Resolution round-up: AMR proposals at McDonald’s and Yum! Brands

SOC Investment Group files at Delta Airlines on expenditures related to union suppression; Nomura AM UK co-files at Canadian bank.

Investment heavyweights Amundi and Legal & General Investment Management (LGIM) have teamed up again to file a shareholder proposal at McDonald’s on anti-microbial resistance (AMR), while Australian super fund HESTA has filed on the issue at Yum! Brands. 

The resolution at McDonald’s, filed in collaboration with US non-profit The Shareholder Commons (TSC), asks the board to institute a policy that the firm will comply with World Health Organisation (WHO) guidelines on “Use of medically important antimicrobials in food-producing animals” throughout its supply chains. 

This is the fourth year in a row that the US fast food chain has been hit with an AMR proposal. Last year, Amundi and LGIM, alongside HESTA, filed a proposal which received 18 percent support. 

Caroline Le Meaux, global head of research, engagement and voting at Amundi, told Responsible Investor the decision to refile was taken due to continued concerns around the firms approach and relative exposure to the issue.

We acknowledge the progress and improvements that McDonalds has made in recent years, including market specific targets for the responsible use of antibiotics. However, the targets and strategies they have in place are general guidance for markets holistically and are not expected or required of each individual producer, she said.

She noted that some geographies in McDonalds supply chain have regulations that are relatively in line with WHO guidance. However, others still allow protein suppliers to use antimicrobials to prevent bacterial diseases, a practice that the WHO has called on countries to end to mitigate AMR risks.

In response to the proposal, McDonald’s has filed a no-action request with the SEC, arguing that the proposal deals with matters related to ordinary business operations and has already been substantially implemented by the company.  

Meanwhile, HESTA’s proposal urges Yum! Brands to comply with WHO guidelines on the use of AMR in food-producing animals throughout its supply chains.

Kim Farrant, general manager of responsible investment at HESTA, told RI: “This move reflects HESTAs focus on systemic issues, highlighting the trade-off between public health and company profits.”

AMR-focused proposals have struggled to get substantial support in recent years, but Maria Larsson Ortino, global ESG manager at LGIM, is optimistic. 

“The first AMR-focused proposal was filed in 2017, but until now investor awareness and capabilities around the issue have not generally been there,” she said. “I think that’s changing. For example, if you look at the engagement FAIRR is doing on the topic, we’re seeing an increasing number of investors getting involved and we’re also getting clients requests on what we’re doing on AMR.”  

Larsson Ortino also noted that 2024 is a crucial year for AMR as there will be a high-level meeting on the topic in September in New York. “I’m hoping that will help catalyse action on AMR in the investor community as well as other stakeholders such as policymakers.”  

LGIM will only be filing the proposal at McDonald’s this year.

“We have to be thoughtful on where we file when it comes to where we think we will have the most impact, but it’s also a question of resource capacity,” Larsson Ortino said. 

Last year, she told RI that LGIM would not be afraid to vote against directors on the issue if necessary. That remains a firm possibility, she said this week. “We won’t be doing it this year, but we will be publishing our first health policy soon, which will detail our expectations of companies on AMR.”  

Union expenditure proposal at Delta 

SOC Investment Group has filed at Delta Airlines requesting that the board issue a report on expenditures that are intended, or could be viewed as intended, to dissuade employees from joining or supporting unions.

The proposal says the report should include disclosure of expenditures made to any outside entities. 

In its supporting statement, the union-backed US investment house claims that Delta has made efforts to dissuade employees from joining or supporting unions. Examples of this include playing videos in workplace rest areas, and distributing posters, flyers and other printed materials to employees, SOC Investment Group said. 

It added that companies are required to file public reports on certain financial dealings with their employees and unions, as well as their expenditures to persuade employees about exercising their rights to organise and bargain collectively.

“However, the only filings Delta has made since 2006 refer to office space used by the pilots’ union. Additionally, while third-party entities, such as labour consultants who are hired by an employer to develop and execute union suppression efforts, are also required to file similar documentation, no filings reflecting such work for Delta appear.” 

Louis Malizia, corporate governance director at SOC Investment Group, told RI: “We’re asking Delta to disclose these expenditures, and also to explain the process by which the board of directors approves of and oversees those expenditures.

“In our view, boards – including Delta’s – have an obligation to ensure that they understand the effects union suppression campaigns have, and that they are taking any related risks into account when determining whether such expenditures are appropriate.”

Last year, As You Sow – on behalf of Amalgamated Bank – filed at Delta calling on its board to adopt and disclose a non-interference policy “upholding the rights to freedom of association and collective bargaining in its operations, as reflected in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work”. At the firm’s 2023 AGM, this received support from 32.6 percent of shareholders.

Responding to the latest proposal, a spokesperson for Delta Airlines told RI: Delta has always supported employees’ right to choose whether or not union representation is right for them, and is committed to providing open, transparent communications with our people.”

The spokesperson added that the firm respects the views of investors and takes all shareholder proposals seriously. “We are reviewing this proposal and will respond as appropriate.”

Nomura Asset Management UK co-files at TD

The UK arm of Japanese investor Nomura Asset Management has made its climate resolution filing debut. The manager has joined AP Pension, Vancity Asset Management, Green Century Capital and Investors for Paris Compliance in a resolution targeting TD Bank.

The filers are calling on the Canadian bank to disclose its transition activities that “describe how it will align its financing with its 2030 sectoral emissions reduction targets, including specific measures and policies to be implemented, reductions to be achieved by such planned measures and policies, and timelines for implementation and associated emission reductions”.

Alex Rowe, portfolio manager at Nomura Asset Management UK, said its decision to join as a co-filer was “significant”.

“We decided to join because we believe this issue is material to the ongoing value of TD Bank and that shareholders have a right to understand how banks will be changing their business model to meet their important net-zero targets.”