European asset managers take on McDonald’s over antibiotics

Two of Europe’s largest asset managers will this week try to increase the pressure on McDonald’s to reduce the use of antibiotics in its food supply chain, highlighting what they say is the risk antimicrobial resistance poses to shareholder returns and the wider economy.

Legal & General Investment Management and Amundi are among the institutions backing a resolution at the fast-food chain’s annual meeting on Thursday, which is calling on the US group to “institute a policy that the company comply with World Health Organization guidelines on use of medically important antimicrobials in food-producing animals”.

The resolution, which has been tabled by Shareholder Commons, a non-profit advocacy organisation, is a sign of the growing concern among some investors about the systemic impact and broader economic threat of antimicrobial resistance (AMR).

AMR has long been seen as a threat to global health and development, believed to contribute to millions of deaths worldwide each year. The inappropriate use, and overuse, of antimicrobial medicines can blunt the effectiveness of drugs critical to controlling an array of diseases that were often fatal in the pre-antibiotic era.

The WHO guidelines recommended “an overall reduction of 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” across its supply chain.

Maria Ortino, global ESG manager at LGIM, said McDonald’s had failed to fulfil a previous commitment to publish antibiotic reduction targets covering all the beef sold in its restaurants by 2020. It had subsequently published more limited targets for “the responsible use of medically important antibiotics”, she said.

Ortino said AMR threatened “devastating consequences both on humans and on the economy”. Around 70 per cent of antibiotics were consumed by animals, she said, noting that McDonald’s was “the largest purchaser of beef in the world”. 

Antibiotics originally designed only for animals were increasingly being used as “last resort” treatments for humans, she said, underlining the risks to the global population if they were rendered ineffective by overuse.

But the resolution faces long odds. Last year, a similar shareholder proposal failed to win support from Vanguard and BlackRock, McDonald’s two largest shareholders. Amundi and LGIM both supported last year’s resolution.

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

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

Adoption of the policy outlined in the resolution would be “unnecessary, duplicative, and would not provide meaningful benefit to shareholders”, it added.

Campaigners are continuing to press their case, however. Caroline Le Meaux, head of ESG research, engagement and voting policy at Amundi, said that antimicrobial resistance was a “material consideration” for both food companies and wider society. 

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

Le Meaux pointed to a 2016 report by the World Bank, which predicted that in a worst-case scenario where antibiotics and other antimicrobial drugs no longer treat infections the way they are supposed to, annual global gross domestic product could fall by 3.8 per cent.

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

Additional reporting by Andrew Edgecliffe-Johnson in New York