A global alliance of pension funds and investors have come together to call on fast food giants such as McDonald's to slash their use of antibiotics.
Over 70 investors with combined assets under management (AuM) of $2trn, including the £19bn Strathclyde Pension Fund, are backing the call instigated by FAIRR Initiative and ShareAction. These investors are concerned that overuse of antibiotics in animals is reducing their effect on humans.
The plea for action was made in a report, The Restaurant Sector and Antibiotic Risk, published on 20 March and signed by large asset managers such as Aviva Investors and Hermes Equity Ownership Services.
The funds highlighted the potential "significant material risks" caused by what the World Health Organisation (WHO) describes as "one of the biggest threats to global health today".
They welcomed the fact that 70% of the companies targeted have some policy to tackle antibiotic usage in poultry, while 80% were actively engaging with suppliers to monitor usage. However, they argued this needs to be extended further to cover all livestock in the supply chain, for which none of the targeted companies had a publically available policy.
The report further cited a changing regulatory environment - such as EU legislation which bans routine preventative use of antibiotics on farms - as a key financial risk.
Strathclyde Pension Fund investment manager Richard Keery said pension funds needed to be proactive in tackling the growing risk.
"There is a growing public focus on rising levels of antibiotic resistance and the risks it poses to public health systems and ultimately to portfolio value," he said. "Antibiotic resistance is gaining traction as an important investment risk factor and the investor engagement is to be commended for ensuring this message is heard loud and clear in the restaurant sector.
"The pension funds and asset managers in the investor coalition will be watching closely to see what further reductions in antibiotic use can be made in this sector and beyond."
The action is being targeted at international brands including Domino's Pizza, J.D. Wetherspoon, and Yum! Brands.
Speaking to PP, ShareAction chief executive Catherine Howarth called on investors to put pressure on companies before it's too late to react to incoming regulation.
"There is a risk of holding companies that are behind the curve on good practice because this is coming up so fast as an area of public health concern," she said. "People and regulators are beginning to wake up to the scale of antibiotic use in the farm industry sector.
"It's quite vulnerable to swift regulatory intervention, which may disallow companies to continue with business as usual. Businesses which aren't well prepared for that would be at financial risk and so would their investors.
"What we're saying to the investment community is support companies in putting in place policies that mean they're not vulnerable to a consumer backlash or, more seriously and problematically, a rapid introduction of a regulatory regime."
The report will be followed by a campaign of correspondence later this month.
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