Features

Why sugar could be next on ethical investors’ list of exclusions

Published

11 years ago

February 5, 2014

Firms that produce sugar foodstuffs and drink could soon be joining the likes of tobacco, alcohol, pornography and weapons on ethical investors’ list of sectors to avoid, writes Alex Blackburne.

The world will see a 70% increase in cancer cases over the next two decades due to unhealthy lifestyles and a lack of public education and prevention in the developing world. As warnings go, they rarely come as stark.

This sobering message comes from the World Health Organisation’s (WHO) International Agency for Research on Cancer (IARC). People are right to be alarmed.

The issues faced by the developed and developing world differ. In the developed world we’re increasing cancer risk through smoking, drinking and eating unhealthily; it the developing world, the issues are exacerbated due to a lack of public health education and accessible cures.

Obesity trends tell a grim story. Last month, a report by the National Obesity Forum said previous predictions, which argued half of Britons will be obese by 2050, may actually be underestimating the scale of the problem.

Over a quarter (26%) of UK adults are currently obese. Meanwhile, estimates from Public Health England say 60% of men, 50% of women and 25% of children could be obese within four decades.

While the negative personal health impacts are significant (diabetes, heart disease, high blood pressure, arthritis, indigestion, gallstones, snoring and sleep apnoea, stress, anxiety, depression and infertility, to name a few), there are also serious economic impacts. The government said in 2007 that if half the population was obese by 2050, this would cost the UK £50 billion in healthcare costs a year.

At the root of this worrying shift is our sugar-rich diet. Only this week, researchers from the Centres for Disease Control and Prevention (CDC) in the US said most adults in the country were taking in excessive amounts of sugar. They linked this with an increased risk of heart disease.

Saying sugar is bad for you is not new information. The fact is drummed into us as children – and knowing it is partly what makes sweets and chocolate so appealing.

Given this alarming trend, investors motivated by ethics and sustainability themes would do well to start making a stand.

Historically, such investors have avoided holding ‘death stocks’ like tobacco and weapons companies and ‘sin stocks’ like alcohol, gambling and pornography. More recently, it’s been companies with poor human rights or environmental records that have been targeted.

Companies whose products are high in sugar could soon be added to this list of exclusions. We know the impact investment has, so if enough investors take this view, these companies will be forced into making significant positive changes to their products.

But rather than avoiding this sector, some investors are looking at solutions to the obesity epidemic. In an article last year, Neil Brown of London-based sustainable investor Alliance Trust Investments said healthy eating represented a “significant investment opportunity” for them.

He added, “We are looking for exposure to companies exploiting these trends and directly profiting from improving and lengthening the lives of consumers.”

The momentum is definitely with sustainable investment – investing in companies providing solutions to and profiting from sustainability challenges like climate change. But the importance of ethics and morals should not be overlooked.

And with all we know about future obesity trends, it surely won’t be long before companies producing products high in both sugar and fat become a key consideration for values-based investors.