Category A - Undernutrition: Governance

• Eleven companies now commit to addressing undernutrition either using commercial and non-commercial approaches, up from eight in 2016. Of these, ten now formally define a commercial approach, compared to four previously.
• It appears that companies now recognize they can, and should, do more to tackle undernutrition. The average score increased substantially from 2.5 to four points. However, there is clearly still room to do much more.

• Unilever leads the rankings in Category A with the most comprehensive approach to address undernutrition, followed by Nestlé, FrieslandCampina, Kellogg and Danone.

A crucial starting point for addressing undernutrition in low-income countries is for companies to make a commitment to do so. Eleven out of 18 companies have committed to playing a role in addressing undernutrition, three more than in 2016. Arla, Kellogg and Mars have published new commitments. Nine of the 11 have undertaken a Board-level strategic review of the commercial opportunities available to them in addressing undernutrition and/or developing products for the undernourished, underlining the importance to the business. Two companies have undertaken strategic reviews but not at Board level.

The findings suggest that companies now focus more on embedding their activities to address undernutrition in their commercial strategy. Currently, ten companies have formally set out how they intend to address undernutrition through their commercial strategy aimed at selling more healthy products that are fortified or otherwise suitable to address nutritional deficiencies in undernourished target groups, compared to only four in 2016.

The number of companies that have formally set out their approaches to addressing undernutrition through philanthropic giving, or in other ways not embedded in their core businesses, increased from five to eight. However, this increase is smaller than the increase in commercial approaches. In contrast to 2016, more companies now take a formal commercial approach than a non-commercial approach, which is a positive development. More information on changes in companies’ commercial and non-commercial approaches.

This increased focus on commercial approaches to tackling undernutrition does not yet translate into higher reported percentages of companies’ total global sales values related to products specifically formulated for the undernourished. In 2016, four out of 20 companies provided such data, compared to five out of 18 in 2018: Danone, FrieslandCampina, Mondelez, Nestlé and Unilever. The reported percentages of sales were very similar to 2016, and although the same three companies reported that more than 10% of their total global sales value was accounted for by fortified products that address undernutrition, the relevant percentage based on the Access to Nutrition Index methodology, which looks only at non-OECD countries, is estimated by ATNI to be lower.

Some developing countries are more heavily impacted by the burden of undernutrition than others. ATNI has compiled a list of high-priority countries  in which the world’s largest food companies should prioritize seeking opportunities and starting new initiatives. Eleven companies include highpriority countries in their initiatives, most often in combination with low-priority countries. Three companies focus exclusively on one or more high-priority countries: Ajinomoto, Arla and Mars, while FrieslandCampina shows best practice by selecting high-priority countries to pilot new initiatives: Nigeria, Indonesia and Myanmar.

Five companies, Coca-Cola, Danone, FrieslandCampina, Nestlé and Unilever, describe a strategic and well-structured commercial approach to address undernutrition in many developing countries, one more than in 2016. FrieslandCampina has started the new program ‘Broadening access to nutrition’, aimed specifically at people with lower incomes. Two companies have a well-structured approach in a single market or small selection of countries – Grupo Bimbo and Mars. All companies with a structured approach, except Coca-Cola, emphasize the importance of their undernutrition commercial strategy by assigning top-level oversight to their CEO or other senior executive (six companies in total), or to a committee that reports to the CEO (four companies in total).

New commercial initiatives, or new initiatives linked to existing commercial strategies, were reported by some companies. For example, Unilever integrates a program to stimulate healthy eating and address iron deficiency anaemia in a priority population in Nigeria with its existing commercial strategy to sell iron-fortified Knorr cubes. Other companies, including Coca-Cola, report new initiatives that enter the commercial phase, taking learning from non-commercial and pilot projects and exploring opportunities that are outside the current scope of the company’s business.

Companies need to undertake market research and studies into the nutritional status and deficiencies of target populations as a basis for designing their strategy. They should seek expert input to advise on setting up and adapting their approach over time. There is a lot of room for improvement on both of these fronts, as only five companies show evidence of having a formal panel in place (Ajinomoto, Coca-Cola, Danone, Mars, Nestlé), but all have a narrow set of mostly nutrition and biomedical experts. Although ten companies in total have done market research, only four companies have done extensive research in five or more developing countries: Danone, FrieslandCampina, Nestlé and Unilever. FrieslandCampina’s leading performance and approach to address undernutrition is based on large-scale research activities in the past and new initiatives.

