When
it comes to McDonald's, an $84 billion Australian superannuation fund
and a small group of Texan nuns are united in their mission.
Hesta
and the Benedictine Sisters of Boerne are part of an investor movement
using the stock market to lobby the world's biggest fast-food chain.
They want the company to make burgers from animal products farmed with fewer antibiotics.
The
use of antibiotics in meat production has emerged as a new front of
shareholder activism, similar to the lobbying that fossil fuel companies
have been facing over climate targets.
However,
the investor group's push is divisive, with McDonald's hitting back and
scientists raising questions about some of the policies being put
forward.
The unlikely antibiotic allies are resolute in their bid to bring about structural change, despite the criticism.
"We intend to stay at the table," Sister Susan Mika, a representative of Benedictine Sisters of Boerne, told the ABC.
So how did a group of Texan nuns and a major super fund end up in a cross-country battle with an American takeaway staple?
The Catholic nuns taking on McDonald's
The
Benedictine Sisters of Boerne have a 32-year history of lobbying
companies on issues such as water access and foreign workers' rights.
Their
activism was spearheaded by Sister Mika and others, quickly growing
into a coalition of 26 monasteries across the United States and Mexico.
However,
the sisters didn't get interested in antibiotics reduction until about
10 years ago, when global attention was turning to antimicrobial
resistance (AMR).
AMR occurs when bugs that cause infectious disease can't be killed by the medicines designed to quash them, such as antibiotics.
It has given rise to so-called "superbugs", with bacterial AMR contributing to the deaths of about 4.95 million people in 2019, according to data published in the Lancet.
The
problem is particularly acute in poorer countries, and it also affects
farm animals when they face disease outbreaks. Even plants are facing
superbugs.
"It's really a
significant problem," said Branwen Morgan, the lead at the Antimicrobial
Resistance Mission at Australia's national science body, the CSIRO.
"And
there's no time to wait. We all have a shared responsibility, trying to
work out how we mitigate the impacts of AMR, which affects food
security, biosecurity and economic security."
It is those economic impacts that piqued Hesta's interest.
"So
antimicrobial resistance is a systemic threat to both global health and
our ability to deliver strong long-term returns to our members," the
fund's head of responsible investment, Kim Farrant, told the ABC.
Ms
Farrant cites modelling by the World Bank, which previously estimated
that AMR – if left unchecked – could wipe out 3.8 per cent of the
world's gross domestic product by 2050.
The
bank's high-impact scenario found global trade would drop, especially
in agriculture as animals get sick, and that healthcare costs globally
would soar.
"It's the same impact as the global financial crisis," Ms Farrant says of the World Bank's forecast.
Hesta,
which is a specialist superannuation fund for Australian healthcare
workers, has also done surveys with its 1 million members about this
topic, and found 80 per cent of them were aware of it.
Members
told the fund they were seeing diseases that were no longer treatable,
and they were having to give patients multiple types of antibiotics and
keep them in hospital longer.
"And they had views on what Hesta should be doing as a fund to help address this issue," Ms Farrant says.
So what can a fund do about AMR?
While
AMR is a natural phenomenon, the World Health Organisation (WHO) links
the "overuse and misuse" of antibiotics in people, plants and animals to
the exacerbation of this trend.
"In
Australia, we're really fortunate that we have quite strong regulation
and practices [around antibiotic use in animals and humans]. But this is
very much a global issue," Hesta's Kim Farrant says.
And this global approach has turned McDonald's into a target.
Fairr,
which is a global investor alliance working on risks in the world's
food sector, identified the fast-food chain as the top company to lobby
over this issue.
That's due to its sheer size and ability to influence a massive network of agricultural suppliers, Fairr said.
Fairr
also highlighted other food companies, including KFC's parent company
Yum! Brands, The Cheesecake Shop, Domino's Pizza, Starbucks, Wendy's and
the owner of Burger King, Restaurant Brands International.
All
of these entities are listed on the world's biggest stock market on
Wall Street, and are beholden to engaging with their shareholders as
public companies.
