Workers at the textile production factory of JayJay Textiles in Addis Ababa, Ethiopia, April 2017. Photo: Michael Gottschalk/Photothek/Getty Images
Workers at the textile production factory of JayJay Textiles in Addis Ababa, Ethiopia, April 2017. Photo: Michael Gottschalk/Photothek/Getty Images

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Executive Summary

Businesses have a vital role to play in improving nutrition, both in the workforce and in the community. Effective action could reduce global deaths from malnutrition and greatly enhance economic productivity.

Malnutrition acts as a brake on the development of individuals, communities and economies around the world. Encompassing both undernutrition (which results in conditions such as stunting and anaemia) and overnutrition (e.g. overweight and obesity),1 malnutrition is the leading cause of death globally, and the leading driver of disability. Malnutrition experienced in childhood has lifelong impacts on cognitive and physical development, as well as on earning potential. It is an intergenerational problem that traps households and communities in a cycle of poverty. Yet progress on tackling malnutrition is stalling. There is chronic underinvestment in potential solutions, while the challenge is becoming more complex.

Previous research has looked at the impacts of poor nutrition on health systems or society at large, but the effects on businesses have gone largely unexplored. This report is the first of its kind to reveal the hidden costs of malnutrition for business, and the extent to which these costs are recognized and addressed by multinational companies (MNCs). It finds that businesses in ‘low- and middle-income’ countries2 collectively lose between $130 billion and $850 billion3 a year through malnutrition-related productivity reductions, equivalent to between 0.4 per cent and 2.9 per cent of those economies’ combined GDP.

In reality, the costs are likely to be much higher. The model developed by Vivid Economics4 for this report looks only at the direct costs of certain forms of malnutrition in the adult workforce in terms of reduced productivity. It does not explore the costs of impaired cognitive development and low educational attainment resulting from undernutrition in childhood, or indirect costs such as paid sick leave for malnutrition-related illness. The study therefore estimates only a share of the total costs, yet still finds that these are in the hundreds of billions of dollars each year.

Despite these substantial impacts, companies routinely overlook or underestimate the cost of malnutrition to their operations and are failing to spot the opportunities to drive action to improve diets and related health outcomes.

The economic costs of malnutrition

The Vivid Economics model estimates the number of workers who are underweight or obese in 13 business sectors across 19 low-, lower-middle- and upper-middle-income countries, and the impact this has on workers’ productivity. It also estimates the prevalence of two other conditions – (a) anaemia and (b) adult short stature as the result of stunting in childhood – in smaller subsets of the same countries,5 again modelling the impact on productivity in the 13 business sectors.

Across the 19 countries studied, the model shows that businesses lose an estimated $8–38 billion per year (equivalent to 0.2–0.9 per cent of GDP) from reduced worker productivity due to employees being underweight, and $4–27 billion per year (0.1–0.6 per cent of GDP) due to obesity. Anaemia (a condition predominantly caused by micronutrient deficiency) is estimated to reduce economic output by an amount equivalent to an additional 0.8 per cent of GDP on average across the five countries where this condition was studied. Short adult stature resulting from childhood stunting (another form of undernutrition) is estimated to cost businesses $3.9 billion per year, or 0.4 per cent of GDP, across the 17 countries where this was studied. Were the indirect impacts of childhood stunting on educational attainment to be included, this would increase by up to 4.5 times to a total cost of 1.8 per cent of GDP.

Of the 19 countries modelled, Ethiopia and India face the highest burdens on business from workers being underweight, while Egypt, Albania and Honduras face the highest burdens due to obesity. A number of countries face a significant ‘double burden’ of malnutrition in the form of high costs associated with both underweight and obese workers, including Ghana, Namibia, Tanzania and Zimbabwe. In Namibia, for example, 10 per cent of the workforce is underweight and 12 per cent obese.

