The global obesity epidemic

According to the World Health Organisation (WHO), in 2022, 2.5 billion people globally were overweight (which is defined as having a Body Mass Index (BMI) over 25), of which 890 million people were living with obesity (a BMI over 30). Over the past 30 years, worldwide adult obesity has more than doubled and adolescent obesity has quadrupled.

In the UK, nearly 28% of adults are living with obesity and in the US over 40% of adults are obese, a number expected to reach nearly 50% by 2030.

Obesity is a chronic complex disease defined by excessive fat deposits that can impair health. Whilst it has been recognised as a disease by the WHO since 1948 (and by the American Medical Association since 2013) obesity has not yet been formally recognised as a disease in the UK.

Perhaps the most obvious and best documented challenge from obesity is Type 2 diabetes, given its close association with high BMIs. Indeed, the risk of developing diabetes amongst obese people is seven times greater compared to those of healthy weight. Health complications are not restricted to diabetes. Research links obesity to sleep apnea, and psychological issues, while carrying extra body fat may also lead to other serious health consequences such as cardiovascular disease (mainly heart disease and stroke).

These conditions can lead to substantial disability or premature death. Indeed, deaths attributable to obesity have risen to five million a year – 8% of total deaths.

In terms of economic impact, the World Obesity Foundation estimates that obesity cost the global economy an eyewatering $1.96 trillion in 2020 (or around 2.5% of global gross domestic product) and this cost is expected to double by 2035.

 What’s driving the epidemic?

While there can be a genetic predisposition to obesity, and it can be linked to other chronic conditions and disability, the most prominent obesity risk factors concern lifestyle including poor diets and low physical activity. These in turn are driven by social determinants of health including your parental upbringing, your food environment, and the resultant knowledge behind nutrition and lifestyle choices.

There are also further physical feedback mechanisms. For example, recent research has shown that long-lasting brain adaptations occur in individuals with obesity, reducing the rewarding effect of food intake which then may contribute to overeating.

What can be done?

Public health guidance

EQ Investors (EQ) has long been involved in addressing the obesity crisis, understanding the burden this puts on individuals, society and the economy. It is a financially material risk factor and therefore action through investments and engagement is valuable to client outcomes.

We not only understand that regulation needs to play a large role, but also have long worked towards instilling greater responsibility on foods manufacturers and retailers which strategically enable unhealthy choices.

Our work on obesity goes back to 2017 where the EQ Foundation (part-owner of EQ Investors) sponsored Centre for Social Justice’ research into policies that could help intervene with some of its drivers of childhood obesity. This resulted in recommendations and the eventual passing of regulation that reduced unhealthy snack adverts and placements in grocery stores aimed at targeting children.

Subsequently, the UK’s first sugar tax on soft drinks came into effect in 2018, internalising the societal costs drinks manufacturers were producing through enabling unhealthy diets. Other regulations introduced in the UK since include restricting certain forms of advertising and introducing calorie labelling.

Despite these changes, obesity rates in the UK have only risen since then.  It’s clear other solutions are needed.

Investor pressure

The EQ sustainability team has been using its influence as investors to drive change.

We were involved in ShareAction’s Healthy markets engagement initiative in 2019 (now called Long-term investors in People’s health).  Alongside a group of like-minded investors, we engaged with UK supermarkets, and food manufacturers – including Unilever, Nestle, Coca-Cola, and Tesco’s and Sainsbury’s. We also joined the Access to Nutrition initiative to elevate their research on food company’s impact on access to healthy foods – targeting companies across the world.

The aims of all of these engagements ranged from requesting disclosure on the healthiness of sold/manufactured foods (using government-endorsed nutrition scores) to help consumers make informed choices, to questioning their advertising, to requesting health-food sale targets.

Successes included Unilever in 2022 becoming the first company to comprehensively publicly report on the healthiness of the food it sells. In 2021 Tesco set a target to increase the proportion of sales from healthier products to 65% by 2025, which it committed to after the group of investors launched a shareholder resolution at the company’s AGM. Since then, supermarket peers have launched similar targets. Recently, a resolution was put to Nestle along similar lines, which we encouraged asset managers to support.

Beyond this collaborative work, members of the EQ investment team have attended AGMs to engage board members directly on the issue of healthy food. For example, in our question to Domino’s pizza in 2023, we asked that more low-calorie options were added to the menu.

However, not everything can be achieved through shareholder pressure. Progress has been slow amongst the US food manufacturers, including the likes of Coca-Cola or Mondelez – with continued engagement yielding no material improvement in their public health commitments. Unless policy changes significantly or critical investor pressure is exerted, some companies will continue to provide unhealthy foods.

The role of GLP-1’s

In the absence of effective government regulation of the food system, and the education system instilling the necessary knowledge that can work against some social determinants of health, obesity rates will continue to rise.

In a system where the determinants of obesity are hard to control, GLP-1s have, as we’ve recently written about, shown significant weight loss results in individuals that have long struggled with chronic obesity and the associated health impacts.

Of course, we wouldn’t claim that Novo Nordisk or Eli Lilly’s drugs are a save-all, cure-all. Until its discovery, obesity and type 2 diabetes was predominantly managed through lifestyle changes. This approach still works for some patients – and will continue to be recommended by doctors. There are also free, accessible NHS weight-loss courses and educational materials available for all, as well as some with counselling access. Similar support exists across Europe and even in the US.

However, changing lifestyles is harder than just flipping a switch, with many patterns deeply engrained in routines and in patients psychology.

In most jurisdictions, GLP-1s has to be accompanied by counselling and training sessions that instil sustainable fitness and healthy eating habits. On top of that, the effects of the hormones tend to lead to less cravings and greater abilities to make conscious choices over foods. This can build the foundation of new habits to follow after the treatment course finishes.

While popular now, GLP-1 is not a new compound and has been approved in the US for diabetes management since 2005. Given its roll-out across the world’s regulators, it is considered safe and effective if administered according to a prescribed plan. Of course, any side effects are continuously studied, and governments around the world will continue to evaluate the costs of these against the benefits of treatment to individuals and society. If the balance changes, EQ’s view within our sustainable portfolios on GLP-1s will adapt accordingly.

GLP-1s provide a promising contribution to fight the obesity crisis and it associated effects, but it cannot be taken out of the context of the manifold drivers of obesity, which also need to be addressed.

Looking forward

The obesity crisis presents one of the biggest social challenges we face and is in line with our sustainable portfolio mandates to invest in solutions to combat it. We continue to support companies providing GLP-1s, alongside healthcare provision and insurance to enable its greater access. We are also continuing to engage on healthy food and have joined the Access to Medicine Foundation to enhance engagement outcomes further.