Eleven companies commit to focus on children as a target group for their commercial undernutrition efforts. Only three non-baby food companies focus on women of child-bearing age and children under two: Ajinomoto, Arla and Unilever. Three companies that sell baby food products focus on these target groups too, but this aspect was not scored (not influencing the score positively or negatively).

Eight companies formally expressed how they intend to address undernutrition through philanthropic giving or other non-commercial approaches, three more than in 2016. FrieslandCampina, Kellogg, Kraft Heinz and PepsiCo focus mostly on donations, school programs and collaborations with NGOs to provide undernourished populations access to specifically fortified products or otherwise suitable products. In addition to such approaches, Ajinomoto, Danone and Unilever focus on developing new social business models; Ajinomoto through its foundation, Danone through ‘Danone Communities’ and Unilever as an integrated part of its category strategies. Although these initiatives have commercial dimensions – for example, participants in these programs may sell locally produced products – they are considered to be non-commercial initiatives in the ATNI assessment, as they are not yet embedded in the core business. Mondelez takes a different approach, focusing on increasing access to fresh foods through programs that help diversify the diets of people in the community, in some cases combined with specific nutrient fortification.

Similar to the commercial approaches described, the companies that have a philanthropic strategy in place focus mainly on children, but only Ajinomoto, PepsiCo , Unilever and one company that sells baby food products include a focus on women of child-bearing age or children under the age of two.

Six of the companies include high-priority countries in their philanthropic or non-commercial approaches, although none of the companies demonstrate an exclusive focus on these countries. Two companies, Kraft Heinz and Unilever, did not provide clear information about their geographic focus of relevant initiatives.

Although a number of companies publish the amount they spend on philanthropy, it is unclear in most cases what part of this budget is spent addressing undernutrition in developing countries, as companies’ activities often include non-nutrition related activities or activities in developed countries.

An effective way for companies to make a contribution to tackling undernutrition is to partner with leading international expert organizations, such as the SUN Business Network or World Food Programme. 13 companies support one or more such initiatives, while five others do not. This represents an increase compared to 2016, when only 11 out of 19 relevant companies reported such activities.

Reporting on how companies implement strategies to address undernutrition is less robust than in the case of nutrition reporting more generally, and has not changed much since 2016. Three companies provide extensive commentary, similar to 2016, but the number of companies that provide limited commentary increased from seven to ten.

The number of companies with clear reporting on their strategy, outlook and targets, progress against these targets and/or the challenges they faced increased. Despite a greater emphasis on commercial approaches to address undernutrition, the reporting is largely done through CSR reports or specific documents or sections of the corporate website, rather than being integrated into companies’ commercial annual reporting.

• Adopt a formal approach to address undernutrition

Food and beverage companies with significant businesses in developing countries have an opportunity and responsibility to address undernutrition and to contribute to public health improvements for the most vulnerable. All 18 relevant companies should formalize their approach in doing so, focusing specifically on commercial opportunities that are expected to be more sustainable in the long run. ATNF will increase the emphasis on commercial approaches for future indexes and adapt the scoring to reflect that, to ensure that companies can attain the full score if they have implemented a well-designed and comprehensive commercial approach to address undernutrition (even if they do not have parallel non-commercial initiatives in place as well).

• Improve the focus on priority populations and expert guidance

Companies have room for improvement with respect to both their commercial and non-commercial strategies to tackle undernutrition by including a focus on women of child-bearing age and children under two in priority countries. To optimize and adapt their strategy over time, companies should appoint formal panels of external experts with a wide range of relevant expertize, focusing not only on nutrition and health issues, but also on cultural, behavioral and other aspects that influence food consumption in developing countries. These panels should meet regularly to discuss, review and update the company’s strategy.

• Pre-competitive collaboration on research to identify nutritional gaps

Danone, FrieslandCampina, Nestlé and Unilever demonstrate best practice in their market research and wider research to map nutritional intake and deficiencies in order to inform their commercial approaches to address these. Although organizations such as the SUN Business Network and GAIN play a role already, there is an opportunity to improve pre-competitive collaboration on a global level between companies and with international organizations to streamline these initiatives and make them more efficient.

• Better reporting on efforts to address undernutrition and the level of investments

As companies increase their focus on commercial approaches to addressing undernutrition, their reporting in this regard should be clear and integrated into their annual reporting. Besides reporting on objectives and progress, companies should reflect more clearly on the level of investment they make to address undernutrition through both commercial and philanthropic avenues, and whether their investment is increasing or decreasing. Currently, although a number of companies provide information on philanthropic spending, the variation in the way this information is reported makes it difficult to compare them. Overall, there is no clear evidence as to whether companies have significantly ramped up their efforts since 2016.