Antimicrobial resistance is one of the critical issues of our time. Bacterial infections that are resistant to antibiotics caused 1.3mn deaths worldwide in 2019, more than malaria; by 2050 the toll is expected to reach 10mn a year. Attention has largely focused on overprescription of antibiotics by doctors, leading to excessive consumption by humans. Investors are now rightly taking aim at overuse in industrial farming and livestock production — which can fuel not only resistance but the emergence of drug-resistant superbugs in people.
European asset managers Legal & General Investment Management and Amundi are among those targeting the fast food giant McDonald’s at its annual meeting on Thursday. They are pushing the company to stick to World Health Organization guidelines on antibiotics use across its supply chain.
McDonald’s acknowledges that AMR is a “critical global public health issue” which, along with suppliers, it has a responsibility to help address as one of the biggest beef buyers in the world. It is adamant it has a “strong record of responsible antibiotic use” and works in line with WHO guidance. But critics say the fast food company has been watering down its commitments on antibiotics use and recently published more limited targets.
Investors are right to agitate, but governments and international bodies must step up too. The Covid-19 pandemic undid some of the progress made in controlling AMR. Meanwhile, no new classes of antibiotics have been brought into circulation since the 1980s. Though the pharmaceutical industry has committed $1bn to fighting drug-resistant superbugs, it prefers funding more lucrative medicines.
The WHO has warned that AMR is a top global public health threat, but it needs to tighten and enforce rules. The economic consequences are also potentially significant. The World Bank says in a worst-case scenario, antimicrobial resistance could reduce annual global gross domestic product by 3.8 per cent by 2050, push an additional 28mn people into extreme poverty, and increase global healthcare costs by $1tn a year. Drug-resistant infections change the profile of many medical interventions. Without effective antibiotics, cancer treatments and other pharmaceuticals may be undermined.
The McDonald’s resolution may well not pass. A similar one last year failed to win support from major shareholders Vanguard and BlackRock; this year shareholder advisory firms ISS and Glass Lewis have also recommended rejection. Yet investors and companies should be attentive. As with resolutions that have demanded action on climate change from oil companies, some European investors are ahead of the curve compared with many US counterparts.
As more data is published and real-world impacts proliferate, investors will inevitably take a more activist stance against public companies that have a hand in industries that perpetuate AMR. The topic has not yet attracted the same support as climate change, but if climate-style litigation is replicated, lawsuits could start to target those perceived to be enabling AMR.
Climate change itself is exacerbating many health challenges, which makes tackling AMR even more important. Higher temperatures are making the outbreaks of various illnesses more common and more severe; flooding can spread disease through sewage contamination and poor hygiene and displaced individuals often have little access to clean water. Poorer countries in Africa and Asia — often worst affected by climate change — will again be among the hardest hit. What has been dubbed “the silent pandemic” requires the intervention at a global level of investors and governments alike.