Malnutrition costs business in developing countries up to $850bn a year

New report The Business Case for Investment in Nutrition by Chatham House and Vivid Economics reveals the hidden costs of malnutrition for business in low and middle-income countries. It finds that while business has a key role in improving nutrition in their workforce and local community, it underestimates the cost of malnutrition and misses opportunities to improve diets. 

The first of its kind, this report reveals that businesses in low- and middle-income countries lose between US$130 and $850 billion a year in lost productivity of its employees. This equates to between 0.4% and 2.9% of the combined Gross Domestic Product (GDP) of these countries. Figures in this report do not account for other forms of malnutrition, and so the total cost of malnutrition is likely to be much higher. 

picThe report conducted an economic modelling of 13 business sectors across 19 developing countries to determine the impact of malnutrition – specifically being underweight or obese – on workers’ productivity. It scaled up these findings to estimate the cost to business in all low- and middle- income countries.  

Where employees are underweight, an estimated $8 - 38 billion per year is lost due to reduced worker productivity. It is a particular problem for businesses relying on manual labour: costing 1.9% of value of the agricultural sector, 1.2% for mining, 1.1% for construction. Of the countries modelled, Ethiopia and India face the highest burden on business due to workers being underweight.

Productivity losses due to employees being obese cost up to $27 billion a year in the countries modelled. Obesity has the biggest impact in physically demanding roles: costing 1.8% of the value of the mining sector, 0.8% of the education and health sector, and 0.7% of household services. Across the 19 countries, Egypt, Albania and Honduras face the highest burdens due to obesity. 

There are also a number of countries that face a significant double burden of malnutrition: Ghana, Namibia, Tanzania and Zimbabwe. In Namibia, 10% of the workforce is underweight while 12% is obese. 

“Poor employee nutrition is a significant but poorly understood challenge for businesses operating in low- and middle-income countries. Undernutrition and obesity are causing big losses across all sectors. Multinational companies have the reach, expertise and resources to help make significant progress on nutrition and the Sustainable Development Goals, and it is in their interests to do so.”
- Laura Wellesley, Senior Research Fellow at Chatham House and report author.

 


Business must do more: recommendations

Through a review of annual reports and a series of interviews, Chatham House probed how businesses saw malnutrition affecting their company and the actions taken to mitigate its impact. Most companies viewed undernutrition as an issue faced only by low-skilled staff, and not well-educated workers. In actuality, undernutrition is seen across all sectors of business. Obesity was more widely recognised by interviewees and seen as a greater concern than undernutrition.

From workplace policies on nutrition to nutrition-focused support to local communities, 80% of the 180 companies studied are taking steps to tackle malnutrition. However, report authors viewed business’s actions to improve nutrition as “patchy and incomplete” and noted a lack of evidence-based effective corporate strategies to improve nutrition. This report identifies three areas for corporate action:

  1. Commit to improving nutritional outcomes of all employees and suppliers 
  2. Seek out partnerships to deliver improved nutrition to communities
  3. Commit to full transparency and good governance around corporate action on nutrition

“Many businesses are showing real leadership, but much more needs to be done, and done at scale," says Kristin Hall, Head of Major Donors and N4G Strategy at The Power of Nutrition.

"With COVID-19 expected to push the most vulnerable further into poverty, and donor and domestic financing under strain, now is the time for businesses to invest in nutrition in a meaningful way. The Nutrition for Growth Summit offers an opportunity to capture financial commitments. Investing in nutrition is not just the right thing to do, it gives back, boosting productivity and positively impacting businesses’ bottom line.” 


Get involved