Engaging with pharmaceutical companies to address the role they play in India’s water pollution crisis
• The death toll related to antimicrobial resistance (AMR) is estimated to reach 10 million people annually by the year 2050
• Pharma pollution in India has been identified as a major contributor to the problem
• NAM initiated a long-term engagement with pharma companies based in India that we are invested in
• We issued two reports exposing the extent of pharma pollution in India
• As a result of our engagement, the PSCI developed an action plan to address the problem
Antimicrobial resistance is one of the largest global threats today and kills more than 700,000 people annually.
Our reports were released amidst repeated warnings from the scientific community about the dire state of India’s water resources. The compound impact of climate change, lack of regulations and a rapidly growing population are putting an unbearable strain on the country’s water sources—and the problem is only expected to worsen. “Beyond the social impact, India’s economy depends on a reliable supply of clean water. The effects of water pollution therefore present a material risk for businesses operating or using suppliers in India, and by extension to investors,” said Eric Pedersen, Head of Responsible Investments at Nordea Asset Management.
The industry took action
In response to the findings and our investor expectations, PSCI developed an action plan, taking an industry-wide approach to address pharmaceuticals in Indian manufacturing and capability training of Indian pharma suppliers/ manufacturers and auditors among other things. This included PSCI members mapping their Indian suppliers against the sites mentioned in the report. Many companies in this industry-level engagement have improved their supply chain and water risk management, especially related to sourcing from India.
Our RI team has established a very constructive engagement with PSCI and the pharma industry. We have been invited to discuss our expectations on pharma supply chain management and manufacturing practices at the PSCI annual meetings and at Indian supplier conferences. As the only investor member of PSCI’s Advisory Panel, we continue to meet regularly with pharma industry leaders to discuss progress. Most of our expectations have been met; the pharma industry has taken important steps to engage with suppliers and address water pollution. Companies have taken an industry approach to address water pollution related to drug manufacturing in India and the release of active pharmaceuticals into the environment. In 2019 over 200 suppliers attended PSCIs supplier conferences in India.
The PSCI principles, which all member organisations have to adhere to, were reviewed in 2019 and include sustainable sourcing, managing releases of active pharmaceuticals into the environment and human rights. The number of PSCI’s membership continues to grow and a sub-team has been established in India.
The effects of water pollution present a material risk for businesses operating or using suppliers in India, and by extension to investors. Eric Pedersen, Head of Responsible Investments at Nordea Asset Management
Draft bill to limit concentrations
To promote better business practices we also engage with other organisations. NAM has co-hosted AMR and water pollution events at the large World Water Week Conference in Stockholm three years in a row. We have been a member of the Expert Committee of The AMR Benchmark, which tracks how 30 large pharmaceutical companies are managing drug resistance, including responsible manufacturing. The ongoing Coronavirus situation emphasises the importance of responsible action and collaboration by the pharma sector and the continued need for AMR stewardship.
In early 2020, the Indian Ministry of Environment, Forest and Climate Change published a draft bill that introduces limits on the concentrations of antibiotics permitted in wastewater released by pharmaceutical factories. We commend the Indian government on this very important step and will continue our on-going dialogue with the pharma industry on water pollution.
1Wattal, C., Kler, N., Oberoi, J.K. et al. Neonatal Sepsis: Mortality and Morbidity in Neonatal Sepsis due to Multidrug-Resistant (MDR) Organisms: Part 1. Indian J Pediatr 87, 117–121 (2020).
2India Brand Equity Foundation, Indian Pharmaceutical industry, June 2020.
3Nordea Asset Management, Changing Markets and Ecostorm, Impacts of pharmaceutical pollution on communities and environment in India, February 2016
5Understanding drivers of antibiotic resistance genes in High Arctic soil ecosystems, Environment International, Volume 125, April 2019.
Nordea Asset Management is the functional name of the asset management business conducted by the legal entities Nordea Investment Funds S.A. and Nordea Investment Management AB (“the Legal Entities”) and their branches, subsidiaries and representative offices. This document is intended to provide the reader with information on Nordea’s specific capabilities. This document (or any views or opinions expressed in this document) does not amount to an investment advice nor does it constitute a recommendation to invest in any financial product, investment structure or instrument, to enter into or unwind any transaction or to participate in any particular trading strategy. This document is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instruments or to participate to any such trading strategy. Any such offering may be made only by an Offering Memorandum, or any similar contractual arrangement. Consequently, the information contained herein will be superseded in its entirety by such Offering Memorandum or contractual arrangement in its final form. Any investment decision should therefore only be based on the final legal documentation, without limitation and if applicable, Offering Memorandum, contractual arrangement, any relevant prospectus and the latest key investor information document (where applicable) relating to the investment. The appropriateness of an investment or strategy will depend on an investor’s full circumstances and objectives. Nordea Investment Management AB recommends that investors independently evaluate particular investments and strategies as well as encourages investors to seek the advice of independent financial advisors when deemed relevant by the investor. Any products, securities, instruments or strategies discussed in this document may not be suitable for all investors. This document contains information which has been taken from a number of sources. While the information herein is considered to be correct, no representation or warranty can be given on the ultimate accuracy or completeness of such information and investors may use further sources to form a well-informed investment decision. Prospective investors or counterparties should discuss with their professional tax, legal, accounting and other adviser(s) with regards to the potential effect of any investment that they may enter into, including the possible risks and benefits of such investment. Prospective investors or counterparties should also fully understand the potential investment and ascertain that they have made an independent assessment of the appropriateness of such potential investment, based solely on their own intentions and ambitions. Investments in derivative and foreign exchange related transactions may be subject to significant fluctuations which may affect the value of an investment. Investments in Emerging Markets involve a higher element of risk. The value of the investment can greatly fluctuate and cannot be ensured. Investments in equity and debt instruments issued by banks could bear the risk of being subject to the bail-in mechanism (meaning that equity and debt instruments could be written down in order to ensure that most unsecured creditors of an institution bear appropriate losses) as foreseen in EU Directive 2014/59/EU. Nordea Asset Management has decided to bear the cost for research, i.e. such cost is covered by existing fee arrangements (Management-/Administration-Fee). Published and created by the Legal Entities adherent to Nordea Asset Management. The Legal Entities are licensed and supervised by the Financial Supervisory Authority in Sweden and Luxembourg respectively. The Legal Entities’ branches, subsidiaries and representative offices are licensed as well as regulated by their local financial supervisory authority in their respective country of domiciliation. Source (unless otherwise stated): Nordea Investment Funds S.A. Unless otherwise stated, all views expressed are those of the Legal Entities adherent to Nordea Asset Management and any of the Legal Entities’ branches, subsidiaries and representative offices. This document may not be reproduced or circulated without prior permission. Reference to companies or other investments mentioned within this document should not be construed as a recommendation to the investor to buy or sell the same but is included for the purpose of illustration. The level of tax benefits and liabilities will depend on individual circumstances and may be subject to change in the future. © The Legal Entities adherent to Nordea Asset Management and any of the Legal Entities’ branches, subsidiaries and/or representative offices.