Introduction
Novo Nordisk has a governance structure in place that oversees the company’s sustainability-driven initiatives. Dedicated committees, chaired by a representative of the executive management are charged with the overall responsibility for areas such as people, environment, bioethics, occupational health & safety and global health.
Besides the disclosure of the typical GRI management approaches, we have included disclosure of how we manage our Triple Bottom Line and risk management.
See management approach for specific areas below.
TBL Management
Organisation
Since TBL is part of how we make decisions, the various parts of the TBL are managed through dedicated committees under the Executive Management such as Environment, Bioethics and Occupational Health & Safety Committee (EBOC) and Health Policy Committee.
A number of cross-organisational boards work with each their parts of our Triple Bottom Line performance. These include Global People Board, External Affairs Board, and R&D Bioethics Board. The boards all have a direct link to an Executive Vice President.
Once a year Executive Management presents a strategic review for the company’s TBL performance and progress by the Board of Directors.
In addition to the board and committees, a TBL Leadership Forum has been created. The Forum is a body with a crosscutting remit spanning TBL performance, including the economic dimension of sustainability, with an aim to secure implementation and development of Novo Nordisk’s TBL strategy. The forum has a direct link to Lise Kingo, executive vice president and chief of staffs.
Policy
The Forum is responsible for oversight of strategy and performance and compliance in relation to the Novo Nordisk Way, and in particular the commitment to the Triple Bottom Line. This entails adherence to the UN Global Compact and other voluntary commitments to standards and practices related to sustainable development.
Goals
The mandate of the TBL Leadership Forum is to
- Identify, discuss and review TBL-related risks and opportunities, and implement or recommend responses
- Assess performance progress against long-term goals and annual targets for TBL-performance and sustainability impact
- Conduct annual reviews of programmes, informed by benchmarks and analysis
- Provide input and challenges to the TBL-strategy for Novo Nordisk
The Chair of the TBL Leadership Forum conveys conclusions and decisions to the TBL Management Steering Committee for endorsement and, if required, resolution.
The mandate of the Steering Committee is to:
- Oversee that all TBL-related areas are managed in accordance with the Novo Nordisk Way and specific policies
- Ensure that a comprehensive, updated TBL strategy of the company is in place and that implementation of actions is anchored with relevant line management
- Approve prioritised TBL issues, identified by Global TBL Management and developed/managed by Global TBL Management and relevant organisational units
- Oversee (approve or initiate) Novo Nordisk responses to trends and emerging issues, identified by Global TBL Management and prioritised by TBL Leadership Forum
- Monitor progress against long-term goals and annual targets for TBL performance and sustainability impact
- Conduct yearly strategic review of Novo Nordisk’s performance, informed by benchmarks, stakeholder views and trend analyses.
Monitoring
Sustainability is a moving target. Understanding the dynamics of society and the business environment that can enhance or impede corporate growth helps identify risks and opportunities for the company as a commercial business and as a corporate citizen. Such insights are gained via trendspotting, scenario analyses and forecasting in a 10-year perspective as part of the Strategic Planning Process.
This translates into medium- and short-term priorities and targets for the company’s financial and non-financial performance. Novo Nordisk has adopted the Balanced Scorecard as the company-wide management tool for measuring progress. As part of the remuneration package, individuals are rewarded for performance that meets or exceeds the financial and non-financial targets in the Balanced Scorecard, which comprise corporate, unit-specific and individual targets.
Progress is tracked against targets in the annual accounts. Financial performance is guided by a set of four long-term targets focusing on growth, profitability, financial return and cash generation. Non-financial performance is guided by measures for the company’s impacts on the Triple Bottom Line. These include socioeconomic impacts such as job creation, the ability to manage environmental impacts and optimise resource efficiency, and social impacts related to employees, patients and communities.
