Antimicrobial resistance could be the next pandemic – here’s what we’re doing about it

2024 is a critical year for antimicrobial resistance (AMR), with the United Nations General Assembly (UNGA) High Level Meeting taking place in September in New York, eight years after the first UNGA meeting on the subject.

As a universal owner on behalf of our clients,¹ LGIM is committed to addressing health as a global issue that has, and will increasingly have, cross-sector impacts on our clients’ assets. AMR is a sub-theme of our health theme; we believe it has the potential to become the next pandemic, and presents a systemic risk to the global economy.

The World Health Organization (WHO) estimates that the global death toll attributable to AMR could rise to 10 million people a year by 2050 if we do not take action now. AMR may also shave $3.4 trillion off GDP annually if no action is taken.²

Our voting on AMR shareholder proposals in 2024

As the threat of AMR moves up the agenda of multilateral organisations, we are seeing an increase in investor interest in antimicrobial use across their investees’ supply chains. Three AMR shareholder resolutions have been filed at high-profile food service companies this year: Yum! Brands*, McDonald's Corp* and Restaurant Brands International Inc (RBI)*.  Below, we explain how we are considering these resolutions in line with our published health policy.

At two of the companies (Yum! Brands and RBI), the filing shareholders are asking the companies to comply with WHO guidelines on use of medically important antimicrobials in food-producing animals throughout the companies’ supply chains. Our Health Policy states our expectation that companies within the restaurant/out-of-home sector (e.g. fast-food companies) should require all their meat suppliers to comply with the WHO guidelines. We expect them to be transparent about their AMR strategy, actions taken to implement it, and steps taken to monitor implementation. We are therefore supporting this resolution at Yum! Brand and RBI.

Yum! Brands and Restaurant Brands International Inc. are among the largest purchasers of animal products in the US and Canada,³ with tremendous potential to impact the wider market. The resolutions filed would require that their suppliers commit to an overall reduction in use of all classes of medically important antimicrobials in food-producing animals, as well as employing a complete restriction of habitual use in disease prevention or for growth promotion.⁴

Antibiotics in the spotlight

The overuse of antibiotics, one form of antimicrobial, is known to exacerbate AMR. Most antibiotics globally are used for animals, not humans⁵; therefore it is essential to limit the use of antimicrobials, and in particular antibiotics, to mitigate the spread of AMR.

Regarding McDonald’s, in their 2023 AGM, LGIM, Amundi and HESTA, in collaboration with The Shareholder Commons, co-filed a similar proposal at the company, which was supported by almost a fifth of shareholders.

For this year's AGM, together with Amundi and in collaboration with The Shareholder Commons, we once again co-filed the same resolution. However, it was subject to a ‘no-action’ ruling by the SEC, a mechanism by which the company is allowed to unilaterally remove proposals from its proxy statement if they are judged to have already substantially implemented the resolution demand. We were disappointed by both the step taken, and the decision announced.

Nevertheless, we note that The Benedictine Sisters of Boerne, Texas, have successfully filed an AMR-related resolution calling upon McDonald’s, as one of the world's largest beef purchasers⁶ and a major buyer of pork, to adopt an enterprise-wise policy to phase out the use of medically important antibiotics for disease prevention purposes in its beef and pork supply chains. The proponent filed the same resolution last year and received 16% shareholder support.⁷

We note that the Global Leaders Group on AMR has recently published a set of recommendations for global targets relating specifically to eliminating certain types of use of medically important antimicrobials in the agri-food sector, alongside other recommendations.⁸

A systemic risk to client portfolios

Failure to adequately address AMR risk across supply chains could cost the global economy $100 trillion by 2050.⁹ We believe compliance with WHO guidelines by these fast-food companies would be a big step in mitigating AMR risk; their influence within their sector could also help them lead by example by encouraging broader improvements, expanding potential for effective action on this systemic risk.

The actions requested by these proposals echo the minimum expectations set out in our health policy. We believe that, as a universal owner on behalf of our clients, it’s crucial to support actions to mitigate AMR risk to help manage systemic risks to our clients’ portfolios, in addition to supporting the broader health of the economy over the longer term.  

We hope that our peers and fellow shareholders will join us in supporting these shareholder proposals.

*For illustrative purposes only. Reference to a particular security is on a historic basis and does not mean that the security is currently held or will be held within an LGIM portfolio. The above information does not constitute a recommendation to buy or sell any security.

1. LGIM’s total AUM at 31 December 2023 (on the basis of client direct investments and excluding any double count from fund of fund holdings, and including the value of securities and derivatives positions) was £1.159 trillion.

2. Bracing for Superbugs: Strengthening environmental action in the One Health response to antimicrobial resistance | UNEP – UN Environment Programme, 2023, page 3

3. $15.2T Investors Ask Global Fast Food Companies to Demonstrate Responsible Antibiotic Use in Meat Supply Chain | FAIRR

4. WHO guidelines on use of medically important antimicrobials in food-producing animals, recommendation 4b, available here: WHO guidelines on use of medically important antimicrobials in food-producing animals

5. Antimicrobial use in agriculture: critical review of the factors influencing behaviour | JAC-Antimicrobal Resistance | Oxford Academic (oup.com) 2021, p 1

6. See McDonald’s website – focus on Beef: Responsible Sourcing (mcdonalds.com)

7. Global Leaders Group on AMR Report, Towards Specific Commitments and Action in the Response to Antimicrobial Resistance, March 2024, p 5. Available here: GLG report:  Towards specific commitments and action in the response to antimicrobial resistance (amrleaders.org)

8. ibid.

9. Jim O’Neil, Tackling Drug- Resistant Infections Globally: Final Report and Recommendations, 2016, p 1