Hesta owns
McDonald's stock — specifically 0.014 per cent of its market value —
through an international fund, as well as shares in Yum! Brand's and US
food giants Tyson and Hormel.
It officially joined Fairr in 2020 to fight AMR before going on to lodge shareholder resolutions two years later.
These
are actions that are lodged by entities that own stocks in a company
and are voted on by all other shareholders, and are a big part of the
shareholder movement that is also fighting climate risks.
Hesta's first AMR resolution was against Hormel, the American owner of tinned meat, Spam.
The
Hormel Foods resolution urged the company to conduct a study into the
public health costs from the use of antibiotics in its supply chain.
The vote received 14 per cent in favour, excluding management's 47 per cent ownership.
The next year, Hesta lodged more resolutions, this time against three companies: Hormel, Tyson, and McDonald's.
What do experts say about antibiotics resistance?
The
action against McDonald's was done by Hesta in tandem with an advocacy
group that is prominent on AMR, The Shareholder Commons, and another
investment fund, Amundi.
Their
joint resolution on the NYSE called on McDonald's to comply with WHO
guidelines on the use of antibiotics in food-producing animals.
WHO has
long recommended that antibiotics deemed medically important for human
use be significantly restricted in food-producing animals.
That includes the "complete restriction of these antibiotics for growth promotion and disease prevention without diagnosis".
"Healthy
animals should only receive antibiotics to prevent disease if it has
been diagnosed in other animals in the same flock, herd, or fish
population," the WHO recommended last decade.
However, scientists said implementing these standards was easier said than done.
Nations have varying approaches to antibiotic use and distinct interpretations of what is classified as medically important.
That
is despite WHO having its own global list, and experts recognising that
lists vary from country to country, when national health priorities are
considered.
Outside of WHO,
which is primarily concerned with human health, there are also advice
lists from other specialist bodies, such as the World Organisation for
Animal Health.
In Australia,
for instance, regulators don't use the phrase "medically important" but
they do have rules around what can and can't be used in agricultural
settings.
"We have a relatively unique position in Australia," the CSIRO's Branwen Morgan said.
"And that's because we [have] very strict regulation around the use of antimicrobials in our primary industries."
Dr Morgan said those pushing new policies had to therefore be "very careful of unintended negative consequences".
"Guidelines for antimicrobial use are very context dependent and locally dependent," she said.
"We
wouldn't want companies in the animal or food industry sector to stop
using antimicrobials. Businesses with unhealthy animals aren't good
businesses and economically viable businesses."
She
also said the most pressing issues in Australia were not the use of
antibiotics on farms, but the overuse of them in humans and in the
treatment of waste, which could spread into the environment.
On
a global scale, Dr Morgan said helping low socio-economic countries
implement stronger rules on the use of antibiotics was a more important
issue.
McDonald's hits back at Hesta's proposal
In
response to Hesta's resolution, McDonald's argued it was already doing
plenty to eradicate unnecessary antibiotics in its supply chain, with
policies that echoed WHO guidelines.
The
fast-food company released a policy in 2017 to eradicate medically
important antibiotics of the highest priority from its chicken supply
chain in "top markets".
It also
pledged to stop the use of antibiotics entirely in chicken for the
purposes of growth promotion and for disease prevention in flocks.
However,
this year, McDonald's said some markets still had not achieved these
milestones, with the company hoping to fulfil its promise in 2027.
It has not made similar pledges on pork or beef.
"Our intention is to help drive positive behavioural change and transparency," it said in May.
"As well as enable comprehensive assessment of antibiotic use across our in-scope supply chains and industries in the future.
"To
this end, we are engaged in global partnerships across our supply
chains to gather antibiotic use data, which helps inform the
development, implementation, and evolution of our responsible
protein-specific antibiotic use policies applicable for in-scope
markets.
"Because each supply chain is unique, we must work in a targeted way to meet our commitments."
McDonald's
was contacted for comment about Hesta's and the Texan nuns' proposals
but referred the ABC to its shareholder statements and declined to say
anything further.
