McDonald’s can do more to tackle the growing threat of AMR

AMR was directly responsible for the death of an estimated 1.27 million people in 2019,¹ up 180% from an estimated 700,000 in 2016.² Indirectly, it’s estimated AMR caused 4.95 million deaths in 2019.³ The author of the earlier study, Lord O’Neill, believes that if we do not take action to limit AMR, this figure will increase to 10 million deaths by 2050.

To put this into context, the John Hopkins University estimates COVID-19 caused 8.8 million deaths globally over a three-year period.⁴ When you consider the immense and long-lasting impact the pandemic had on the global economy, it becomes clear why we at LGIM deem AMR a systemic risk.

In response to this threat governments must take significant action, but investors must also play their part. As stewards of our clients’ assets, we have a duty to consider medium- to long-term risks, and we have identified AMR as one such risk.⁵

How McDonald’s can galvanise positive change

McDonald’s* is the largest beef purchaser in the US⁶ and one of the largest in the world. The actions the company takes reverberate across the sector, and also have repercussions for sectors such as animal pharmaceuticals, livestock and water utilities.

Globally, most antibiotics are used not for humans, but for animals.⁷ Overuse of antibiotics is known to exacerbate AMR. This is why LGIM, as an investor in McDonald’s, has co-filed a shareholder resolution that asks the company to comply with World Health Organization (WHO) guidelines on the use of medically important antimicrobials in food-producing animals throughout its supply chain. The resolution seeks adherence to the WHO guidelines throughout the full supply chain, including beef, chicken and pork.

It is important to note that we are not asking the company to ban the use of antibiotics in its supply chain, but to comply with the WHO guidelines. We also highlight that these guidelines cover those antimicrobials, including antibiotics, that are medically important, and not all antimicrobials.

The WHO guidelines were developed to help preserve the effectiveness of medically important antimicrobials, particularly those judged to be critically important to human medicine. The Guideline Development Group that drafted the guidance included experts in infectious diseases, veterinary medicine, clinical microbiology, economics (including of pharmaceuticals and antibiotics), public health, epidemiology and food safety.⁸

McDonald’s states that it aligns with WHO guidelines,⁹ indicating that their antibiotic use policies do not permit the routine use of medically important antibiotics for the purpose of growth promotion or the habitual use of antibiotics for disease prevention.¹⁰ However, the company notes that these policies currently do not apply to its pork supply. While we recognise and applaud the efforts that McDonald’s has taken so far, we still believe that the company must go further.

Our approach to engagement

We have been publicly raising our concerns about AMR for more than two years. This has included engagement with companies and policymaking bodies such as the UN and G7.

We have also engaged specifically with McDonald’s. We deem the time to be right to use this additional escalation tool of co-filing a shareholder resolution, to further emphasise the systemic risk of AMR at a company that could have a significant impact on an entire sector if it adopted these guidelines.

We ask our fellow investors to also take action on AMR and to support our shareholder proposal at the upcoming AGM.

For more information about how we are voting, please refer to our pre-declaration blog.

*For illustrative purposes only. Reference to a particular security is on a historic basis and does not mean that the security is currently held or will be held within an LGIM portfolio. The above information does not constitute a recommendation to buy or sell any security.

Sources

1. The Lancet, Global burden of bacterial antimicrobial resistance in 2019: a systematic analysis

2. Tackling Drug-Resistant Infections Globally: Final Report and Recommendations

3. Op. cit.

4. Coronavirus Resource Center, John Hopkins University of Medicine, collected data on COVID cases, deaths, vaccines, testing and demographics from 22 January 2020 to 10 March 2023. The total number of deaths was 6,881,955 on the last day. Website accessed on 12^th May 2023: https://coronavirus.jhu.edu/map.html

5. In a 2017 report the World Bank estimated AMR could lead to a 3.8% reduction in global GDP

6. https://www.theguardian.com/business/2018/dec/12/mcdonalds-to-curb-use-of-antibiotics-in-its-beef-supply

7. Antimicrobial use in agriculture: critical review of the factors influencing behaviour

8. WHO Guidelines of Use of Medically Important Antimicrobials in Food-Producing Animals, Annex I, WHO 2017. Available here: https://www.who.int/publications/i/item/9789241550130. Last accessed 15 May 2023.

9. See e.g. McDonald’s 2023 proxy statement page 91, fn 11. Available here: https://proxyexchange.issgovernance.com/voting/voting/company/companyDashboard.xhtml#footnote-23

10. McDonald’s 2023 proxy statement page 91, fn 11. Available here: https://proxyexchange.issgovernance.com/voting/voting/company/companyDashboard.xhtml#footnote-23