A consortium of Tesco PLC (LON:TSCO) shareholders have said they will look to pressure the supermarket giant to cut its reliance on junk food to drive sales growth in what is thought to be the first health-related resolution at a FTSE 100 company.
The investor grouping, which numbers over 100 institutional and individual shareholders and is headed by responsible investment group ShareAction, said on Wednesday that its resolution, which will be voted on at Tesco’s AGM this summer, will ask for the company to set and report on a target to grow the proportion of its sales derived from healthier products.
The resolution will also require the firm to develop a strategy to increase the ratio of healthy to junk food sales over the next decade and to publish a review of its progress each year from 2022.
We’re not specifying what the target needs to be, or by how much they need to improve on their current position. We’re simply asking that they [Tesco] set a target, and work toward achieving it. Without setting a clear target for increasing the proportion of healthy sales, Tesco are leaving themselves open to questions about how committed they really are to helping their customers stay healthy”, ShareAction said in a statement.
The consortium also highlighted that taking no action will also leave Tesco with “over-exposure to punitive measures” enacted by the UK government to tackle obesity such as sugar taxes.
“The financial risk of inaction is simply too great to do nothing”, ShareAction said.
“As the UK’s largest food retailer, with over a quarter (27%) of the grocery market, Tesco’s actions are of systemic importance in tackling poor diets and reducing obesity levels… Embracing the resolution demands would enable Tesco to take a leadership role commensurate with its market position – and would bring its health policies up to the standard of its more ambitious steps on climate. As we start to think about a world beyond the pandemic, Tesco has an opportunity to address this gap in its strategy and to use this moment to become the market leader in supporting its customers to have healthy diets”, they added.
The resolution follows reports that the UK’s obesity epidemic has increased during the coronavirus (COVID-19) pandemic, as lockdown measures have kept people indoors and snacking more often.
The government has already signalled that it will take steps to address the crisis, with proposals such as banning promotional offers on unhealthy foods and limiting the placement of junk food in prominent positions in shops among those being considered.
Shares in Tesco were up 0.5% at 247.2p in mid-morning trading.