23 Dec 2021 4 min read

Tackling obesity as an ESG issue

By Jonathan Lawrence , Madeleine King

The global disease presents risks and opportunities to investors, as well as the chance to deliver positive change.

Obesity is widely recognised as the most prevalent disease in the world, with meaningful health, social and economic implications. Yet we believe many investors do not acknowledge its financial materiality as an ESG issue, nor the role they can play in tackling the condition.

More than 650 million people were obese in 2016, according to a recent update from the World Health Organisation.[1] In 2017-2018, over 40% of the US population was obese.[2] The rate of obesity prevalence is increasing, as people are less physically active and eat more energy-dense food with low nutritional value.

Obesity is linked to multiple leading causes of death, including diabetes, heart disease and strokes. As a result, it has significant economic implications: the OECD estimates that 8% of member countries' health budgets will be spent treating the consequences of obesity and related conditions over the next 30 years.[3]

Indeed, the disease holds back economic growth as it prevents workforces from operating at full productivity. In doing so, it obstructs progress towards a number of the UN’s Sustainable Development Goals, which we target as a firm; for example, “decent work and economic growth” and “good health and wellbeing.”

Active engagement

At LGIM, we believe that given the significance of the issue, it is important that as a forward-looking, responsible investor we must consider obesity as a factor —both in our investment process and in our engagements with the companies in which we invest on behalf of our clients.

We have already started to engage on the topic with companies across different industries. Our Investment Stewardship team worked with ShareAction, the NGO, on Tesco.[4] Our engagement helped to prompt the retailer – Britain’s largest – to set a more ambitious nutrition target, with the company now pledging to derive 65% of total sales from healthy products by 2025 (up from 58% at present).

We also work with the Access to Nutrition Initiative to engage with the 20 largest listed food and beverages companies in the world on their nutrition strategies.

Within our Active Strategies team, we now factor the issue into our assessment of packaged food and beverage companies, to inform our investment views and engagement agenda. We believe companies with high revenue exposure to unhealthy products are likely to face the dual headwinds of increasing regulation and limitations on marketing of unhealthy foods.

Obesity issues and LGIM investment process

In addition, we see appealing investment opportunities in the healthcare space, where the anti-obesity medication market is experiencing a breakthrough in terms of safety and efficacy.

Today, only about 2% of obese patients are treated with anti-obesity medication (AOM).[5] With safer and more efficacious anti-obesity drugs coming into the market, we expect this percentage to increase meaningfully, driving growth for the AOM market over the next decade.

This issue is but one of many on which our Global Research and Engagement Groups focus, leveraging expertise across fixed income, equities and investment stewardship to deliver cross-asset insights into investment opportunities and risks – and areas to deliver positive change for our clients.


[1] Source: Obesity and overweight (who.int)

[2] Source: Adult Obesity Facts | Overweight & Obesity | CDC

[3] Source: The economic burden of obesity - OECD iLibrary (oecd-ilibrary.org)

[4] For illustrative purposes only. Reference to a particular security is on a historical basis and does not mean that the security is currently held or will be held within an LGIM portfolio. The above information does not constitute a recommendation to buy or sell any security.

[5] Source: The Societal Value of Broader Access to Antiobesity Medications (nih.gov)

Jonathan Lawrence

Responsible Investment Analyst, Active Strategies

Jonathan focuses on integrating ESG factors into the credit research process. Jonathan joined LGIM from BlackRock, where he worked as a Transitions Portfolio Manager, and prior to this within the Client Solutions practice focusing on bespoke investment solutions for UK pension schemes. Jonathan graduated from the University of Nottingham with an honours degree in Economics. Following this he earned an MSc in Finance and Development, with distinction, from the School of Oriental and African Studies (SOAS). Jonathan also holds the Investment Management Certificate and is a CFA charterholder.

Jonathan Lawrence

Madeleine King

Head of Research and Engagement

Madeleine joined LGIM in 2015 from Credit Suisse where she worked as a credit trading desk analyst for five years. Prior to that, she was a TMT research analyst at HSBC and Barclays Capital. Madeleine graduated from the London School of Economics and holds a first class BSc in Business Mathematics and Statistics.

Madeleine King