Bloomberg reports that the link between obesity and more severe cases of Covid-19 has given investors in the US$3 trillion global food and drink sector reason for pause.
Fund managers – especially those with a bent for ESG investing – are reviewing food companies in their portfolios, scrutinising product ingredients, screening medical literature, and tracking changes to product recipes for signs of progress. They’re also pushing companies for greater information disclosure.
The UK government has proposed curbing junk-food advertising, banning certain promotions on sugary and fatty foods, and forcing cafes and restaurants to slap calorie labels on more products.
As the pandemic throws a spotlight on the importance of a healthy diet, governments beyond the UK may choose to impose more anti-obesity measures, further shifting the way makers of sodas, breakfast cereals, chocolate bars, and ready-to-eat meals do business.
“We are seeing that Covid could very well reinforce healthier choices and regulation,” says David Czupryna, the Paris-based head of environmental, social, and governance development at Candriam, which manages about $143 billion in assets.
“Putting on a market highly unhealthy products is a very poor way to look after your customers. The authorities could very well decide to go after the companies that are primarily responsible for unhealthy food behavior.”
Companies that make food often derided as “junk” face a number of risks, ranging from sugar taxes and limits on marketing and sales to tobacco-like health warnings and product labeling.
This is on top of litigation and reputational threats, as well as the potential for consumers to curb their appetite for unhealthy food.