Nordea Asset Management has taken home the ‘ESG engagement initiative of the year’ prize in the 2020 Sustainable Investment Awards for our engagement with the pharmaceutical industry The awards are hosted by the Environmental Finance magazine and Nordea is recognised for our efforts in moving the industry towards less pollutive production methods.
Our efforts engaging with the pharma industry in India show that you can influence and conduct a change for the better when you are persistent and dedicated”, says Eric Pedersen, head of Responsible Investments in NAM.
“For us engagement with the companies and industries, where we are invested, is a backbone of our Responsible Investment strategy. In that perspective we are very proud of being recognised, receiving the ‘ESG Engagement initiative’ award.
“Importantly, engagements like this address both sides of what is sometimes called the ‘double materiality’. At one and the same time, we have succeeded in reducing a material risk that the industry posed to the environment locally and the risk that companies are exposed to by not having proper control of the sustainability aspects of their operations – which is material from an investor profitability point of view.”
Our engagement with the pharma industry goes several years back. In 2015, Nordea Asset Management (NAM) started a dialogue with the pharma industry about the environmental and health impact of pharma manufacturing in India. Directly with the companies we were investing in and through the industry-led Pharmaceutical Supply Chain Initiative (PSCI). NAM visited Hyderabad in India where fierce industrial pollution surrounded several manufacturing sites.
In 2016 Nordea then commissioned an on-the-ground investigation on pharmaceutical manufacturing in Hyderabad and published a report on the results that we also shared with the industry. Two years after we commissioned a follow-up investigation. Evidence confirmed that pharmaceutical pollution was still rife and not being effectively addressed.
India’s chemical industry
The chemical industry in India is the main bulk provider to the pharma industry in the Western world. With an expected growth to USD100 billion by 2025, the pharmaceutical industry is one of the fastest growing segments of Indian economy and a major supplier to global pharmaceutical companies.
The industry took action
In response to the findings and to our investor expectations, PSCI developed an action plan, taking an industry-wide approach. The action plan included mapping Indian suppliers and sharing industry expectations on pollution management, auditing and participation in training conferences. In 2019 over 200 suppliers attended PSCIs supplier conferences in India.
Nordea has since established a very constructive engagement with PSCI and the pharma industry. Regular meetings take place to discuss the progress and most of our expectations have been met. We have been invited to discuss Nordea’s expectations on pharma supply chain management and manufacturing practices at the PSCI annual meetings and at Indian supplier conferences. Nordea is a member of the PSCI advisory board as the only investor.
The PSCI principles, which all member organisations have to adhere to, were reviewed in 2019 and include sustainable sourcing, managing releases of active pharmaceuticals into the environment and human rights. The number of PSCI’s membership continues to grow and a sub-team has been established in India.
Water pollution and antimicrobial resistance
Water pollution from pharmaceutical manufacturing in India has been pointed out as an important driver of antimicrobial resistance (AMR).
Antimicrobial resistance is one of the largest global threats today and kills more than 700,000 people annually.
Draft bill to limit concentrations
To promote better business practices we also engage with other organisations. Nordea has co-hosted AMR and water pollution events at the large World Water Week Conference in Stockholm three years in a row. Nordea has been a member of the Expert Committee of The AMR Benchmark, which tracks how 30 large pharmaceutical companies are managing drug resistance, including responsible manufacturing. The ongoing corona virus situation emphasises the importance of responsible action and collaboration by the pharma sector and the continued need for AMR stewardship. In early 2020, the Indian Ministry of Environment, Forest and Climate Change published a draft bill to limit concentrations of antibiotics discharged by pharmaceutical factories into waterways.