Responsible sourcing
Novo Nordisks’ social and environmental responsibility extends throughout the value chain including Novo Nordisk’s suppliers. Novo Nordisk seeks to drive improved performance by Novo Nordisk’s suppliers and subsuppliers in order to mitigate risks and act on Novo Nordisk’s responsibility.
Through Novo Nordisk’s Responsible Sourcing Programme Novo Nordisk ensures that business partners are meeting ethical, social and environmental performance standards. These are framed by the UN Global Compact and the Universal Declaration of Human Rights (UNDHR). Novo Nordisk has established environmental, social and ethical standards for the company’s business partners. These cover not only labour, health and safety and environmental practices but also business ethics, including safety and rights of clinical trial patients and healthy volunteers, and animal welfare.
How well the standards are met is assessed in annual audits, with a focus on close engagement with a few key suppliers that face challenges in implementing the standards for healthy and environmentally friendly working conditions.
The company prefers to engage with suppliers to address breaches of quality, social and environmental standards. However, if a supplier repeatedly demonstrates a lack of interest or unwillingness to improve its standards, Novo Nordisk will take appropriate action, which could eventually mean withdrawal from the relationship.
Performance 2007
Roll-out of standards
In 2007, Novo Nordisk issued Responsible Sourcing standards. These standards are an integral part of doing business with Novo Nordisk. The standards are classified in six categories: general compliance with laws and regulations; environment; health and safety; labour practices; ethics; and subsuppliers. The new standards will also cover clinical trials and animal welfare, so that suppliers and contractors to different parts of the organisation are informed of all the company’s expectations in a single standard. Click here to download the brochure 'Doing business with Novo Nordisk'. The aim is to engage with suppliers to promote implementation of these standards. The company recognises that while standards and assessments may uncover areas in need of improvement, they will not necessarily result in improvements per se. Therefore, the company is developing an engagement programme, targeted towards suppliers that face challenges in implementing these standards. This programme will be piloted in 2008 and will build on Novo Nordisk’s experience in working with stakeholders to drive change.
Assessing suppliers’ performance
Novo Nordisk expects suppliers to adhere to the company’s standards for managing environmental impacts and respecting human and labour rights. Suppliers are regularly evaluated on their performance. Systematic evaluation was introduced in 2001 for the company’s more than 300 key suppliers in production. This was based on annual self-evaluation questionnaires, supplemented by audits conducted by Novo Nordisk internal auditors.
As of 2005, all significant purchasing, including via service companies, has been incorporated in varying forms in this programme. In 2007, 14 audits were carried out: five in Brazil, one in Argentina, and four in China.
Managing a global supply chain
As Novo Nordisk expands its supply chain operations globally, there are cost benefits to be gained. However, this must not compromise company standards and the Novo Nordisk Way of Management.
In 2006, the supply chain programme was reviewed to assess its effectiveness in mitigating risks and improving social and environmental performance. As part of the review, the company consulted selected suppliers in China and Brazil to obtain feedback on the current programme and to identify areas for improvement. Stakeholder engagement has contributed to framing this new approach.
The conclusion of the review was to strengthen risk management and place greater emphasis on suppliers of Novo Nordisk-branded products and suppliers with production in countries where enforcement of social and environmental legislation is weak.
Since a higher share of the Novo Nordisk supplier base will be shifting to developing countries, business risks will increase, but so will the opportunity to engage with suppliers with a view to ensure compliance with Novo Nordisk and global standards, thereby often raising the bar locally.
This more focused approach aligns well with Novo Nordisk’s global sourcing strategy. Any prospective supplier regarded as high-risk will be pre-screened and audited prior to approval. Approved suppliers regarded as high risk will be evaluated periodically on their social, environmental and ethical performance as part of the annual business evaluation, which covers both commercial and quality aspects.
This page has been reviewed by PricewaterhouseCoopers as part of its assurance of Novo Nordisk’s non-financial reporting. Please refer to Audit and assurance for a full description of the conclusions and the nature of assurance offered.
