The biotechnology industry is constantly evolving and developing new ways to help improve the world. Biotechnology has a positive impact on many industries from medical applications to food production, especially in regard to ESG investments.
Financial advisors need to be aware of the opportunities that this rapidly growing sector presents. Here are some ways that biotechnology is helping to make the world a better place and where some sectors are ripe for growth in 2023 and beyond.
What is biotechnology and how is it being used today?
Biotechnology is a powerful tool that encompasses a wide range of technologies used to modify and manipulate living organisms or their components in order to produce useful materials and products. By leveraging ESG principles, biotechnology can serve as a viable solution for improving the well-being of our planet and people.
For instance, it has been applied in areas such as plant breeding, crop production, and animal husbandry, among others; all of which aim at optimizing food sources around the world, reducing water consumption, and finding ways to benefit our global supply chain.Additionally, companies are now using these technologies to manufacture sustainable products in line with ESG values, such as bioplastic from biomass like corn starch, making it more environmentally friendly than traditional petroleum-based plastic.
All these demonstrate that biotechnology is an invaluable asset for fostering a better planet with conscious consumption of resources, especially as our global population continues to grow and we have an increasingly smaller space to produce, reuse, and deposit any excess waste.
How has biotechnology helped to improve the quality of life for people around the world?
Biotechnology has had an overwhelmingly positive effect on the quality of life for people around the globe. From healthier societies due to increased access to vaccines, more accurate and cost-effective methods of diagnostics and treatments for a variety of illnesses, to improved methods of food production such as IoT-enabled greenhouses, biotechnology advances have brought about healthier lives for all, but a growing issue looms on the security of these systems and equal access to these technologies.
The advancements made in biotechnology are allowing future generations access to healthier environments and better healthcare prospects than before, helping to ensure a healthier future for the next generation and beyond.
How is biotechnology addressing issues across water use, land preservation, and ensuring safer water in the near and long term?
Although biotechnology has made significant advances, we are just scratching the surface of what biotechnology and bioaugmentation can do to address issues of water use and preservation.
The water needed to grow food, process materials like paper and plastics, and generate energy can be hard to come by and difficult to purify.
We currently face a growing water crisis, between global droughts brought about by climate change and the continued issues of safe water access, water is key to not only our global health but public health.
Biotechnology is aiming to help address these issues, especially in areas of water use and waste treatment in water. For example, alternative plant protein products from companies like Beyond Meat, where a Beyond ground beef burger takes 99% less water to produce when compared to real ground beef, and had significant time, land, and energy savings for our planet.
In areas such as wastewater treatment, biotechnology, and bioaugmentation, the practice of adding microbial strains to enhance treatment performance, can help break down complex chemical pollutants that can not be broken down by microorganisms.
Though these new advances in biotechnology are making life-saving changes to our planet, access to the latest technology is not always available in developing countries where some of the greatest needs could be served by biotechnology.
Finally, unintended consequences need to be taken into consideration before integrating biotechnology with more traditional solutions; possible missteps can have grave impacts on ecosystems that must be weighed carefully as new methods are implemented. But currently, the possibilities and positive impacts are outweighed by any slight risks that are possible through biotechnology.
How can we ensure that biotechnology is used responsibly and ethically?
As the biotechnology sector grows, so too will the need for additional ESG regulation and disclosure. This is due to the increased complexity of advancing technologies, as well as their potential implications for society and the environment.
A recent study from Life Sciences Law Firm, Fenwick, found that 70% of pre-commercial public biotechs do not have ESG references in public disclosures. But as these companies move toward IPOs the disclosures should come soon.
With heightened scrutiny over ethical concerns in emerging technologies such as gene editing, advanced diagnostics, personalized drug treatments, and data sharing, regulation and disclosure are becoming increasingly important to ensure a safe and responsible biotechnology sector.
In addition, greater transparency can help investors and stakeholders gain a better understanding of potential risks and rewards associated with biotechnology investments. This can also improve corporate governance as companies become more aware of their responsibilities to society at large.
As growing disclosure requirements become standard globally, the necessary information to address specific ESG factors will expand to increase transparency around how these companies operate more specifically in regard to ESG issues and how shareholders are able to file strong shareholder resolutions to create change if goals are not met or upheld.
How to examine and compare top biotechnology companies based on individual values.
While there are many different areas where biotechnology is used, the pharmaceutical industry has been a heavy adopter of this technology, especially in its use in creating COVID-19 vaccines.
From Drug discovery and development, manufacturing, and testing, to safety/toxicity assessment, and regulatory compliance, biotechnology has expanded to many areas of this sector.
In drug discovery and development, biotechnology techniques are used to identify new targets or drugs that can be developed into treatments. In manufacturing processes, biotechnology is used to produce bulk quantities of drugs, as well as to modify existing treatments in order to increase their efficacy or reduce adverse side effects.
In testing and safety/toxicity assessment, biotechnology tools are utilized to analyze the potential toxicities of drug candidates and provide data necessary for regulatory approval. Finally, biotechnology is also used to ensure compliance with regulatory standards when producing and selling drugs.
As large public pharmaceutical companies continue to expand their use of biotechnology, Financial Advisors might have clients that want to invest in these dynamic companies but their values on how these companies operate beyond biotechnology could be a barrier of entry.
Our Company Screener was built with this exact question in mind, “How do I compare companies in relation to how my client feels about these issues?”
For example, if a client was looking to invest in biotechnology pharmaceutical companies but after taking a values questionnaire, expressed an interest in investing in companies that reflect fair pay, diversity, low health and safety violations, and have strong environmental commitments, finding the right company for your client can be difficult.
After putting the top companies into our Company Screener and selecting your clients' value screens, you’ll easily see how each company compares in each value area to help select the best company that aligns with your client's individual values.
The key difference in our platform is not finding the best overall company, but showcasing the data and trade-offs between companies to then find the right company that aligns with your client’s values.
In the comparison screens pictured above, two key issues a client expressed, CEO pay and Strong Climate Commitments tell a different story based on what’s most important for a client.
If they wanted a strong climate committer for a pharmaceutical biotech company, Johnson & Johnson (JNJ) might be the right choice, whereas if they cared more about fair pay across an organization, Novavax (NVAX) could be a better choice.
Having transparent data can lead to better conversations around what choices were made at the investment level so clients can feel confident that their Advisor is investing with their values in mind while still considering financial goals.
A technology that could unlock the ability to save our planet and people
Biotechnology has been used to develop products and processes that have dramatically improved the quality of life for people around the world.
From diagnosing illnesses to sourcing sustainable food sources and developing renewable energy, biotechnology is a tool with enormous potential.
This potential, however, also carries with it some risks that need to be taken into consideration and disclosed properly to better the sector overall and access risk in a full picture outside of an independent project, but at the company level.
Moreover, there is always the need to ensure that in using these technologies there will be equity both in terms of access and outcomes. Predictions of what biotechnology may bring in the future range from generating sustainable fuel sources, and curing diseases like cancer, to combating climate change - the possibilities are endless.
See how to invest in the right companies for your clients, especially if they want to be invested in new biotechnology that is actively solving the top issues our planet faces now and in the future.