Overuse and overreliance on antibiotics in livestock farming is becoming an ever more prevalent and public issue. Evidence points to the rise of ‘Superbugs’ resistant to medical antibiotics as a result of its over-use in livestock farming and this poses a threat to both human health and portfolio value.
Last year’s ‘Review on Antimicrobial Resistance’ (AMR) commissioned by the UK government and written by Jim O’Neill estimated that the resulting global financial cost of no action against current levels of use would be the loss of 10 million lives a year by 2050 and GDP 69tn (US dollar 100tn) a year. Currently 700,000 deaths a year are attributed to antibiotic resistant infections globally. O’Neill said there was a lack of understanding and awareness of the scale of the issue and that a huge global awareness campaign is necessitated to tackle it.
The AMR is pushing for urgent policy action within the G20 to limit the use of antibiotics. Public health concerns and greater consumer and investor engagement would lead to greater scrutiny of policies and practices in the industry. An initiative has been launched by FAIRR, coordinated in partnership with responsible investment charity ShareAction, to target this issue. Impax Asset Management is a signatory to this initiative along with 50 other investors, whose assets under management total over US dollar 1.5 trillion.
As a result of their engagement McDonald’s has committed to phasing out medically important antibiotics in US and Canadian poultry production and The Restaurant Group (including brands such as Frankie & Benny’s and Garfunkel’s) has committed to take steps to phase out the routine use of antibiotics in their supply chain. Whilst these are but a few examples of strong steps in the process, the goal of a global, cross-species policy on this issue has not yet been achieved and the work continues. This is an example of the type of partnered engagement work Impax does as part of its wider engagement programme.
Further on the topic of antibiotic use in the food chain, changing consumer demands are requiring greater transparency in labelling and sourcing of food. This is benefitting stocks under our investment focus with testing companies experiencing rising demand, organic and natural food growing in prominence and rising recognition of the benefits of the antibiotic-free and lower risk model of Norwegian salmon farming practice. Impax is looking to formalise its approach in this area with a new antibiotics restriction for the sustainable food investment strategy which is currently being developed in partnership with BNP Paribas Asset Management.
Published on 16 April 2017