All sectors need to deal with sustainability and the life science industry is no exception. As regulations tighten in many countries, working on your sustainability profile has moved from a ”nice to do” to a ”must do” for companies within biotech, pharma and medtech, regardless of size.
But there is also a pure business case for stepping up your game in the sustainability arena. Investors are increasingly evaluating life science companies on this parameter when they make their pick. If you want the money and the strategic partnerships, you better work on that sustainability plan.
In the session Follow the money – Investors leading the way to sustainability at Nordic Life Science Days, moderator Anne Margrethe M. Platou, ESG analyst at DNB Markets, and speaker Alice Mattsson, founder of Pharmista Technologies, will discuss the business case for sustainability.
The ESG (environmental, social, and governance) criteria are increasingly important to investors as regulation around sustainable finance has progressed in both depth and scope, according to Ms M. Platou.
“The investor market’s interest in sustainability activities has grown immensely,” she says. “Five to ten years ago investors took an exclusion approach – they made sure to exclude the companies they didn’t want to invest in for ethical reasons. But in the past few years, investors are becoming interested in not just avoiding the downsides, but also look to where they can place money to make a positive impact.”
“It’s an area which is growing, and I think there’s also a business case for life science here, because a life science company is often per definition one that would make things better,” she says.
Regulations for investors is a key driver behind the shift to a greater sustainability focus, as is new demands from increasingly aware consumers, according to Ms. M. Platou.
“Another driver is that investors have changed their time dimensions. The ‘short term-ism’ within finance is more a thing of the past. We are looking into long-term investments to a greater degree,” she adds.
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Alice Mattsson, whose Sweden-based company is developing a re-usable pregnancy test, argues that a product that’s truly sustainable must meet environmental, social, and economic sustainability targets, no matter the industry.
“I believe that the life science industry has been mainly focused on addressing social sustainability, but there is also an urgent need to address environmental-related issues and work with prolonging the life-cycle of products and use sustainable materials in production for instance,” Ms. Mattsson says.
“I would say that in order for our industry to become more sustainable, we need to start analyzing the impact of our innovations from a holistic perspective and not settle with meeting just one sustainability criteria,” she says.
The European Commission has developed a sustainability taxonomy aimed at bolstering the market for sustainable activities, and businesses that are classified as sustainable find it easier to attract investments. The E in ESG is already covered in the taxonomy for EUs climate objectives, and work is underway to also include the S – social sustainability – with a draft for the “social taxonomy” put forth by the European Commission in February. Healthcare is one of the sectors identified as a potential benefactor of the social taxonomy, with obvious scope for impact for the life science industry.
Reflecting on some of the challenges for businesses, Ms. M. Platou emphasizes the importance for companies to understand how sustainability regulation relates to their business and be mindful of their material impact, as it’s something that investors consider.
“I think that for Nordic companies within life science, this is probably something that’s embedded in the DNA. In the Nordics we are used to thinking about material issues in terms of ESG, probably more so than elsewhere in the world. What’s new now is that in order to attract investors, companies have to demonstrate this, not only think that sustainability is part of their DNA, but find ways to show, report, and highlight this.”
Don’t miss Ms. M. Platou and Ms. Mattsson on stage at the super session Follow the Money – Investors Leading the Way to Sustainability, at Nordic Life Science Days in Malmö, Sweden, on September 29.
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