What’s the business case for investing in nutrition?

Across the globe, millions of children are trapped in diets dominated by cheap, ultra-processed foods. It’s the reason why this year, obesity overtook underweight as the leading form of malnutrition, with UNICEF recently finding that obesity now affects 188 million children and adolescents — 1 in 10 — throughout the world. The scale of the problem is staggering — and with traditional aid flows crumbling, many are looking to the private sector to fill the gap. But doing so raises a fundamental question: Can tackling childhood malnutrition deliver not just health benefits, but economic returns? The answer, it turns out, is complicated. But last week, dozens of experts from both the private and public sectors gathered at the Building Bridges conference in Geneva, Switzerland, to brainstorm nutrition’s business case and to understand whether a profitable investment path for nutrition could actually exist. On the one hand, there’s the larger, macroeconomic case: the World Bank estimates that for every dollar spent on nutrition, the world gets $23 in return. That’s calculated by measuring how interventions such as supplements, breastfeeding promotion, and food fortification can improve children’s health, cognition, and productivity — reducing health care costs, increasing educational attainment, and boosting workforce potential as a result. But for many, those benefits are seen as long-term, diffuse, and spread across sectors, which makes nutrition a difficult proposition for investors seeking quick, measurable returns. “What we’ve heard a lot from investors is that they think [investing in nutrition] is very interesting, but they want to see it work first,” said Thierry Buchs, the senior policy adviser at the Swiss Agency for Development and Cooperation, or SDC, at a session during the Building Bridges conference. “First, come and see us with a portfolio, and with the business case, because we have to make sure it’s investable and that we get the money back. And then we’ll invest.” Such hesitations aren’t the only hurdle. The world would need to spend an extra $13 billion a year just to roll out these interventions, the World Bank found, alongside stronger policies to curb obesity and make healthier diets more accessible. While the private sector is investing in food and agriculture — and more than 60% of impact investors have at least some capital in the sector — the vast majority of those investments don’t go toward healthy foods, explained Greg Garrett, the executive director of the Access to Nutrition Initiative, or ATNi. Instead, he said, that cash often goes toward the same companies producing ultra-processed foods — the types of products that are engineered for mass production, extended shelf life, and higher profit margins. “The problem is not the money. It’s not the capital,” said Garrett, speaking during the Building Bridges session on the topic. “[I]t’s what that capital is seeking to achieve.” The Netherlands-based foundation tries to push the private sector toward healthier food systems by benchmarking companies on their nutrition policies and urging investors to tie financing to stronger standards. Efforts like these aim to shift incentives — showing that investing in better nutrition can protect long-term returns, reduce regulatory risk, and meet growing consumer demand for healthier foods. The challenge For Garrett, that shift cannot move fast enough. UNICEF’s recent report showed that the childhood obesity rate has more than tripled in 25 years. Those in the Pacific islands were hit the worst, with rates in some small nations at nearly 40% — and even in high-income countries such as the United States and the United Arab Emirates, those figures surpassed 20%. “When we talk about malnutrition, we are no longer just talking about underweight children,” UNICEF Executive Director Catherine Russell said in a statement. “Ultra-processed food is increasingly replacing fruits, vegetables and protein at a time when nutrition plays a critical role in children’s growth, cognitive development and mental health.” ATNi has drilled into that problem at a country level. In Kenya, the organization found that sales of processed packaged foods grew by 16% from 2017 to 2023, while adult obesity has tripled since 2000. In Tanzania, ATNi found that sales of ultra-processed packaged foods grew by more than $300 million over six years, and across the country, more than three-quarters of the population is unable to afford a healthy diet. And across the world, less than one-third of the companies surveyed by ATNi — which included 30 of the world’s largest food and beverage manufacturers — demonstrated a strategy to price some of their healthier products more affordably for their lowest-income customers. “The cost of malnutrition is staggering, and the economic toll is expected to exceed $41 trillion over the next decade,” ATNi’s analysis stated, adding that the cost of overweight and obesity-related issues is anticipated to account for 3.3% of GDP by 2060 — with the worst economic impacts facing the lowest-income countries. The opportunity Despite those challenges, dozens packed into a session at Building Bridges to understand how the private sector could make a change — aside from, of course, the food and beverage sector transforming itself. Patrick Elmer, the head of impact investing company iGravity, spoke about investing in social enterprises: His team just approved a loan to a small Ugandan company that hopes to produce fortified flour using pumpkin seeds. Those pumpkin seeds are produced by smallholder farmers in the eastern Ugandan region of Mbale, he said, and with iGravity’s loan, they are purchasing a drying facility to grind those seeds into the flour. The plan is for that company to sell their product to hospitals, schools, and supermarkets, creating a nutrient-rich product that can be used for local recipes. SDC’s Buchs spoke about blended finance, which is the use of public or philanthropic capital to attract and de-risk private investment in development projects. Last year, SDC and the now-defunct U.S. Agency for International Development poured $11 million into the Nutritious Foods Financing Facility, an impact investment fund that helps small businesses in sub-Saharan Africa boost access to affordable, safe, nutritious food for low-income consumers. The bilateral aid agencies provided first-loss capital for the fund, Buchs said, agreeing to absorb initial losses if the fund’s investments don’t perform well. “It’s a great example of market creation,” said Buchs. But still, he added, there are challenges. While the fund has had huge success in deploying capital — there are investees including across Kenya, Tanzania, and Uganda — it’s been difficult to attract private investors to the mix. Juan Salazar, a senior engagement specialist at Pictet Asset Management, had a similar take. Salazar mentioned that Pictet has found it’s been difficult to find listed companies in emerging markets that are attractive for the investment space, noting that most are still focused on producing processed foods. Even so, he added, Pictet sees nutrition as being at an “inflection point,” one driven by both changing consumer preferences and more government regulation. When it comes to the former, consumers across the world have increasingly begun to demand healthier products: in India, for example, a survey from PricewaterhouseCoopers, or PwC, found that 84% of people are seeking safer, healthier food choices — despite the fact that 63% were concerned about the price of food. That barrier, along with the relative convenience of processed foods, is typically one of the biggest challenges for consumers to make healthier choices. Salazar also pointed to the pickup of GLP-1, the class of medications that reduce appetite and, in turn, lead to weight loss. Last year, 1 in 8 adults in the U.S. are estimated to use GLP-1, according to an analysis by the research organization KFF. And, there’s the uptick in digital health technologies, with 67% of people in China, 60% of people in the United States, and 44% of people in Germany now tracking their health digitally, whether that be through a smartwatch or a phone application. “We’ve been hearing for such a long time that, yes, consumers want healthier food, and the needle hasn’t moved as fast as we would have wanted,” said Salazar. “But we believe this is changing.” As for regulation, Salazar mentioned the move toward front-of-package nutrition labels, which give consumers clearer, at-a-glance information about how healthy a product is. As of last year, 16 countries have mandated companies to place front-of-package nutrition labels on food products, while another 28 countries have implemented that policy voluntarily. “We think that companies will identify and take advantage of these drivers, and that’s going to create more interest and opportunities for impact-minded and socially responsible-minded investors to invest in,” he said.