In previous
statements, it has called Hesta's push "duplicative" and "unnecessary",
and recommended that all other shareholders vote against it. The
resolution got 18 per cent support, excluding company management.
The
Shareholder Commons, which was the lead on the action, disputes
McDonald's claim that their action was unnecessary and says the
fast-food chain still isn't following WHO guidelines.
Last year, an investigation
by the Guardian found suppliers for McDonald's and other American
chains like Walmart had antibiotics in their meats in ways that were
"reckless".
Hesta's Kim
Farrant said the fund was satisfied with the results of its efforts,
having also lobbied pharmaceutical companies to make changes.
"Engagement is never a one-meeting sort of process," she said.
"It occurs over a number of years and is intended to drive awareness and action.
"We do hope to see further support from a range of investors as they also recognise this as a systemic risk."
As
part of their bid to create more awareness, Hesta moved its attention
to lodging a similar AMR vote against the owner of KFC, Yum! Brands
during Wall Street's shareholder meeting season in May.
They received a similar result, while McDonald's was instead tackled by the sisters.
How the sisters have gone further than Hesta
In Texas, the sisters have been lobbying McDonald's for far longer than Hesta.
In
their 10 years of activism against the $194 billion company, they have
achieved something that the fund has found difficult: getting meetings
with McDonald's representatives.
Experts
believe that antibiotic resistance will become a global problem in the
long term, with a new study finding high rates of resistance in samples
of salmon and beef.
All because they hold just $US2,000 in McDonald's shares.
"We
own the stock, and so we said that we would step up and be the leader
in order to raise questions with the company," Sister Mika said.
"If you're owning shares in any company, you are an owner of the company. That gives you power.
"And that's how we look at this. It's a ministry to us."
"When
we first started raising questions [10 years ago] the company said they
would start with chicken, which they did, and they have taken it out of
the chicken across the US [and many other markets].
"So we're still working on the pork and the beef."
The
sisters also started lodging shareholder resolutions against McDonald's
a few years ago, with their latest lodged just a few months ago to
tackle those meats.
It called
for McDonald's to phase out the use of all medically important
antibiotics "for disease prevention purposes" in pork and beef products.
"The
basic premise of what we're talking about here is that there are
antibiotics for animals and there's antibiotics for humans," Sister Mika
says.
The sisters' vote in May
2024 got just 15.16 per cent in favour, and another slap down from
McDonald's, which vigorously defended its existing policies.
"Our board unanimously recommends that you vote against this proposal," it noted.
"Overall
reduction remains an intended outcome, while allowing for the necessary
treatment of sick animals, aligned with herd veterinarian direction."
McDonald's didn't respond to multiple requests for comment from the ABC.
However, the pressure on companies about antibiotics isn't going away.
Last
year, despite Australia being seen as having tight policies on
agricultural use, supermarket giant Woolworths put out a brief policy on
the use of antibiotics in its supply chain.
Its rival Coles says it has one too, but that it is confidential.
Meanwhile,
other companies overseas have walked back on pledges after finding them
too difficult to implement, including the US food giant Tyson, which
backflipped on an antibiotics-free chicken pledge.
"Consumers have a very powerful voice," the CSIRO's Dr Branwen says.
"And
sometimes they may not realise that what they're doing and calling for a
particular action is actually going to have detrimental effects."
Despite
her reluctance to support any specific shareholder resolution, Dr
Branwen thinks Hesta and the sisters have a role to play in fighting a
global problem.
"Shareholder
action is a really powerful mechanism to make the broader community
aware of the antimicrobial resistance problem globally," she said.
"A
key way that investors and insurers can help to focus on the AMR
problem at large is by considering appropriate use and what that means."
That
includes measures to reduce the need for antibiotics, she said, such as
developing better vaccines and giving farm animals better ventilation,
so they don't get sick to begin with.
Back
in Texas, the sisters are about to enter their 10th year of engaging
with McDonald's, and Sister Mika said they would be continuing that
relationship as long as possible.
"I think most companies want to improve," she said.
"And so we're in it for the long haul. We intend to stay at the table for as long as possible."
