It may surprise you to learn that, rather than eschewing companies that carry out animal testing, by investing in them instead, you can actually help to promote strict and thorough animal welfare practices in the pharmaceutical industry.

The pharmaceutical industry currently represents tremendous opportunity for improvement in animal welfare practices. By identifying those companies with robust environmental, social, and governance policies in industries with direct exposure to animals, investment opportunities can be created that affect significant positive change.

This investment approach, commonly referred to as impact investing, enables you to use your money to support causes that matter to you. And it’s growing evermore popular, especially with young professionals. A recent report noted that 84 percent of millennials are keenly focused on aligning their values and the environmental, social, and governance impacts of their investments.

Here at Karner Blue Capital, our investment strategies do not avoid exposure to companies with animal involvement – to the contrary, we actively seek investment in companies that maintain best-in-class policies and practices related to animal welfare and actively engage with industry laggards to improve their standards. Because together, we CAN make a change.

“Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.”
Margaret Mead

ANIMAL WELFARE IN BIG PHARMA
Domestically and abroad, government mandates require animal testing in the pharmaceutical pipeline to establish a presumption of product safety. In the US, the EPA and FDA set standards for animal use in the development of drugs, vaccines, biologics, chemical and pesticides, and some medical devices.

In 1966, the US established The Animal Welfare Act (AWA), which set specific requirements for the treatment, handling, and monitoring of animals that are subject of tests conducted by internal and third party contract labs. The ensuing development of a regulatory framework for the complex network of modern research facilities, including ubiquitous contract laboratories, has afforded some vulnerable research animals certain minimum safeguards.

The USDA is tasked with oversight of the AWA, which applies to all ‘regulated’ animals in any US research facility. Notable, birds, rats and mice do not fall under the purview of this regulation representing approximately 95% of animals tested. Under the AWA, the USDA enforces relevant regulations via routine and unannounced audits of all registered research facilities. Results of these audits are made available to the public via the USDA’s Animal and Plant Health Inspection Service’s public search tool.

Research laboratories are also monitored by a handful of stakeholders, which play an important role in the animal testing ecosystem. One key component of the AWA is that each institution that engages in federally funded animal research must establish an Institutional Animal Care and Use Committee (IACUC), which is responsible for the oversight and monitoring of all animal testing conducted at that institution.

Furthermore, some pharma companies hire third-party accreditors such as The Association for Assessment and Accreditation of Laboratory Animal Care (AAALAC). Third-party laboratory accreditation generally signals to stakeholders a strong commitment to the ethical treatment of animals.

STRIVING TO INVOKE CHANGE
Within the activist community, however, the merits of AAALAC accreditation have been heavily debated with some observing that third-party accreditation may not always improve compliance with animal welfare policies. In fact, there is some evidence that AAALAC certified labs have a higher instance of animal related non-compliance than non-certified labs.

Although imperfect, AAALAC certification is used by Karner Blue Capital as one indicator of better animal welfare practices. To responsible investors, AAALAC accreditation is still a good indicator in third-party laboratory monitoring. The AAALAC seal of approval signals to stakeholders a dedication to a consistent baseline standard of care and an overall commitment to transparency throughout a company’s business operations.

We also recognize, the importance of consistently striving to move beyond these baseline standards and believe that there are many opportunities to significantly improve animal welfare standards throughout the pharmaceutical industry. By engaging in direct company advocacy, pressing for legislative and regulatory change, and raising consumer awareness, Karner Blue Capital intends to lead the investor community in its efforts to enhance animal welfare generally and in the pharmaceutical industry specifically.

Compassionate investors have the power to drive social change because business, society, and the environment are so inherently intertwined.

The Karner Blue Capital Animal Welfare and Animal Guardianship Strategies are designed to facilitate animal welfare reform by investing in businesses that have direct relationships with animals in the scope of their business operations, including animals in farming and laboratory animals used in research.
These Strategies provide clients with investment exposure to companies that exhibit leadership in their animal welfare policies and practices and ultimately serve as trusted allies in the replacement of animal testing with alternative methods.

THE FUTURE LOOKS BRIGHT
The development of alternatives to animal testing is one area that is ripe for innovation. In fact, there is reason to believe that animal studies may not be particularly good predictors of how drugs will affect humans.
Over the past year, a research team at Johns Hopkins has been working to compare standard animal tests with more modern scientific testing methods, including human cells or computer models.

Emerging technologies, such as “tissue on a chip” could hold the key to improving animal welfare by significantly reducing the need for animal studies while also improving the safety of the medicines that are available to all of us.

Although pharmaceutical companies do not currently have any way to fully replicate the impact of a drug on a complete living system, their adoption of new technologies over time hold the promise for better outcomes for both animals and humans.

If you are interested in investment opportunities that can help animal welfare, view our compassionate investing strategies here.

Wayne Pacelle, author of The Humane Economy: How Innovators and Enlightened Consumers Are Transforming the Lives of Animals, is president of The Center and founder of Animal Wellness Action.