its progress each year from 2022.

The issue of setting out a healthy food strategy was raised at Tesco's 2020 AGM, ShareAction said, but the retailer refused to commit to making changes.

It said the resolution was a "marked escalation" in pressure from shareholders.

Elsewhere, other big British retailers have already established a strategy to increase sales of healthy products.

Marks & Spencer Group PLC's "Plan A" sustainability programme includes a target of 50% of sales on its own-brand items to be generated by healthier products by 2022.

Some 43% of J Sainsbury PLC food and soft drink sales came from healthier products in 2019/20, and it has committed to reporting its progress twice yearly from 2021 onwards, ShareAction said.

The resolution is being backed by seven institutional investors managing more than GBP140 billion in assets, along with 101 individual investors.

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."

By Tess de la Mare

source: PA

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