The TBL Leadership Forum serves as the formal body to which the strategic unit, Global TBL Management, reports progress. Monitoring includes:
- Quarterly trend and issue analyses
- Consolidated inputs to the quarterly and annual risk reporting
- Annual update of the long-term TBL strategy
- Support to the line of business on TBL implementation
- Input to the annual strategic planning process
- Production of ‘business case’ argumentation
- Quarterly and annual TBL performance reports for senior/executive management and board
- External TBL reporting, incl. development of targets and KPIs
- Annual review of stakeholder engagements.
Environment
Organisation
The Environment, Bioethics & OH&S Committee (EBOC) is the company’s highest authority with regard to environmental, bioethical and occupational health & safety issues. The committee works on behalf of Executive Management to ensure that Novo Nordisk’s interests and needs regarding EBOC issues are met, and that Novo Nordisk is in compliance with the charter of the Novo Group. The committee includes two members of Executive Management: Chief of Staffs (Chair) and the Chief Science Officer.
Policy
The committee is responsible for oversight of strategy, performance and compliance in relation to the Environmental Policy, Bioethics Policy and the Occupational Health & Safety Policy. The policy Novo Nordisk Way commits the company to subscribe to the International Chamber of Commerce’s Business Charter for Sustainable Development, and to support the United Nations Convention on Biological Diversity. Novo Nordisk also subscribes to the UN Global Compact.
Goals
The Novo Nordisk environmental and Occupational Health & Safety-strategy is supported by a Strategy and Action Plan providing specific actions to be undertaken 2009–2011 to address these focus areas:
- Energy
- Water
- Waste
- CO2 emissions from cooling agents
- Occupational injuries
- Ergonomics
In addition, environmental aspects and impacts of operations such as resource consumption, waste and emissions are managed as part of ISO 14001 activities. Novo Nordisk has adopted a climate strategy for the company worldwide, in which we have committed to reducing total CO2 emissions in 2014 to 10% below the 2004 level.
Monitoring
For a number of years, we have been reporting on Eco Intensity Ratio (EIR) as a top-level indicator for monitoring of resource efficiency within water and energy. This year the four EIR indicators have been removed as they will no linger be part of the internal follow-up of efficiency. This is partly due to the fact that the indicators are unsuitable for the purposes they were intended for and therefore do not make sense in the day-to-day initiatives at the production sites.
These targets and thereby the reporting on quantity will be reported as part of the corporate Balanced Scorecard, Novo Nordisk’s company-wide management tool for measuring progress. Performance against Balanced Scorecard targets is linked to remuneration.
See more information in the section Environmental strategy.
Labour
Organisation
Labour issues are overseen by the People Board, which is responsible for overseeing strategy, performance and compliance in relation to the People Policy and the Health and Safety Policy. Both policies are part of the Novo Nordisk Way. The board’s mandate includes responsibility for:
- Labour relations
- Human rights (employees)
- Diversity and equal opportunities
- Occupational health and safety
- Training and education
- Employment.
The board is chaired by the executive vice president and chief of staffs, and consists of senior People & Organisation (human resources) professionals representing key geographies and functions in the company. Occupational health and safety (OH&S) is also subject to oversight by the Environment, Bioethics & OH&S Committee. See also the environmental management approach disclosure above.
Policy
The Novo Nordisk Way defines the overarching policy framework, in terms of business conduct, business in general, and specifically in terms of the management of labour issues (including its support for the Universal Declaration of Human Rights):
Goals
Novo Nordisk’s overall labour-related goals are defined in the People Strategy, which has been developed based on business needs and challenges throughout Novo Nordisk. The strategy is guided by the Vision, People Policy and the Triple Bottom Line approach that all stress the critical importance of people in Novo Nordisk. At the global level, the primary focus of Novo Nordisk’s human resources management, as defined in the People Strategy, ensures that key capabilities are built and maintained within the company. These include recruitment; talent development; performance management; reward & mobility; and organisational design. Responsibility for defining and achieving specific performance goals are developed for regions and affiliates in order to ensure the local country context.
Global health and safety targets have been set annually since 2003 in order to reduce the number of accidents. In 2006 a global OHS Management System based on OHSAS 18001 came into force as a Novo Nordisk quality assurance document. The system is mandatory for the entire Danish organisation as well as for R&D, and production facilities worldwide.
