Investors' Appetite Grows for Antibiotic Reduction
Investor demand for tackling antibiotic resistance continues to grow, evidenced by a third consecutive year of proposals and greater separation between companies’ performance.
Antibiotic reduction proposals have produced encouraging results. In 2016 and 2017, 12 proposals requesting stricter standards for antibiotic use by meat suppliers concluded in seven withdrawal agreements, with only five going to a shareholder vote.
Companies’ willingness to take action on this issue reflects the consensus of global health authorities that antibiotic resistance is a serious threat. Overuse of antibiotics in confined animal feeding operations and other animal production facilities has contributed to the creation and spread of antibiotic resistant bacteria (superbugs). Experts in 2014 warned that we are headed for a future where common infections and minor injuries could be fatal, projecting that resistant bacteria would kill 10 million people per year worldwide by 2050.
Nearly 70 percent of the medically important antibiotics (i.e., those used in human medicine) in the U.S. are sold for use in livestock. These drugs are often fed to healthy animals to prevent illness caused by unhealthy conditions, such as cramped environments and poor diet. The Food and Drug Administration implemented new rules in 2017 to restrict antibiotic use, but experts characterized them as “half-measures” unlikely to stem the tide of resistance. Meanwhile, research from leading global experts concludes that minimizing antibiotic use can be achieved with little or no increase in production costs.
In 2018, restaurant companies remain the primary recipient of antibiotic-related investor proposals and engagement by a global coalition of investors managing over $3 trillion in assets (FAIRR). A majority of top-25 restaurant chains in the U.S. have restricted the use of medically important antibiotics in poultry, according to a report by consumer groups, but beef and pork commitments are few – due in large part to more complex supply chains and longer animal lifespans. The major chains with the strongest beef and pork commitments are Chipotle Mexican Grill and Panera Bread.
After a 2015 resolution at McDonald’s the company agreed to end the use of medically important antibiotics for chicken it purchases, but proponents ever since have asked that the commitment be extended to beef and pork.
Denny’s, Darden Restaurants (Olive Garden), and Bloomin’ Brands (Outback Steakhouse) are major restaurant chains that still lack a commitment on antibiotics in chicken; the first has received a 2018 proposal. Similarly, Sanderson Farms remains the only major poultry producer that has not adopted public goals to reduce or eliminate use of medically important antibiotics; a second-year proposal was supported by 43.1 percent of shares in February 2018, the highest vote on antibiotics in livestock ever.
Recent legislation in California and Maryland aims to restrict the routine use of antibiotics in healthy animals, and a recently passed ordinance in San Francisco will require large grocery stores to report which antibiotics are used in the meat they sell. The San Francisco ordinance may provide the first public data on major producers’ use of antibiotics, drawing greater scrutiny to those who overuse antibiotics.
Environmental Health Program Manager, As You Sow