Boosting sustainability for increased investor confidence and funding in biotech sector: New ESG guide

Biotech News: In a move aimed at bolstering the environmental, social, and governance (ESG) reporting efforts of Australian life sciences companies, AusBiotech has introduced a comprehensive guide to support industry players. The organisation is now seeking industry feedback to finalise the resource for implementation.

Titled the ESG Guide for Australian Life Science Companies, this draft has been a labour of collaboration, taking nearly a year to develop in conjunction with industry leaders. AusBiotech has worked diligently to create a practical and user-friendly ESG tool tailored specifically for biotech companies, with a particular focus on small and medium-sized enterprises (SMEs).

The guide, crafted with support from the AusBiotech ESG Working Group, which consists of investors, life science companies, and pharmaceutical industry experts, is seen as an invaluable opportunity to enhance Australia’s business environment and attract both international and local investors and collaborators. This initiative aligns with AusBiotech’s Biotechnology Blueprint, a sector strategy devised by industry professionals for industry advancement.

“Small, public companies, such as Amplia, need to pay more attention to ESG to align their practices with expectations of the investor community. This ESG guide is a valuable resource to help SMEs like ours to begin incorporating ESG into their business,” said Warwick Tong, Chair, Amplia.

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By facilitating a consistent approach, the guide enables life science companies to proactively identify and report on key ESG factors relevant to their operations. Given the dynamic nature of ESG reporting and regulation, and the inherent subjectivity in determining the most significant aspects for each company, there are no universally agreed standards, tools, or metrics to guide businesses. This void underscores the necessity for AusBiotech’s ESG Guide – a voluntary set of guidelines exclusively designed for Australian SMEs in the life sciences sector.

“Managing the extensive range of ESG topics that can impact the ability to create long term value can seem overwhelming. That’s why it is so important for all companies – big, small, and in between – to take the foundational step of conducting a materiality assessment. For Cochlear, identifying our most material ESG topics was critical in providing focus and helping us prioritise initiatives,” stated Brooke O’Rourke, Vice President Government Affairs & Sustainability, Cochlear.

Globally, the significance of ESG factors has gained considerable traction over the past decade, now widely recognised as an integral aspect of contemporary best business practices and investment strategies.

Australia’s life sciences sector currently comprises over 1,400 companies engaged in research and development, with SMEs forming the majority. Empowering these emerging companies to develop and communicate proactive ESG strategies, policies, and practices will elevate the reputation and credibility of the sector. In turn, this will foster increased investor confidence, attract more funding, and accelerate the delivery of innovative healthcare solutions.

However, a staggering 93% of small-cap companies in Australia presently do not report on their ESG efforts. This presents a remarkable opportunity for businesses to differentiate themselves in the market and capture the attention of potential investors.

“As a lean company, raising capital and developing early-stage drug discovery programs, it is not easy to divert resources to ESG reporting. There is no doubt that as awareness and requirements for ESG reporting grow within the investment community and larger corporations, there will be a competitive advantage for those smaller organisations that have started to integrate ESG principles and reporting into their company practices,” commented Joanne Boag, CEO, Oncology One.

The ESG Guide serves as a reference for company executives and boards, emphasising the importance of establishing ESG programs. It also helps businesses understand the materiality of factors specific to the life sciences industry and their own organisations, initiating an assessment process to identify strengths and areas for improvement. Additionally, it offers valuable insights to investors, serving as a roadmap to comprehend the priority ESG considerations for life sciences companies and as a criterion to assess their ESG credentials.

AusBiotech is actively seeking industry feedback on various aspects of the guide. This includes evaluating the guide’s practicality for biotech companies, ensuring the inclusion of comprehensive ESG considerations in Section 4.0, and soliciting suggestions for additional frameworks that could enhance the guide’s scope.

Industry is invited to provide feedback to AusBiotech on the ESG Guide by Friday, 23 June.

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