This week, two of Europe’s biggest asset managers will try to increase pressure on McDonald’s for it to reduce its use of antimicrobials in the food supply. They are highlighting the risks that antimicrobial resistant poses to the economy and to shareholders.
Legal & General Investment Management, Amundi and other institutions backed a resolution during the annual meeting of the fast food chain on Thursday. The resolution called on the US group “to institute a policy to ensure that the company complies with World Health Organization Guidelines on the use of medically-important antimicrobials on animals used for food production”.
Shareholder Commons is a non-profit advocacy group. The resolution was tabled to show the growing concerns among investors regarding the systemic impacts and wider economic threat of antibiotic resistance (AMR).
AMR is a growing threat to the global health and development. It’s believed that AMR contributes to millions of deaths each year. Overuse and inappropriate use of antimicrobials can reduce the effectiveness of medicines that are critical in controlling a variety of diseases, which were often fatal before the advent of antibiotics.
The WHO guidelines recommend “a reduction in the use of antimicrobials of all types, including those of medical importance.
McDonald’s has asked shareholders to reject this latest resolution. It says it has “a strong record of responsible use of antibiotics” throughout its supply chain.
Maria Ortino of LGIM’s global ESG manager said McDonald’s failed to meet its previous commitment to reduce antibiotics in all beef sold at their restaurants by 2020. She said that it had published more specific targets on “the responsible usage of medically-important antibiotics”.
Ortino warned that AMR could have “devastating effects on both humans and the economy”. She said that animals consume 70 percent of the antibiotics, and noted that McDonald’s is “the world’s largest buyer of beef”.
She said that antibiotics, originally intended for animals, are increasingly used for humans as “last-resort” treatments, underlining the dangers to the world population if these drugs become ineffective due to overuse.
The resolution is not likely to succeed. A similar shareholder proposal last year failed to gain support from Vanguard or BlackRock, McDonald’s largest shareholders. Amundi, LGIM and both supported the resolution last year.
Both the largest shareholder advisory firms, ISS and Glass Lewis, have recommended that shareholders reject McDonald’s. ISS stated that “[McDonald’s] seems to be aligned with regulatory requirements regarding antibiotic use.” Shareholder support at this time is not warranted.
McDonald’s explained to investors that it has “currently responsible-use antibiotic practices and policies, our focus to help drive continuous improvement within our industry and suppliers, and our efforts to increase transparency and access to antibiotic data”.
The resolution stated that adopting the policy would be “unnecessary and duplicative” as well as not providing meaningful benefits to shareholders.
Despite this, campaigners continue to make their case. Caroline Le Meaux is the head of ESG Research, Engagement and Voting Policy at Amundi. She said that antimicrobial resistant was a material consideration for food companies as well as society.
She said: “Antimicrobial Resistance is going to be a major cost for society, and it will cause a lot more deaths in the future.”
Le Meaux referred to a 2016 report from the World Bank that predicted that a worst case scenario in which antibiotics and antimicrobials no longer treat infections as they should, could cause global economic damage on par with the 2008 financial crisis.
She said that food companies could face more regulation, fines, or even be sued for the animal consumption of anti-biotics in their supply chain. She said that governments will increase regulations at some point and that if companies do not anticipate it, they could be in for a costly situation.