Building credibility requires transparency in the data and information we put forward in our social report. We also realise, however, that, given the nature of the information in a report such as this, traditional methods of auditing may not be the most suitable way to review our social report. Therefore we have adopted a two-pronged approach by asking both KPMG C Jespersen and Simon Zadek of New Economics to provide their comments to this report based on a cooperation with Novo Nordisk's Group Internal Audit. We shall continue to explore how to create a verification process that meets the need for credibility while matching the process behind and content of our social report.

This Social Report 1998 is the responsibility of the management of Novo Nordisk. It has been prepared on the basis described in the introduction.

Since mid-1997 we have participated in Novo Nordisk's process to gain a better understanding of the coherence, differences and similarities between financial and social auditing and accounting. This has been an introductory phase for social accounting at Novo Nordisk.

The scope of our work has been agreed upon with the management of Novo Nordisk. The verification work performed by us does not constitute an audit in the sense of a financial audit and therefore we do not express an audit opinion.

The management of Novo Nordisk has asked us to verify the accuracy of the data that Novo Nordisk has chosen to include in the social report. As part of the verification, we have interviewed management concerning procedures for data documentation and data collection. On a sample basis, we have checked that data and other information are in accordance with Novo Nordisk's registrations and we have reviewed relevant documents. In our view, the data included in the Social Report 1998 is consistent with the documentation presented to us.

Copenhagen, 25 June 1999

KPMG C Jespersen

Jens Frederiksen
State-authorised public accountant

Information about a company's performance needs to be credible to form the basis for effective dialogue and mutual understanding as to what has been achieved, and what could be aimed for in the future. There are diverse approaches to the external verification of social accounts and reports. Each has its own merits, but none alone yet provides adequate assurance to stakeholders of their completeness, accuracy or relevance.

Novo Nordisk has therefore experimented with a two-track approach to quality assurance. KPMG has provided a formal verification statement focused on the accuracy of the published quantitative data. This statement by New Economics seeks to provide a broader perspective on the quality of the published information and the underlying process of social accounting. Its starting point is that organisations need to develop policies, procedures, and credible public reporting covering all of its relationships, and based on an inclusive dialogue, with stakeholders.

This statement is based on information gained through the accompaniment by New Economics of Novo Nordisk throughout its first social accounting cycle. It is also based on end-of-cycle interviews with the external verifiers, Group Internal Audit, the company's Social Accounting Team, and key senior managers. Finally, it draws on the growing body of 'good practice' benchmarks, including 'leadership standards' set by other companies, and emerging standards frameworks from bodies such as the Institute of Social and Ethical AccountAbility.

This first social report accurately reflects where the company is today. It highlights its stated and underlying values, its focus on nurturing its employees, and its stated commitment to taking practical steps to making these values relevant in its relationships with other stakeholders. The report confirms the company's Danish foundations, whilst also offering a limited profile of its growing presence and range of stakeholder interactions internationally. This report should be read in conjunction with Novo Nordisk's public reporting on environment and bioethics to understand other aspects of the company's overall approach to sustainable development.

This first social report, in summary, informs its audience more about what or who Novo Nordisk is and wishes to be, than about what are its social impacts on stakeholders, or stakeholders' own experiences of the company.

Novo Nordisk affects many people worldwide. This means that any single report, particularly the first, is necessarily limited. Important in this context, therefore, are the company's future commitments to build on this initial experience.

Novo Nordisk has been forthright in its introduction to its social report in setting out the company's 'objectives for the future social reporting process'. All of these ambitions are relevant and should be encouraged. Of particular importance in the short to medium term are the commitments:

• To clarify key policy areas bearing on social performance, such as human rights, and to establish strategic indicators relevant to each area.
• To extend the process of social accounting to external and non-Danish stakeholders, particularly those in developing countries where employees' and other stakeholders' rights and opportunities may be relatively limited.
• To open up more of a two-way dialogue with stakeholders and their representatives that seeks to understand and respond where possible to divergent values, situations, and interests.
• To work with stakeholders in establishing further quantitative indicators, and in particular to provide more effective performance benchmarks.
• To begin the task of integrating social accounting and reporting with the economic and environmental dimensions of the company's performance.
• To establish and publish more systematic social performance targets and to ensure that performance against these targets is externally verified and the results made publicly available.

London, 25 June 1999

Dr Simon Zadek
On behalf of New Economics