Antibiotics overuse in livestock supply chains

The case for engagement with companies on antibiotic use in livestock

Around 40% of all antibiotics used in the UK and 75% in the US are given to livestock. The World Health Organization has warned that this trend is leading the globe towards a ‘post-antibiotic era’ where antibiotics will be defunct due to rising antimicrobial resistance. The growing public health risk of antimicrobial resistance has underscored the need to shift towards welfare and health-oriented approaches to rearing livestock, instead of reliance upon antibiotics to compensate for unsanitary methods of production.

The UK government described the over-use of antibiotics as “excessive and inappropriate” in a report which found that drug-resistant infections could cost the world around US $100 trillion in lost output by 2050 – a cost that will come home to roost in a widely diversified portfolio. Investors can play an important role engaging with companies about phasing out the routine use of antibiotics in livestock production.

2017 target expansion

After a year of engagement with an original target list of companies (see below for background), and are seeing encouraging progress with the initial company target list, the company coverage has been expanded to include an additional 10 companies listed below.

Companies were selected due to their particular exposure to the financial risk and reputational harm associated with antibiotics overuse. Such companies are also international market leaders, holding major market share and corporate influence:

  • Bloomin’ Brands
  • Denny’s
  • Dine Equity
  • Greene King
  • Marston’s
  • Papa John’s International
  • Sonic Corporation
  • The Cheesecake Factory
  • Texas Roadhouse
  • Whitbread

Background

This new expansion phase is the continuation of a successful year-long investor engagement on antibiotics in the food chain. In March 2016, the FAIRR Initiative coordinated letters sent to 10 leading companies in the restaurant and fast-food sector. The letters called on companies to implement appropriate timelines to phase-out the overuse of medically important antibiotics in their livestock supply chains.

Follow-up letters were sent in autumn 2016 and spring 2017. These sought to progress engagement in a pragmatic yet suitably ambitious manner; building on positive signals whilst continuing to encourage company-wide adoption of timelines to phase out routine antibiotic use – as was requested in the first correspondence.

To date the initiative has attracted the support of more than 70 institutional investors, with combined assets under management of over USD $ 2 trillion.

Initial target group of restaurant and fast food companies:

  • Brinker International
  • Darden Restaurants
  • Domino’s Pizza Group
  • J.D. Wetherspoon
  • Mitchells & Butlers
  • McDonald’s Corporation
  • Restaurant Brands International
  • The Restaurant Group
  • The Wendy’s Company
  • Yum! Brands