We have all recently witnessed the significant impact that a global pandemic can have on our lives and the economy. However, there is another lurking in the shadows – anti-microbial resistance (AMR).
The ‘silent pandemic’ of AMR is not a theory or a scenario. It’s a reality here and now. In 2019, 1.27 million deaths were directly attributable to bacterial AMR, a figure that the World Health Organisation said could rise to as much as 10 million per year by 2050 if no mitigating measures are taken.
The systemic risks associated with AMR also have significant financial implications. The World Bank estimates that AMR could result in as much as 3.8% loss in global GDP by 2050, causing economic damage commensurate with the 2008 financial crisis.
Our global food system is under threat
AMR misuse is common in our food system. Agriculture, particularly the livestock, aquaculture, and crop production are significant contributors. In fact, global meat production accounts for 73% of antibiotic use, largely for growth promotion in food-producing animals, and is set to rise by 11.5% by 2030.
Several countries recognise the risks and have attempted to increase scrutiny and eliminate inappropriate overuse in the food system.
The European Union (EU), for example, took strong and early action through banning of antibiotics as growth promotion in 2006. Other significant producing markets, however, are still lagging behind. With the intensification of agriculture and land use around the world, as well as in our global food supply chains, it is critical that standards are raised globally.
Why the water sector is key
The water system plays a key role in both contributing and responding to AMR. It is, however, often overlooked. For example, antimicrobials that enter our water system are simply not being removed. Wastewater treatment plants can play an important role, but they are not currently monitoring or extracting antimicrobials.
The result is that antibiotic residues from hospital and community waste, agricultural run-off and effluents from antimicrobial manufacturing, enters and stays in our water system. This lack of a clean water supply unnecessarily exposes humans, animals, and our food system to the risks of AMR.
While policymakers must take a systems-wide approach, greater focus on the water sector can be impactful in combating the growing threat of AMR.
What can be done about it?
The Covid-19 pandemic has taught us that a delayed response to an urgent public health crisis has drastic consequences for both human life and financial security. AMR has been developing for decades, and without enforceable, globally coordinated policy to tackle the problem we risk sleepwalking into a dark new chapter of medical history.
Solving the AMR challenge is complex and will require collaboration and knowledge sharing across multiple sectors and stakeholders – including investors of all different shapes and sizes, academics, and national and international bodies.
Four steps are needed to tackle the issue of AMR:
- We must significantly expand and strengthen sectoral coverage to highlight AMR in the environment, particularly when it comes to water and waterways. There needs to be a coordinated effort to highlight the risks that antibiotics in the environment present to humans and society at large. Water utilities are often overlooked industries when it comes to AMR.
- AMR risks should be integrated into sustainable finance, specifically the various pieces of regulation targeted at improving disclosure across the investment chain. As an initial step, policymakers should focus on strengthening corporate disclosures across public and private markets, namely through the IFRS International Sustainability Standards Board (ISSB) standards and activity-based classification regulations such as the EU and UK Green Taxonomies.
- We need to build on existing work in line with WHO initiatives and establish a ‘Global Multi-stakeholder Partnership Platform on AMR’ that creates both an independent accountability mechanism and a focal point to guide countries and stakeholders to effectively tackle risks from AMR.
- Robust enforcement mechanisms must be implemented in cases of significant inaction. Governments must strengthen their monitoring and enforcement mechanisms to improve transparency and implementation. Policymakers should consider incentivisation or application of a penalising factor, i.e. an ‘AMR tax’ on those taking no action.
As investors that seek to mitigate the impact of systemic risks on our clients’ assets, it is imperative that investors actively engage with our investee companies across sectors, and with policymakers around the world.
This is an issue that investors are already engaging with companies on, but without greater prioritisation through globally coordinated, collaborative, and systems-wide action, AMR may be the next global crisis.
