Sustainability Insight
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August 30, 2019
Health Care
 

Sustainability Insight

Health Care

Health Care

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August 30, 2019

 
 

Positive Science

A number of the health care companies we own in our global portfolios report their contributions to UN Sustainable Development Goals (UN SDGs) as part of their annual reporting. While we don’t seek out companies with an explicit ESG agenda or score in mind, we welcome corporate engagement with the 17 UN SDGs and 169 specific targets. Here we discuss three of the UN SDGs most commonly supported by the health care companies we own: Zero Hunger (Goal 2), Good Health and Well-Being (Goal 3) and Clean Water and Sanitation (Goal 6):

 
 
 
‘‘
Contemporary society demands that organizations operate with a sense of social and ethical responsibility and, in the case of health care, use science and technology to address health needs."
 
 

ZERO HUNGER

Two billion people are affected by micronutrient malnutrition; half reside in countries where rice is a staple food. Fortifying rice can make a real difference to improving nutrition. Scientists at an American health care company we own are working with a nonprofit organization to improve rice fortification technology and have succeeded in both reducing costs and improving nutritional value. This rice is distributed as part of a school lunch program in India targeting 450,000 children and will be able to help many more in the future. The German multinational life sciences company we own has introduced “high-quality food for all” as a central tenet of its sustainable development program. The company aims to help overcome the challenge of feeding an increasing number of people using increasingly scarce arable land using its innovation in seeds and in biological crop protection solutions.

GOOD HEALTH AND WELL-BEING

The health care companies we own support SDG 3 by using science and technology to address health needs, and by making their products affordable and available. A British multinational pharmaceutical company we own has trained over 21,000 health care professionals on responsible antibiotic use. The same company donated 8 billion tablets in 2017 to treat neglected tropical diseases, and provided hundreds of millions of vaccines at heavily discounted rates to the world’s least developed countries. The Kids and Diabetes in Schools (KiDS) Project run by another of our holdings, a French biopharmaceutical company, has reached more than 45,000 children and 4,400 teachers in Brazil, Egypt, India, Japan, Pakistan, Poland and the United Arab Emirates. The project aims to foster a safe and supportive school environment for children with diabetes. A third holding, an American medical technology company, has a pipeline of products in development to help reduce maternal mortality and preventable newborn deaths, while its technologies are integral to the diagnosis and management of infectious diseases.

CLEAN WATER AND SANITATION

The British pharmaceutical company we hold has robust controls in place to manage the risk of pharmaceuticals, particularly antibiotics, entering the environment via water pollution. The company works with its supply chain and peers to share best practices on managing environmental discharges. Meanwhile, the American health care company we own supports SDG 6 by developing innovative products that can be used safely even when clean water is scarce, supporting communities in water management and working to reduce its own water footprint.

The UN SDGs present a useful framework for companies to help assess and improve their impact on the environment and on society. Our preference is for medical technology and animal health versus pharmaceuticals where government focus on affordable pricing presents challenges to pricing power. We don’t select companies on their ESG credentials – we do focus on companies’ sustainable long-term returns. Through proactive social and environmental policies, companies can work to safeguard their reputations and sustain their long-term returns.

 
 

RISK CONSIDERATIONS

There is no assurance that a portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market value of securities owned by the portfolio will decline. Accordingly, you can lose money investing in this strategy. Please be aware that this strategy may be subject to certain additional risks. Changes in the worldwide economy, consumer spending, competition, demographics and consumer preferences, government regulation and economic conditions may adversely affect global franchise companies and may negatively impact the strategy to a greater extent than if the strategy's assets were invested in a wider variety of companies. In general, equity securities' values also fluctuate in response to activities specific to a company. Investments in foreign markets entail special risks such as currency, political, economic, and market risks. Stocks of small-capitalization companies carry special risks, such as limited product lines, markets and financial resources, and greater market volatility than securities of larger, more established companies. The risks of investing in emerging market countries are greater than risks associated with investments in foreign developed markets. Non-diversified portfolios often invest in a more limited number of issuers. As such, changes in the financial condition or market value of a single issuer may cause greater volatility. Option writing strategy. Writing call options involves the risk that the Portfolio may be required to sell the underlying security or instrument (or settle in cash an amount of equal value) at a disadvantageous price or below the market price of such underlying security or instrument, at the time the option is exercised. As the writer of a call option, the Portfolio forgoes, during the option's life, the opportunity to profit from increases in the market value of the underlying security or instrument covering the option above the sum of the premium and the exercise price, but retains the risk of loss should the price of the underlying security or instrument decline. Additionally, the Portfolio's call option writing strategy may not fully protect it against declines in the value of the market. There are special risks associated with uncovered option writing which expose the Portfolio to potentially significant loss.

 
marcus.watson
 
Executive Director
 
 

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