Biotech Growth Trust | ESG

The Biotech Growth Trust PLC

 ESG Policy

The Biotech Growth Trust PLC (the “Company”) seeks capital appreciation through investment in the worldwide biotechnology industry. The Board believes that consideration of environmental, social and governance ("ESG") factors is important and has the potential to protect and enhance investment returns. The Portfolio Manager’s investment criteria ensure that ESG factors are integrated into their investment process and best practice in this area is encouraged by the Board. The Board has delegated authority to its Portfolio Manager to evaluate investee companies’ performance and engage with their management teams on material ESG matters.  The Board receives reports from the Portfolio Manager on their approach to handling ESG-related issues at portfolio companies.

ORBIMED'S APPROACH TO ESG

The Company’s Portfolio Manager, OrbiMed, is guided by its Responsible Investing Policy in its approach to integrating ESG issues into its investment decision-making. 

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The Portfolio Manager seeks to invest in innovative biotech and life sciences companies that are working towards addressing significant unmet medical needs globally.

OrbiMed believes that there is a high congruence between companies that seek to act responsibly and those that succeed in building long-term shareholder value. The Portfolio Manager seeks to integrate ESG information into the overall investment process, with the objective of maximising investment returns. Investment decisions are based on a variety of financial and non-financial company factors, including ESG information. 

As a responsible investor, OrbiMed negatively screens potential investments and business sectors for factors that may lead to negative impacts on public health or wellbeing. The importance of robust governance and social safeguards in biotech has grown significantly; regulators and investors are increasingly scrutinising financially material ESG issues such as clinical trial transparency, equitable access to therapies, and pricing practices. Governance issues, including board structure and executive pay, are also financially relevant. For companies which do not have manufacturing and are focused on drug discovery and development, environmental factors such as greenhouse gas (GHG) emissions are not generally regarded as financially material. The Portfolio Manager generally utilises healthcare sector-specific guidance from the Sustainability Accounting Standards Board (SASB) and in-house analyses from investment analysts to guide its selection of material ESG factors as part of its investment research.

Healthcare and life sciences sectors are highly regulated, globally. Regulation is well-established across developed markets and emerging markets for the sector. To that end, OrbiMed considers compliance with local laws and regulations as one of the factors in its investment evaluation. Depending on the investment, all or a subset of the ESG factors that are financially material and relevant are considered in OrbiMed’s research.

MONITORING AND ENGAGEMENT

OrbiMed utilises ESG scores for public equity holdings from third-party service providers. To supplement the information from the third-party service providers, OrbiMed also conducts proprietary analysis on ESG performance.
The Portfolio Manager engages on a regular basis with its portfolio companies through meetings with management, proxy voting, and in some cases, through board representation.

OrbiMed’s analysts regularly track ESG information on safety of clinical trials, drug safety, ethical marketing, call-backs and other materially relevant factors. As part of these efforts, OrbiMed engages with companies directly or
through brokers, and facilitates dialogues and exchange of leading practices among investors, companies, and other relevant experts on ESG in the healthcare sector.