Anti-microbial resistance ‘missing in action’ from corporate disclosure frameworks

UK investment heavyweights LGIM and Aviva push for the inclusion of AMR in the ISSB and green taxonomies.

UK investment giants Legal & General Investment Management (LGIM) and Aviva Investors are pushing for the inclusion of anti-microbial resistance (AMR) in key corporate disclosure regimes. 

Aviva’s global head of ESG and strategic partnerships, Abigail Herron, told Responsible Investor that AMR is “missing in action” from standards being developed by the likes of the International Sustainability Standards Board (ISSB), the body created in November by the IFRS Foundation to create a global baseline for sustainability corporate reporting.  

Herron was responding to a question on a blog published this week by LGIM, in which it 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 is currently missing in action from a number of key sustainability disclosures, and we therefore support its inclusion into the ISSB framework,” she told RI

The UK government should also embed AMR into “core health, economic, trade and financial decision-making processes”, Herron said. 

This should extend to UK regulatory and legislative architecture, such as the upcoming Sustainable Disclosure Requirements (SDR) and the UK’s green taxonomy, she added, and require all principal financial regulators “to explicitly incorporate AMR risks present in developing countries and at home into their activities”.   

LGIM recommended in its blog that policymakers should initially focus on regulation around corporate disclosures, namely the ISSB standards and “activity-based classification regulations such as the EU and UK green taxonomies”, then move to disclosure regulation “across the investment chain”.

Both Aviva and LGIM are investor partners of the Investor Action on AMR, the body created in 2020 through collaboration between the UK government, NGOs and the Principles for Responsible Investment (PRI).

LGIM’s blog was penned by its global ESG manager Maria Larsson Ortino, ESG policy lead Alexander Burr, and Emma Cameron, ESG analyst, stewardship and sustainable investing.

‘Silent pandemic’ 

The trio described AMR as the “silent pandemic”. They pointed to estimates that in 2019, 1.27 million deaths were attributed to bacterial AMR – a figure which could rise to as much as 10 million by 2050 if no mitigating measures are taken. 

They 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.  

LGIM engaged around 30 water utilities globally on the issue of AMR and what they can do to help stem it. Larsson Ortino described their response as “lacklustre”. 

“They either had no idea what we were talking about at all, or they fully understood but said they did not have the regulatory environment within which to act,” she told RI. This prompted LGIM to start to focus on policymakers.  

Speaking about the various corporate disclosure regimes being developed in the EU, UK and globally through the ISSB, LGIM’s Burr told RI: “What we are looking for is an approach that is broader than just climate and across the ESG spectrum. We think integrating AMR into that is important as we hope national authorities will adopt ISSB and mandate that disclosure.” 

Larsson Ortino said that AMR-based disclosures would have to be done on a sector-by-sector basis as the types of disclosures needed from a pharma manufacturer would be different from a water utility or a livestock farmer. One thing that could be more generally required, she added, is that companies outline in risk assessments how they are factoring AMR as a risk.  

AMR is not specifically mentioned in the ISSB’s draft disclosure standards but is mentioned in those of the Sustainability Accounting Standards Board (SASB), which the ISSB’s will be built on. At the most recent ISSB board meeting it was revealed that further work would be undertaken on industry-specific disclosures. 

In the last couple of years, several shareholder proposals on the topic have gone to the vote at US corporate giants but have received relatively low levels of support, hovering around the 10 percent figure.  

Last year, a proposal at McDonald’s on disclosure around the use of antibiotics in the US fast-food giant’s supply chains garnered around 11 percent support. The resolution was co-filed by Europe’s largest asset manager, Amundi, along with US non-profit The Shareholder Commons (TSC).  

This year, TSC refiled on AMR at McDonald’s, achieving around 13 percent support. LGIM pre-disclosed its support for the proposal this year.  

Larsson Ortino told RI she was “disappointed” with the level of support and saw it as a “missed opportunity” for the investment world to signal to corporates beyond McDonald’s that the systemic issue was important to them.

As to whether LGIM will file a shareholder proposal on the issue in the 2023 proxy season, she said it currently has no plans to. She added, however, that the manager “wouldn’t be negatively inclined to it, if there was a possibility of doing it”.