Welcome to the latest edition of Gilmartin Group’s ESG newsletter. With a special focus on the healthcare sector, this newsletter sheds light on the latest trends in the rapidly evolving ESG space, covering developments with companies, investors, regulators, and policymakers.
In The Spotlight
In December, the state of Tennessee filed a lawsuit against BlackRock alleging that the firm made misleading statements about its ESG investment strategies, breaching consumer protection laws. Although the backlash against BlackRock over its approach to ESG has been ongoing, this marks the first lawsuit that a GOP official has brought against the firm on the issue.
Instead of claiming that BlackRock is violating its fiduciary duty by integrating ESG into its investment process, Tennessee’s Attorney General claims that the firm is harming consumers by inconsistently describing how its different funds incorporate ESG. The suit points to BlackRock’s membership in ESG coalitions, such as the Net Zero Asset Managers initiative, as evidence that it has “downplayed the extent to which ESG considerations drive its investment strategies across all holdings, even in non-ESG funds.”
BlackRock responded in a statement rejecting Tennessee’s claims and is planning to fight the suit.
The Healthcare View
My Green Lab, a non-profit focused on improving sustainability in scientific research, recently launched a new initiative to support research lab sustainability across pharmaceutical and biotechnology supply chains. The initiative, dubbed Converge, will encourage companies with large research footprints to pursue the My Green Lab Certification to reduce their environmental impact.
Converge, whose founding sponsors include AstraZeneca, GSK, Bristol Myers Squibb, and Amgen, will provide pharmaceutical and biotechnology suppliers with resources to increase lab scientist awareness and engagement on sustainability. The program also includes a supplier dashboard where partners can track the green lab certification process across their supply chain.
In The Weeds
In the coming weeks, the Global Reporting Initiative (GRI) will release an updated disclosure standard covering biodiversity. Although identifying and quantifying a company’s impact on biodiversity is difficult, the standard outlines the most significant, location-specific information that companies should disclose on the topic. For example, the standard asks companies to disclose information on direct drivers of biodiversity loss, such as pollution and overexploitation of natural resources.
The GRI’s new update comes as ESG-focused investors and other ESG reporting standards are starting to focus more specifically on biodiversity as a distinct issue separate from climate. For example, Fidelity International announced this week that nature loss is one of the four focus themes that will form its new approach to sustainable investing. Last Fall, the Taskforce on Nature-Related Financial Disclosures (TNFD) published its final disclosure recommendations to encourage companies and financial institutions to take action on biodiversity loss.
A Note on Product Lifecycle Management
At the end of last year, the European Commission moved a step closer to adopting the Ecodesign for Sustainable Products Regulation (ESPR), which aims to set sustainability performance and information requirements for almost all categories of physical goods in the EU market. The proposal includes a provision for Digital Product Passports (DPPs), a tool to share sustainability-related data across the entire lifecycle of a product. The EU DPPs are a first-of-its-kind tool to promote circularity across value chains and will require companies to share information on raw material extraction, production, and recycling. The EU plans to enforce the regulation on “imported products, their components, and intermediary products, with importers being held responsible for ensuring compliance”, meaning that companies outside the EU will be affected.
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Authored by: Patrick Smith, ESG, Gilmartin Group & Tamsin Stringer, ESG, Gilmartin Group