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Getting behind the labels
In recent years health issues such as the nutritional content of food, sedentary lifestyles and obesity have started to appear on the radars of responsible investors. It’s also become an increasingly high-profile political issue in part due to popular campaigns like TV chef Jamie Oliver’s programme Jamie’s School Dinners.
One current issue attracting attention in this area is the question of food labeling. The UK is currently running something of a controlled experiment, with two systems being operated by different groups of retailers.
In one corner is the Food Standards Agency’s ‘traffic light’ system, which provides colourcoded guidance on whether a given product has low, medium or high levels of sugar, salt, fat and so on. This system is backed by the likes of Sainsbury’s and Asda. In the other corner, is the Guideline Daily Amounts (GDA) system which provides information on the contents of products but based on percentages. This system is preferred by industry heavyweights like Tesco, Unilever and Coca Cola.
Food labeling might be considered a classic ‘nudge’, a policy based on trying to help consumers make certain beneficial choices without forcing them to do so. Media reports suggest that the traffic light system does indeed nudge consumers towards healthier choices and away from less healthy ones. Sainsbury’s reportedly saw a 142% rise in sales of Be Good to Yourself spinach and ricotta cannelloni whereas high-fat meals such as chicken Madras, which would sport a lot of red on their traffic light label, fell by as much as 40%. In contrast critics argue that the GDA system does not provide consumers with simple guidance. As such it was something of a surprise to see the Conservative opposition say last week that they would not endorse ‘traffic lights’ labeling if they formed a future government, and that they would instead make the Guideline Daily Amounts system mandatory.
As shadow health secretary Andrew Lansley made clear: “Government promotion and FSA promotion of 'traffic light' labelling will stop.” Given the noise some members of David Cameron’s Conservative opposition team have made recently about using behavioural approaches to policy, this is particularly odd.
But could investors play more of a role in this debate? Certainly some have looked at the issue of obesity and other public health concerns but to date none seem to have taken a position in the debate over food labeling. All the main parties have shown an interest in the role investors can play as responsible owners, so isn’t time for investors to get in on the act and make their presence felt?
