Private-sector challenges

Private-sector challenges

The food supply chain is immensely complex, comprising the many businesses that bring food from farm to fork at a local, national, and global level. Primary food producers, agricultural input industries, primary food and feed processing and trading industries, food manufacturers, food retailers and caterers, along with the supporting financial services, marketing industries, and distribution companies all contribute to shaping our diets.237

Interacting with such complexity is challenging for public health. Nonetheless, public-private partnerships with the food industry have been created for multiple purposes, including: promotion of healthy workplaces, development of food and drinks low in salt, sugar, and fats, support for local, less processed foodstuffs, environmental protection (eg, organic production and reduced food miles), and social benefits (eg, investing through corporate social responsibility).175

Although most food businesses are small-sized and medium-sized enterprises, the large food corporations and their industry-interest associations have a dominant political role and they are explicitly driven by a fiduciary duty to prioritise financial returns to investors. The greatest returns come from large-scale, ultra-processed products marketed around the globe. Mass-produced, long shelf-life food products are typically high in fat, salt, and sugar.74 Although not all ultra-processed food products are bad for human health, almost all the foods that are linked to risks to health are included in the ultra-processed food category, as outlined by the NOVA classification.74

On these grounds, Freedhoff238 argues that partnerships between the corporate food sector and the government are a risk to public health. There are many examples that support his conclusion,239 and show that scepticism, particularly about the ultra-processed food companies, is well justified. The sugary drinks sector, for instance, spent almost $50 million in 2016–17 to lobby against US government-led initiatives to reduce soda consumption.240 Research funded by this sector is five times less likely to find an association between sugary drinks and obesity compared with other studies241 and it has also been deliberately used to hide the causative role of sugar in coronary heart disease242 and undermine the evidence base for policy making. Outlawed marketing practices in one country have been introduced or sustained in non-regulated countries.243 A great deal of marketing activity exists in the global south, in countries, such as Nepal, Ghana, South Africa, and Mongolia, where marketing of sugary drinks can be found everywhere, including around schools or at the school entrances.244 When concerns about these activities have been raised, companies have used public relations drives with marketing communications campaigns and front groups to deflect criticism,243 rather than changing their course of behaviour.

Nonetheless, the private sector has to be part of the solution to The Global Syndemic,245 because it is just too important and powerful for it to be otherwise. The question, then, is what is the best way to work with industry actors, whose products contribute to chronic diseases, and whose practices undermine policy responses to NCDs, without jeopardising public welfare? How can the realignment of food systems with environmental and health interests become profitable?

Reducing power imbalances and conflicts of interest

Approaches to redressing the power imbalances and conflicts of interest when engaging with large companies are varied and include the identification, management, and minimisation of conflicts of interest,246 incremental statutory regulation,247 legislation combined with industry action,86 performance-based regulation,248 benchmarking companies (eg, Access to Nutrition Index [ATNI]249), and the replacement of industry self-regulatory programmes with co-regulatory approaches.86

The key lesson to emerge from this range of options is that self-regulation is ineffective, because it preserves market interests and lacks the legislative or regulatory accountability systems required for effective implementation.250 The marketing of breastmilk substitutes251 and unhealthy food and beverage products to children252 are clear examples of weak standards, poor industry adherence to voluntary codes, and the need for stronger regulatory, and monitoring systems. Similarly, the UK Public Health Responsibility Deal (appendix p 17) relied on industry’s willingness to take voluntary actions but resulted in the avoidance of more effective strategies and a continuation of usual business.253

Quasi-regulatory approaches refer to policies in which government specifies the policy goal, manages the process, stipulates criteria and rules, does monitoring and evaluation, and provides a tangible threat of regulation, but the engagement of the food industry is voluntary and not compulsory.86 The Health Star Rating system for front of pack labelling in Australia and New Zealand is an example of quasi-regulatory approach.254 Experience with the Health Star Rating system is that it represents some progress and gives consumers interpretive information on the healthiness of the product if it is carrying the Health Star Rating logo. Nonetheless, industry has been very slow in labelling their products with Health Stars and ongoing problems exist with correcting anomalies and getting the right signals to consumers. It is probably inevitable that the conflicts of interest inherent in working with industry in developing quasi-regulatory policies, such as the Health Star Rating, result in long delays to full implementation, watering down of content, flaws in design, and ultimately reduced effects on outcomes.

