Investors Make A Push For Mandatory Reporting in the Food Industry
Investors representing over £3.8 trillion in assets are lobbying the Government to introduce annual mandatory reporting in the Food Industry on sustainability and public health grounds.
The coalition, led by Rathbone Greenbank Investments, has published an open letter to the UK Government to introduce legislation promoting a mandatory reporting policy proposed by the National Food Strategy in July 2021.
If implemented, all food businesses with over 250 employees would be legally obligated to publish annual data on sales of high fat, sugar and salt ("HFSS") foods, proteins by type and origin, vegetables, fruits, and major nutrients, food waste and total sales.
Reporting obligations would also be assisted by the Food Standards Authority ("FSA") issuing guidance to help standardise reporting across the sector as a whole.
These recommendations are also viewed as low-cost as food companies both have extensive reporting obligations and already track and report their sales to ONS. However, the FSA should harmonise with other data reporting initiatives to reduce reporting obligations.
Green-thinking stakeholders will have a particular interest in such information on companies and can use this to put pressure on management to enact changes.
A number of large businesses already voluntarily report such data as part of the Food Foundation's Plating Up Progress initiative. However, the trend is not mainstream across the sector and reporting is inconsistent.
"More widespread and consistent information reporting, it is argued, would give the FSA better data to guide policy and reports to Parliament."
Additionally, mandatory disclosure of data has an effect on public scrutiny, and watched companies have more reason to change their practices. For example, a 2018 study indicated that when companies disclosed data on their carbon emissions for the first time, only 38% had an emissions reduction target in place. By the third year, this number ticks up to 69%.
What is the likelihood of the proposal being enacted?
The mandatory reporting push is recommended as one part of a wider 'Good Food Bill' proposed by the National Food Strategy to be introduced in 2023/24.
The National Food Strategy's report also attracted media attention in July 2021 with a proposal to introduce a sugar and salt tax. However, the Government quickly rejected this proposal.
It may be the case that its proposal for reporting obligations on companies will be more amenable to the Government by reducing HGSS consumption indirectly. That said, opposition exists from food suppliers.
Former Food and Drink Federation CEO Ian Wright said he believed such a proposal would be rejected, citing concerns that "…you are asking all sorts of companies to impart all sorts of confidential information that their competitors will gobble up with glee".
It's currently uncertain whether the proposal will make its way into legislation, but trends are leaning in favour as institutional investors and market stakeholders indicate their backing. In addition to the investor coalition, major supermarkets such as Tesco, Sainsbury's, Waitrose, Iceland, Greggs, Co-Op, Greencore and Morrisons have all backed the proposal.
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This article was prepared by Meer Gala-Shah