2008 is the fifth consecutive year of integrated reporting on Novo Nordisk’s financial and non-financial performance. We have chosen to apply the term ‘non-financial reporting’ to performance on sustainability-driven issues.
Novo Nordisk continues the process to drive integration of the financial and non-financial perspectives to 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 consultations that involve internal and external stakeholders.
The external annual reporting consists of two publicly filed documents: The Annual Report, filed with the Danish Commerce and Companies Agency.The Form 20-F Report, filed with the United States Securities and Exchange Commission
Additional reporting online provides more background, context and data. Many sections of the public filings contain references and links to information posted on the Company’s website.
The Annual Report is designed to meet the information needs of shareholders, financial analysts and other corporate stakeholders.
The online reporting caters to those stakeholders who take a particular interest in specific topics, providing additional background and data, particularly in relation to sustainability issues.
Annual Report 2008
The Annual Report 2008 covers the financial year (equal to the calendar year) and is issued in February 2009 for approval by shareholders at the Annual General Meeting on 18 March 2009.It consists of a narrative business review and the consolidated financial and non-financial statements.
The report discusses key challenges and strategic initiatives to develop the business in order to meet targets and sustain long-term value creation. It also explains Novo Nordisk’s way of doing business as a values-based company guided by a vision.
The feature articles present company-driven activities in pursuit of the Novo Nordisk Vision and respond to concerns identified through interactions with shareholders, financial analysts and other stakeholders during the year.
In the Annual Report 2008, external opinion leaders have been invited to contribute their perspectives on some of the key issues: the current economic climate, challenges in the healthcare industry and marketplace, new treatment paradigms for diabetes care and the interrelationship of the global climate change and a healthy future.
Novo Nordisk is in compliance with applicable corporate governance codes and follows current international standards for mandatory and voluntary reporting:
- International Financial Reporting Standards (IFRS).
- AA1000 Assurance Standard (2003).
- US Sarbanes–Oxley Act requirements for documenting and reporting on the effectiveness of internal controls for financial reporting.
- Novo Nordisk embarked in 2008 on a process of structuring the control environment for non-financial data with the aspiration to have full alignment with the control environment for financial data.
- The accountability standard, the AA1000 Framework.
- Global Reporting Initiative (GRI) G3 Sustainability Reporting Guidelines.
- UN Global Compact, Communication on Progress.
Novo Nordisk’s assurance process is designed according to the AA1000AS (2003).
In the absence of global standards for inclusive reporting, the Annual Report is prepared in respect of current best practice for financial and non-financial reporting, respectively. This includes applying the principles of materiality, completeness and responsiveness.
Evolution of standards
In October 2008, AccountAbility launched a new version of the AA1000AS (2008). Novo Nordisk will in 2009 decide the timeline for implementing the new assurance standard.
In 2007, Novo Nordisk upgraded its reporting against the Global Reporting Initiative’s (GRI’s) Sustainability Reporting Guidelines from the 2002 version to the G3. Reporting on management approaches and performance against the list of indicators covering economic, environment, labour practices, human rights, society and product responsibility can be found here.
Novo Nordisk reports on the GRI G3 because it is the only internationally recognised set of indicators. By reporting on the indicators, it is possible for stakeholders to compare Novo Nordisk’s performance to other organisations’ performance.
As a signatory to the UN Global Compact, a platform to promote good corporate principles and learning in the areas of human rights, labour, environment and anticorruption, Novo Nordisk reports on actions during 2008 to implement its 10 principles in the Communication on Progress (CoP). We are also actively involved in the development of UN Global Compact.
With new legislation in Denmark, effective as of 1 January 2009, Novo Nordisk will be required to account for the company’s activities on social responsibility, reporting on business strategies and activities on human rights, labour standards, environment and anticorruption. Companies that subscribe to the UN Global Compact and annually submit their CoP will be in compliance with the new legislation, provided that the annual report includes a reference to where the CoP has been made publicly available. See Novo Nordisk’s Communication of Progress 2008.
The accuracy, completeness and reliability of the company’s reporting is verified through internal controls, assurance and independent audits.
The annual report is prepared in respect of current best practice and the principles of materiality, completeness and responsiveness, in accordance with the AA1000 Framework. In doing so, it seeks to provide a complete, accurate, relevant and balanced picture of the organisation’s approach to and impact on society.
Stakeholder engagement informs the process, which also incorporates independent expert reviews of the company’s annual reporting. In 2008 this process included benchmark reports from a financial reporting and a sustainability reporting perspective, respectively, interviews with major shareholders and financial analysts and a series of focus groups with retail shareholders. The selection of information included in the annual reporting reflects evolving priorities in response to business and societal challenges.
Ongoing stakeholder engagement and trendspotting help identify new issues which are or could become material to Novo Nordisk. The Novo Nordisk learning curve is a tool that aligns the process of defining materiality with integration into business practices. Emerging issues that are identified as relevant and potentially material are included at the bottom of the learning curve. Following a review of its implications for Novo Nordisk’s long-term business, a strategy is framed for those issues that are deemed material and subsequently data, indicators and targets are identified. Once management of the issue has been embedded in the organisation, so that it is fully integrated into business processes, the strategy will be revisited as appropriate.
Moreover, issues that are included on the learning curve are monitored as part of the integrated risk management process.
It is Novo Nordisk’s responsibility to ensure that those areas are addressed in which the company has significant impact or where it has a responsibility and ability to act. Novo Nordisk has sought inspiration in AccountAbility’s materiality test to define what is material to Novo Nordisk, what should be included in the annual report and on which grounds topics should be excluded. Applying the materiality test as a tool, sustainability-related issues are prioritised to be reported either in the printed annual report (most material; business critical), online (material, often to specific stakeholder interests) or not reported (not material). The same process applies for the assurance provider’s recommendations.
The outcomes of formal reviews, research, stakeholder engagement and internal materiality discussions are presented as a proposal for the annual reporting to Executive Management and the Board of Directors, and subsequently approved. In addition, Novo Nordisk’s external assurance provider is requested to assure whether the non-financial performance included in the annual report covers the material aspects. The conclusion is available in the Independent Assurance Report on Non-financial Reporting 2008.