Amundi, LGIM and HESTA team up on AMR proposal at McDonald’s

Investment heavyweights Amundi and Legal & General Investment Management have teamed up with Australian super fund HESTA to file a shareholder proposal at McDonald’s on the systemic risks posed to investors by anti-microbial resistance.

The resolution, a collaboration with US non-profit The Shareholder Commons (TSC), asks the US fast food chain to align its business, including supply chains, with the World Health Organization’s guidance on antibiotic use.

McDonald’s systemic importance as the largest beef purchaser in the US is highlighted, with the proposal text noting that the firm’s policies “have tremendous influence on the market as a whole”.

The filers add that the decision by McDonald’s not to prioritise broad AMR risks “does not account for its diversified owners’ interests in optimising public health, the economy and their long-term portfolio returns”.

HESTA and Amundi have already filed the same proposal at US meat giants Tyson Foods and Hormel Foods this proxy season, attracting shareholder support of 5 and 6 percent, respectively.

The tallies at both companies are, however, substantially higher when insider votes are discounted. Support among shareholders not linked to management was estimated to be 13 percent at Hormel Foods and 20 percent at Tyson Foods.

The level of support for the Tyson Foods proposal is particularly notable given that influential proxy advisers Glass Lewis and ISS recommended that shareholders vote against it. The former stated that the proposal’s proponents had not provided “a sufficiently compelling argument as to how adoption of [it] would benefit the company’s shareholders”.

Proposals on AMR risks have generally struggled to secure support.

Last year, another proposal at Hormel Foods, which asked the company to report on how its current business practices around antibiotics threaten the returns of diversified owners, attracted 14 percent of non-insider votes. That resolution was also filed by HESTA in conjunction with TSC.

The same proposal achieved similar support in 2022 at McDonald’s. That resolution was a re-filling of one put to the company the year before by TSC with the backing of Amundi – a first for Europe’s largest asset manager.

LGIM’s involvement in the new request at McDonald’s is the first time the UK-based manager has filed on the issue of AMR.

The firm is a partner of Investor Action on AMR, the body created in 2020 through collaboration between the UK government, NGOs and the Principles for Responsible Investment.

In a blog published last year, LGIM called on policymakers to “integrate AMR risks into sustainable finance, specifically the various pieces of regulation targeted at improving disclosure across the investment chain”.

AMR was described as the “silent pandemic”, with the blog pointing to estimates that 1.27 million deaths were attributed to bacterial AMR in 2019 – a figure that was forecast to rise to as much as 10 million by 2050 if no mitigating measures are taken.

LGIM also warned that AMR poses systemic risks to financial markets. The World Bank has estimated it could result in as much as 3.8 percent loss in global GDP by 2050, causing damage on par with the 2008 financial crisis.

Speaking to Responsible Investor at the time, LGIM’s senor global ESG manager, Maria Ortino, said that she was “disappointed” with the level of support for the AMR proposal at McDonald’s last year, describing it as a “missed opportunity” for the investment world to signal to corporates beyond McDonald’s that the systemic issue was important to them.

Commenting on the new proposal, she said: “Failure to adequately respond to AMR could lead to far greater risks – for our clients, society and the global economy – than any individual company costs McDonald’s would incur by addressing this issue.

“Without coordinated action now, AMR could lead to the next global health crisis.”

TSC chief strategy officer Sara Murphy agreed: “Most investors own a broad range of securities, but individual companies sometimes pursue profits at the expense of their diversified shareholders.

“These proposals are designed to preserve the systems that support both the economy and their portfolios, but which are threatened by the social or environmental costs of certain corporate behaviour.”