The food retailer has committed to growing the proportion of sales from healthier products in response to shareholder challenge

UK food retailer Tesco has today set a target to increase the proportion of sales from healthier products to 65% by 2025. The supermarket giant commits announced the move responding to a shareholder resolution co-ordinated by ShareAction. Tesco committed to publishing a strategy to achieve this goal and to report on its progress annually, as requested by the shareholder proposal filed in February.

“Compared with other UK retailers who have set similar targets this looks to be market leading,” Jessica Attard, head of health at ShareAction, told NutritionInvestor. Attard explained that Marks & Spencer’s Plan A includes a target of 50% of sales of own-brand only from healthier products by 2022, and it reached 40% in 2019.

Equally, Sainsbury’s has a target to increase the percentage of healthier products sold from 41% in 2015 to 45% in 2020, and reached 43% in 2019/20 period.

ShareAction welcomed Tesco’s announcement, recognising it as a significant achievement for shareholder engagement on health issues.

Market influence

Tesco holds 27% of the British grocery market, which ShareAction argued gives the retailer an outsized influence on the nation’s health.

ShareAction’s Healthy Markets campaign convened a group of institutional and individual shareholders to co-file the first-ever health-based shareholder resolution at a retail company. It called on Tesco, the UK’s largest food retailer, to disclose targets for increasing the proportion of healthier products in its sales, which Tesco has now done.

Attard told NutritionInvestor that Tesco’s announcement today followed a meeting between the co-filers and Tesco’s Chairman, John Allen, earlier this week.

The resolution followed a period of engagement between ShareAction’s coalition of investors and Tesco throughout 2019 and 2020. Investors co-ordinated by ShareAction made similar requests at Tesco’s 2020 AGM.

The group has been having a similar engagement with other retailers and manufacturers.

ShareAction noted that Tesco’s plans cover only its Tesco-branded UK stores and exclude other parts of its business, such as Budgens and Londis-branded convenience stores, which are owned by Tesco, through Booker, and its international operations.

What are healthy products?

The responsible investment NGO said that work is also needed to better understand the definition used by Tesco to categorise products as healthier.

Attard explained that Tesco’s methods for defining ‘healthier’ are based on government guidelines. “We think that given the wide variation in targets and actual reported data, [Tesco] may be working from slightly different definitions,” she said.

The resolution called on Tesco to use a government-recognised definition of ‘healthier’ such as the nutrient profiling model UK NPM 2004/5, which aligns with the government’s HFSS classification.

Attard explained: “This approach takes into consideration the balance of the positive (i.e. fibre, protein, fruit/vegetables, etc.) versus negative (fat, salt, sugar) components of food and drink.”

ShareAction hopes that this commitment from Tesco will make other retailers sit-up and take note. “We’re calling on all food retailers and manufacturers to publish the proportion of their sales from healthier products and to set a target to grow this,” Attard concluded.

Date published: 5 March 2021

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