Investors representing $7tn join to tackle antimicrobial resistance

What’s happening? Aviva Investors, Sumitomo Mitsui Trust Asset Management and Nordea Asset Management are among the first 12 international investors and financial institutions to join the Investor Action on Antimicrobial Resistance (AMR) initiative. The members, with a combined $7tn in assets under management, have pledged to promote sustainability, assess the risks and impact of investment decisions, and engage with food and pharmaceutical portfolio companies. Covid-19 treatment has led to “disturbing” rates of AMR in 2020, the World Health Organization said. The initiative involves the Access to Medicine Foundation, FAIRR Initiative, Principles for Responsible Investment, and the UK Department of Health and Social Care.

Why does this matter? Superbugs – those resistant to antibiotics – claimed 700,000 lives worldwide in 2019. It’s predicted this will rise to 10 million a year by 2050, at cost of $10tn to the global economy, so investor action to combat the issue is extremely welcome. Substantial investors paying more attention to the issue, and potentially holding corporates to greater account over it, is a significant development.

The ongoing Covid-19 pandemic is a direct threat to efforts to fight AMR as many hospitalised patients develop secondary infections resulting from the disease that require antibiotic treatment. Adding to the problem, other patient types have been prescribed antibiotics during the pandemic they may not have needed.

Aside from Covid-19, there are a multitude of reasons for the growth of AMR, the most obvious being the overuse and misuse of antibiotics in humans, plants and animals. This leads to antibiotic residues entering the environment through landfill and waterways as well as the food chain. Hygiene is also a problem. Hospital-acquired superbugs are widespread and data suggests that deep cleaning wards alone is not enough to keep them at bay.

Lack of access to clean water in poorer nations is also an exacerbating issue and, concerningly, there is emerging evidence that climate change is potentially playing a part too.

Without urgent action, health care as we know it will dramatically change for the worse. A wide range of life-saving procedures depend on antibiotics and if they don’t work hundreds of thousands more people will die before their time. Awareness of the issue needs to be raised among both corporations and society, while steps need to be taken to reduce unnecessary antibiotic prescriptions and test for the most appropriate treatments. Further, there is a need to reduce the use of antibiotics in animal food production and advance technologies to remove antibiotic waste from the environment.

As highlighted by the Investor Action on Antimicrobial Resistance initiative, the financial industry is not taking AMR seriously enough. Antimicrobial stewardship is lacking among a number of large meat, fish and dairy companies and plans to make clinical-stage antibiotics easily available after launch are lacking among pharmaceutical companies. Investors should be taking note of this.

There is a substantial case here for pull incentives, which will ensure drug developers have an economically viable model to produce antibiotics without compromising good stewardship on the part of doctors. The updated PASTEUR Act in the US could introduce a subscription model that pre-pays for US federal use of antibiotics, following on from an earlier scheme announced in the UK in 2019, acting as such an incentive and encouraging R&D in the space

The initiative calls on investors to consider the effect AMR many have on their long-term financial returns and to press governments to act on market failures. It also suggests the creation of incentives for antibiotic development and responsible manufacturing along with the development of guidance to adopt an “AMR lens” across different asset classes.

Lateral thought from Curation – In recent years, lawsuits have been filed against oil majors seeking to hold these companies accountable for their historical contribution to climate change.

With more attention being placed on how corporate action increases AMR, should we expect similar legal action, focusing on historical lapses in governance, to be levelled against certain institutions? Food production, for example, could be one particularly vulnerable sector.

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