Since 2008, we have been working on implementing global governance on OH&S by developing global OH&S standards and processes and to improve the data collection to monitor the global OH&S performance. This work will continue in 2011.
Furthermore our production sites have framed an ambitious plan to reduce ergonomic strain and to reduce the severity rate of occupational injuries in the coming years.
Monitoring
Novo Nordisk has monitored global OHS performance annually since 2003. During the second half of 2007, OHS internal audits were initiated to measure compliance with the management system. The outcome so far is positive and has improved the focus on OHS management. Responsibility for monitoring performance on other labour related issues is devolved to regions and affiliates. Global OH&S standards and processes (OHSAS 18001) are implemented at all production sites in Novo Nordisk.
Human rights
Organisation
Human rights issues are overseen by the following bodies within Novo Nordisk:
- Human rights generally: in view of the cross-cutting nature of human rights, responsibility for human rights at an overall level is anchored in the TBL Leadership Forum, with an aim to secure implementation and development of Novo Nordisk’s TBL strategy. See Triple Bottom Line Management approach disclosure above.
- Employees’ human rights: responsibility for oversight of these issues is anchored in the People Board. See Labour management approach disclosure above for more information on the People Board.
- Human rights in the supply chain: are subject to oversight by the Procurement Committee.
Policy
The Novo Nordisk Way sets the tone both specifically in its support for the Universal Declaration of Human Rights (UDHR) and generally in the way that it sets out how Novo Nordisk should conduct business. It also includes the Fundamental that ‘Every manager must establish and maintain procedures in the unit for living up to relevant laws, regulations, and group commitments’, which obliges managers to consider how they fulfil Novo Nordisk’s human rights commitment in their own sphere of business activity.
Many aspects of human rights are embedded in different parts of the business, eg equal opportunities, occupational health, trade union liaison etc within the human resources function, intellectual property-related issues in Corporate Patents, and access to health issues.
Goals
Beyond our donations to the World Diabetes Foundation, our approach to expanding access builds on the right to health and aligns with the UN Millennium Development Goals (MDG), which offers a common vision for tackling some of the major challenges facing the world by 2015.
Over the next decade, our emphasis will be on areas selected because of their ability to have an impact on current and future generations, with a long-term impact consistent with our role as a sustainable business. Our areas of emphasis support three of the UN Millennium Development Goals.
- treating children with type 1 diabetes
- confronting diabetes in pregnancy
- building partnerships and capacity through donations to support World Diabetes Foundation and differential pricing
For more information see Access to health.
Monitoring
- Facilitation (see the section Novo Nordisk Way) is a specific follow-up method that is unique to companies in the Novo Group. It is used to provide systematic and validated documentation of the levels of compliance with all aspects of the Novo Nordisk Way, including the human rights commitment.
- Access to health: Each year Novo Nordisk measures and reports: how many Least Developed Countries purchase insulin sold under the differential pricing policy; how many activities have been conducted; and how many healthcare professionals and people with diabetes have received training as a result of World Partnership Programme initiatives.
- Our Responsible Sourcing programme (see the section Supply chain) works to ensure that human rights are systematically integrated into purchasing decisions. All purchasers are trained in human rights and associated ILO Convention requirements that form the basis of the programme’s standards. How well the standards are met is assessed through audits, with a focus on suppliers in countries with known challenges in working conditions. Human rights included in the Responsible Sourcing programme concern: wages and benefits, working hours, health & safety, child labour, forced labour, discrimination, disciplinary measures, and privacy.
Society
Organisation
- The Business Ethics Steering Committee is the formal body for driving the preparation of the Business Ethics Policy and procedures as well as outlining the implementation programme. It is a cross-functional group with representatives from across the business, chaired by the executive vice president and chief of staffs. The committee addresses business ethics in the context of all aspects of the business, including R&D, production, sales and marketing, sourcing and public policy engagement.
- A Business Ethics Compliance office in Headquarters supports and monitors the company’s Business Ethics Policy and Procedures and manages training covering anticorruption, conflicts of interest, promotion of pharmaceutical products, and interaction with healthcare professionals, suppliers and intermediaries.
