Integrated Reporting at a Novo Nordisk

Abstract

Novo Nordisk is widely regarded as a leader in diabetes care, employing over 27,000 people across 81 countries. A controlling share in Novo Nordisk is owned by the non-profit-making Novo Nordisk Foundation, which means that the company has a degree of operational freedom by comparison with the rest of the pharmaceutical industry and is protected from the threat of possible takeovers. In 2000, Novo Nordisk was de-merged from its enzymes business, Novozymes, and the two companies have remained separately listed since then. Novo Nordisk Foundation effectively owns a controlling interest in both companies and acts as a stable platform for the two operating companies. A holding company, Novo A/S, creates a link between the foundation and the two operating companies: importantly, Novo A/S has the voting majority at the annual general meeting of Novo Nordisk. This structure has given the company relative freedom to choose its strategic direction, not least in relation to the integration of sustainability within business strategy. Novo Nordisk was founded in the 1920s with a specific mandate to help people, and this mandate continues to influence the company’s strategic direction. In 2004, Novo Nordisk amended its Articles of Association to explicitly commit itself to ‘strive to be economically viable, socially responsible and environmentally sound’. This decision was endorsed by the company’s investors, who regard the company’s strategic direction as being particularly compatible with the company’s business model:The origin of the company’s modern interest in sustainability may be traced to specific incidents over the last three decades, where the company suffered criticism from external stakeholders and associated negative media coverage. The first of these incidents occurred during the early 1970s when the companyfaced allegations from the then consumer advocate Ralph Nader, who claimed that new detergent enzymes were affecting the health of the American employees involved in the production process. The reputational damage caused by this episode caused sales in the company’s US market to fall by half; as a consequence, management attention became focused on the vulnerability of the business to public opinion.