The biotech industry has not caught the ESG bug that has swept across C-suites in recent years as part of the broad push for corporate social responsibility.
A whopping 70% of pre-commercial public biotechs do not have environmental, social and governance references in public disclosures, according to a review from life sciences law firm Fenwick.
"[M]any companies are at an early stage of implementation," the report (PDF) noted. But the flurry of biotech initial public offerings in 2021 could "accelerate" ESG disclosures, because the longer a company is public, the more likely it reports on such practices, the review found. In turn, governance and compliance functions expand.
The report is based on a review of the presence of ESG disclosures in Securities and Exchange Commission filings and on the corporate websites of 50 public biotechs based in the U.S. with market caps ranging from $1.3 billion to $4.6 billion. Editas Medicine, Intellia Therapeutics, Nkarta, Novavax and Sangamo Therapeutics were among those reviewed.
This trend could change quickly, though. Based on a survey of 100 biotech executives and industry investors, Fenwick reported that 92% of respondents think ESG disclosures will become more important in 2022.
Nearly 75% of the respondents also said they expected their company to increase ESG disclosures over the next year. Investors cited increasing pressure from clients as the No. 1 reason for ESG disclosures playing a more integral role in investment decisions.
Biotech executives also want ESG disclosures to be mandated. Less than 20% of the respondents did not want such mandates. The biggest reason for wanting mandates? The ability to measure year-over-year progress.
And, it turns out, many biotechs are working on the issue. Of the 100 respondents, 42% said they have implemented ESG programs but have yet to report on them.
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The other factor to consider in the ESG equation is what topics to track. Biotech executives were "more inclined" to track social metrics than environmental and governance topics, the survey found.
At the top was human rights, with 64% of respondents saying their company either already discloses or plans to disclose that topic in the next 12 months. In second was data security at 60%, followed by diversity, equity and inclusion at 60%. For an industry focused on testing and delivering drugs to patients, clinical trial safety notably came in fourth, at 58%, followed closely by patient safety and drug access, both at 56%.
Patients were placed front and center in the latest biotech ESG report, out Thursday from ADC Therapeutics (PDF). The company, which developed large B-cell lymphoma drug Zynlonta, said its workforce is 52% women and 48% men, with women comprising 70% of the leadership team in 2021.
Twist Bioscience also reported on ESG programs at the company last month. The San Francisco-based synthetic DNA manufacturer found that nearly two-thirds of the total U.S. workforce and 40% of senior staff or executives at Twist are people of color. Over a quarter of employees are women of color. Twist also has an executive team made up of 42% women.