Wednesday, 8 August 2007

Indian ruling against Novartis: Victory for public health

This week’s verdict by an Indian court against the Swiss pharmaceutical giant Novartis is an important victory for global public health, according to aid agencies CARE International and Oxfam International, and the church-based advocacy network, the Ecumenical Advocacy Alliance. The decision will protect India’s special role as the world’s leading provider of affordable medicines to the poor. The agencies welcome Novartis’s response that it is unlikely to appeal the ruling. Novartis had challenged a law that allows India to refuse a patent for an existing medicine when it had been modified only slightly.

Novartis and the pharmaceutical industry have been given a clear message to respect developing countries’ legal right to use the World Trade Organization TRIPS (trade-related intellectual property) safeguards to strike the right balance between protecting public health and intellectual property, the agencies said. The right of all WTO members to use the flexibilities and safeguards in the TRIPS Agreement to promote “access to medicines for all” was confirmed in 2001 (the Doha Declaration). Since then, however, rich countries and big pharmaceutical companies have sought to prevent or limit their use by developing countries, endangering the well-being of poor patients everywhere.

India – known as the ‘pharmacy of the developing world’ due to its massive generic drug production industry – supplies most of the world’s affordable generics to developing countries where patented medicines are priced out of most people’s reach. More than two-thirds of generic medicines exported from India are sold in developing countries at a fraction of the cost of patented brand medicines.

This week’s ruling comes at a time when patentability criteria are under examination in other countries as well, for instance the United States. Recognizing that patentability criteria which lead to the granting of frivolous patents can hinder innovation and access to new products rather than promote it, the US Supreme Court has recently ruled in favour of stricter criteria. – The provision in Indian law under challenge by Novartis constitutes an important public health safeguard in TRIPS. Developing countries should be commended for using this and other safeguards to promote access to affordable medicines for their populations. Recent examples include the issuance of compulsory licenses by Brazil and Thailand, and the introduction of a new, pro-health intellectual property law in the Philippines.

Tuesday, 7 August 2007

Banks, pulp and people: The social and environmental impacts of the pulp industry

Over the next five years, the global pulp industry is planning to increase its production capacity by more than 25m t. This capacity increase is unprecedented and would mean a five-fold increase, when compared to the growth rates of the last decade. More importantly, it would mean a dramatic increase in the problems that the pulp sector is already causing for people and the environment in producer countries. “Pulp mills and the industrial tree plantations that feed them have become increasingly controversial”, says Chris Lang, the author of a new report, Banks, Pulp and People – A Primer on Upcoming International Pulp Projects. The vast areas of monocultures required to feed modern mills have severe impacts on biodiversity, forests, water, land rights and livelihoods. And pulp mills themselves are among the most polluting industrial facilities, with grave consequences for the health of local communities and river ecosystems.

Lang, who studied Forestry at Oxford University, has been analyzing the pulp sector for over 15 years. His study gives an overview of the industry’s expansion plans and provides information on individual projects in the pipeline. The bulk of new expansions are slated to take place in only a few countries: Uruguay, Brazil, Indonesia, Australia, China and Russia. “The aim of our report is to inform financial institutions about the impacts and risks of upcoming pulp investments before decisions are made and contracts are signed”, says Heffa Schücking, director of the German environment and human-rights organization Urgewald, the report’s publisher.

“Pulp mills are extremely capital intensive”, says Schücking. “As such the financiers of pulp mills play an important role in deciding which mills get built and where. One only needs to look at countries like Indonesia, to see that financial institutions have yet to begin taking their responsibilities seriously.” In order to hold the financiers of the pulp industry accountable, Urgewald has also set up a new website, It documents the problems caused by the pulp industry's operations and informs the public, financiers and decision makers regularly about upcoming problematic projects.

Thursday, 2 August 2007

Royal Bank of Scotland: Profits threatened by fossil fuel financing

As the Royal Bank of Scotland (RBS) prepares to announce its interim 6-month profits on Friday, NGOs such as Friends of the Earth and People & Planet warn that the bank’s financing of oil & gas projects may threaten current & future profit margins. Calculations indicate that the bank is carrying unaccounted for current carbon liabilities of up to almost £1 billion, over 20% of the bank’s interim profits. According to a study, in 2006, RBS’ estimated embedded emissions resulting from loans to oil & gas extraction totaled over 43.7 million tonnes carbon dioxide. If costed according to a social price calculated by Sir Nicholas Stern, these carbon liabilities add up to £940m over six months - equivalent to over 20% of RBS’ expected interim profits. Even at the EU’s carbon trading figure – generally recognised as lower than the real cost of carbon, due to overly generous permit allocations - internalising these costs would set RBS back £598m per year.

The bank’s forays into conflict areas bring further risks. RBS is working to source financing for a $6bn gas project in the Niger Delta involving Shell. The Olokola LNG project threatens to displace local communities and cause conflict. The largest rebel group in the Niger Delta, the Movement for the Emancipation of the Niger Delta, has threatened, “It is inconceivable that … they can be protected from our ability to sabotage the Olokola facility. We will test the integrity of that protective measure.”

RBS’ insurance divisions have been particularly hard hit by the recent extreme weather events and floods that hit England, widely associated with climate change, could bring £300 million of claims to Direct Line & Churchill, through which RBS controls 16% of the home loans market. Mika Minio-Paluello from Platform said “Unless the bank begins to recognise its climate responsibility and take its carbon liabilities seriously, shareholders may be in for a revenue shock in the future. On its current course, RBS faces a double whammy – greater insurance losses as a result of climate change; and higher costs should Governments impose financial charges to reduce climate changing emissions.”