ISS ESG InFocus: Pharmaceuticals & Biotechnology

ISS ESG’s team of specialist analysts release regular updates on the ESG risks associated with a specific industry. The InFocus reports focus on the ISS ESG Corporate Rating for companies within each sector, and also provides headline results from other ISS ESG product lines. This month, the InFocus is on: Pharmaceuticals & Biotechnology

KEY TAKEAWAYS

• The Pharmaceuticals & Biotechnology (PH&BIO) industry is part of the solution to global health challenges, with products and services that contribute toward the social dimensions of the Sustainable Development Goals. It has a relatively large share of Prime-rated companies (27%).
• In contrast to these social benefits, there is little evidence that the environmental risks of the PH&BIO industry’s operations and incidental activities are being actively managed, including challenges arising from water management due to pharmaceutical residues in the environment.
• The PH&BIO industry is relatively less carbon intensive than other industries, but its impact is still significant, with the emission reduction approach of companies in the sector offering a key point of leverage for investors looking to take action on climate change.
• Most of the severe controversies faced by the Pharmaceuticals & Biotechnology industry are high-profile cases involving anti-competitive behavior, bribery, consumer health, water pollution, and consumer rights.
• Access to health care is a key risk for investors to monitor. Underserved populations often lack access to the beneficial products and services that the Pharmaceuticals & Biotechnology industry provides. The level of access to products and services impacts the industry’s absolute contribution to sustainable development.
• Further, the COVID-19 pandemic has highlighted other sustainability risks, such as business continuity and information security, faced by the industry.

ESG Ratings Results

Pharmaceuticals & Biotechnology companies demonstrate relatively good ESG performance: 27% of companies are rated ‘Prime’ by the ESG Corporate Rating, meaning they fulfill ISS ESG’s demanding requirements regarding sustainability performance in the industry. This figure is considerably higher than the share of Prime companies out of the total rating universe, which stands at just below 15%.

Explore ISS ESG solutions mentioned in this report:

• Identify ESG risks and seize investment opportunities with the ISS ESG Corporate Rating.
• Use ISS ESG Climate Solutions to help you gain a better understanding of your exposure to climate-related risks and use the insights to safeguard your investment portfolios.
• Assess companies’ adherence to international norms on human rights, labor standards, environmental protection and anti-corruption using ISS ESG Norm-Based Research.
• Understand the impacts of your investments and how they support the UN Sustainable Development Goals with the ISS ESG SDG Solutions Assessment and SDG Impact Rating.
• Understand the F in ESGF using the ISS EVA solution.
• Use ISS ESG Sector-Based Screening to assess companies’ involvement in a wide range of products and services such as alcohol, animal welfare, cannabis, for-profit correctional facilities, gambling, pornography, tobacco and more.