By Andrea Figueras

A group of Nestle shareholders called on the Swiss consumer-goods giant to further reduce unhealthy foods in its portfolio, piling pressure on the company ahead of its annual general meeting.

Shareholders led by ShareAction, a U.K. nongovernment organization, said Thursday that they filed a proposal urging the maker of KitKat chocolate bars and Haagen-Dazs ice cream to set a new target to increase the proportion of sales from healthier products.

In response, Nestle said it doesn't plan to change the target to boost sales of foods it considers nutritious set in September. The company engaged with ShareAction and agrees with the goal of increasing the availability of more nutritious foods, but rejects some of its ideas, it said.

The shareholders that filed the proposal--Legal & General Group's investment arm, Candriam, La Francaise Asset Management, VGZ, and Guys and St Thomas's Foundation--requested that the item be voted at the company's annual general meeting on April 18. Nestle urged shareholders to reject the resolution.

The request is the latest public dispute between the world's largest food company and investors over whether its products are healthy enough. Last year, a group of 26 investors had already urged Nestle to increase the proportion of its sales from healthy products.

In September 2023, Nestle set out a target to deliver a 50% increase in sales of what it deems more nutritious products by 2030 compared with 2022 levels.

The company uses the health star rating system, or HSR, which created by the Australian government and ranks the nutritional profile of packaged foods. The rating mechanism consists of a scale ranging from a low of half a star up to five stars for the healthiest products.

Products with a rating of 3.5 stars or more, which are considered nutritious, and specialized-nutrition products, including baby foods, vitamin and mineral supplements, as well as medical nutrition accounted for around 59% of the company's food and beverage sales, according to Nestle's 2023 annual report. The figure excluded pet-care products.

The target fell short of Legal & General Investment Management's hopes, said Maria Larsson Ortino, senior global ESG manager at the asset manager. Engagement with the company reached an impasse and filing the shareholder proposal was the next appropriate step, she said.

"A debate about whether the target has been set correctly is not useful at this time," Nestle said, adding that it would focus on achieving the target.

Write to Andrea Figueras at

(END) Dow Jones Newswires

03-14-24 1220ET