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
Over the past month, a cascade of financial institutions have strategically withdrawn from global climate-focused collaborative initiatives, marking a pivotal moment in the intersection of corporate sustainability and geopolitical pressures.
Two weeks ago, JPMorgan Chase withdrew from the UN-backed Net-Zero Banking Alliance, completing the departure of all major U.S. financial institutions from this climate-focused coalition. This follows the recent exits of other banks including Citigroup, Bank of America, Morgan Stanley, Goldman Sachs, and Wells Fargo.
BlackRock, the world’s largest asset manager, also withdrew from the Net Zero Asset Managers initiative, a coalition of investment firms committed to achieving net-zero greenhouse gas emissions by 2050. BlackRock maintains that its exit will not alter its approach to product development or portfolio management for clients.
This strategic withdrawal from climate initiatives is primarily attributed to political pressure, legal concerns, and business interests. President Trump’s re-election and subsequent withdrawal from the Paris Agreement has caused financial institutions to go on the defensive, as Republican-led states continue to file lawsuits alleging antitrust violations and collusion to suppress fossil fuel production.
While this shift signals a potential recalibration of corporate environmental strategies, financial institutions continue to emphasize their independent efforts towards decarbonization.
A Note on Sustainable Investing
Despite an anti-ESG political backdrop in the U.S., a majority of global asset managers (78%) and asset owners (80%) expect sustainable assets to increase over next two years, according to Morgan Stanley’s most recent Sustainable Signals survey.
According to the survey, most institutional investors agree that sustainable themes offer exposure to diverse growth opportunities, and that sustainable investing has matured, demonstrating a proven track record. Demand from clients or other external stakeholders, the need to address long-term challenges in the world, and portfolio risk reduction (e.g., lower tail risks, lower volatility, higher Sharpe ratios) rank among the top three reasons why asset managers and owners are practicing sustainable investing. At the same time, data availability and consistency persist as the primary hurdles for responsible investing.
Healthcare is a leading sustainability theme globally, with 41% of institutional investors invested in the sector.
The Healthcare View
The World Health Organization (WHO)’s Department of Regulation and Prequalification has issued a comprehensive call to action, urging the pharmaceutical sector to embrace sustainability across its value chain, from API manufacturing to packaging and distribution.
The WHO’s call to action is anchored in a 2023 UNITAID study, which revealed that for six key medicines, including HIV and tuberculosis treatments, materials acquisition, pre-processing, and manufacturing activities contribute to approximately 95% of their total greenhouse gas emissions, with Active Pharmaceutical Ingredients (APIs) being the primary source at around 70%.
The initiative emphasizes the critical need for new regulatory standards to facilitate a swift transition towards more sustainable practices in the medical products industry. The WHO proposes three key strategies: 1) establishing standards that support innovative approaches for sustainable manufacturing and the use of medical products; 2) implementing a digital transformation of regulatory systems to enhance information exchange; and 3) adopting forward-thinking regulatory procedures that encourage early collaboration between regulators and medical manufacturers on eco-friendly innovations.
In The Weeds
Researchers from UK universities Southampton and UWE Bristol recently developed a biodegradable electronic textile (e-textile) called SWEET (Smart, Wearable and Eco-friendly Electronic Textiles), designed to offer green solutions for wearable tech in healthcare.
The innovative three-layer design incorporates a wood-derived Tencel as the base fabric, combined with Graphene and the conductive polymer PEDOT: PSS as the electronic layers. These electronics are applied to the fabric through precision inkjet printing, which reduces waste and increases efficiency compared to traditional screen printing.
This approach addresses the disposal issues associated with metallic components in traditional e-textiles, as wearable monitoring systems become increasingly in demand.
To learn more about how Gilmartin strategically partners with our clients, please contact our team today.
Authored by: Tamsin Stringer, ESG, Gilmartin Group