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The Actuary The magazine of the Institute & Faculty of Actuaries

Investors warned of ‘antibiotic crisis’ facing global food firms

The large majority of meat, fish and dairy suppliers around the world are leaving human health at risk by failing to reduce the excessive use of antibiotics in the rearing of animals.

Antibiotic health risks ©Shutterstock
Antibiotic health risks ©Shutterstock

A new index launched today by the Farm Animal Investment Risk and Return (FAIRR) initiative reveals that 77% of the sector is not adequately managing or disclosing antibiotic use.

This includes major suppliers to the fast food industry like Venky’s and Fujian Sunner, which are ranked as “high risk”, despite growing regulation to combat antibiotic resistant ‘superbugs’.

The index also rates farming companies on environmental and social issues, scoring the majority poorly across all sustainability factors, leaving billions of shareholder value at risk.

“It is of deep concern that a majority of these suppliers are failing to manage such significant business risks,” Aviva Investors global head of responsible investment, Abigail Herron, said.

“Three in four of these companies are ignoring the calls from regulators, health professionals and the financial community to manage and reduce their use of antibiotics.”

The index analyses 60 global food companies with a combined market capitalisation of $300bn (£226bn), giving 36 firms the worst possible score for health, environmental and social issues.

These include Cal-Maine Foods in the US and Guangdong Wens in China, with one in five firms unable to show full traceability in their supply chains – a key part of food safety.

It was also found that almost three-quarters of the livestock sector is failing to manage climate risk, despite being responsible for 14.5% of global greenhouse gas (GHG) emissions.

However, Norwegian seafood company Marine Harvest – the top ranked firm – was praised for its approach to antibiotics after revealing it plans to have “minimal use” by 2022.

US meat producer Tyson Foods was singled out for its investments in sustainable food companies, while Norwegian firm SalMar was rated highly for its proposals to cut GHG emissions by 10% by 2020.

“As megatrends like climate change, antibiotic resistance and food technology radically reshape the way we produce and consume meat, fish and dairy, the index will help identify both best in class companies, and potential stranded assets in the food sector,” FAIRR founder, Jeremy Coller, said.

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