Lean times ahead for the fatty firms

Lean times ahead for the fatty firms

Companies producing or selling "irresponsible" fatty, salty or sugary foods face joining tobacco, armaments, alcohol, gambling and firms involved in animal experimentation on socially responsible investment blacklists.

And ethical investment firms say the issue is fast moving up the table of concerns, with many talking of an "obesity epidemic" which could reverse the trend for each generation to live longer.

World health organisation figures show obesity rates have risen three-fold in the UK, the US and eastern Europe since 1980.

This increases the risks of diabetes, heart disease, osteoarthritis, strokes, and some types of cancer. In the UK alone, the annual cost of severe obesity is around £3.7bn, according to parliament's health select committee.

"Whether you look at this from the ethical point of view, or as pure investment, fat issues are very much on the agenda," says Richard Singleton at F&C Investments, which includes the Stewardship Growth ethical fund, the largest in the market at £2bn, and one of the top five performers over the past five years (see table).

"If.....continued below

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Stewardship Growth is a "screened fund" - it excludes companies with businesses where there are ethical worries. But F&C, which also controls the funds of life insurance and pension giant, Friends Provident, considers obesity across everything it manages.

At Norwich Union's Ethical and Sustainable Future Growth UK fund, manager, Peter Michaelis, says that obesity is a key theme.

"We ask which companies will do badly as a result, and which will see increased growth because of fatness and health concerns," he says.

"On pure investment grounds, food companies and retailers producing high-quality food and healthy lifestyle ranges, will enjoy an increase in demand; those producing poor quality food, with high sugar, salt and fat content, risk losing market share," he adds.

A further factor is the higher profit margins possible on healthy foods which tend to be bought by the better-educated and better-off.