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. Companies in our portfolios are creating innovative products or services with impact that connects to broad global themes. We seek opportunities where positive social and environmental impact is linked to positive financial performance.
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.* 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. 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.
Stock example: Chipotle Mexican Grill
Chipotle, a 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. Also, 100% of its chicken and beef met the company’s “No Antibiotics Ever” standard as of 2018.
- 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.
- 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.
Chipotle has been a meaningful contributor to the financial returns of our sustainable portfolios. The company is known for its competitive advantage with the 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. We believe Chipotle continues to offer capital appreciation potential for its shareholders, including our funds.
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. 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
Putnam offers two funds that pursue strong sustainability performance with strong financial performance over the long term.
Learn more about the funds and our sustainable investing approach at putnam.com.
*For source information from throughout this post, see pages 26 and 27 of our Sustainability and impact report
As of 12/31/19:
Sustainable Leaders Fund: Chipotle represented 1.66% of portfolio holdings.
Sustainable Future Fund: Chipotle represented 3.06% of portfolio holdings.