Reporting strategy
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.
Fifteen years of reporting - an evolution
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. See the list of awards and recognitions.
Objectives of reporting
Novo Nordisk’s reporting processes – including data gathering and analysis, materiality assessment, editorial work, audit and assurance, design and distribution) – are well integrated. Management of financial and non-financial reporting, audit and assurance is done in separate work streams, aligned and coordinated via an internal team responsible for producing the annual report. There is still room for improvements towards a seamless, one-stringed process, but in the course of the first four reporting cycles significant improvements have been achieved in terms of efficiency, speed, quality, internal controls and assurance.
The Annual Report 2007 illustrates this development. Novo Nordisk has chosen to apply the term ‘non-financial reporting’ to performance on sustainability-driven issues. Hence, the consolidated accounts include two sections: financial statements and non-financial statements, while the narrative parts of the report present the company’s performance in an inclusive perspective.
The aim is for the Annual Report to:
- Explain the main trends and factors underlying the development, performance and position of the business during the year
- Explain the main trends and factors that are likely to affect Novo Nordisk’s future development, performance and position
- Interpret and assess the financial and non-financial statements in the context of the environment in which we operate
- Assess what management views as the most important issues facing Novo Nordisk and how it intends to manage these issues
- Assess the company’s strategies and the likelihood that they will be successful
- Be future-oriented
- Be understandable, relevant, supportable, balanced and comparable over time.
Standards and guidelines
One challenge to this inclusive approach lies in the fact that there is as yet not one inclusive reporting standard. Hence, as a company listed on the stock exchanges in Copenhagen, London and New York, Novo Nordisk follows current international standards for mandatory and voluntary reporting and is in general in compliance with applicable corporate governance codes:
- International Financial Reporting Standards (IFRS)
- Sarbanes–Oxley – requirements for documenting and reporting on the effectiveness of internal controls over financial reporting. (Data management and internal controls for non-financial reporting emulate this approach, but not with the same amount of resources invested.)
- The accountability standard, the AA1000 Framework
- Global Reporting Initiative (GRI) 2002 Sustainability Reporting Guidelines
- Global Compact
See Novo Nordisk’s approach to audit and assurance.
Tailored to stakeholder needs
The financial community is the primary audience for the Annual Report, but in preparing it, the information needs of other stakeholders are considered too.
The articles in the printed report focus on issues that are deemed material for assessing the performance and position of the company.
In the online version additional information is provided for other users with special interests or users just wanting to get a general overview.
Some markets translate or adapt the Annual Report into their local languages, and a supportive communications package facilitates local units’ use of the information and the key messages from the Annual Report.
Global Reporting Initiative
For the year 2007, Novo Nordisk has adopted the G3 Guidelines and reports at the GRI application level A+.
Novo Nordisk was one of the companies to pilot the first set of guidelines for sustainability reporting developed by the Global Reporting Initiative (GRI) and has since then reported ‘in accordance’ with the 2002 Guidelines.
Novo Nordisks supports the GRI – as an Organisational Stakeholder – and its initiatives to drive sustainability reporting. This includes support to the new G3 Guidelines and appreciation of the improvements it represents.
Global Compact
Furthermore, Novo Nordisk is a signatory to the United Nations Global Compact, a platform for encouraging and promoting good corporate principles and learning experiences in the areas of human rights, labour, environment and anti-corruption.
Novo Nordisk signed up to the United Nations Global Compact in 2001. In 2004 Novo Nordisk reaffirmed its commitment as signatory to the Global Compact, including the tenth principle, which was adopted in June 2004.
Reporting strategy - going forward
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. See recommendations in relation to Novo Nordisk's non-financial performance here.
