Animal Testing in the Context of Sustainable Investing

It plays a crucial role in understanding diseases, developing new treatments, and ensuring human safety in clinical trials, providing invaluable data on drug interactions and effects. In many instances, experimentation on animals is a regulatory requirement. Yet, it raises ethical concerns due to the potential for animal suffering, limitations of applying findings across species, and potentially adverse environmental implications. While animal testing contributes to medical advancements and public health, these concerns highlight the need for a careful balance. This piece aims at elucidating our approach to the topic.??

Regulatory Considerations

Animal testing involves using non-human animals in research and development projects to assess the safety, efficacy, or biological mechanisms of products and substances, especially important for a number of medical applications.

The ethical and regulatory landscape for experimentation on animals is markedly varied across geographies, with the European Union setting a high standard through Directive 2010/63/EU. This framework underscores the protection of animals used for scientific purposes, embodying the principles of replacing, reducing, and refining animal testing – the so called 3 Rs. As such, a desire to shift towards animal free drugs is embedded in the EU regulatory framework. Within the United States, the Animal Welfare Act and Regulations (AWAR) serves as the cornerstone of animal welfare in scientific research, setting forth federal standards for treating, housing, and caring for animals across various settings, including laboratories. Regulations on animal testing in parts of Asia, Africa, and Latin America are often less rigorous or enforced less stringently.

At Kieger, we view compliance with local regulatory frameworks as a minimum requirement for animal testing facilities. Given the ethical considerations, our expectation is that such facilities also endeavour to meet more rigorous international standards, irrespective of their operational jurisdiction. As such, an ambition to adhere to ethical guidelines and standards beyond a focus on compliance is pivotal. Important considerations are whether companies engage with globally recognized frameworks reflecting high standards, and whether they place a priority on ethical aspects internally, such as through having relevant expertise, clear accountability mechanisms and related reporting.

Social Impact

Animal testing is for many medical applications mandated by the regulatory authorities. An interesting development we observe, is with the advent of alternative testing methods—such as in vitro models, organ-on-a chip technology, stem cell research and advanced computer simulations—presenting potentially viable avenues to reduce or in the future even eliminate the need for animal experimentation, aligning with the imperative to minimize animal suffering. We follow related innovation developments with a keen interest and expect that investee companies consider their applicability as alternatives to animal testing. While research into many of these alternative methods is encouraging and the advert and acceleration of artificial intelligence hold significant promise for their evolution, there is still a need to further develop these methods in order to phase out animal testing for medical use cases.

The relevance of the chosen animal models, in terms of biological similarity to humans, and the quality of data derived from such tests are also factors important to scrutinize. The reality is that animal testing results do not always replicate in the case of humans. This can be more the case with more advanced drugs, which means that developing alternatives to animal experimentation is needed not only from the point of view of lessening the suffering of test animals, but as a prerequisite to further advance biomedical research and progress research & development and product quality & safety of drugs for human use.

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Environmental Considerations

Environmental stewardship is also an integral part of assessing animal testing practices. The treatment and disposal of biological waste, the long-term sustainability of animal populations, and the accreditation of laboratories under ISO standards such as ISO14001, ISO 9001 and ISO 45001 are crucial considerations. For example, pollution related to animal testing, whether affecting water bodies or soil, is a critical concern, underscoring the necessity for stringent environmental management systems to mitigate related environmental and social risks.

?Kieger's Approach

At Kieger, we have developed, over many years, healthcare investment expertise. Our investment process for building healthcare portfolios places a strong emphasis on innovation that aligns with our values of ambition, dedication, and making a positive impact, purposefully.

Our stance on animal testing is underpinned by a focus on responsibly fostering needed medical innovation, where alternatives are not yet available. Our emphasis is on responsible corporate practices that exhibit a commitment to ethical precepts and consider social, environmental and governance frameworks. With many years of hands on experience in healthcare investing, we have found that such companies are also best positioned to deliver value to patients, defend and grow their market share.?

Written by Panagiota Balfousia, Head Sustainability, and Pietro Visetti, Sustainability Analyst at Kieger