Strathclyde Pension Fund has signed a letter to food giants such as McDonalds, J.D. Wetherspoon and Domino’s Pizza Group urging them to reduce their use of preventative antibiotics on farm animals.

The use of preventative antibiotics in farm animals is seen as risk to the rising threat of antibiotic resistance in humans, in which the World Health Organisation has described as “one of the biggest threats to global health today”. Farm Animal Investment Risk and Return (FAIRR) has argued that this exposes institutional investors to significant material risks.

A report launched today by FAIRR cites changing regulation – including potential new EU legislation, which would ban routine preventative use of antibiotics on farms, already voted through the European Parliament, and the 2017 US Food and Drug Administration (FDA) guidance on antibiotic use – as a key financial risk for companies failing to improve practices.

As a result, a $2trn investor coalition including Aviva Investors, Aegon Asset Management, Natixis Asset Management and Strathclyde Pension Fund engaged a $170bn group of ten large restaurant companies in March 2016 to end the routine overuse use of medically important antibiotics. The coalition was brought together by the FAIRR Initiative and ShareAction.

Furthermore, the report examined how these companies have responded to the coalition and responses show 70 per cent of companies have now adopted either a comprehensive or partial policy to prohibit use in poultry, up from 50 per cent in March 2016.

In addition, 80 per cent of companies report they are now actively engaging with suppliers to monitor antibiotic usage. Yum! Brands however was the only company that ignored a request for further information.

However, none of the companies surveyed have developed fully comprehensive, publicly available antibiotics policies to cover their entire livestock supply chain. The coalition has therefore sent another letter urging them to take further action.

Commenting, Strathclyde Pension Fund investment manager Richard Keery said: "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.”

“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."

In addition, FAIRR Initiative founder and Coller Capital CIO Jeremy Coller stated: “Investors are not immune to antibiotic resistance. It’s hard to put a monetary cost on antibiotics becoming useless, but some estimate it could lose $100trn from global economic output, creating an enormous global financial and public health crisis. New regulation, shifting consumer preferences and trade restrictions are already driving a reduction in antibiotic use in livestock. The clear message to these companies is that their shareholders want to see meaningful action on antibiotics.

“The last year has seen encouraging commitments to reduce antibiotic use in poultry, but there are still dangerous levels of antibiotics administered to pigs, cattle and other livestock. Fast food chains must take action across the entire animal supply chain.”

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