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Report Watch: Novo Nordisk Explains Why Social, Environmental, and Financial Data Belongs in One Annual Report

By Melissa J. Anderson (New York City)

Last week Danish pharmaceuticals company Novo Nordisk released its most recent Annual Report. Rather than publishing several different reports dealing with its financial, sustainability, corporate responsibility, philanthropy work, etc, the company stuck them all together in one big document.

Integrated reporting goes a long way to reveal how the company thinks about its social and environmental commitments – that they are strategically important, side-by-side with its financials.

The “One Report” movement has been picking up steam for some time now, a tangible symbol of the triple bottom line thinking which initiated much of today’s corporate responsibility work.

According to Lars Reiben Sorensen, this is all part of the company’s values-based management system, the “Novo Nordisk Way of Management.” He wrote:

“In the words of our people, we are continuing to manage our business in a responsible and sustainable way, with a focus not only on improving the company’s finances but also on improving our social and environmental performance.”

Big Pharma & Governments

Another interesting aspect of the report was that it, like many recent corporate responsibility reports, went beyond simply reporting metrics or program successes. It also delivered a bit of philosophy on large-scale corporate responsibility. For example, very close to the beginning of the report, the company discusses how it sees its role as the worlds largest diabetes medication provider in light of government intervention. One one hand, it has a responsibility to those patients who have come to rely on its products. On the other hand, it says, it’s still a business.

For example, wrote Sorensen, last year when Greece mandated temporary price cuts on medication, the pharmaceuticals giant pulled some of its products out of the country, while keeping insulin on the shelves.

He wrote:

“In a situation like this, there is a major dilemma for a company like ours. The proposed price reductions for patented products would not have allowed us to continue running a profitable business in Greece. In the long term, if we cannot maintain profitability, we will be unable to continue to provide and improve treatment for the people who most need it.”

Whether or not you agree with the Novo Nordisk’s actions, it was refreshing to see a CEO so candidly deal with the issue in his company’s annual report.

Novo Nordisk Way

Sorensen also announced that this report marked the ten-year anniversary of the establishment of the company’s values-based strategic management system. The system was still relevant, Sorensen argued, and the company has revised its points to make it moreso.

The Novo Nordisk Way involves “improving care for people whose healthcare needs we serve; developing our employees and ensuring a healthy and safe work environment; and making a positive contribution to the communities in which we operate.” It also involves the company’s environmental commitments, and adherence to business ethics.

To ensure its leaders and employees are actually practicing the company’s values-based management strategy within the company’s culture, Novo Nordisk even performs regular “values audits.” The report explains, “Values audits, called facilitations, are conducted by our global facilitator team, consisting of senior people with deep understanding of our business and the business environment.”

And finally, to underscore the importance of its values, an interview within the report asks Jesper Brandgaard, the company’s CFO, “How do the company’s long-term financial targets tie to the Novo Nordisk Way?” He answers:

“We believe that the only way we can run a sustainable business is to generate strong results on multiple dimensions. Growing our business profitably and delivering competitive results is the basis of our ability to help patients live better lives, offer an attractive return to our shareholders and serve all of our stakeholders.”

But Brandgaard’s answer is not the interesting bit – what is so fascinating is that the question is even posed. Rather than corporate leadership asking the head of corporate responsibility, “what will these values do for our company’s bottom line?” the question asked at Novo Nordisk is “what will these our financial targets do for our values?” And that is innovative thinking.

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