What a welfare audit actually inspects

The fifth principle of the Ethical Technology Charter states that animal and biological welfare standards travel with the capital into every life-science position. A principle stated in a charter is a sentence. An audit is what converts it into a finding with a date attached and a consequence behind it. The programme has run since 2024 from Eagle Street House in Brisbane, where the biological-industries specialists sit, and it is sponsored by an independent director of the Board whose career was spent in pharmaceutical regulatory affairs.

Nineteen of the group positions carried biological exposure at 31 March 2025: animal health and veterinary biologics, aquaculture and marine, agri-science, and the two pharmaceutical positions that use animal-derived inputs. Scope follows the activity rather than the sector label. A specialty materials producer that renders animal by-product is inside the programme. A veterinary software position that never touches a live animal is outside it. The register is reviewed at each Investment Committee meeting and moves as positions are entered and realised.

An audit inspects housing, handling, transport, stocking density, veterinary oversight and the records that evidence each of them. Transport is where the standard is most often missed, because it sits between two sets of records and is usually performed by a third party under a short contract. Of the 83 findings raised in the year to 31 March 2025, 29 concerned transport, and 22 of those 29 arose at sites a portfolio company uses under contract rather than owns.

Contract sites are the point of the programme. A portfolio company controls its own premises and can present them well. It rents the rest of its capacity, and a welfare standard that stops at the boundary of ownership stops before the risk does. Twenty-six site audits were completed in the year, nine of them at contract sites and four of them unannounced. The unannounced element is fixed at one audit in five and is not open to negotiation in a facility agreement.

Findings are graded one to four. Grades one and two are recorded and closed at the site. A grade three goes to the Investment Committee with a written remediation plan and a date. A grade four stops a drawing or a follow-on investment until it is closed. Two grade-four findings were raised in the year, both at contract sites, and they were closed in 21 and 34 days. One of them held a follow-on investment of US$7 million for five weeks.

The programme completes its first full pass in 2026, by which point every biological position will have been audited at least once. From 2027 it runs annually as ordinary business under the Animal and Biological Welfare in Investment policy, paid for from the compliance budget rather than from a programme line. Results go to the Ethics and Technology Council and to the Investment Committee each year. A position that cannot meet the standard is not held at a discount. It is sold.

Published 2025-05-13 by the Private Equity division. Research is prepared for eligible counterparties and does not constitute advice.