Nestle S.A. | Amendment to the Articles of Association regarding sales of healthier and less healthy foods

Status
11.07% votes in favour
AGM date
Previous AGM date
Proposal number
7
Resolution details
Company ticker
NESN
Lead filer
Legal & General Investment Management
Co-filers
ShareAction, Candriam, La Francaise Asset Management, Coöperatie VGZ U.A.
Resolution ask
Set targets or plans
ESG theme
  • Social
ESG sub-theme
  • Public health
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Staples
Company HQ country
Switzerland
Resolved clause
Proposal by shareholders acting through ShareAction:
In particular, and with regard to this item on the agenda, the shareholders propose to amend the company’s Articles of Association by adding an Article 23bis following the Article 23 and reading as follows:
Article 23bis: Report on non-financial matters [new]
For each financial year, the Board of Directors shall prepare a report on sustainable development, social issues, employment matters, respect for human rights and anti-corruption, which presents the results achieved in relation to certain environmental, social and governance (ESG) key performance indicators (KPIs).
These KPIs will include absolute and proportional sales figures for food and beverage according to their healthfulness, as defined by a government-endorsed Nutrient Profiling Model. The company will set a timebound target to increase the proportion of its sales derived from these healthier products.
Supporting statement
Nestlé consistently states that health and good nutrition are at the core of its strategic aims, “applying its expertise in nutrition, health and wellness to help people live happier, healthier lives”.
However, Nestlé relies heavily on the sales of less healthy foods, which have a major impact on public health. More than 50% of Nestlé’s sales do not meet the Health Star Rating (HSR) healthier threshold of 3.5 or above, exposing itself to financial, regulatory, legal and reputational risks.
Increasing public health policies, such as sugar taxes and marketing restrictions, threaten sales. Regulatory compliance creates legal risks. Reputational risks arise from increasing societal scrutiny. Meanwhile, consumer demand for healthier alternatives is increasing.
Shareholders have been calling for the company to reduce its reliance on sales of less healthy products. However, whereas Nestlé has announced a target to increase sales from ‘nutritious’ products by 50% by 2030, this growth is simply in line with its overall growth guidance (4-6%/yr), so that sales of less healthy products would also increase by 50%.
Moreover, some products have been included in the “nutritious” category, while HSR does not apply to them. This is for example the case for infant food and milk formula for children aged over 12 months, despite these products often not being recommended by health professionals. It is also the case for coffee, contrary to HSR guidelines. This enables the company to meet its healthier food sales target solely by increasing the sales of these products and prevents shareholders from correctly assessing the applicable risks.
Investors want to see a strategic shift to reduce over-reliance on the sale of less healthy foods, mitigating the risks these expose the company to, and capitalising on growing demand for healthier products. This resolution supports that aim, requiring the company to set targets to increase sales of healthier products in both absolute and relative terms, while correctly applying government-endorsed methodology.

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
CCLA For The company falls short of our expectations to use internationally accepted standards when assessing the health implications of its products and setting targets for increasing sales of healthier food.
Cardano For Despite its claim to prioritise nutrition, health, and wellness, we believe Nestlé is falling short in this area.
Legal & General Investment Management (Holdings) For A detailed explanation for the filing of the resolution and our vote intention for the shareholder resolution and other resolutions can be found on the LGIM Blog: https://blog.lgim.com/categories/esg-and-long-term-themes/crunch-time-were-asking-nestle-to-do-more-to-support-healthy-food-choices/ and https://blog.lgim.com/categories/esg-and-long-term-themes/lgims-voting-intentions-for-2024/
Mercy Investment Services, Inc. For
LBPAM La Banque Postale Asset Management For Nestlé relies heavily on the sales of less healthy foods, which have a major impact on public health. More than 50% of Nestlé’s sales do not meet the Health Star Rating (HSR) healthier threshold of 3.5 or above, exposing itself to financial, regulatory, legal and reputational risks.
Rothschild & co Asset Management For
Impax Asset Management For We are supportive of Nestle reducing its reliance on the sales of less healthy products and for the company to set a proportional target to grow sales from its more nutritious products.
AkademikerPension For

DISCLAIMER: By including a shareholder resolution or management proposal in this database, neither the PRI nor the sponsor of the resolution or proposal is seeking authority to act as proxy for any shareholder; shareholders should vote their proxies in accordance with their own policies and requirements.

Any voting recommendations set forth in the descriptions of the resolutions and management proposals included in this database are made by the sponsors of those resolutions and proposals, and do not represent the views of the PRI.

Information on the shareholder resolutions, management proposals and votes in this database have been obtained from sources that are believed to be reliable, but the PRI does not represent that it is accurate, complete, or up-to-date, including information relating to resolutions and management proposals, other signatories’ vote pre-declarations (including voting rationales), or the current status of a resolution or proposal. You should consult companies’ proxy statements for complete information on all matters to be voted on at a meeting.