Managing a sustainable business implies taking broader responsibility than delivering healthy returns on investments. A profitable business is the basis for sustainable development, but as a responsible corporate citizen the commitment goes beyond narrow business concerns. This is why we track our economic footprint.

We use the Global Reporting Initiative (GRI) as a framework for analysing our impact on the creation of economic wealth and on the economic stakeholders that benefit from our activities. We also support the development of the GRI in this area.

Taking our inspiration from the GRI, we are developing a systematic approach that begins with our direct economic impacts. As a company, our most direct contribution to wealth creation is through employing people’s skills in creating goods and services and investing in new plants and equipment.

Indirect impacts, in turn, refer to when a company’s operations affect the economic activities and performance of others, both individuals and organisations. The kind of data and indicators available today make accounting for the direct impact a manageable task, but it will be a challenge to get a better grasp of our indirect impacts.

Novo Nordisk's economic stakeholder model
(click to see illustration)

Key indicators of economic performance
(click to view graphs)

Cash value distribution 
(click to see table)

We have started to address that challenge by mapping out our economic impact. The Novo Nordisk economic stakeholdermodel attempts to summarise our socio-economic impact on society based on production and consumption activities. The model illustrates the interaction in society between Novo Nordisk, suppliers, patients and healthcare providers, local communities, the global community, and the public sector.

The company’s added value is created through a range of internal business processes, into which the commitment to the Triple Bottom Line is integrated. This kind of model prompts a new form of decision-making, in which we aim to achieve a better understanding of our wider socio-economic impact.

In each of these processes the added value is generated through interaction with various stakeholders. This is addressed in other sections of the report and hence not further described here:

• R&D: bioethics and animal welfare.
• Production processes: environmentally friendly
  technologies/evaluation of suppliers.
• Management systems: risk prevention.
• Marketing strategies: affordable pricing in the
  developing world, LEAD initiative.
• Human resources: equal opportunities/human
  rights.
• Social investments: global health/education and
  training of doctors and nurses.

One of the factors we examine is distribution of created wealth. We use a cash value distribution chart derived from the statement of consolidated cash flow and financial resources in the Annual Financial Report for 2002.

Customers – that is people with healthcare needs and healthcare providers – represent the
most important economic stakeholder group of our company. From 2001 to 2002 our turnover grew by 6%. 99% of our sales are outside Denmark, with Europe at 42% as the most important market. However, the relative importance of North America (23%), Japan & Oceania (17%) and ‘rest of the world‘ (17%) is growing. Most production takes place in Denmark, where 62% of the employees and 89% of the company’s tangible assets are located.

External economic stakeholders (suppliers) receive 55% of the company cash, and the remaining 45% is distributed to various economic stakeholder groups profiting from the company added value.

The share of the total company cash received by suppliers indicates the extent to which suppliers profit from the location of Novo Nordisk’s plants in their neighbourhood. Suppliers to production are located primarily in Denmark.

Employee income (75% of cash added value) is a measure of the market value of people’s
productive capabilities. The regional distribution of this wealth points to a concentration in the developed world and in particular in Denmark. Net cash flow in 2002 for future growth is negative. This reflects the fact that investments made in 2002 have been self-financed through reduction of company cash reserves.

The level of investment is a measure of the company’s future economic capacity and development. In 2002 Novo Nordisk invested DKK 4.0 billion in new facilities, an increase from DKK 3.8 billion in 2001, primarily in Danish production facilities.

Novo Nordisk acquired the Brazilian company Biobrás in 2002 at DKK 380 million. This acquisition is a major expansion of Novo Nordisk’s activities in the large and growing market for diabetes care products in Brazil and other Latin American countries.

Expenditure on R&D is an important capacity builder from a societal point of view and a major part of the innovation that will create our future wealth. The wage share of R&D is an indicator of the company’s impact as a capacity builder in a region or a community. The expenditure on R&D constitutes 16% of the net turnover. This share has remained fairly constant at 16–17% in the period between 1999 and 2002.

Knowledge consists of all the skills, expertise and competences of the employees of our company. There is a growing understanding of the value of knowledge or intangible assets as drivers in the creation of company wealth. Novo Nordisk‘s employee base (fulltime employees) grew by 12% from 2001 to 2002, primarily in ’rest of the world‘ (47%)  followed by Denmark (10%), North America (6%), Europe (3%) and Japan & Oceania (2%).

In generating profit from our production, we have an impact on the environment through our use of resources and materials. Novo Nordisk works intensively to improve production technologies in order to reduce the negative impacts on the environment.

Our turnover contributes to overall economic wealth with 1.6% measured as a share of GDP in Denmark in 2000 rising to 1.8% in 20011). Our economic contribution through the value added is approximately 0.7%2) of GDP in 2001. Total corporate taxes in 2002 amounted to 8.8% of our turnover. Of the corporate Danish taxes 13% are paid as local taxes and 87% as state taxes. Further, in 2002 the company’s employees contribute with
0.5%3) of the total Danish personal income taxes (60% state taxes and 40% local taxes).

However, as a healthcare company it can be argued that we make a more profound contribution to society through our products’ value to customers in terms of improved health.

We contribute to total current as well as future socio-economic welfare by securing and creating employment, by developing the competences of our employees, and by making products that provide better health for people dependent on insulin.

We work with knowledge and investment in people; long-term development plans are made for all our employees in a consultative process with their manager. This process ensures a continuous development, education and motivation of each employee. Continued
education is an important socio-economic enabler as it helps increase individuals’ employability, not just for the benefit of employees and the company, but also for the benefit of society and other companies. By making such investments, resources can be freed elsewhere for other use and investment in companies and society.

We also have an impact on the future direction of economic growth and societal wealth through investments in new production. A decision to make an investment in a local area or a country, or to withdraw investment in another, can have either positive or negative social, environmental and economic effects. Therefore, it is highly important to understand how these decisions can support sustainable development.

An important contribution from the company, where the current and future worlds become
linked, is knowledge: not just through R&D activities, and investment in training employees, but also from our efforts to educate doctors and nurses worldwide in diabetes care.

Alleviating poverty has become part of the agenda for companies that want to see their business grow, as Novo Nordisk does, in the developing world. Globalisation promises bigger markets and more profit but it also exposes the ever-widening gap between the rich and the poor. Economic growth and trade, combined with foreign investments, is one of the most important factors in economic growth for the developing world.

But corporate responsibility in the developing world cannot be limited to investments and tax contributions. A community must benefit in a broader sense from having the company located there. Often, companies that establish themselves in the developing world find that the regulatory, public or institutional frameworks on which the conventional business model is based are often weak or absent.

In that context, corporate social responsibility becomes a concrete issue for these communities. Companies have to assume greater responsibility by helping to provide services that are conventionally provided by the public sector in the developed countries. These factors underpin the work we are doing in our global access to health initiative,
LEAD, and the way we approach our business in China.