Schroders targets sugar investment with ESG principles

Schroders has launched a set of principles for encouraging food and drink companies to reduce the sugar content in their products.

The framework, published jointly with Rathbone Greenbank, has been endorsed by investors representing £1 trillion in assets.

The move comes in response to a challenge from Public Health England to the food and drinks industry to cut sugar by 20 per cent by 2020.

A recent Faculty of Dental Surgery report showed there has been a 24 per cent increase in the number of teeth being removed from children aged four and under. A number of countries, including the UK in 2016, have also introduced sugar taxes.

The new Schroders/Rathbone Greenbank framework consists of five engagement principles; governance, strategy, implementation, public policy and demonstrating progress, with the aim of providing investors with the tools to encourage food and drink companies to provide greater transparency on how they are adapting to challenges to the sugar industry.

Schroders environmental, social and governance analyst Elly Irving says: “The rise of global obesity, diabetes and diet-related disease is well known but we think the scale of the issue now makes this an investment concern. As this trend continues, we think companies will have to invest more in R&D, innovation and product reformulation.

“We believe that sugar is a material investment issue for all global fund managers and we would encourage investors to sign up to our robust framework and use this in engagement going forward.”

Rathbone Greenbank investment director John David says: “By building a framework for gathering information and setting baseline expectations for companies to follow, we hope to raise the profile of sugar-related health concerns and seek to identify leaders and laggards in the relevant sectors.”