Responsible sourcing
A growing number of companies now recognise that to reach their environmental and social goals and to satisfy stakeholders' expectations, they need to look further than their own facilities and ensure that their suppliers are also achieving acceptable social and environmental standards.
Customers and other stakeholders do not always distinguish between a company and its suppliers, and they may hold companies accountable for suppliers' environmental and labour practices. Many companies - and a growing contingent of investors as well - regard social and environmental supply chain management as a potential risk area. Environmental and social issues with the potential to seriously affect company reputation often arise somewhere in the supply chain.
As globalisation increases supply chain complexity, it also raises social awareness and expectations for companies to take responsibility for what they buy, sell and produce and how they go about it. Leading companies recognise that there are many business benefits to supply chain management. In addition to risk management, such programmes or initiatives can reduce costs, enhance quality, and safeguard reputation and brand image.
Novo Nordisk’s approach
Human rights violations or poor environmental management among Novo Nordisk’s suppliers could represent a risk to the company if unaddressed. Furthermore, as a responsible company, Novo Nordisk has an obligation to promote social responsibility in its business practices and within its sphere of influence. This includes suppliers and contractors.
In recognition of these committments, in 2002 Novo Nordisk launched the Sustainable Supply Chain Management (SSCM) programme. It is an enactment of Novo Nordisk’s commitment to the United Nations Universal Declaration of Human Rights, the United Nations Global Compact and the International Chamber of Commerce’s (ICC’s) Business Charter for Sustainable Development.
Within this programme, Novo Nordisk is working with suppliers and contractors to support human rights and labour standards as well as sound environmental practices. Although a set of requirements are asked from suppliers, the company’s approach to supply chain management is based on dialogue and engagement rather than sanctions and termination of contracts, although such measures may be necessary in rare cases.
At the same time, the programme reflects an active risk management approach which seeks to identify and reduce potential risk to an acceptable level.
The programme is now reaching out to second-tier suppliers (suppliers to Novo Nordisk’s suppliers) via a website, which makes the programme and tools available to suppliers and others. This way, suppliers can adopt Novo Nordisk’s programme or parts of it to extend requirements to their own suppliers.
Evaluation criteria
The sustainable supply chain management programme requires suppliers to complete a self-evaluation questionnaire as part of their contract and to allow Novo Nordisk to perform a social and environmental audit. For production materials, office supplies, laboratory equipment and engineering, social and environmental issues account for one third of the total rating of a supplier or licensee, which also includes quality and commercial aspects.
Novo Nordisk’s suppliers are evaluated with respect to environmental management and basic labour rights:
- Preserving the environment
Identifying, monitoring and managing environmental impacts, including compliance with regulations, and policies and programmes to improve performance - Treating people fairly
This dimension specifically addresses labour standards: wages and benefits, working hours, health and safety, child labour, forced labour, freedom of association and collective bargaining, non-discrimination, disciplinary measures and privacy.
