A €3 trillion investor coalition led by Achmea has asked Covid-19 vaccine manufacturers to link executive pay to increased availability of vaccines across the globe.
In brief
- 65 leading institutional investors have sent letters to the main vaccine manufacturers demanding greater vaccine equity
- They specifically target the remuneration policy of managers and directors
- The coalition backs WHO guidelines and identifies Africa as a particular area of concern
- Broader issues at play beyond Covid are preparedness for future pandemics and addressing pharmaceutical companies’ social impact
More than 65 asset managers led by Achmea are pressurising the four main vaccine producers – Pfizer (BioNTech), Moderna, Johnson & Johnson, and Astra Zeneca – demanding greater vaccine equity.
Frank Wagemans, senior engagement specialist at Achmea told Impact Investor that “vaccine equity is a huge issue and the most important way for us to get onto a path towards that is to bring executive remuneration into play”.
He added: “If you work for a pharmaceutical company and you know that your board of directors’ remuneration is tied to the issue of vaccine equity, then you know that your leaders have skin in the game, and that this is a very real commitment.”
“Vaccine equity is a huge issue and the most important way for us to get onto a path towards that is to bring executive remuneration into play.”
Achmea is taking a leadership role in the coalition. “We have a particular interest in the health sector given that many of our clients are pension funds from that sector. The examples of vaccine nationalism we have seen around the world by many first-world companies and their governments is something that we wish to eradicate.”
The group of investors has concluded that vaccination rates in less developed countries are still too low and further steps by pharmaceutical companies and governments are needed. In particular, Wagemans says, “Africa is the continent where vaccine equity has been most absent”.
This is certainly borne out by the data comparing vaccination rates globally. Whilst 74% of Americans and 73% of EU citizens have received at least one dose, that number is only 15% for Africans. Some countries’ rates are particularly low – Nigeria 5.1%, Tanzania 3.4%, and the Democratic Republic of Congo (DRC) 0.29%.
However, the pharmaceutical companies outline their own significant distributions of doses to developing countries “at cost”.
The numbers vary between companies. Moderna has pledged 650 million doses and Pfizer over one billion. J & J has committed to providing 500 million doses, and a further 900 million to the African Union in 2022. Astra Zeneca says it has delivered 145 million doses to COVAX (the equitable vaccine initiative) and that over a billion doses have been given in India.
Wagemans adds: “We accept that some companies have been more generous in the distribution of vaccines at cost to the developing markets. They certainly should welcome this tying of executive remuneration to such behaviours given that they’re already doing it.”
Covid in Africa
The African situation is complex. A group of scientists writing in the PLOS open science journal point out that “many African countries have been spared the scale of mortality seen in Europe and North America”.
Despite the low vaccine rates cited earlier, official death rates show this clearly. While the USA has had 2587 deaths per million, Belgium 2446 and Italy 2313, by contrast Nigeria has had only 14, the DRC 13 and Tanzania 12.
Writing in Science, Justin Maeda and John Nkengasong refer to ‘the puzzle of the COVID-19 pandemic in Africa‘. “Many African countries appear to have benefited from factors such as quick intervention on the part of governments, a comparatively young population, warmer climate, widespread adherence to infection control measures, and higher barriers to movement,” they write.
Certainly, demographics would appear to be a vital factor in this age-related pandemic. According to Statista the median age of Africans is just twenty and an extraordinarily high percentage, 40%, is under 15.
By contrast, according to The World Bank in sub-Saharan Africa the demographic most at risk, the over 65s, is a mere 3% of the population, while in Europe it is 20.6% according to Eurostat.
WHO guidelines
For the investor coalition “access to affordable vaccination around the world is vital to combatting the pandemic from both the humanitarian and economic viewpoints”. They are calling on pharmaceutical companies to make the vaccination targets set up by the World Health Organisation (WHO) part of their remuneration policy.
Wagemans says: “We believe WHO guidelines are very important, particularly when it comes to achieving equitable and transparent distribution. Pharmaceutical companies have generally struggled in this regard.”
The WHO guidelines seek to “provide full transparency on production and manufacturing schedules and the planned and actual distribution of Covid-19 vaccines to low-income countries” and to “commit to sharing know-how, licensing and production facilities”.
“We do not accept the arguments from pharmaceutical companies that a focus on vaccine equity means endangering intellectual property rights for shareholders.
Calls to waive intellectual property rights are controversial. When they first appeared last May, Pfizer’s CEO Dr Albert Bourla released an open letter which stated categorically that such a waiver would not improve the supply situation but would instead create more problems.
At the time, Bourla explained “that waiving of patent protection will disincentivise anyone else from taking a big risk. We deployed $2 billion before we knew whether we could successfully develop a vaccine”.
He also worried about “the thousands of small biotech innovators that are totally dependent on accessing capital from investors who invest only on the premise that their intellectual property will be protected”.
Wagemans disagrees. “We do not accept the arguments from pharmaceutical companies that a focus on vaccine equity means endangering intellectual property rights for shareholders. We are sure that licensing will enable them to protect those rights and maximise their commercial opportunities.”
“Part of a broader framework”
Wagemans continues: “It may be that the outcome of this pandemic in Africa has been more benign than we first thought, we certainly didn’t know how this pandemic would progress.
“However, we are seeking to establish a framework for the future and one where Africa will have better access to any future vaccines in any future pandemic. We want to establish strong supply chains and sufficient distribution for all peoples in the developing world.”
This, he adds, “is part of a broader strategy for us to seek a greater focus on social impact by pharmaceutical companies”.
This view is shared by another major member of the alliance. Sophie Deleuze, head of stewardship and engagement at Candriam says: “As a responsible investor, our investment decisions should lead to sustainable benefits/positive impacts for society in general. We think big pharma has a duty to step up its efforts.”
Companies, she added, should “boost their research efforts, communicate on their anti-corruption efforts and measure the impact of their access initiatives”.
Deleuze very much supports the focus on executive remuneration. “For too long, management incentives schemes have incentivised behaviours that only benefited shareholders, and not the broader interests of society.”
And Wagemans adds: “This is not ‘a fire and forget’ strategy with companies. As a group of investment companies, we wanted to put a marker down ahead of the AGM season. In terms of our own company, we will definitely follow this through in voting against boards who will not accept this policy.”