Even where there has been effective policy implementation with strong accountability at the national level, as with the sugary drink taxes in Mexico, powerful lobbying by the beverage industries continues, requiring constant vigilance and defence. Such lobby pressure can unravel the progress made in policy enactment or implementation and changes of government often provide an opportunity for conflicted industries to slow down or kill a policy that threatens their profits. As has been the case with the FCTC, and to some extent the International Code of Marketing of Breastmilk Substitutes, a set of policies enforced and applied at international level (as proposed for an FCFS) can reduce these threats.

Multilateral agencies, such as WHO, are also exposed to potentially conflicted interests, and statements about the need for partnerships and stakeholder engagement can raise alarm among public health professionals aware of the danger such collaboration can bring. The issue for WHO has been recognised for several years,176 and WHO has reviewed its policies and developed a Framework for Engagement with Non-State Actors255 and advice to Member States.246

Although these efforts are welcome, the resulting documents are criticised by NGOs working on food and nutrition policies for promoting the notion that engagement with the private sector will speed up action in areas such as NCD prevention. They say that this belief “is not supported by evidence — indeed such engagement is more likely to slow things down — especially when it comes to regulation. Voluntary promises attract much publicity, but unless backed up by regulation can be little more than diversionary public relations — here today and gone tomorrow. WHO must not allow itself to be used as a cover for corporations whose practices damage health and the environment”.256

Business models for the 21st century

The private sector has a central role in creating wealth, income and jobs, advancing innovation, and mobilising domestic resources. Globally, the economic power of corporations is increasing, driven by economies of scale and scope. Furthermore, today’s globalised economy enables transnational corporations to take advantage of low-cost production opportunities, diverse revenue sources, and low tax jurisdictions.257

Given the enormous size and contribution of the corporate sector globally, it is critical that corporations are included in the collective work to address major societal issues, such as The Global Syndemic, in ways that ensure effectiveness and accountability for their actions. There needs to be widespread recognition that the current politico-economic systems and prevailing global regulatory structures have incentivised businesses to be the engines driving The Global Syndemic and allowed them to prevent policy action to reduce it. In economic terms, this situation represents a clear case of commercial success (wealthy corporations) but market failure (negative health and environmental outcomes).258 In other words, the current systems allow or incentivise the privatisation of profits and the socialisation of the costs of The Global Syndemic.

Drivers of corporate performance

Corporations, including those in the commercial food industry, have a business purpose that is focused predominantly on short-term (typically quarterly) profit growth. For publicly listed companies, this is typically seen as the imperative to maximise shareholder value and encourage continued investment. The traditional corporate performance measures are based on financial indicators and regulated by corporate laws and accounting standards. Negative externalities resulting from company actions or the sale of their products and services are not included. As a result, corporations that contribute substantially to The Global Syndemic have operated without accountability.

The ongoing pattern of transfers of large amounts of public money to corporations in the form of subsidies and tax breaks and the large amounts of public money to pay for their damages needs to change. For example, global subsidies in 2015 from governments to the fossil fuel industries were about $5·3 trillion each year (6·5% of global GDP)259 and nearly half a trillion dollars go to agricultural subsidies in the top 21 food-producing countries every year.70 Subsidies are predominantly for beef and dairy and a small number of grains, such as corn, wheat, and rice, that are used for animal feed or form the basis of most ultra-processed foods.260 The costs of the environmental damage from these industries, through greenhouse-gas emissions, waterway degradation, and soil erosion, as well as the health costs from their products, will largely be paid by the taxpayers and ratepayers of current and future generations. The dynamics of the operating conditions for businesses, and corporations in particular, must be fundamentally transformed if we expect business to contribute to the solutions for The Global Syndemic.

Measures of corporate performance

No globally agreed framework for preparing and presenting environmental and social performance exists, and there is no agreement on domains to include or objective key metrics. The absence of appropriate metrics might reflect the many and varied social and environmental effects that corporations can have on society, making the acceptance of a consistent, comparable reporting framework difficult. Nevertheless, increasing attempts at measuring, monitoring, and benchmarking broad corporate performance across many domains include transnational corporations and financial investors monitoring and evaluating their contributions to the SDGs,261 the UN Global Compact encouraging corporations to adopt and report on sustainable and socially responsible policies,262 Sustainability Reporting Guidelines from the Global Reporting Initiative,263 the Dow Jones Sustainability Indices,264 and the World Benchmarking Alliance.

