Leaders in Pharmaceutical Business Intelligence (LPBI) Group

This is a blog by Kate Schrank, Founder and CEO of Sustainability Partners, Inc. (SPI), Former Corporate Environmental Attorney | ESG Analyst | Strategist | Sustainability Practitioner, and is an example of additional research she completes when a company is identified by Seeking Alpha analysts as appropriate for investment.

Seeking Alpha contributors, and their readers, have recently show interest in Biogen IDEC (NASDAQ:BIIB) as a valuable long-term pick in the biotechnology sector. As an investor, I am interested in companies with a long-term financial performance record, alongside a record of strong environmental, social and governance (ESG) performance on key issues.

I am not alone. The 2015 proxy season includes many shareholder resolutions that raise climate change and greenhouse gas issues for hundreds of companies, especially those with large environmental footprints. Another 2015issue getting some attention is gender diversity on corporate boards. This blog will analyze several key environmental and social metrics for Biogen that support its superior reputation as a corporate sustainability leader.

Companies voluntarily release key environmental, social and governance (ESG) data through annual reports such as the 10K and the sustainability reports. Since 2009, corporate ESG data has been available through the Bloomberg Finance and ESG platform (Bloomberg). Our primary source for the ESG data in this blog is Bloomberg. If a company sees an error in their ESG data, it should contact Bloomberg and get it corrected, as it would with public financial data.

Key Environmental Issues

Investors interested in environmental issues want transparency and accountability on key metrics that help determine corporate preparedness to compete in a low carbon economy, with limited natural resources. Greenhouse gas (GHG) Intensity, Water Intensity, and Energy Intensity, among other metrics, help determine how well a company manages these operational issues. Companies that operate with higher environmental intensities than their peers do raise the question of reduced profitability because of a higher cost of doing business.

Biogen is a company that has for several years consistently disclosed key metrics environmental metrics that address the issues raised above. Table I shows that Biogen is the top ESG discloser (Column 2) compared to top competitors AMGN and CELG.

Table 1: BIIB’s ESG Disclosure Score and Key Environmental Metrics Compared to Top Peers

ESG disclosure scores range between 0 (no disclosure, no transparency) to 100 (full disclosure, transparency and accountability). Biogen is also the top ESG discloser among its 34 Bloomberg Peers who have an average ESG disclosure score of 20.

Table 1 also shows that BIIB’s GHG emissions (thousands of metric tons), energy consumption (thousands of megawatt hours MWh), water use (thousands of cubic meters), and waste (thousands of metric tons) metrics are all below the industry average. Also, Table 1 shows that the environmental footprint of the biotechnology sector is not very large.

Table 2: Key Environmental Intensity Metrics for Biogen Compared to Top Peers

Standing alone, BIIB’s environmental intensity metrics indicate that the company does not have an environmental intensity issue. For this blog, intensity metrics for GHG and water are normalized by sales. According the metrics in Table 2, Biogen emits less GHG and uses less water to produce its products and services, compared to its peers.

For example, Biogen’s GHG intensity metrics are below average for the biotech sector. Biogen’s Total GHG emissions (Column 2), which include Scope 1 and Scope 2 GHG emissions, are low. A company generates Scope 1 GHG emissions on-site, while Scope 2 GHG emissions are generated by the utility that provides electricity to the company. Biogen does not appear to have serious issues with Scope 1 and Scope 2 GHG intensity metrics or Total GHG emissions.

When it comes to water, ESG metrics show the biotechnology sector is more water intensive than it is GHG intensive. Even so, Biogen’s water intensity of 100 is well below the industry average of 424, so Biogen may even enjoy an advantage when it comes to production costs.

Column 6 provides BIIB’s most recently disclosed budget for Biogen’s investment in sustainable operations, which is significant. Biogen stands out as the only company to disclose this metric, and sets the average for its sector.

Further to our analysis, Table 3 show Biogen’s leadership when it comes to gender diversity on the board. Biogen exceeds the industry average of 15% women on the Board by electing 25% women on the board.

Table 3: Key Social Metrics for Biogen Compared to Top Peers

Also, Biogen is the only company to disclose the % of women in management, and it is good to see that 40% of Biogen’s management includes women. These metrics bode well for Biogen achieving parity at the director level, and show Biogen’s commitment to attracting the best and brightest for corporate leadership roles.

Finally, Biogen disclosed its current community investment budget (Column 4) of $710 M, which far exceeds the industry sector average, and stands out compared to Amgen and Celgene. Some investors, especially in the healthcare sector, are looking for companies that invest in stakeholders most effected by company operations, or can benefit from company products and services. In Biogen’s case, the $710 M represents charitable services to the MS patient community, who are among Biogen’s key stakeholders.

Who values this data? Investors seeking long-term investments in maturely positioned companies value the data to identify key environmental, social and governance risks and opportunities. Other stakeholders – such as future and current employees and customers – value ESG data too. If you want a deeper explanation of this megatrend towards corporate disclosures, browse through the several articles on my website.

Disclaimer: The author does not hold a position in any of stocks mentioned in this article, and has no plans to change that position within the next 72 hours.