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The Missing Link in ESG. Health. ESG+H as Private Equity Investment Criteria

Growing consumer awareness of nutrition’s impact on health drives increased spending on categories understood as “healthy.” The mainstream ambiguity on the definition of “healthy” –…

by | Nov 20, 2020

Growing consumer awareness of nutrition’s impact on health drives increased spending on categories understood as “healthy.”

  • The mainstream ambiguity on the definition of “healthy” – both for consumers and financial markets – is a challenge in assessing risks and opportunities

  • To unlock long-term value creation, scientific rigor must be implemented to identify what is genuinely healthy

  • This paper briefly outlines Manna Tree’s strategy to quantify and compare the impact of specific consumer foods on human health outcomes

Nutrition is often overlooked in healthcare, despite the sobering reality that poor diet is a leading cause of poor metabolic health, chronic illness, mortality, and healthcare spending globally. [1] Evidence suggests that metabolic risks have skyrocketed globally, including an estimated 70% increase in overweight (based on the body-mass index) and a 38% increase in elevated blood glucose levels (a risk factor for diabetes) between 1990 and 2017.[2] Further, global deaths due to all known dietary risks have risen by 19% and due to more upstream metabolic risk factors by 25% between 2007 and 2017.[2]

Given the inextricable link between diet and health, it is no wonder there is rising interest in the role that food plays in our health.

Historical definitions of hunger centered around getting enough food, but now we witness Silent Hunger’s phenomena: adequate calories while not getting enough of the nutrients you need. The quality of the food we eat is a crucial detail in defining the healthfulness of foods.


In 2018, LEK Consulting found that 93% of consumers report wanting to eat healthy at least some of the time, and over 60% try to eat healthy most, if not all, of the time. [3] While the millennial generation has catalyzed this transition, the study found significant interest in healthy eating across all age groups. In 2019, a Deloitte study confirmed that more than three-quarters of consumers are “actively seeking healthier versions of the food they purchase while avoiding preservatives and chemicals.” [4]

LEK also found that 2/3 of respondents are willing to pay a premium for natural, ethical, enhanced, and alternative dietary foods.[3] This represents a 10% increase in just two years for specialty marketed foods, and while it doesn’t always equate to the scientific healthfulness of food, it forecasts consumer demand for healthy foods.

In recent years, a majority of consumers are willing to pay a premium for healthy, fortified, and better-for-you alternatives, as well as fresh foods. Nearly 70% of millennials will pay a premium for organic or sustainable foods.[6]

The COVID-19 pandemic reinforced the importance of health in every industry. As a result, the current consumer demand for healthy food is unprecedented. According to a 2020 Harris Poll, 67% of remote workers say they are able to lead a healthier lifestyle since working from home; 41% report eating more nutritious snacks, and 38% have had additional time to cook meals.[7]

Healthy eating is not a fad. It is a shift in the mainstream’s food decision making at the point of purchase. And, in turn, companies at all stages are responding. “Better for you” and healthy options are appearing in nearly every food product category, incepted by both venture firms and leading larger-capitalized firms.

In an environment where the majority of consumers now prioritize the healthfulness of food in their buying decisions, one key question remains: how is the healthfulness of food evaluated?

ESG Today

There is increasing recognition that companies who do the right thing for the environment, society, and governance (ESG) will be more successful, more profitable, and will realize better investment opportunities. Compelling evidence indicates a positive ESG-corporate financial performance and lower volatility relation, in addition to the necessary social benefits.[8,9] While metrics to evaluate an entity’s environmental impact and governance have been established over the past 20 years, the metrics for the social component of ESG are inconsistent across the market and fail to comprehensively cover a business’ health and nutrition impact.[10,11]

The World Economic Forum’s recent effort towards standard metrics and consistent ESG reporting identified Health and Well-Being as an ESG theme, evaluated based on metrics about employee work-related injury and employee access to non-occupational medical and healthcare services.[12]

However, there is no widely accepted scientifically-based framework to evaluate food and beverage companies based on their products’ healthfulness or product mixes. This non-financial analysis has the potential to identify risks and opportunities inherent in consumer food companies.

The Missing Component

The more we know about how healthy a company’s products are – based on the best nutritional and medical science – the better positioned we are to identify business  growth opportunities as consumer awareness continues to increase. — Dr. Joshua Smith, Director Manna Tree

Incorporating Health as a factor in the analysis of consumer food companies could deepen the more commonly used ESG metrics and predictively capture the premium consumers are willing to pay for healthier food options. For the consumer, the expansion of labeling and health claims in food packaging, social media, and other mass messaging about food and health obfuscates the answer to a simple question — is this better for me? A clear answer would likely impact consumer decision making, given the desire for healthier food options. Furthermore, the more a company can substantiate its health claims, the more likely it is to defy its product’s commoditization.

Given the robust consumer demand for health-marketed foods, there is an opportunity to expand the non-financial factors, specifically a health factor, that identify material risks and value creation opportunities in food companies.

The +H Factor

The Health factor’s addition will be enabled by underlying metrics defining the “+H,” or health impact of consuming food products. The foremost goal is to ensure the metric’s scientific integrity to combat the ‘greenwashing’ of socially responsible investment principles and ensure validity.

Manna Tree’s corporate philanthropy has created a partnership with faculty at the Tuft’s University: Friedman School of Nutrition Science & Policy. The work focuses on creating a scientifically-based framework of metrics to rigorously evaluate a food business’s product portfolio and corporate strategy through the lens of consumer health. Effectively, this brings to life the “+H” factor in Manna Tree’s investment analysis.