- The External Affairs Board coordinates and aligns global public policy engagement activities in terms of strategic direction and ethical conduct.
- The TBL Leadership Forum is a body with a cross-cutting remit spanning all Triple Bottom Line (TBL) issues, aiming to secure implementation and development of Novo Nordisk’s TBL strategy.
Policy
Our Business Ethics Policy sets direction and states that bribery and corruption are unacceptable. It also commits Novo Nordisk to adhere to the principles of the UN Convention against Corruption. It is backed by three procedures for ethical business conduct.
Goals
The Business Ethics Compliance Programme is anchored in the Balanced Scorecard, against which individual managers’ performance is measured. Goals focus on training, implementation of and adherence to procedures.
Monitoring
Monitoring progress and continued development of the programme ensures that it is responsive to the most relevant and pressing concerns as viewed by Novo Nordisk and its stakeholders.
Compliance is assured by Group Internal Audit, which conducts reviews of business units worldwide.
See Public affairs and Business ethics sections for more information.
Product responsibility
Organisation
Pharmacovigilance is the science and activities relating to detection, assessment, understanding and prevention of adverse effects or any other drug-related problem. At Novo Nordisk, the chief responsibility for pharmacovigilance within the company is undertaken by International Product Safety (IPS), whose responsibilities include involvement in any emerging drug safety-related concern; provision to authorities of safety information; and review of safety reports, new safety information and complaints.
The vice president of IPS reports to the senior vice president of Quality. IPS is organised according to three key processes:
- Customer complaint handling
- Safety case handling
- Safety surveillance.
In order to be in compliance with procedures for handling adverse events and safety information, Novo Nordisk has several Safety Committees that review safety of specific products. In order to protect the safety of clinical trial participants, Novo Nordisk may initiate external independent Data Monitoring Committees.
The global regulatory affairs function obtains and maintains the market authorisations for all products and is responsible for all product labelling.
Goals
Ensuring patient safety is one of the most important commitments a pharmaceutical company makes in the delivery of its products and devices. It is also an aspect of company activities which is highly regulated. Novo Nordisk has long had policies and processes and a comprehensive Quality system in place to minimise any safety risks connected with the use of its products and devices. The Quality Mindset is one of the fundamental management principles in the Novo Nordisk Way: “Everyone must continuously improve the quality of their work.”
Policy
Novo Nordisk has long had policies and processes and a comprehensive Quality system in place to minimise any safety risks connected with the use of the company’s products and devices. It is our policy to take early contact with authorities and to be proactive in addressing any safety issues that arise. We strive to be open and transparent in our communication about the safety of our products. In adhering to high standards in both the manufacturing of products and their safe use by patients, Novo Nordisk is overall in high compliance with regulatory demands, as reflected by the outcomes of recent inspections.
Novo Nordisk subscribes to the WHO Ethical Criteria for Medicinal Drug Promotion. Furthermore, the company’s policies and procedures are in accordance with the principles of industry codes of practices, such as the PhRMA, EFPIA, IFPMA, JPMA marketing codes. Novo Nordisk does not have specific policies regarding consumer privacy.
Monitoring
Novo Nordisk has procedures, systems and processes in place to ensure that safety information on all serious adverse events is entered into a global Novo Nordisk safety database. This activity comes under the broad heading of pharmacovigilance.
This work is supported by hundreds of people throughout the Novo Nordisk organisation. Subsidiaries in the local markets are required to report serious adverse events within 48 hours and non-serious adverse events on a weekly basis, unless otherwise agreed.
The vice president of IPS reports to the senior vice president of Quality.
Information about adverse events can come from a range of sources, including spontaneous reports from healthcare professionals and patients; post-marketing or observational studies; investigators who submit reports about ongoing clinical studies; regulatory authorities; medical and scientific literature; and the media. All such information is entered into the Novo Nordisk global safety database. The information is used to analyse, monitor and report on the safety of all our products to regulatory authorities.
