With the continuously increasing number of ESG-data it is becoming more and more difficult to use ESG for investment ideas, this is why it is extremely important to focus on what is material for a company.
Hi, I am Maria Specogna from Kieger.
Our team invests in the Healthcare sector. As the chart shows, around 60% of the ESG controversies in the healthcare industry are related to social issues.
Governance issues due to questionable corporate behaviour are also material and account for 36%. The number of environmental controversies, however, is quite low as manufacturing in the sector is highly regulated and management of environmental issues tend to be good. Intuitively it makes sense that social controversies are so important, as healthcare products have a significant impact on society.
Unfortunately, there are many examples in the past of big product recalls due to serious side effects. Recalls will continue to happen in the future, as medicines tend to have potential side effects, this cannot be completely avoided.
What does it mean for healthcare investors? Should we avoid healthcare because of ESG? Not at all! But we need to have a strong process in order to select the right investments. We focus on companies with responsible strategies to monitor the safety and quality of their products and we also analyse how management proceeds in case of a product recall. With this process, we aim to identify investment opportunities that provide solutions to the key healthcare challenges ahead. Ensuring global well-being and health is critical to the sustainable development goals in the future.
If you would like to know more about our process for ESG integration, do not hesitate to contact us.
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