Solutions to antibiotic resistance

Katherine Collins, CFA, MTS

Katherine Collins, CFA, MTS
Head of Sustainable Investing, 02/19/20


Sustainable Investing | Stories of impact

  • Each year, about two million people are hospitalized with antibiotic-resistant infections, and thousands die as a result.
  • There is growing global consensus around the need to reduce antibiotic use and to tackle antibiotic resistance.
  • Our research has highlighted an important link between antibiotic resistance and production practices in animal protein. Chipotle Mexican Grill has taken a leading role in this area.


Our team is constantly researching, and investing in, companies that are creating meaningful solutions to key sustainability challenges.

Often, our research identifies issues that cross over conventional sector boundaries. For example, over the past two years, we have focused on the trend toward natural ingredients in food production, and also on the risk of antibiotic resistance in health care. As consumers pay more attention to the composition and production of the food they eat, demand for natural ingredients has grown meaningfully. As the focus on ingredients intensifies, so has concern about antibiotic use in food production.

Antibiotic use in food

Though we are likely most familiar with the antibiotics prescribed by our doctors, approximately 80% of antibiotics in the United States are used in agriculture.1 Antibiotic overuse in agriculture, particularly in meat production, increases the threat of antibiotic resistance, creating meaningful health risks. Each year, about two million people are hospitalized with antibiotic-resistant infections, and thousands die as a result.2 Many of us have found that our own doctors are becoming much more cautious about prescribing antibiotics. There is growing global consensus around the need to reduce antibiotic use and to tackle antibiotic resistance.

ESG example: Chipotle Mexican Grill

Chipotle, a current holding in our sustainable portfolios, is one company that is helping to address this challenge:

  • Chipotle does not allow sub-therapeutic antibiotics anywhere in its supply chain. Additionally, 100% of its chicken and beef met the company’s “No Antibiotics Ever” standard as of 2018.3
  • In a 2018 report examining the top 25 fast food and fast casual chain restaurants, Chipotle was one of only three companies to earn an industry-leading “A” score for its comprehensive policies restricting the use of antibiotics.4
  • Chipotle’s commitment goes as far back as 2001, when it first adopted the slogan “Food with Integrity.” It made a commitment to responsibly source ingredients and maintain a standard for animal care.5
The company is known for its use of fresh ingredients, and it has benefited from improved demand and efficiency within its operations. Chipotle has made important improvements in food safety measures following outbreaks of foodborne illness linked to its restaurants in 2015.

There is growing global consensus around the need to reduce antibiotic use and to tackle antibiotic resistance.

The antibiotic challenge continues: Systemic change is needed

Despite the commitments of Chipotle and others, the level of U.S. antibiotic use is still approximately 20 times higher per kilogram of beef than in other regions such as the United Kingdom. Further progress is likely to require more systemic change, such as different animal care and sanitation practices.6 Government, corporate, and consumer commitments to this shift highlight a burgeoning desire for systemic change since the judicious use of antibiotics will help protect their efficacy for animals and people alike.

Learn more about our sustainable investing approach

To learn more about our sustainable investing approach and insights, download our Sustainability and impact report and visit Putnam.com.

Sources:

1 Hollis and Ahmed. (2013) Preserving Antibiotics, Rationality. https://www.nejm.org/doi/10.1056/NEJMp1311479

2 Centers for Disease Control and Prevention. Antibiotic Resistance Threats in the United States, 2013. 2013. http://www.cdc.gov/drugresistance/threat-report-2013/

3 Per Chipotle’s Global Head of Investor Relations.

4https://consumersunion.org/wp-content/uploads/2018/10/ChainReaction4_Report_FINAL.pdf

5https://www.ecowatch.com/chipotle-proves-sustainable-food-sourcing-is-profitable-1882011655.html

6https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/750811/_1473963-v1-UKVARSS_2017_Report_FINAL.pdf

As of December 31, 2019, Chipotle represented 1.66% and 3.06% of holdings in the Putnam Sustainable Leaders and Putnam Sustainable Future strategies, respectively. Holdings are for a representative account and are shown for illustrative purposes only. Each account is managed individually. Accordingly, account characteristics may vary.

The company presented as an investment example represent the position deemed most relevant to the applicable ESG investment themes being discussed (antibiotic resistance and production, supply chain and distribution management). Investment themes selected are determined by the sustainable investing team based on certain environmental, social, and governance factors based on the analysis and opinions of Putnam's Sustainable Investing team and are not intended as an investment recommendation. Current investment themes were selected without regard to whether such themes, or relevant securities, were profitable and are intended to help illustrate the investment process. A security may be selected for a portfolio based on factors other than the ESG themes highlighted herein, and the analysis should not be considered a recommendation to purchase or sell any security. It should not be assumed that an investment in the securities mentioned was or will be profitable.

This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument, or any Putnam product or strategy. References to specific asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations or investment advice. This material does not take into account any investor's particular investment objectives, strategies, tax status, or investment horizon. Investors should consult a financial advisor for advice suited to their individual financial needs. Putnam does not guarantee any minimum level of investment performance or the success of any investment strategy. Actual results could differ materially from those anticipated.

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