Published: 25/01/2023

One of the top considerations amongst ethical investors, after fossil fuel free, is animal testing. In recent years, the matter has gained greater momentum - spurred on by consumer demand in the marketplace, particularly in the cosmetic and consumer good sectors. Despite the push, Humane Research International estimates that more than 115 million animals worldwide are still subjected to laboratory experiments every year. 

Alternative methods to animal testing have continued to evolve on the back of innovative science and technology capabilities. Companies such as Unilever have been developing non-animal safety assessment processes for its range of products and are sharing their work at scientific conferences and workshops to promote wider adoption amongst peers in the industry. L’Oreal also has a dedicated research team applying in vitro (non-animal) techniques including reconstructed human skin models and predictive evaluation methods such as molecular modelling. Colgate-Palmolive disclosed that since 1999, it had voluntarily declared a worldwide moratorium on all animal tests in relation to its personal care products and its corresponding ingredients. However, the group, along with many other companies who take a similar initiative, have found themselves compromised where the imposition is required by health and regulatory agencies, be it in their own country or to the country the goods are sold to. For example, L’Oreal is required to carry out animal testing for the range of products sold to China.

Animal testing has been illegal in the EU since March 2013. The law extends to ingredients used to manufacture products sold in European Union markets, regardless of the country of origin. Other countries to have taken a similar ban (with degrees of variation) include Australia, Israel, India, New Zealand, Norway, South Korea, Turkey, Taiwan, parts of Brazil, Switzerland and Guatemala and more recently California. In July 2020, Australia banned animal testing on new ingredients used exclusively in cosmetics, but the ban does not apply to household cleaning products even if it uses the same ingredient.

As for medicinal and research purposes, the common conundrum boils down to safety versus cruelty. Proponents argue the experiments are often time-consuming, resource intensive and more importantly, the results from animal testing do not correctly translate to human reaction and may not be a great indicator of drug toxicity on the human body. Instead, advancements in alternative methods such as computer models, 3D cell cultures and tissues offer better precision and relevance. In 2018, a study found that combining non-animal methods to predict skin sensitization worked as well as or better than the standard mouse test. On the other hand, in the battle against time, scientists and research involved in the development of COVID vaccination regarded the data from animal testing as an important component in giving the vaccine manufacturers and regulators the evidence of safety needed to rapidly progress into larger human clinical trials.

At EIS, we often hold this conversation with fund managers who may have investments exposed to this area. We understand that especially in Australia and United States, animal research is governed largely by the ‘three Rs’: to replace animal research with other strategies when feasible, reduce the number of animals used as much as possible, and refine experimental techniques to minimise animal pain. Based on the engagement work, we were informed in addition to animal welfare policies, some companies have voluntarily gone the extra mile to work with regulatory bodies and participate in industry collaboration initiatives to support the development and validation of alternative methods to replace animal testing.

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