Animal testing – a necessary evil?

It’s estimated that 50-100million vertebrate animals are used in experiments every year.

These experiments take place for a variety of reasons, from testing disease treatments to testing cosmetics and household product safety. It can be a painful experience for the animals, and many are euthanised following the experiment.

Animal testing is an emotive and divisive topic. Some believe it can’t be justified under any circumstances. Others argue it can lead to discoveries that save and improve human lives.

In this article, we delve into the subject of animal testing. Why it’s used, what standards are in place to protect animals and the alternatives, before exploring the options for investors.

This article isn’t personal advice. If you're not sure if an investment is right for you, ask for financial advice. All investments can fall as well as rise in value, so you could get back less than you invest.

Pharmaceutical vs non-pharmaceutical animal testing

For many, there’s a big distinction between animal testing used for medical and non-medical purposes. Experiments using live animals have led to the discovery of critical insights into biology and disease.

Insulin therapy for diabetics, penicillin, the polio vaccine, and the Covid vaccines are just some of the medical breakthroughs achieved through animal testing. In fact, research on animals has contributed to almost every medical advance over the last century. And there’s overwhelming scientific consensus worldwide that some animals are still needed to make medical progress.

But what about animal testing that’s not saving lives?

Animal testing of cosmetics products is mostly banned in the UK and the European Union. Since 2013, it’s been illegal to sell cosmetics products that have been newly tested on animals, or that contain ingredients that have been – although, animal testing might still be carried out on some chemicals under specific circumstances. A number of countries outside Europe have adopted similar approaches.

That’s not the case everywhere though. In the US, while a small number of states have banned cosmetic animal testing, it’s still widespread. In China, while some regulations have been changed for ordinary cosmetics, the law still requires certain cosmetic products (like hair dye and sunscreens) are tested on animals before they can be sold to the public.

What standards are in place to protect animals?

The UK has strict laws surrounding animal testing. Permission to work with animals is granted by the Home Office under very specific conditions. There’s an inspection system in place to make sure these rules aren’t violated.

When applying for a licence to carry out animal testing, researchers must carry out a harm-benefit analysis. They must weigh the harm to the animals against the potential benefits to humans. They also need to define the level of suffering animals are likely to experience in each experiment.

The standards to protect animals worldwide vary from country to country. Groups like People for the Ethical Treatment of Animals (PETA) have launched successful international campaigns in recent years, and the standard of animal protection has risen on the whole.

However, there’s still work to do. PETA continues to work with governments across the world to highlight animal testing alternatives and encourage greater protection for animals.

Is animal testing the only option?

There are thousands of products already on the shelves that are made with ingredients that have a long history of safety and don’t require any additional testing. Companies can ensure safety by using those ingredients in their products.

Where testing is required, in many cases, companies can use non-animal alternatives like computer modelling and cell culture-based experiments. These modern alternatives can more closely mimic how humans respond to cosmetic ingredients and products. They’re also often more efficient and cost-effective than animal tests.

In some countries though, regulation hasn’t caught up with technological advancement, and companies are still required to test cosmetic products on animals.

Case study – Unilever

Consumer goods giant Unilever has been pioneering the development of non-animal methods of testing for 40 years.

Occasionally, across Unilever’s portfolio of brands, ingredients they use still have to be animal tested to comply with regulatory requirements in some markets. Some government authorities also test certain products on animals to meet their regulations.

However, Unilever doesn’t agree that animal testing is necessary to make sure products are safe, and the company supports calls for a worldwide ban on animal testing in cosmetics.

They work with non-governmental organisations, regulatory authorities, and suppliers across the world to share their approach, and to promote broader acceptance of testing methods that don’t involve animals.

What are the options for investors?

Lots of people know it’s possible to shop ‘cruelty free’ to avoid products that were tested on animals. But many don’t know it’s possible to reflect your views on animal testing in your investments too.

Avoiding companies with exposure to animal testing is no easy task – a fifth of the companies in the FTSE 100 use it. But there are funds out there that avoid investing in these companies.

They take a variety of different approaches though. It’s important to read the fund documentation before making any investment to be sure the fund manager’s approach aligns with your beliefs and values.

We look at two funds and explain their approach to avoiding companies using animal testing below.

Investing in funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a long-term diversified portfolio.

Aegon Ethical Equity

Audrey Ryan has managed the Aegon Ethical Equity fund for 20 years. She aims to identify and understand the key environmental, social and governance risks of each company, industry and sector she invests in. She believes companies that lead the way in governance and sustainability tend to outperform over the long run.

The fund uses a strict exclusions-based approach. It won’t invest in companies involved in activities deemed unethical, from tobacco and alcohol producers to munitions manufacturers and banks with significant exposure to third-world debt.

The fund also avoids companies that provide animal testing services, or that sell animal-tested cosmetics, household products or pharmaceuticals.

The fund applies a number of other animal-related exclusions, like companies involved in intensive farming, companies that operate abattoirs or slaughterhouses and companies that sell meat, poultry, fish, dairy or slaughterhouse by-products.

Investors should note the fund’s investments in smaller companies add risk. The fund also invests in Hargreaves Lansdown plc.

More on Aegon Ethical Equity, including charges

Aegon Ethical Equity Key Investor Information

Janus Henderson UK Responsible Income

The Janus Henderson UK Responsible Income fund aims to give a good level of income, alongside capital growth over the long term. Andrew Jones has been at the helm since January 2012 and has over 20 years’ experience managing UK Equity Income funds.

His investment process starts with a screen which excludes companies involved in areas some investors consider unethical. He also excludes companies that aren’t compliant with the UN Global Compact (a United Nations pact on human rights, labour, the environment and anti-corruption).

The fund doesn’t invest in companies that make vitamins, cosmetics, soaps or toiletries, unless it’s clear their products and ingredients aren’t animal tested. The fund will invest in companies that use animal testing for medical purposes if the company is committed to demonstrating best practice in line with a set of guiding principles called the ‘Three Rs’:

Refine experiments to ensure suffering is minimised

Reduce the number of animals to a minimum

Replace animals with alternative techniques where possible

Investors should note the manager’s flexibility to invest in smaller companies adds risk. The fund also takes charges from capital which can increase the income but reduce the potential for capital returns.

More on Janus Henderson UK Responsible Income, including charges

Janus Henderson UK Responsible Income Key Investor Information

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Our fund research is for investors who understand the risks of investing and that investing in funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.