A group of institutional investors representing $1.1trn in funds have composed to Morrisons Chairman Andrew Higginson to call on the company to increase sales of healthy food and drink poducts.
The investors include NEST, Guy’s & St Thomas’ Foundation and JO Hambro Capital Management and the letter was coordinated by ShareAction. They argue that Morrisons’ present healthy eating strategy does not go far enough.
Morrisons has set a target to increase the amount of healthier own-brand merchandise to 65% of all own-brand traces by 2025. But Ignacio Vazquez, Senior Manager in ShareAction, said the retailer should be using sales — not the variety of products — as a step and working together with all product lines, not just own label.
“Investors want to better understand how supermarkets are taking responsibility for their enormous influence on public health,” Vazquez argued.
The correspondence comes before Morrisons’ AGM today (10 June). Shareholders will not be able to table questions this year, so the letter specifically calls on the company to disclose share of total food and drink sales of healthier products; publish a long-term commitment to ‘significantly’ grow that share; and include a progress report on delivery in its annual targets from 2022 onwards.
Morrisons: A laggard on health strategy?
Morrisons represents 10% of the grocery market and is one of the largest listed supermarket operators in the UK, alongside Tesco and Sainsbury’s.
ShareAction highlighted that of the three companies, Morrisons is the only one not to set sales-based health targets. Recently, Tesco bowed to investor pressure to do so after ShareAction filed the UK’s first ever shareholder resolution on health issues at a supermarket.
A report from Access to Nutrition also found Morrisons lagged its rivals on health issues. The report assessed public commitments and actions on issues like nutrient profiling, product formulation, responsible marketing and labelling. Morrisons scored 20% for its performance on health issues, below Sainsbury’s on 35%, Marks & Spencer on 33%, the Co-op and Tesco both on 30% and Lidl on 25%.
A separate report from the Food Foundation found that’encouraging healthy diets’ is Morrisons’ weakest area of performance out of 10 key ESG subjects for the supermarket sector.
ShareAction argued that this performance represents a risk to the company, as regulatory and consumer trends towards healthier diets are hastening.
“Questions remain about the Company’s strategy and overall exposure to growing regulatory pressure and consumer trends supporting healthier diets.” Vazquez told FoodNavigator: “An October 2020 report from ShareAction noted that 85% of UK shoppers now report actively trying to improve their diet when shopping, so there is a strong case that targeting healthier sales will help the company to meet rising consumer expectations.”
“For this reason, we are pleased to be joined by investors today in calling on the company to follow other major listed UK supermarkets in disclosing and committing to grow the proportion of its sales made of healthier food and drink products. We hope that Morrison’s Board will grasp this opportunity to build on its social responsibility credentials while also demonstrating to its shareholders that it is appropriately managing the rising financial risks and opportunities in this area.”
Morrisons’committed’ to supporting healthy decisions
A spokesperson to Morrisons told FoodNavigator that the supermarket is’committed’ to promoting healthier choices and’supportive’ of performance targets and measurements.
“We are committed to helping our customers make healthier choices and we are supportive of measuring performance and setting meaningful targets. We already publish the proportion of our own-brand products which are classed as healthy and have a commitment to increase this,” the spokesperso