Investors Challenge Food Companies on Antibiotics

April 15, 2016

Investors Challenge Food Companies on Antibiotics
by Robert Kropp

The collaborative investor network Farm Animal Investment Risk & Return writes to ten of the largest restaurant chains, requesting policies addressing overuse of medically necessary antibiotics.

SocialFunds.com — In 2014, the World Health Organization (WHO) warned that antimicrobial resistance posed potentially dire consequences for global public health. The overuse of antimicrobial drugs, including antibiotics, “means that standard treatments no longer work,” WHO reported. “Infections are harder or impossible to control; the risk of the spread of infection to others is increased; illness and hospital stays are prolonged, with added economic and social costs; and the risk of death is greater—in some cases, twice that of patients who have infections caused by non-resistant bacteria.”

“The problem is so serious that it threatens the achievements of modern medicine,” the report concluded. “A post-antibiotic era—in which common infections and minor injuries can kill—is a very real possibility for the 21st century.”

Perhaps the most egregious overuse of antibiotics occurs in the food industry. Eighty percent of antibiotics produced in the US are given to livestock, as are about half of those produced in the UK. In response, Farm Animal Investment Risk & Return (FAIRR) Initiative—a recently formed coalition of 54 institutional investors representing one trillion dollars in assets under management—have written to ten of the largest restaurant chains in the UK and US, requesting “an end to non-therapeutic use of antibiotics important to human health in their global meat and poultry supply chains.”

“The use of antibiotics in livestock is causing the development of antimicrobial-resistant bacteria which can spread to humans, and that antibiotic-resistant bacteria are transferring between humans and animals more frequently than initially thought,” FAIRR reported in a press release. “Drug-resistant infections could cost the world around $100 trillion in lost output by 2050.”

The ten companies written to by investors on March 15th are: Brinker International Restaurants; Darden Restaurants; Domino’s Pizza Group; J. D. Wetherspoon; McDonald’s Corporation; Mitchells & Butlers; Restaurant Brands International; The Restaurant Group; The Wendy’s Company; and Yum! Brands. The letter requests that the companies “set appropriate timelines to prohibit the use of all medically important antibiotics in their global meat and poultry supply chains.”

At present, none of the companies have policies addressing antibiotic overuse, and only half have policies designed to manage overuse in their supply chains. “The investors are concerned that a failure to confront irresponsible antibiotic use poses significant risks to their investments,” FAIRR stated. “These include the substantial risk of regulation as antibiotic overuse has increasingly become a target for stricter regulation in both the EU and US; further regulation is highly likely.”

“There is also the reputational risk of contributing to a global threat to human health which currently kills an estimated 700,000 people per year,” the coalition continued.

In collaboration with the UK-based responsible investment charity ShareAction, FAIRR recently published a report entitled The restaurant sector and antibiotic risk, which is available upon request.

Among the US-based participants in the initiative are As You Sow—which has filed a shareowner resolution this year with McDonald’s which addresses the issue—and the In terfaith Center on Corporate Responsibility (ICCR).

“This $1 trillion investor coalition sends a powerful message to corporations that this issue is firmly on the investor radar, and that the current state of play must change,” Nadira Narine of ICCR stated. “Consumer concern about antibiotic resistance and demand for meat produced without routine antibiotics has increased significantly. We hope this engagement will help drive up standards in the sector and highlight the financial risks at stake to other companies and investors. Companies can improve their market position by adopting policies to reflect these consumer preferences.”

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