Why antibiotics risk matters 

Antimicrobial Resistance (AMR) is internationally recognised as a global public health threat by both supranational organisations, including the World Health Organization (WHO) and the World Bank, and by research communities. Multi-drug-resistant bacteria would place centuries of medical progress at risk, rendering previously routine infections untreatable^[1].

The challenge is twofold – due in equal part to a lack of development in this area by the pharmaceutical industry and, critically, the use of antibiotics in vast quantities^[2]. This increase is due in part to the animal agriculture sector, which is responsible for 70% of all antibiotic use globally.

Antibiotic-associated risk in this sector is the result of a dependence on antibiotics for the maintenance of animal health, in the face of suboptimal husbandry practices within intensive animal agriculture. There is also a reliance on antibiotics for growth promotion, particularly in the production of poultry and pork. Although AMR risk currently develops separately in human and animal populations, the increased risk of zoonotic disease is narrowing the gap.

Preventing AMR: phasing out the routine use of all antibiotics 

Phasing out the routine use of antibiotics for growth promotion and disease prevention is crucial for reducing the rate of consumption to levels where AMR risk is mitigated. Continuation of practices that demand substantial levels of antibiotic use to be economically viable are, therefore, potentially unsustainable and leave companies and their investors open to risk^[3][4]. Limiting the usage of antibiotics to the treatment of animals directly impacted by an infectious disease, or those which have been in close contact with clinically infected animals, would significantly reduce this risk^[5].

The emergence of an AMR disease would have economic consequences for both the animal agriculture industry and wider society. Furthermore, the material exposure to animal agriculture companies lacking antibiotic policies presents multiple material risks in itself. The World Bank estimates that losses caused by AMR could cause annual gross global GDP to fall by 1.1-3.8% by 2030 and that animal agriculture production in low-income countries could decline by 11% by 2050^[6].

The direct risks for investors include reputation and lawsuit risk (targeting portfolio companies) from disease emergence, loss of livestock through culling of animals infected with resistant bacteria, exposure to impending regulation, and increasing consumer appetite for antibiotic-free meat and fish.

Derivative and portfolio risks include the changing role of animal health companies, the potential loss of revenue across all areas of the economy due to a wide-scale public health crisis, and exposure to the health and pharmaceutical industries. Investors may, therefore, want to consider engaging with portfolio companies on antibiotic issues, encouraging the transparency necessary for the determination of exposure and the implementation of responsible and comprehensive strategies to mitigate potential risks.

The state of antibiotic regulation

With recognition of the threats posed by AMR continuing to build, some small-scale government policies and regulations have been imposed in major agriculture markets since the inception of the Coller FAIRR Protein Producer Index. In 2019, for example, China published its antibiotic use figures for the first time;^[7] India banned the use and sale of Colistin, a critically important antibiotic, in the same year;^[8] and a five-year action plan targeting the reduction of antibiotics was released in the UK, with revisions following in 2020 and 2021.^[9] In 2020, Brazil banned the import, manufacture and sale of Tylosin, Lincomycin and Tiamulin, which are used as growth promoters.^[10]  

This progress culminated in a breakout year for recognition on the world stage in 2021, with mention at the United Nations General Assembly and within the G7.^[11],[12] The EU’s integration of antibiotics within its farm-to-fork strategy in 2022 builds on this development.^[13]

Non-therapeutic (routine) usage of antibiotics that have uses in human medicine, including for growth promotion and preventative measures, have been banned within animal agriculture operations inside the EU since January 2022.^[14] The use of antibiotics exclusive to animals is still allowed for preventive measures; however, their application must go hand in hand with prioritising animal welfare. 

The regulation limits the use of most antibiotics to necessary cases – either where groups of animals have been directly exposed to a disease or animals are already infected. It also extends to companies that export to the EU, although only two clauses are applicable: antibiotics cannot be used for growth promotion, and a specific list of antibiotics reserved for human use may not be used anywhere. 

Farmers outside the EU can continue using antibiotics for non-therapeutic disease treatment on animals destined for the EU market. Some non-EU countries have expressed concerns regarding this regulation, suggesting it might not align with the EU's commitments under the World Trade Organisation's Sanitary and Phytosanitary Measures agreement. The difference in regulations may seem to disadvantage EU producers, but high import tariffs make exporting meat to Europe largely unprofitable. 

Current regulation could be insufficient to meet the EU’s goal of halving sales of antimicrobials destined for livestock farms by 2030. This would require a reduction in intensity of use and in production output across the EU bloc. As it stands, animal agriculture production output is set to rise by 11% by 2030 – and, although there has been a drop in sales since 2011, notable gaps in the regulation still allow for a continuation of today’s practices.^[15],[16] 

Further efforts are required to achieve EU's goal of halving antibiotic use, emphasising transparency, reporting, and alternatives to animal agriculture. Investors might consider concentrating on supplementary measures accompanying broad policy shifts. In the short term, a challenge is motivating both regulators and companies to progress beyond mere policy enactment. 

How FAIRR evaluates antibiotic risk 

FAIRR assesses the strength and coverage of a company’s policy on antibiotic use and whether the company has taken measures to avoid the routine use of antibiotics. FAIRR also assesses the disclosure of quantity, type and performance on antibiotic usage.

Best practise for preventing AMR is coverage of all types of antibiotics, including those used only in animal farming. This means all 35 classes of medically important antibiotics (see Table 2), and those types of antibiotics that are not useful in human medicine.

The role of animal welfare in reducing antibiotic usage 

In order to move away from routine use of antibiotics, the rate of disease incidence in industrial animal agriculture models need to be reduced. One crucial means of achieving this is by improving animal health and living conditions, helping to promote natural resilience in livestock populations.

What is the next step for companies with policies in place? 

Upon establishing a comprehensive antibiotics policy, companies are expected to augment their disclosure, enabling stakeholders to monitor specific performance indicators. From 2019, the Index has captured a key metric: the quantity of antibiotics utilised. The data indicates that over 57% of companies with "no routine use" policies also disclose their usage figures. This, in conjunction with the increasing uptake of "no routine use" policies, infers that Index companies are generally enhancing both their disclosure and farming methods.