Getting Your Facts Straight to Gain Investor Trust

Investors look for companies that understand their real impact
ESG Performance and Investors
Publ. date 1 Feb 2018
The launch of the Antimicrobial Resistance Benchmark at this year's WEF in Davos, the introduction of a sugar tax to fight obesity, and the recent New York City lawsuit against five major oil companies for their contribution to climate change. These are just a few recent developments showing that managing externalities now have a clear business case. Today investors seek companies that demonstrate effective management of their most relevant ESG factors and focus on their issues that have a real impact. The time for storytelling is over. It is now high time to have the data on issues in place in order to mitigate your business risks and to start seizing market opportunities.

Increased attention from investors: it’s about valuing impact

One of the most prestigious ESG benchmarks, the Dow Jones Sustainability Index, continuously raises the bar for sustainability by updating their questionnaire annually and including industry-specific externalities. For example, the issue of water-related risks has been introduced for the chemical industry and the issue of access to medicine for disadvantaged populations for the pharmaceutical industry.

Example: Pharma’s most prevalent externalities

For global pharmaceuticals companies access to medicine has been a subject of intense debate for many years and is still a major topic today. Data from the World Health Organization shows that in low and middle-income countries the access to public health facilities is 38% and 46% respectively. While the access to private health institutions is somewhat higher: 70% and 72%, there is still a part of the global population lacking  access to medicine. This lack of access is emphasized in the DJSI questionnaire through the key criterion “Strategy to Improve Access to Drugs or Products” which contributes to 5% of the total DJSI score. Currently, GlaxoSmithKline and Roche Holding are the two companies classified in the gold class category as revealed in RobecoSAM's Sustainability Yearbook 2018.

Investor buying shares of pharmaceutical companies are therefore especially keen to understand how these companies create value through their access to medicine initiatives. The goal of investors is to create long-term shareholder value in the companies in which they invest. Their potential is maximized if money is invested in high quality, well managed companies, measured by the extent to which the full range of business risks and opportunities that affect their business are actively managed. On top of this, remediation and mitigation undertakings need to be in place as well as innovation programs to grasp growth potential.

Introduced last week at the World Economic Forum in Davos, the Antimicrobial Resistance Benchmark, created by the Access to Medicine Foundation, aims to replace old medicine and distribute it to those in need. The foundation is also the founder of the Access to Medicine Index, which ranks 20 of the largest pharmaceutical companies on 7 technical areas. The index includes twenty of the world’s largest research-based pharmaceutical companies with products for high-burden diseases in low- and middle-income countries. Companies are ranked according to their efforts to improve access to medicine in seven areas of corporate behavior, including patents, pricing, ethical behavior and donations.

Over 40 investor firms, with $5.5 trillion Assets Under Management, have signed of the Access to Medicine Index, indicating the index will be taken into account when making investment decisions. Current frontrunners are GlaxoSmithKline, Johnson & Johnson, and Novartis, whereas Merck and Merck & Co are complementing the top five.

What matters most to your organization?

It is important for organizations to be transparent and upfront about both their positive and negative impacts. That's why Finch & Beak has developed the RAPIDO service platform offering concise services with a short time-to-value that are practical and actionable. To learn more about this approach, please contact us at for more information.

Image source: Alexandre Duarte, Flickr

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