Companies do not understand the problem well

In addition to the economic modelling, Chatham House conducted a desk-based review of the sustainability and annual reports of 180 of the largest MNCs operating in developing countries. We interviewed 19 representatives from 16 of these companies to find out what they thought about the impact of malnutrition on their business, and what they were doing to address it.

Notably, the majority of company representatives did not consider undernutrition to be a material issue. Most thought that undernutrition and its cognitive and physical impacts affected only low-skilled, low-earning staff, and therefore were not likely to be a problem for their skilled and well-educated workers. This assumption is misplaced: our modelling shows that a significant share of the workforce is underweight across all sectors. That said, having underweight workers is a particular problem where manual labour is central to output: on average, the cost of lost productivity due to employees being underweight is equivalent to 1.9 per cent of gross value added (GVA)6 in the agricultural sector, 1.2 per cent in mining and 1.1 per cent in construction.

In contrast to undernutrition, more than half the interviewees said obesity was prevalent in their workforce and represented a significant issue for their company. Most interviewees assumed obesity was more prevalent and more of a material concern than undernutrition, but in fact obese employees are less common than underweight employees across all of the sectors analysed.

Interviewees broadly associated obesity with high-earning and/or skilled workers in sedentary or non-physically demanding occupations. However, our model shows that sectors characterized by physically demanding roles suffer the greatest costs associated with obesity among the workforce: across the 19 countries modelled, the cost of obesity is most concentrated in mining (1.8 per cent of GVA), education and health (0.8 per cent), and household services (0.7 per cent).

The missing link in the SDG agenda

The risks to global business from pervasive malnutrition extend beyond productivity losses. Adequate nutrition is the missing link for sustainable growth and is integral to achieving the Sustainable Development Goals (SDGs). Success in tackling malnutrition in all its forms would have a multiplier effect at both household and economy level, improving health, boosting incomes and stimulating economic development. Failure, on the other hand, would slow long-term economic growth, hinder human capital development, and threaten the long-term viability of corporate investment and market growth in low- and middle-income countries.

Adequate nutrition is the missing link for sustainable growth and is integral to achieving the Sustainable Development Goals

The impact of businesses on the health and well-being of stakeholders is also increasingly recognized as a core element of the sustainability agenda, and an area of material risk for institutional investors and asset managers. As investor interest in the nutrition agenda rises, and scrutiny of the role of corporate practices heightens, companies will be under growing pressure to demonstrate a positive impact on the nutritional well-being of their workforces and wider stakeholders.

An opportunity and an imperative for more action

Notwithstanding this report’s judgment that corporate action on nutrition remains insufficient overall, a number of pioneering MNCs are already leading the way on the issue. Over 80 per cent of the 180 companies analysed for this report are taking some measures to tackle malnutrition, whether through partnerships with non-governmental organizations (NGOs) to deliver nutrition programmes, nutrition-focused support to local communities or workplace initiatives aimed at improving nutrition among employees. Food and beverage companies are doing the most; those in other sectors have further to go.

Our interviews revealed that some company executives see action to improve nutrition as beyond the power or remit of individual businesses. However, a number of the driving factors behind malnutrition lie within companies’ direct sphere of influence. Companies can upgrade the food environment in which workers spend a large share of their day, for example, or pay a fair living wage. Progress in other areas may require society-wide collaboration, and companies bringing their resources and expertise to bear on the issue – examples include the development and distribution of micronutrients to support mothers and infants in their first 1,000 days, or nutrition-supporting interventions in health, education, water and sanitation.


There is a clear opportunity and business incentive for companies to take more and further-reaching action to tackle malnutrition, which is currently costing them so much, and to be part of the solution to a problem that claims millions of lives a year. Companies have the reach, the expertise and the resources to advance global efforts to overcome malnutrition. There is no reason for them not to act.

