Embedding Sustainability at Novo Nordisk: The Compassion Vs Competitiveness Dilemma




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Excerpts

History of Sustainability at Novo Nordisk

In the late 1960s, Novo Nordisk faced severe stakeholder criticism for the first time in its history. During the 1960s, Novo Nordisk’s predecessor, Novo, had started producing enzymes through new production processes of fermentation of microorganisms. These new processes used genetically engineered microorganisms and led to the evolution of a successful new product line of enzymes.

These enzymes became important ingredients in many products like detergents. Environmental organizations and activists alleged that the use of enzymes developed by Novo could cause skin allergies in people who came into contact with them...

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Novo Nordisk Way of Management

In 1996, Novo Nordisk introduced the ‘Novo Nordisk Way of Management’ (NNWM) to serve as an overall guidance system to reach its strategic goals. NNWM served as the value-based governance framework for the company. It described how people at Novo Nordisk put values into action and defined the principles to be followed by the company while doing business. NNWM offered a broad framework of guidelines to the employees and covered Novo Nordisk’s activities beyond the products and manufacturing operations. The central part of the goal was to integrate and implement the various sustainable business practices of Novo Nordisk. NNWM consisted of three parts, viz. the vision, the charter, and global company policies .....

Triple Bottom Line

In 1997, just one year after it introduced NNWM, Novo Nordisk started another important initiative to help it evolve as an organization practicing sustainable business practices. It introduced the Triple Bottom Line (TBL) philosophy to maximize value to all its stakeholders. The TBL philosophy focused on operating in a way that was financially, environmentally, and socially responsible. The main objective behind the introduction of the TBL philosophy was to balance its short-term profitability with the long-term interests of the society. In this way, Novo Nordisk aimed at optimizing its business performance in all the societies in which it had its operations....

Progress on Sustainability

After the demerger of Novo Nordisk A/S, a new sustainability strategy focusing on the healthcare business of Novo Nordisk was developed. This new strategy marked the shift to Novo Nordisk’s next stage of sustainability endeavors. According to the new strategy, Novo Nordisk would have global health at the heart of its sustainability initiatives. Despite its focus on sustainability for such a long period of time, Novo Nordisk faced new criticism from activists and NGOs regarding its business practices after the demerger. In 2001, a consortium of 38 pharmaceutical companies along with Novo Nordisk filed a lawsuit against the South African government for violating their intellectual property rights, mostly in relation to the medicines used in the treatment of AIDS...

Climate Change

Manufacturing insulin was an energy intensive process. Therefore, another important area which Novo Nordisk focused on as part of its sustainable development initiatives was climate change. Novo Nordisk set long-term environmental targets in three areas, viz. CO2 emissions from energy consumption, energy consumption, and water consumption. During 2003-2004, Novo Nordisk’s environmental management practices at all its production facilities were certified according to the ISO 14001 standard...

Greek Price Cut Controversy

By the year 2005, Novo Nordisk had significantly grown its business around the world. In 2005, it emerged as the leader in the US insulin market for the first time since it had entered the market. By 2011, it got 40.1 percent of its sales from North America and 28.9 percent of its sales from Europe. Novo Nordisk also emerged as the leading producer of insulin in the world with a market share of 50 percent. Despite its growth and sustainable development, it again faced allegations regarding its business practices. In the year 2010, Novo Nordisk stopped selling some of its insulin products in Greece. The decision to do so came after the government there decreed a 25 percent cut in the prices of all the medicines sold due to the debt crisis that the country was facing ...

Looking Ahead

Novo Nordisk got several recognitions for its progress in sustainable development. It was named as the most sustainable company in the world by the business magazine Corporate Knights for the year 2012. Commenting on the recognition, Kingo said, “This is a wonderful recognition of our Triple Bottom Line approach and a clear indication that Novo Nordisk is poised for long-term business success. But most importantly, it is an encouragement to continue to find new ways of growing our business in a way that is profitable, responsible, and valuable for patients, employees, and society.” Novo Nordisk was listed in the 2010/2011 Dow Jones Sustainability Indices (DJSI). It was also awarded a gold class rating by Sustainability Asset Management (SAM) in its Sustainability Yearbook 2011 in recognition of its integrated reporting, stakeholder engagement, and its consistent high sustainability performance......

Exhibits

Exhibit I: Top Twenty Companies on the 2012 Corporate Knights Global 100 Most Sustainable Corporations in the World List
Exhibit II: Income Statement of Novo Nordisk from 2007 to 2011 (Figures in DKK million)
Exhibit III: Novo Nordisk’s Building Blocks of Sustainability
Exhibit IV: A Sample Balance Scorecard of Novo Nordisk
Exhibit V: The Novo Nordisk Learning Curve
Exhibit VI: Novo Nordisk Stakeholder Maps over the Years
Exhibit VII: Economic Pyramid and Access to Diabetes Care
Exhibit VIII: Novo Nordisk’s Ambitions in Improving Access to Diabetes Care Up to 2015
Exhibit IX: CO2 Emissions from Energy Consumption (1,000 Tons)
Exhibit X: Energy Consumption from 2007 To 2011 (1,000 GJ)
Exhibit XI: Water Consumption (1,000 m3)
Exhibit XII: Sales of Novo Nordisk by Geographic Region for the Year 2011 (In Percentage)
Exhibit XII: Percentage of Poorest Countries Where Novo Nordisk Sold Subsidised Insulin