Executives and Investors Deploy Varying Approaches Amid Calls for Reporting and Standardization
In the last few years, environmental, social and governance (ESG) topics have become common in boardrooms, as investment funds with an ESG focus have raised billions and ESG's non-financial metrics are increasingly factored into how investors and other stakeholders evaluate corporations. The U.S. Securities and Exchange Commission has also expressed an interest in ESG disclosure more broadly and has indicated the potential for rulemaking in the near future.
ESG practices and trends tend to be discussed as if there is one standard for all public companies, from the S&P 100 to small-cap growth industries. In an effort to understand the common practices of pre-commercial biotech companies, Fenwick's inaugural report draws insights from a survey of 100 executives at biotech companies with market capitalizations ranging from $100 million to more than $4 billion as well as representatives of investment banks, venture capital firms and hedge funds.
In addition to a detailed summary of our research and accompanying analysis, this report also includes guidance about how biotech companies can adapt to the changing ESG landscape, as we believe the conclusions drawn from our findings can start to help companies across the sector set benchmarks and plan for what's ahead in ESG best practices, disclosures and regulation.
Key takeaways for biotech companies include:
- Current ESG reporting among biotech companies is limited and there is no consensus on where or what to report.
- Biotech executives and investors agree that ESG should be or will be a focus in the future, but efforts to prepare for anticipated disclosure requirements vary among companies.
- Biotech companies indicated that diversity was an important area of focus, with many companies expressing the importance of disclosing board and employee composition in SEC filings. This is attributed to state laws and recent disclosure requirements by the Nasdaq Stock Market.
- Biotech executives and investors agree that ESG disclosures should be mandated to provide consistency and standardization. Among the respondents who did not think that disclosure should be mandated, a lack of standardized metrics was viewed as the primary obstacle.
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