Interview: Novo Nordisk about their award winning CR Reporting

This weeks interview is with Anne Gadegaard Larson from the Stakeholder Relations Department of Novo Nordisk, a global healthcare company and a world leader in diabetes care based in Copenhagen, Denmark.

The interview:

1) Could you tell us a little bit about the history of CR reporting at Novo Nordisk?

Novo Nordisk published its first environmental report in 1994 (covering the year 1993), and was the first company in Denmark and one of the first internationally to do so. This was one year ahead of Danish legislation requiring that certain companies (in total around 2,000 at the time) disclose information about their environmental impacts. The report included information about resource consumption, emissions and use of experimental animals – issues that reflected stakeholder concerns at the time, and indeed still do. Since then, the company has continued to set new targets every year aimed at raising environmental and bioethical standards in the company’s operations. Reporting helps maintain focus and create transparency about environmental impacts, performance and goals.

In 1998 Novo Nordisk published its first social report. The report set targets and followed up on the company’s efforts to live up to its social responsibility – towards employees and as a corporate citizen.

In 1999 these two supplementary reports were merged into one document, the environmental and social report. In addition, since mandatory environmental reporting remains applicable for some of the company’s Danish sites (Bagsværd, Gentofte, Hillerød and Kalundborg), annual green accounts are prepared for these sites and submitted to the Danish Commerce and Companies Agency.

In November 2000 the enzyme business was demerged from the healthcare company, and the two businesses continued as two separately listed companies, Novozymes A/S and Novo Nordisk A/S. The ownership structure remained unchanged, and a holding company, Novo A/S, was established as the link between the Novo Nordisk Foundation and the operating businesses. That is why the 2000 environmental and social report is published under the name of Novo A/S, covering performance for both companies.

As of 2001 Novo Nordisk began to include socio-economics, and the 2001 report was entitled ‘reporting on the Triple Bottom Line’. The Triple Bottom Line approach has guided the company’s development of its sustainability agenda, and from 2001 the company became more proactive – internally and externally – in ‘branding’ this Triple Bottom Line concept as its interpretation of sustainable development.

In 2002 and 2003 the company’s voluntary reporting on environmental, social and economic performance and key issues was published in Sustainability reports. In 2003, for the first time, the Sustainability Report was published at the same as the Annual Financial Report and distributed to shareholders. This move was very well received by shareholders and other stakeholders, as the two documents together provided a more comprehensive overview of the company’s performance, progress, positions and strategic initiatives.

In March 2004 the Annual General Meeting adopted an amendment to the company’s Articles of Association to specify in the objectives that the company will ‘strive to conduct its activities in a financially, environmentally and socially responsible way’. In this way, the commitment to the Triple Bottom Line (which was already included in the Novo Nordisk Way of Management) was further anchored as a business principle.

In order to reflect this approach, Novo Nordisk merged its financial report and its sustainability report into one inclusive document. The 2004 Annual Report was the first inclusive report and, although recognised as a ‘beta version’ of a more comprehensive approach to reporting, it was very well received.

Novo Nordisk has a long track record as a leader in sustainability reporting. In 2007 – for the eleventh time – Novo Nordisk’s Annual Report 2006 was awarded ‘best non-financial annual report’ by the Danish association of state-authorised accountants, FSR, and the business daily, Børsen.

In addition, Novo Nordisk won the award for ‘best Corporate Responsibility report’ issued in Denmark in 2006 and an award for second-best online information amongst C20-index companies.

In March 2008, Novo Nordisk was selected as the winner of the first-ever, global CR Reporting Award for best integrated report.

See all reports here

2) Novo Nordisk has won a lot of CR awards for their reporting over the course of the past 10 years. What do you do different then other companies?

Novo Nordisk has chosen to report on the company’s financial and non-financial performance in one inclusive document, the Annual Report, which is published in English and Danish.

Novo Nordisk continues the process to drive integration of the financial and non-financial perspectives on business and seeks to reflect this in the approach to reporting. In the absence of global standards for inclusive reporting, this approach takes its point of departure in current standards for mandatory financial reporting and current guidelines for voluntary non-financial reporting. The aim is to drive business performance and enhance shareholder value by exploring the interactions between financial and non-financial objectives. This entails alignment of key priorities, target-setting and definition of key performance indicators, in consultation with internal and external stakeholders.

We recognise the challenges of reporting within two distinctly different frameworks. However, we deem that the benefits of presenting one view of the company’s performance outweigh the drawbacks, and we are continuously working to improve disclosure and transparent reporting.

The Annual Report is prepared in respect of current best practice and the principles of materiality, completeness and responsiveness. Stakeholder engagement informs the process, which also incorporates independent expert reviews of the company’s annual reporting. The selection of information included in the annual reporting reflects evolving priorities in response to business and societal challenges.

3) What is your opinion on stakeholder engagement? Will companies ever be able to properly communicate to their stakeholders? What does Novo Nordisk do?

Stakeholder engagement is a key principle of corporate responsibility – it helps an organisation stay attuned to stakeholders’ concerns and interests, and it is a key element of organisational learning and development. Any organisation wishing to work and report proactively on corporate responsibilities needs to define whom to engage with and how. It is important to recognise that stakeholder engagement is not just the annual meeting with the local NGO, but regular contact either directly or indirectly through media, formal or informal, with top management or on an individual employee level. Therefore stakeholder engagement is not to be perceived as a process that can be managed in its completeness by a central department. However, it is important to secure coordination of engagements with key stakeholders.

The SR report has for some years been one way to communicate with stakeholders. Novo Nordisk’s learning has been that also other communication channels need to be developed, as stakeholders’ interests are very diverse. The annual reporting on our sustainability website therefore serves as a reporting repository through which all stakeholders can find updated information on Novo Nordisk’s performance in regards to their key area of interest. This is supplemented with updates during the year on specific topics.

4) Where is CR reporting at Novo Nordisk going in the future? What are the priorities?

Novo Nordisk’s reporting strategy considers developments in reporting standards and regulatory initiatives. We recognise that, unlike financial reporting whose format is now well-established by international standards, sustainability reporting is still at a stage of experimentation. We believe that with the approach to integrated reporting we are getting closer to a reporting format that works well for Novo Nordisk, our shareholders and other stakeholders. However, we will continue to seek inspiration from reader and stakeholder feedback, independent external reviews and benchmarks with peer reporting.

As part of this work, Novo Nordisk is working to develop more long-term non-financial targets, indicators and metrics.

5) Where do you think CR reporting is going in the next 5-10 years? Will it be more important for companies in the future then now?

Novo Nordisk believes in the value of integrated reporting and predicts that in 5 to 10 years financial and non-financial reporting will have blended into truly inclusive reporting. The reports will convey information thatthe organisation’s stakeholders regard as material for their decision-making, whether it is about engaging with the company as an investor, a potential new employee, an authority or other.

In Denmark, authorities are currently discussing whether the regulatory requirements to the annual report should be expanded from reporting on material environment and knowledge information to a broader requirement that all larger Danish companies should produce a CR report. We see the same trend in other countries.

6) What would be your top 5 CR reporting tips to someone new managing CR reporting within a business?

Novo Nordisk’s top 5 CR reporting tips are:
1.    Make sure to have a robust CR strategy in place, which will serve as the point of departure for reporting, and set clear, communicable targets and indicators that are meaningful to the organisation and which can drive performance
2.    Make sure that the CR reporting is balanced
3.    Involve stakeholders in the reporting as well as the shaping of the CR strategy – including selection of material issues to report
4.    Assure CR content according to the AA1000AS
5.    Have fun while developing the CR report. It IS a huge effort, but it’s worth it!