And now is the time. Over the next 18 months a series of key international events and moments will give companies the opportunity to signal their commitment to improved nutrition as a core component of their sustainability agendas. In particular, the Tokyo Nutrition for Growth Summit, currently scheduled for December 2020, could be a milestone for new and ambitious corporate action to help meet the SDG 2 nutrition targets by 2025, including financial commitments and pledges to improve workforce nutrition.

As it stands, the evidence base on which to design effective corporate strategies to improve nutrition, both among the workforce and among the wider population, is lacking. In the absence of common reporting frameworks for corporate nutrition-related activities, there is a dearth of examples on which to draw. Those that do exist are rarely subject to robust and independent monitoring and evaluation. More research is required to identify promising avenues for corporate engagement, to test novel programmes and initiatives, and to share experience and expertise through transparent reporting and knowledge exchange.

Despite these challenges, this report identifies three broad areas for corporate engagement to harness existing opportunities for positive action on nutrition and to build the evidence base to inform sustainable and effective strategies in the future.

  1. Commit to improving nutritional outcomes among all employees and suppliers, through:
    • Implementing group-wide minimum workplace policies on nutrition, such as mandatory nutrition training for employees, healthy workplace canteens, workplace support for breastfeeding mothers, and the inclusion of healthy-eating guidance in well-being programmes;
    • Supporting supply chain partners in introducing similar minimum policies, for example through providing resources and guidance to facilitate the delivery of the above policies;
    • Working towards alignment with best-practice guidance where available, and in particular working in collaboration with nutrition-focused business initiatives such as the Global Alliance for Improved Nutrition (GAIN) and the SUN Business Network (SBN).
  2. Seek out partnerships – with business, government and civil society – to deliver improved nutrition to communities and populations, through:
    • Integrating nutrition within existing corporate sustainability programmes, for example through the inclusion of nutrition training and outreach in programmes focused on community health or on water, sanitation and hygiene (WASH);
    • Pooling resources and expertise to deliver large-scale programmes targeting at-risk communities, such as the fortification of staple foods and the distribution of ready-to-use therapeutic foods in emergency situations;
    • Committing significant financial resources, including through commitments at the upcoming Tokyo Nutrition for Growth Summit, to support the development, distribution and scale-up of novel and existing nutrition solutions, and to generate momentum for change at scale.
  3. Commit to full transparency and good governance around corporate action on nutrition, through:
    • Monitoring, evaluating and reporting on all nutrition-related activity, both internally and externally;
    • Ensuring full disclosure of conflicts of interest, including around the funding of research and lobbying activities and around partnership arrangements with third-party stakeholders;
    • Supporting the integration of nutrition into environmental, social and governance (ESG) frameworks, through full disclosure of data and information to ESG data providers;
    • Ensuring food and beverage products are supportive of improved nutrition, not only through compliance with best-practice codes on marketing, but through reformulation and innovation to deliver healthy and affordable food that supports a diverse and nutritious diet.
1 This report defines ‘malnutrition’ as both undernutrition (wasting, stunting, underweight, micronutrient deficiencies) and overweight/obesity.
2 The Vivid Economics model classifies countries according to the World Bank’s four income bands: low-income, lower-middle-income, upper-middle-income and high-income. The 19 countries modelled in this study are from the low-income, lower-middle-income and upper-middle-income bands. For convenience and brevity, we also use the term ‘low- and middle-income’ to refer to these economies (i.e. we define ‘middle-income’ as encompassing both ‘lower-middle’ and ‘upper-middle’ groups). Income levels referred to in other research sources are cited in accordance with the terminology used in each source.
3 All dollar figures in this report are US dollars.
4 Vivid Economics is a strategic economics consultancy, specializing in analysis and modelling relevant to public policy and commercial decision-making.
5 Five countries are modelled for anaemia, 17 for adult short stature. Chapter 2, Box 4 lists the full set of 19 countries, as well as indicating which are used in the estimates for anaemia and adult short stature.
6 Gross value added (GVA) is the value of a sector’s net contribution to GDP.