Scratching the surface: Ultra-processed foods

12 June 2024

Throughout my career in sustainability-focused investing, there have been many different areas signposted as issues that must be solved, best outlined by the UN’s Sustainable Development Goals (SDGs). The climate crisis (shown by SDG 13) is and always will be the poster child for the sustainable investment movement, and rightly so. The world faced the hottest May on record, completing 12 months in a row that have set a new global temperature record for that time of year, it is an urgent issue.

However, that is not what this blog is about. Instead, I’d like to discuss another critical issue, the obesity epidemic, for those interested, closely tied to SDG 3.

PA future, asked me some questions on the global phenomenon which is seeing roughly two out of three U.S. adults being overweight or obese, with the UK not far behind. In the article, I talk about the growing rhetoric that the cause is how much our diets have changed in the last century, rather than a mass failing of human willpower. Specifically, the movement from a diet consisting of whole, single ingredient foods from local sources and a focus on seasonality to a supermarket model where everything is available, all year round with little knowledge of where it came from. A recent conversation with my Grandad where he shared how he used to have a veggie patch, fruit cage, and make his own wine made me realise how just how far our food system had changed, to a time where we stress whether a food is a ‘protein’ or what the calorie content is rather than making sure it doesn’t contain anything harmful.

Foods containing 50+ ingredients (it’s much more common than you think) is a recent phenomenon, and has slowly entered our daily lives as we have moved away from the culinary wisdom that our ancestors abided by and effectively utilised to evade obesity, and its subsequent health issues. As our penchant for quick eats and ready meals has grown, we have effectively outsourced the preparation of our meals, in almost all cases, to these ten global companies.  With it, a focus on the calories and macronutrients the food contains rather than the chemicals, emulsifiers and real ingredient substitutes which bring those headline ‘nutrition indicators’ down.

Further, this current food system has opened the floodgates to levels of experimentation by food companies to make these foods hyperpalatable (the perfect taste profile to trick the taste buds that the food is satiating), soft enough to make consumption easy, but sufficiently lacking in nutrients to make the body crave more to actually ‘hit the spot’. The result? Ultra-processed foods, or ‘industrially formulated edible substances’. Profits of the largest producers of these goods have grown handsomely, achievable from the increased consumption the products’ specific formulation promotes.  

In my role as a custodian of client assets, particularly those who have made the conscious decision to promote positive environmental and social outcomes, I believe that this emerging classification of food needs to be embedded into investment decisions. That’s why I went to the fund managers, whose funds we hold in the TAM Sustainable World portfolios, showed them the research and asked them to justify any holdings in ultra-processed foods providers. It has been a truly insightful journey from that point last Autumn which has seen a key fund I engaged with create a whitepaper on the health and financial implications of this information, with changes to the holdings within the fund as a result. I recorded a podcast with the fund manager this week to provide further detail of what this process looked like which I thoroughly look forward to sharing with you all.

Ultra-processed foods is an emerging science but the evidence of the negative effect it is having is growing. Like within all disciplines in sustainability investing, we must be open to new ways of thinking. As always, if we work together, I believe we can make a difference, for the better. 

If you would like to speak with me about my research into ultra-processed foods, or to discuss our TAM Sustainable World portfolios, please do not hesitate to get in touch.