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Joseph Mariathasan: Investors and the antibiotic crisis

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The Four Horsemen of the Apocalypse in the biblical Book of Revelation – whose arrival heralds the end of the world – are commonly identified as Pestilence, War, Famine, and Death.

Clearly, mankind cannot avoid death, but it can and should be able to avoid the other three. War and famine are a function of political instabilities, and therefore the realm of politicians, but investors can play a part in controlling pestilence.

Pandemics have been a feature of human history that have had devastating effects. The Black Death in the Middle Ages reduced the population of England by 50% by the 1370s. Cholera, typhus, tuberculosis, and leprosy are names that once struck fear across the globe because there was no way of curing them apart from the body’s own defences. Antibiotics changed that.

The world now faces a new danger that may bring back the first horseman of the apocalypse – but investors can play their part in defence.

Resistance to commonly used antibiotics is rising to dangerously high levels. In September 2016, the UN secretary general, Ban Ki-moon, warned that antimicrobial resistance was a “fundamental, long-term threat to human health, sustainable food production, and development”. Bill Gates added that people across the world, particularly those in developing countries, face a decade at risk from pandemics spread by antibiotic-resistant bugs.

A key cause of the rise of resistance to antibiotics is not their use by humans to treat disease, but their use in the farming industry where they are administered to livestock to prevent the spread of illness or to promote growth. This is especially true in intensive factory farms where animals may be kept in fundamentally unhealthy environments.

This abuse of antibiotics has been often cited as a key factor in the emergence of superbugs. The Farm Animal Investment Risk and Return (FAIRR) recently released a progress report on the issue.

The issue is becoming more serious. The FAIRR report cites the example of scientists who, in January, found that a gene allowing resistant bacteria to move from animals to humans had spread to over 30 countries. Meanwhile, in the US, a superbug resistant to all 26 available antibiotics was reported to have killed a woman in Nevada.

How can and should investors react to this issue? In March 2016, a $1trn (€0.9trn) group of investors formed to engage with 10 of the world’s largest restaurant and fast-food chains, coordinated by the FAIRR initiative and ShareAction. The group engaged with the companies to ask them to end the routine non-therapeutic use of antibiotics important to human health in their global meat and poultry supply chains. One year on, the investor group backing this engagement has grown to 71 institutions with over $2 trillion AUM. Clearly, this is an issue that investors are concerned about, and want to act on through engagement.

As FAIRR argues – and few outside the farming industry are likely to disagree with – antibiotics should be reserved for the treatment of diagnosed disease or illness in livestock; they should not be used to support irresponsible practices such as growth promotion, or routine disease prevention for livestock kept in overcrowded and unhygienic conditions.

FAIRR says companies should work with their supplier base to phase out the use of antibiotics identified as medically important by the World Health Organisation, and to ban prophylactic use. Food companies are showing signs of acknowledging the risks of antibiotics in their food chains and, as the report notes, there have been improvements in awareness and action on this issue over the past year.

As FAIRR argues strongly, the scale of the problem demands concerted, coordinated attention and engagement to encourage those who are showing signs of leadership and to hold laggards to account. For institutional investors everywhere, it is a problem that should not be ignored. 

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