Fast reading
- AMR is a systemic problem, often caused by the misuse or overprescription of antimicrobial medicines, particularly within livestock farming.
- There are growing regulatory and operational risks associated with AMR, ranging from its sale, use and efficacy, to discharge and wastewater pollution.
- EOS has been engaging with companies on AMR since 2017, alongside our public policy advocacy work.
The devastating impact of the Covid-19 pandemic may have overshadowed the growing threat of antimicrobial resistance (AMR), but on 26 September global leaders will meet in New York to address this serious public health challenge. In 2019, AMR contributed to 1.27 million deaths globally. This could increase to 10 million deaths per annum by 2050, overtaking cancer as a leading cause of mortality.
The 2024 UN General Assembly High Level Meeting (HLM) will be a chance for global leaders to review the progress made on AMR to date, identify existing gaps, and find solutions to accelerate progress. The meeting follows an initial UN gathering on AMR in 2016, where eight commitments were made and adopted under the Political Declaration. This highlighted the actions needed, including the development of effective surveillance, monitoring, and regulatory frameworks on the preservation, use and sale of antimicrobial medicines, and the finalisation of a global stewardship framework.
A second Political Declaration is under development and will be adopted during September’s HLM on AMR. This is expected to be more action-oriented, focusing on research and development. It will also seek to address the challenges faced by low- and middle-income countries, and highlight the importance of animal health.
What is AMR and why does it matter to investors?
AMR is a systemic problem and a material issue for investors. It is expected to cost the global economy up to US$100tn cumulatively by 2050 and is often caused by the misuse or overprescription of antimicrobial medicines. These medicines lose their efficacy to treat diseases, as bacteria, viruses and parasites change over time and develop a resistance to antibiotics. AMR therefore poses risks – and ultimately, financial consequences – to companies that provide treatments and services reliant on effective antibiotics, as well as those dependent on the use of antibiotics in their supply chain. We covered this in detail in our Battling the Superbugs article.
In 2020, EOS at Federated Hermes Limited signed up to the Investor Action on AMR (IAAMR), a coalition between the Access to Medicine Foundation, the FAIRR Initiative, and the UK’s Department of Health and Social Care, to galvanise investor efforts to address global AMR. In 2024, EOS signed the IAAMR Public Investor Statement alongside 80 others, calling for global leaders and policymakers to reinvigorate efforts, coordinate action, and reaffirm their commitments to combatting AMR at the UN meeting in September.
What are the risks?
There are growing regulatory and operational risks associated with AMR, ranging from its sale, use and efficacy, to discharge and wastewater pollution. Failure to address these risks may lead to financial and reputational damage for companies.
Food manufacturers and retailers may contribute to the growing threat of AMR through their supply chains. An estimated 70% of global antibiotic use occurs in animal agriculture, where antibiotics are deployed to prevent, treat and control bacterial infections. These infections are often caused by intensive livestock or fish farming, particularly where there is overcrowding or poor hygiene measures, as we highlighted in our previous article on AMR in this sector. Companies in the EU now face regulatory constraints on antibiotics in the veterinary medicines used to treat, prevent or diagnose diseases in animals, to combat AMR.
Pharmaceutical companies that provide medical devices, drugs, or treatments that rely on the effective use of antibiotics are also exposed to the potential risks. For example, companies involved in producing or delivering cancer treatments are dependent on the availability of effective antibiotics. It is estimated that a fifth of cancer patients need antibiotics during their treatment, due to a lowering of immune defences.
Manufacturing antimicrobials often results in active residues that end up in the environment or in wastewater. Regulations around discharge, or wastewater pollution limits can become an operational risk for antibiotics manufacturing companies, which may need to reduce production or enhance their water filtration systems to comply with regulations.
In our engagement with companies, we seek to elevate discussions on AMR to board level and press for effective governance of these risks.
Engagement expectations
EOS has been engaging with companies on AMR since 2017, alongside our public policy advocacy work. More about this can be found in our AMR Q&A in the EOS 2021 Annual Review. In our engagement with companies, we seek to elevate discussions on AMR to board level and press for effective governance of these risks. We expect companies to limit their contribution to the spread of AMR, develop alternatives to the use of antimicrobials, and assess the risk that a high AMR scenario may have on their business.
Companies should have strong policies and strategies in place to limit the amount of antibiotics used across their value chains, with a focus on medically important antimicrobials (MIA) for human medicine, as defined by the World Health Organization. Pharmaceutical companies should ensure the responsible labelling, marketing, sales and use of antimicrobials. Sales teams should not be incentivised to increase the volume of antimicrobials sold, as this could lead to overuse and misuse.
It is important for companies to track and disclose their antibiotic use by type and volume, and to set time-bound reduction targets. They should develop a robust environmental stewardship plan to prevent active ingredients from leaking into the environment and contributing to the spread of AMR.
Diversifying business models and product portfolios will be crucial for future revenue generation. Animal protein producers can leverage opportunities related to the spread of AMR by capitalising on the growing demand for antibiotic-free meat that can be sold at a price premium. Alternative, plant-based or microorganism (fungi or algae) protein is a growing space, expected to reach US$423bn in market capital by 2033. For pharmaceutical companies and antibiotic manufacturers, development of alternatives such as vaccines should be prioritised.
We expect companies to integrate AMR into their risk management frameworks and quantify the business risk from AMR, including through regular discussion and oversight at the board level. Companies should conduct a risk scenario analysis to determine their business resilience if antibiotics lose their efficacy. Once they have a strong understanding of their exposed business areas, they should develop a clear mitigation strategy to address the potential risks.
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