Poor diets to cause corporate loss as productivity dips

Poor diets in developing countries are costing businesses as much as $850bn a year in lost productivity, underlining the need for companies to play a bigger role in tackling a problem that’s being compounded by the coronavirus pandemic.

Those are the findings of a study by Chatham House and Vivid Economics, the first to analyse the impact of undernutrition and obesity on business in low- and middle-income countries. Both conditions make it difficult for employees to reach their potential and lead to ill-health, which leads to more sick leave.

Multinational companies need to do more to fight malnutrition, according to Chatham House. That should include policies that support breastfeeding mothers, offer regular health checks, and provide nutritious and subsidised food at work, the London- based think tank said.

“Business has a significant role to play,” Laura Wellesley, a senior research fellow at Chatham House, said in an interview.

“Aside from productivity losses, there is a significant reputational risk for companies who have a large footprint in low- and middle-income countries and who aren’t doing anything on nutrition.”

Obesity has been on the rise in poorer countries, which were already grappling with high rates of undernourishment. The pandemic has further highlighted the importance of nutrition, with studies showing that obese people are more likely to die from Covid-19. The United Nations predicts the virus could push another 10 million children into acute malnutrition.

“We can expect the pandemic to worsen the costs, because economic insecurity is so closely associated with nutrition insecurity,” Wellesley said. “We can expect that more households will struggle to access a nutritious diet.”

The Chatham House study examined the impact of poor nutrition on 13 business sectors – from mining and agriculture to construction and retail – in 19 countries. It then scaled up the findings to estimate the annual productivity losses due to obesity and undernutrition across developing nations.

The greatest productivity losses from being undernourished were in agriculture, mining and construction, with Ethiopia and India facing the highest burden. The biggest impact from obesity was felt in the mining, education and health sectors.

The direct productivity losses are estimated at $130bn to $850bn. That range reflects a number of variables and the way Vivid Economics’s model extrapolates the findings from the 19 countries, according to Chatham House.

Still, the impact of poor nutrition could be even larger. The model doesn’t include the costs of impaired cognitive development and low educational attainment resulting from undernutrition in childhood, nor does it capture indirect costs such as paid sick leave for malnutrition-related illness.

“The toll on human health is enormous, but the economic impact is so huge as well,” Sarah Rawson, a nutrition and health lead at Olam International, said in an interview. “If we’re going to face up to future pandemics, we need the whole population to be as well-nourished as possible so they’re resilient to it.”

Olam, an agribusiness giant, is one of the companies backing the Power of Nutrition foundation that funded the study.