Crucially, corporate sustainability measures typically hold substantially less primacy than financial metrics in driving corporate behaviour and assessing corporate performance. In the current regulatory environment, corporations are only likely to seriously focus on non-financial issues to the extent that they boost long run, sustained profits. Corporations often tend to report only the positive aspects of their environmental and social activities as part of Corporate Social Responsibility,265 which has frequently been criticised as little more than public relations exercises aimed at favourably shaping perceptions of companies, rather than genuine efforts to disclose and be held accountable for their environmental and social impacts.266

Business-driven mechanisms to re-orient markets and corporations

Businesses could lead the way in re-orienting markets and corporations so that social and environmental aspects of corporate performance are given greater prominence, even equal to financial performance. A number of voluntary initiatives have been taken since the early 2000s to encourage corporations to contribute to sustainability, including The B Team,267 Uncharted,268 and Forum for the Future.269

Evidence is emerging that corporations that focus more on sustainability practices than just short-term profitability outperform their counterparts in the long term, both in terms of stock market and accounting performance.270 However, this finding is not universal,271 and these business practices are more likely to be sustainable from a commercial perspective if the regulatory environment and the market operating conditions are changed so that all players in the market operate under the same constraints.

Arguably, the single largest contribution that corporations could make to addressing The Global Syndemic is to stop investing enormous efforts and resources into opposing the enactment of regulations and fiscal policies for the public good.

Government-driven mechanisms to re-orient markets and corporations

Government intervention through financial incentives, such as taxes on unhealthy foods or subsidies for renewable energy, can help redress negative externalities. The increasing application of taxes on sugary drinks (now enacted in >30 jurisdictions globally)272 is an encouraging example of this type of intervention. Governments can also intervene through other regulatory measures that are designed to limit the sale of products with negative externalities, such as restrictions on advertising unhealthy foods to children. However, corporations continue to strongly oppose these types of government intervention, and commonly exert their significant political influence to prevent further regulation.119

Thus, governments have a crucial role in creating the market operating conditions that favour corporations that seek to work for people and the planet, as well as profits. Previous efforts by the Western Australian Government, which outlined a sustainability strategy for the state, including measures to galvanise industry to support sustainability, provide an illustrative example of how this might be operationalised.273 Crucially, the globalised economy and the transnational mobility of large corporations means that initiatives and regulations at the national level are unlikely to be sufficient to address The Global Syndemic. Instead, changes to the global regulatory environment, including international trade and investment agreements, are needed (see the A Framework Convention on Food Systems section). However, the strong influence of transnational companies on the development and implementation of these agreements, and their strong interest in maintaining the status quo, is likely to be a key barrier to progress.274

Investor-driven mechanisms to re-orient markets and corporations

The investment community, and sustainable investment practices in particular, represent another potential avenue for changing corporate behaviour.275 Responsible and ethical investing includes a range of strategies to consider financial return as well as social and environmental impact as part of investment decisions. Strategies might include divestment practices that seek to avoid harm, such as excluding certain types of companies from investment portfolios (as is occurring for tobacco companies), as well as more proactive practices, such as social impact investing that seeks to generate positive social impact from investment decisions alongside financial return. Sustainable investments are showing strong growth and have recently experienced superior returns, prompting increasing interest in the future of investment.276 However, it will take substantial cultural and social change processes to reorient the current strategies and considerations of the vast majority of investors so that sustainability factors are comprehensively considered. A substantial change is only likely to occur with strong leadership from global economic institutions and organisations, such as the World Economic Forum and the World Bank, and accompanying changes to the regulatory framework in which markets operate. The Commission considers that these global institutions also have an important role to play in convening the leading economic thinkers for the 21st century to articulate the new economic paradigms, pathways, and policies for better outcomes for people, the planet, and prosperity (panel 11).

