European asset managers take more antibiotics than McDonald’s

Europe’s two biggest asset managers will this week seek to step up pressure on McDonald’s to reduce its use of antibiotics in its food supply chain over what they say is a risk to shareholder returns and the wider economy over antimicrobial resistance.

Legal and General Investment Management and Amundi are among institutions backing a resolution at the fast-food chain’s annual meeting on Thursday asking the US conglomerate “to establish a policy that the company complies with the World Health Organisation’s Complies with guidelines for use clinically. Important antimicrobial in food-producing animals”.

The resolution, which has been introduced by Shareholder Commons, a nonprofit advocacy organization, signals growing concern among some investors about the systemic impact and macroeconomic threat of antimicrobial resistance (AMR).

AMR has long been viewed as a threat to global health and development, which is believed to contribute to millions of deaths worldwide each year. Inappropriate use of, and overuse of, antimicrobials can blunt the effectiveness of drugs that are vital to controlling a range of diseases that were often fatal in the pre-antibiotic era.

The WHO guidelines recommended an “overall reduction in the use of all classes of medically important antimicrobials in food-producing animals”.

McDonald’s has urged shareholders to reject the latest resolution, saying it has a “strong record of responsible antibiotic use” in its supply chain.

Maria Ortino, global ESG manager at LGIM, said McDonald’s had failed to meet a previous commitment to publish antibiotic reduction targets covering all beef sold in its restaurants by 2020. “, He said.

Ortino said that AMR threatened “devastating consequences on both humans and the economy”. About 70 percent of the antibiotics were consumed by animals, she said, adding that McDonald’s was “the largest buyer of beef in the world.”

Antibiotics originally designed only for animals were increasingly being used for humans as a “last resort” treatment, she said, underscoring the risks to global populations if they became ineffective from overuse.

But Sankalp faces tall hurdles. Last year, a similar shareholder proposal failed to garner support from Vanguard and BlackRock, McDonald’s two largest shareholders. Both Amundi and LGIM supported last year’s resolution.

The two largest shareholder advisory firms – ISS and Glass Lewis – have also recommended rejection. “[McDonald’s]appears to be aligned with regulatory requirements around antibiotic use,” ISS said. “Shareholder support is not guaranteed at this time.”

McDonald’s highlighted to investors its “current responsible-use antibiotic policies and practices, our focus on helping drive continuous improvement with our suppliers and industry, and our work to increase access to antibiotic use data and transparency.”

It added that adopting the policy outlined in the proposal would be “unnecessary, duplicative and would not provide meaningful benefits to shareholders”.

However, campaigners continue to press their case. Caroline Le Moux, head of ESG research, engagement and voting policy at Amundi, said antimicrobial resistance was a “material consideration” for both food companies and wider society.

She said: “Antimicrobial resistance is going to create a huge cost to society and it will lead to a lot of deaths.”

Le Meaux pointed 2016 report by the World Bank, which predicted that in a worst-case scenario where antibiotics and other antimicrobial drugs no longer treat infections, as is believed, annual global GDP could decline by 3.8 percent.

He said individual food companies faced the threat of greater regulation, fines or even prosecution for animal consumption of antibiotics in their supply chains. “At some point governments are going to increase regulation around this and if companies don’t anticipate it it will be very costly to them,” she said.

Additional reporting by Andrew Edgecliffe-Johnson in New York