Manna Tree will be the first investment firm to use this novel scientific instrument to assess prospective portfolio companies and their food-health impact. In tandem, Manna Tree is tracking the financial premium gained by investing in food companies with positive Health scores.

By focusing on Human Health through nutrition and leveraging best practices in ESG investing, Manna Tree intends to demonstrate the positive correlation between Health scores and a company’s financial outperformance. An additional goal is unifying the financial markets around a metric on human health through nutrition.


In an environment where the majority of consumers prioritize the healthfulness of food in their buying decisions and food has the possibility of positively contributing to health outcomes, the addition of a Health factor is inevitably missing in the analysis of the value of consumer food companies.

Assessing the healthfulness of a consumer food product deepens the analysis of a food company, highlighting inherent risks and opportunities. By driving investor interest, the +H factor will reward companies that develop healthier consumer foods.

Beyond that, if through the +H factor, the consumer better understands which foods are healthier, this framework can positively influence a company’s growth and financial performance. The consumer’s decision to support companies with healthier food products can also positively contribute to national and global health outcomes. Ultimately, the +H analysis can make a substantial social impact.

As the Covid-19 pandemic exacerbates consumer interest in health and well-being, there is no better time to apply the +H factor and reward companies that can positively impact population health and nutrition. In partnership with Tufts University, Manna Tree is proud to introduce this effort in our investing framework. We will continue to share the case study results of the ESG+H application.


Manna Tree is a Vail, CO-based private equity firm that invests in companies that produce, process, and distribute healthy food. Manna Tree’s first fund closed in March 2020 at $141.5 million; women and Next-Gen investors represent 45 percent of the investors. Manna Tree sources deals through a deep network of partners and leverages their extensive operational background to position investments for optimal growth and strategic partnerships. Manna Tree works to provide consumers with a more transparent food supply chain from production to plate. Current portfolio: Vital Farms, MycoTechnology, Verde Farms, and Nutriati. www.mannatreepartners.com


The Friedman School pursues cutting-edge research and education from cell to society, including molecular nutrition, human metabolism, population studies, clinical trials, nutrition interventions, behavior change, communication, food systems and sustainability, global food insecurity, and humanitarian crises, and food economics and policy nutrition.tufts.edu.


Faculty at the Friedman School of Nutrition Science and Policy at Tufts University are pioneering a scientifically-based framework of metrics to evaluate a food business’ product portfolio and corporate strategy from the lens of consumer health.

Organizations providing guidance are Manna Tree, JUST Capital, and the Friedman School Board of Advisors, including Danielle Capalino, Christiana Falcone, Denise Morrison, and Sarita Nayyar. Additionally, conversations are ongoing with the Tufts Food & Nutrition Innovation Council and the World Economic Forum. Manna Tree Partners’ advisor and Professor of Finance and Director of the Georgetown Center for Financial Markets and Policy, Reena Aggarwal, will also provide input on the project.


[1] Murray, CJL, Aravkin, AY, Zheng, P, Abbafati, C, Abbas, KM, Abbasi-Kangevari, M, et al. Global burden of 87 risk factors in 204 countries and territories, 1990–2019: a systematic analysis for the Global Burden of Disease Study 2019. The Lancet. 2020; 396(10258): 1223-1249

[2] Stanaway, JD, Afshin, A, Gakidou, E, Lim, SS, Abate, D, Abate, KH, et al. Global, regional, and national comparative risk assessment of 84 behavioural, environmental and occupational, and metabolic risks or clusters of risks for 195 countries and territories, 1990–2017: a systematic analysis for the Global Burden of Disease Study 2017. The Lancet. 2018; 392(10159): 1923-1994

[3] Lek.com. 2020. Consumer Health Claims 3.0: The Next Generation Of Mindful Food Consumption | LEK. Consulting. [online] Available at: https://www.lek.com/insights/ei/next-generation-mindful-food-consumption

[4] foodnavigator-usa.com. 2020. Deloitte: Fresh Food Spending Is On The Rise, But The Store Perimeter Is Still Underperforming. [online] Available at: https://www.foodnavigator-usa.com/Article/2019/11/13/Deloitte-report-Consumers-fresh-food-spending-on-the-rise#:~:text=Two%2Dthirds%20of%20US%20consumers,according%20to%20recent%20Deloitte%20research

[6] Fona.com. 2020. [online] Available at: http://www.fona.com/wp-content/uploads/2019/01/0119_FONA_Premiumization-Report-1.pdf

[7] Carter, E., 2020. [online] Available at: https://www.morningbrew.com/daily/stories/2020/11/12/get-used-americans-embrace-remote-work-per-exclusive-morning-brew-polling

[8] Friede, G, Busch, T, & Bassen, A. ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment. 2015; 5(4): 210-233

[9] Subodh Mishra. (January 14, 2020). ESG Matters. Harvard Law School Forum on Corporate Governance: Harvard Law School.

[10] FTI Consulting. (2020). Time to rethink the ‘S’ in ESG: COVID-19 prompts increased focus n a new’ S’- the Stakeholder. Retrieved from: https://corpgov.law.harvard.edu/2020/06/28/time-to-rethink-the-s-in-esg/  August 1, 2020

[11] BNP Paribas. The ESG Global Survey, 2019. Retrieved from: https://securities.bnpparibas.com/files/live/sites/web/files/medias/documents/esg/esg-global-survey-en-2019.pdf  August 1, 2020

[12] World Economic Forum. (2020). Measuring Stakeholder Capitalism: Towards Metrics and Consistent Reporting of Sustainable Value Creation. World Economic Forum. Available from: https://www.weforum.org/reports/measuring-stakeholder-capitalism-towards-common-metrics-and-consistent-reporting-of-sustainable-value-creation

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