Safety Committees
In order to be in compliance with procedures for handling adverse events and safety information, Novo Nordisk has several Safety Committees that review safety of specific products. For marketed products, members consist of representatives from the relevant safety surveillance department, global development, marketing and regulatory affairs, with ad hoc attendance from other relevant areas.
These are responsible for reviewing:
- The results of non-clinical studies in pre-clinical development
- The results of ongoing safety surveillance managed by IPS on Novo Nordisk’s products and devices
- Any safety concern that has come to the attention of any Novo Nordisk employee and which has been reported to IPS
The Safety Committee is the sole Novo Nordisk body responsible for initiating appropriate actions in the event of a safety signal or alert.
Data monitoring committees
In order to protect the safety of clinical trial participants, Novo Nordisk may initiate external independent Data Monitoring Committees. These are formed to independently review and evaluate accumulating safety data from an ongoing clinical trial. Such committees may be warranted in clinical trials investigating high morbidity and/or high mortality trial populations, particularly in vulnerable populations or in long-term exposure clinical trials.
Clinical risk management plans
Another important feature of the Novo Nordisk system for ensuring safety of our products for patients is the Clinical Risk Management Plan. This plan identifies the potential risks associated with a medical product, methods to further clarify the safety profile of a product, and ways to minimise risk and achieve an improved benefit-risk ratio for individual patients in clinical use.
To enhance transparency of information to physicians and patients about the safety profile of products in clinical trials as well as marketed products, data from Novo Nordisk’s clinical trials are available at a dedicated website.
In addition to Novo Nordisk’s own monitoring activities, the company is subject to regular external audits by regulatory bodies such as the US Food and Drugs Administration to ensure that all aspects of quality are being managed appropriately.
For more information on how Quality is handled in Novo Nordisk.
Economic
Policy
Novo Nordisk strives to conduct its activities in a financially, environmentally and socially responsible way. This commitment is made in the company’s Articles of Association and in the Novo Nordisk Way. For us, being economically viable mean managing the business in a way that ensures corporate profitability and growth, while seeking to make a positive economic imprint in the community.
Goals
We constantly strive to achieve competitive business results so that we can build a sustainable business. Strong business growth combined with productivity improvements in manufacturing, administration and corporate functions has in recent years enabled Novo Nordisk to increase investments in research and development as well as strengthening our presence in the marketplace to be well-positioned for continued, sustainable growth.
Novo Nordisk’s impact on society model illustrates economic stakeholders and the interactions that drive economic growth in well-developed societies. This model serves as a management tool to better understand the role of the company in the global and local society.
A vital part of our socioeconomic work addresses the economic implications of the diabetes pandemic in developed and developing countries. The disease hits doubly by impeding people’s productive abilities as well as being costly to treat and to provide care for. We believe that investing in health can free up resources for other social development purposes. This is particularly relevant for diabetes, where many studies - including several conducted by Novo Nordisk - show that the cost of not treating diabetes is much greater than the cost of proper treatment. With healthcare spending rising faster than GDP in many countries, governments are looking for ways to reduce direct healthcare costs. Socioeconomic calculations provide evidence that investing in proper disease management reduces costs to both individuals and society due to fewer complications, higher productivity and increased quality of life.
For more detailed information on Novo Nordisk’s economic performance in 2010, see the section Socioeconomics.
Monitoring
Novo Nordisk continually monitors its financial performance, and reports this on a quarterly basis.
Looking beyond direct economic impact, we are working with many policymakers and other influential stakeholders to advocate a more sustainable approach to tackling the diabetes pandemic. This means an increased focus on preventative measures, better education, earlier diagnosis and earlier, more effective treatment to delay the onset of complications.
The Changing Diabetes Barometer is an initiative that identifies best practices for the prevention and management of diabetes. The Barometer provides a set of quality indicators defined by international guidelines including targets for blood glucose, blood pressure, weight control and lipids. It also measures quality of life experienced by patients and direct and indirect healthcare expenditures. By creating more transparency, it is the aim to give policy-makers and healthcare providers the best possible basis for making informed decisions about improving health outcomes while bringing down total costs.
