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Photographer: David Paul Morris
Photographer: David Paul Morris
The coronavirus has highlighted the risks created by another growing health emergency: obesity. The prevalence of obesity has almost has tripled in the past four decades and continues to increase. Obese people have a higher risk of suffering complications or dying from Covid-19, while also being vulnerable to diabetes, heart disease, strokes and cancer. The United Nations warned in 2020 that obesity was a “full-fledged global pandemic.” Stricter rules have forced more disclosure on food labels. Now, portfolio managers concerned about the social impact of their investments are pressuring food companies to take action.
1. What are the links between obesity and Covid-19?
Being obese, which usually means having a body mass index of 30 or more, decreases lung capacity and is linked to impaired immune function. Obese people diagnosed with Covid-19 were more than twice as likely to be hospitalized, 74% more likely to need an intensive care unit and 48% more likely to die, according to one study at the University of North Carolina at Chapel Hill. Research has also linked obesity to lower responses to many vaccines. Meanwhile, a UK survey found that twice as many people gained weight as people lost during the initial pandemic lockdown in early 2020.
2. What is the prevalence of obesity?
Some 39% of adults, or more than 1.9 billion people, were overweight in 2016 and among them more than 650 million were obese, according to the World Health Organization. The bulging waistline is partly driven by economic success – wealthy populations eat more. But the poor in affluent countries tend to have higher obesity rates than the rich, and obesity is increasing in developing countries as well. Countries as diverse as Indonesia and Brazil have communities that are both malnourished and overweight.
3. What is the cause?
The reasons are complex: diet, genetics, lack of exercise and social environment all play a role. Fast food meals, ultra-processed foods, and soft drinks are among the culprits. Industrially prepared meals – usually loaded with salt, fat, sugar, and additives – account for more than half of the calories consumed in the US and UK, where they are often cheaper than fresh foods. Worldwide, more than 3 billion people cannot afford a healthy and nutritious diet, according to the UN.
4. What is the cost?
Obese people tend to lead shorter, less healthy lives. Treating overweight-related conditions is expected to cost G-20 countries an average of 8.7% of their health budgets over the next three decades. Overweight children are more likely to miss school and less likely to complete higher education. A study found that reducing calories by 20% in energy-dense foods such as chips and candy in 42 countries could prevent more than a million cases of chronic disease per year. If unhealthy diets and obesity are not addressed, the associated health costs will exceed $ 1.3 trillion per year over the next decade, the UN estimates.
5. How did the authorities react?
Over the past decade, government officials alarmed by this trend have taken action, mostly with targeted taxes and new food labeling regulations. While some measures have been controversial – and criticized as unwarranted state interference or revenue-raising exercises – research shows they have had an effect. Before the pandemic, taxes on sugary drinks were introduced in countries ranging from Mexico to the Philippines. San Francisco and Seattle were among the eight US cities that adopted so-called soft drink taxes, most of which were around 1 cent an ounce. Another was Philadelphia, following a campaign backed by Michael Bloomberg, the majority owner of Bloomberg LP, the parent of Bloomberg News. Now other countries are stepping up the pressure. UK is moving to curb junk food advertising and force cafes and restaurants to put calorie labels on their menus.
6. How do investors get involved?
Some fund managers are reviewing their holdings, urging food companies to disclose more information, and reviewing the medical literature as part of a trend to invest with environmental, social or governance goals in mind. At least 55 institutional investors totaling $ 7.7 trillion in assets signed Until pressure from the Access to Nutrition Initiative for manufacturers to take a series of measures, such as linking executive compensation to food quality goals and making healthy products more accessible. At the end of 2020, they included Aviva and Storebrand. Stéphane Soussan, portfolio manager at CPR Asset Management in Paris, said the backlash could resemble the move to divest from fossil fuels.
7. How did the industry react?
Manufacturers are reformulating their products, but there is still a long way to go. Coca-Cola Co. has been criticized by health experts when it was revealed in 2015 that it was funding research to focus on exercise, rather than cutting calories, as the key to weight loss. One of the reasons companies hesitate is that DIY could ruin a brand’s taste. Some simply pack their goods in smaller quantities.
The reference shelf
- Bloomberg article on weight gain being the flip side of the Covid food crisis for wealthier nations.
- A New York Times article on the outlook for increasing obesity.
- Bloomberg story about how Covid-19 raises an existential question for a $ 3 trillion industry.
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