Panel 11: Towards a sustainable economic model: a global summit

Although the quest for growth and profit has generated enormous prosperity and development gains globally, the current global regulatory environment does not adequately account for negative externalities. Inadequate controls are causing massive harm to planetary health. Previous efforts to reduce this harm have focused on mitigation. The Framework Convention on Tobacco Control, for example, has successfully regulated and contained the market for tobacco. The Global Syndemic could be greatly reduced through a similar approach. However, the sheer scale of the problems presented by climate change suggests that post-hoc interventions and running repairs are unlikely to suffice.

In any case, prevention might be more cost-effective than treatment. Debate is urgently needed about how our economic systems, and the regulatory environments that govern them, can be adjusted to make them healthier and more sustainable, rather than waiting for inevitable problems to emerge and then trying to fix them.

To this end, a Global Summit is needed, convened by global business organisations, such as the World Economic Forum, the World Bank, and key philanthropies. This Summit should bring together experts in commerce, economics, public health, philosophy, theology, indigenous culture, human rights, and others. The challenge is daunting and immediate answers are unlikely, but the conversations must begin, and such a Summit could begin to frame the questions.

Small and medium enterprises

Many of the debates about new business models centre on the major actors and their undue influence on governance at the national and global levels. However, it is important to reiterate that the vast majority of the private actors who grow, process, distribute, and sell food are small-sized or medium-sizes enterprises that have little sway over the conditions they operate under. Many are struggling to make a profit and they see the positive and negative sides of unhealthy foods (panel 12).

Panel 12: People’s experience — an Indian shop owner’s challenge in selling healthier foods

We started this shop around 27 years ago. I used to assist my father as a child, during school days. I was always keen that my father stocked all the latest items, like wafers, chocolates, cold drinks, and sweets. I knew whatever came to the shop, I too would get my share from it. Most of my school friends loved coming to our shop as we had so much variety for kids. After graduating I took over this shop, as by then we had expanded and my father started managing a nearby bakery.

Like my father, I too make sure we keep the latest products in the shop, as I am aware that my customers, especially kids, have an eye on everything new that comes to the market. For instance, some companies came up with the concept of selling chocolates inside fancy toys. Also, wafer companies include stickers of famous cartoon characters, which children like to collect. Companies selling sweet drinks give free mugs if you buy a bigger one, which can attract children. Keeping these products in the shop ensures good sales and profits for us. In fact, some companies give us incentives if we exceed a monthly sales target.

I am educated and aware that, though these taste good, most are unhealthy because they are processed and high in sugar and fat. I started realising more when my own kids started demanding these often. I have grown up eating these products because it was readily available to me, but now me and my wife have a tough time convincing our kids to eat home cooked healthy food, fruits, and vegetables. My daughter is becoming more health conscious as she is growing up, but my son prefers eating wafers, pastas, and pastries over home cooked food.

If I have to choose between healthy and unhealthy options, I would say I will go with a mix of both. In fact, we have been selling theplas [healthy flat breads popular in Indian cuisine made with fresh fenugreek leaves], phaphras [made of gram or chickpea flour and carom seeds], and these masala oats products, which are a hit among our female customers. I cannot exclusively sell healthy varieties, as there are not sufficient takers. To make profit, I have to ensure that we store everything preferred by customers. If customer demand for healthy food rises, shop owners will make a shift in that direction.

Contributed by Raji Devarajan, Public Health Foundation of India and Centre for Chronic Disease Control, New Delhi, India from interviews with shop keepers in Delhi.

If people working in the food system are struggling to just make a living, the extra effort and risk of shifting their business towards healthier foods is a luxury they cannot afford.

Civil society-driven mechanisms to re-orient markets and corporations

Civil society can potentially send strong, transformative signals to industry if a large enough group of consumers create a step change in demand for healthy, sustainable products and a rejection of unhealthy products. This occurs rarely but is not impossible with the viral spread of information through social media.

Civil society organisations can also exert leverage for accountability by being part of the monitoring and benchmarking systems.277 For example, the ATNI reports have assessed the nutrition-related policies, practices, and disclosures of many transnational food and beverage companies;249 and Oxfam has released the Behind the Brands report that has monitored the agricultural system policies of many of the same food and beverage companies. However, these tools have not yet been broadly applied across different markets and sectors to monitor other food system actors, such as transnational food retailers and chain restaurants, and do not address all relevant aspects of the corporate political activity and impact on obesity and undernutrition.278

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