See the section Support and advocacy.
Organisation
The TBL Leadership Forum is a body with a cross-cutting remit spanning Triple Bottom Line (TBL) performance, including the economic dimension of sustainability, with an aim to secure implementation and development of Novo Nordisk’s TBL strategy. The forum is tied to Lise Kingo, executive vice president and chief of staffs, through the TBL Management Steering Committee.
Risk management
Identifying and mitigating risks is a key part of any manager’s job. A formal risk identification process encourages everyone to keep an eye on both immediate risks and those emerging on the horizon.
Strategic risk management is high on the agenda of the Board of Directors and Executive Management. The aim is not to avoid risks, but to ensure that key risks are proactively managed. This allows Novo Nordisk to better allocate resources and to target future growth opportunities. An analytical and systematic approach to risk management makes the assumptions behind decisions more transparent. It allows management to discuss risks and choose whether to accept, transfer, share or eliminate the individual risk in order to align our consolidated risk profile with the readiness of Executive Management and the Board of Directors to take risks. Clearly, the appetite to take calculated risks will be higher in early discovery phases, while in other areas such as quality and patient safety the tolerance of risks will be close to zero.
We define risks as ‘events or developments which could reduce our ability to meet our overall objectives’. This broad definition includes all types of risk, both financial and non-financial, ranging from discovery and development, through manufacturing, sales and support functions that might impede the long-term objectives set out in the company’s Vision and reflected in its business plans.
Novo Nordisk is operating in an industry that is impacted by consolidation, cost containment and intensified competition. Articulating risks can improve decision-making, and Novo Nordisk has developed an integrated and systematic risk reporting approach, which is aligned with existing reporting and recurs on a quarterly basis. It is designed to ensure that key business risks are identified, assessed and reported to our Executive Management and Board of Directors.
Once a year we undertake a strategic planning process involving in-depth identification and evaluation of long-term growth opportunities. Through this process, risk factors and mitigations are identified and factored into the individual units’ business plans. This disciplined questioning of the context for identified risks and assessment of which objectives may be threatened enables us to be more attentive to factors that help or hinder long-term value creation.
Assessing risks
In all assessment of risks two factors are considered: the likelihood of the event and its potential impact on the business. Impacts are quantified and assessed in terms of potential financial loss and reputational damage. The risks are assessed at both gross level and net level. The gross level is the assessment of the risk with the assumption that no mitigating actions have been implemented. The net risk level is the residual risk when taking into account the mitigating actions and their anticipated effect.
Impact in terms of reputational damage is included because we see our reputation as one of its most valuable assets. A good reputation, based on solid performance and the business principles laid down in the Novo Nordisk Way, helps the company to attract talented people, investments and collaboration partners – and opens doors to customers and regulators. Consequently, any significant damage to its reputation impairs Novo Nordisk’s ability to meet the business goals in the longer term.
We apply a comprehensive and systematic method for assessing the reputational impact of potential risks. It aims to make more fact-based assessments of the likelihood and impact of a risk from a reputation perspective. As such, the tool serves as a common starting point for management’s discussion on specific risks.
See a list of current key risks.
Risk management set-up
Executive Management has established a dedicated Risk Management Board of senior executives representing all key business activities and selected support functions. Chaired by the chief financial officer, it reports to Executive Management and the Board of Directors. The Risk Management Board meets at least four times a year.
It sets the strategic direction and challenges for risk management, and analyses the risk and control information generated by the individual business areas. This process helps to reduce blind spots and consider potential cross-functional impacts. In quarterly reports to Executive Management and the Board of Directors, risks are assessed and quantified in terms of potential financial impact and reputational damage. For each risk the potential impact is specified, as are mitigating actions.
The Risk Office is the scretariat of the Risk Management Board. It drives and consolidates risk reporting from discovery and development, through manufacturing and logistics, to marketing and sales. In addition, risks related to support functions such as regulatory, business development, finance, legal & IT and people & organisation are included. This is done in consultation with relevant Novo Nordisk committees, boards and management groups.