09 Nov 2021 3 min read

Anti-microbial resistance: engaging water utility companies

By Maria Larsson Ortino , Clinton Adas

Why and how we are engaging water utilities on this critical public-health issue

 

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In our first blog on anti-microbial resistance (AMR), we highlighted the phenomenon as an increasingly material issue for investors. We continue to believe that without coordinated action today, AMR may be the next global health crisis and the financial impact could be significant. As such, we seek to address this issue with our investee companies in sectors that can play a key role, and as part of this we started by focusing on the often-overlooked area of water utility companies.

The overuse and inappropriate use of many antimicrobials (including antibiotics) in human and veterinary medicine, animal agriculture and aquaculture, as well as discharges from pharmaceutical production facilities, are often linked to the uncontrolled release and disposal of antimicrobial agents. These include antibiotics into our water systems, be that the clean water that we may drink, wastewater, or rivers and seas.

This process leads to the extensive presence of agents that can persist for extended periods of time and, if not treated correctly, can reappear in the water systems that provide our drinking water. In other words, there needs to be a monitoring system in place.

While the infrastructure of, for example, wastewater treatment plants has improved over the past century, waste sanitation and management systems have not been designed to address AMR concerns. We believe a first step is to understand whether (or how much) water utility companies are aware of this critical issue, so that they can introduce effective monitoring systems to detect agents such as antibiotic-resistant bacteria and antibiotic-resistant genes.

What we found

In order to better understand global market awareness and practices, we sent an open letter to over 20 investee companies across Asia, Europe (including the UK), North and South America, setting out our concerns and seeking dialogue.

We met and had open and frank discussions with several of these companies, and were disappointed to learn that in most countries awareness is low and very little monitoring is undertaken in this area. We believe this is mainly due to the lack of national (or international) regulatory requirements or incentives to do so, and perhaps because there is little perception of any immediate to long-term potential risks to the individual company.

We did, however, find that a few companies are considering AMR. One utility company is seeking to understand what happens to emerging contaminants in the wastewater treatment process, and as part of this has implemented a programme that will analyse the results to try to understand what improvements in their systems would be required to address it.

What is clear from the overall picture is that going forward, we need to consider how we might influence the regulatory landscape in this area so as to help promote a more enhanced and standardised approach to this problem. As part of this, we are also working with our peers within the Investor Action on AMR initiative.

Solving the AMR challenge within water systems is complex and will require collaboration and knowledge sharing across the water sector itself, as well as other sectors and stakeholders – including investors, academics, and national and international bodies.

The window of opportunity in which to address the AMR challenge remains open, but we must act soon.

Maria Larsson Ortino

Global ESG Manager

Maria leads the Stewardship team’s efforts on health as well as being responsible for global engagement and voting activities for holdings within the pharmaceutical, biotech, healthcare, chemicals and tobacco sectors. Prior to joining LGIM in 2019, Maria was a member of the ESG teams at Newton Investment Management and State Street Global Advisors. She has also headed up the research team at a start-up corporate governance data company, served as an analyst within the IVIS team, part of the Investment Association, UK. She started her ESG career at PIRC, a proxy adviser, in 2007. Maria has an LLB from Queen Mary College, University of London and a Master’s Degree from the Graduate Institute of International Studies, University of Geneva, Switzerland.

Maria Larsson Ortino

Clinton Adas

Global ESG Product Specialist

Clinton joined the team in 2019. He predominantly focuses on client-related activity, but also contributes to broader investment stewardship initiatives. Clinton joined LGIM from Capital Group where he spent six years managing the Investment Information function for Europe and Asia, which covered equity, fixed income and multi-asset products. He holds a BA from Stellenbosch University, an LLB from University College London, and an LLM in Environmental Law from Queen Mary University of London, where he is also currently completing a PhD in Animal and Environmental Law, focusing on biodiversity and conservation. Additionally, he is studying towards a sustainability qualification from Harvard University. Clinton is a fellow of the Zoological Society of London.

Clinton Adas